A politically turbulent 2020

I woke up in the morning of January 1, thinking about this column after recalling the night before most of the socio-political events that happened in 2019. Then, in the morning of January 3, the US takes out Iran’s general Soleimani in a drone attack near the Iraq airport, starting/feeding a dangerous and volatile geo-political crisis situation in the Middle East. We are really headed for a politically turbulent 2020 with dire economic implications.

The unrests and demonstrations in Iraq, Lebanon, and Syria are their citizens’ grievances against their government’s failings, graft and corruption, lack of services and opportunities, injustice, and oppression. Iran’s problem, is with the US economic sanctions related to their disagreement of Iran’s denuclearization program, which led to Iran’s meddling in Iraqi politics, the shelling of an American construction company in Iraq, and the attack of the US Embassy in Iraq which was blamed on Iranian instigators. Turkey is now inundated with Syrian refugees escaping their civil war, and Turkey itself is facing local civil unrest as Erdogan clamped down on the opposition and entrenched himself with the revision of their constitution. This makes the Saudi Arabia conflict with Qatar a minor issue.

In Latin America, there is the pestering problem of Venezuela’s repressive government and economic meltdown, and migration of almost two million of their people to the neighboring countries, who are in no position to accommodate and afford them. Bolivia and Chile are experiencing varying levels of civil unrest against their governments also against corruption and government failures. In Eastern Europe, the Ukraine and Russia territorial warfare is still ongoing, with the $400 million US assistance already released and now the main issue in the Trump impeachment.

In the Asia-Pacific, the North Korean nuclear arms escalation is the big elephant with implications not just to South Korea and Japan but also to the rest of the world. Then there is the Hong Kong civil demonstrations/protests now running seven months, getting more violent and problematic for China. There is also the South China Sea issue which is contested by the Philippines, Vietnam, and now Indonesia and Malaysia against China, with the support of Australia, Great Britain, and the US

While it is possible, there is a low probability that any or many of these political conflicts may lead to a full-scale war, but there are serious socio-economic effects that are forthcoming. The Middle East troubles already spiked oil prices by 4% in two days, dropped the prices in most of the world stock markets, and unnerved international investors. Slower world trade will follow and then a slowdown in the economic growth of most countries. These will also slow down poverty reduction efforts in developing countries, increase social dissatisfaction/division and polarization that feeds political stress and turbulence.

For the Philippines in particular, the Middle East scenario will mean higher oil prices which is very significant for an imported oil dependent economy. There is also the specter of millions of Filipino overseas workers in the Arabian Peninsula who will have less income to remit to the Philippines, and the worst-case scenario, of their losing employment and coming back to the Philippines. Add to these, the slower foreign investments due to the Malacañang’s rhetoric on the water distribution contracts and big business. We are looking at a slower economic/GDP growth rate in 2020 with lower aggregate demand and private investments. The current administration in its position on the South China Sea, political and human rights, and international relations is abetting social division and polarization instead of unification which is needed to withstand the international political storms in 2020 and beyond.

Filipinos are a hopeful, some say fatalist people and will withstand adversities; but we should be prepared for more difficult times politically and economically.