An Epic Struggle Between Nations
No, not the conflict in Ukraine, the FIFA World Cup: even those trying to avoid the soccer will have noticed that the tournament is on, and that it has been riven by scandal and dissent.
FIFA the world soccer governing body has a (shall we say) “patchy” record when it comes to corruption allegations: in 2015 the US Department of Justice charged nine of its officials and five of its corporate directors with “racketeering, conspiracy and corruption”, resulting in a number of bans, fines and in one case a 9 year prison sentence. It is perhaps no wonder that skepticism has surrounded FIFA’s choice of Qatar, which is not a famous footballing nation, has limited infrastructure for visiting fans, unplayable temperatures for most of the year, and imposes strict legal constraints on what most societies regard as human rights and personal liberties (homosexuality, alcohol and adultery are all illegal: even displays of empathy with human diversity, such as rainbow symbols, have been banned by the event organizers).
Although official numbers are hard to find the UK’s Guardian newspaper claimed as long as a year ago that 6,500 foreign laborers had died during the construction of venues for the 2022 World Cup in Qatar, including many from heat related injuries. This was hotly contested by Hassan Al Thawadi, the secretary general of Qatar's Supreme Committee for Delivery and Legacy. In a recent interview with controversial British journalist Piers Morgan, Mr Al Thawadi said only between “400 and 500” workers had actually died. That is around one immigrant worker each week for ten years. Oh, that is OK then; I was beginning to worry that the whole event was a cesspit of corruption, hypocrisy and exploitation.
European Defense is Subsidized by the USA
Finnish Prime Minister Sanna Marin this week pointed out the obvious to attendees of an event at Sydney based think-tank Lowy Institute - that Europe is still reliant on the US for its collective defense.
I must be brutally honest with you, Europe isn't strong enough right now. We would be in trouble without the United States.
Sanna Marin, Prime Minister of Finland
At the start of the year the US European Command (EUCOM) had approximately 65,000 troops in Europe; chiefly in Germany, the UK, Italy and Poland. In March EUCOM said US forces had surged to 100,000 in the region, in response to Russia’s invasion of Ukraine. To put that in to context, the whole regular British Army that is fully trained to do its job numbered 77,000 as at January this year. Not all of those troops would be deployable due to injuries, training duties and standing obligations, so the US deploying 100,000 of its people to Europe is a lot: more even than the US has stationed in Japan and South Korea.
The US is by far and a way the largest financial and military donor to Ukraine in its existential conflict with Russia, having so far pledged more than $30bn in support. Anyone in Europe that does not realize that their freedom since 1945 has been broadly underwritten by the US (and to a lesser extent the UK because of its extant “at sea” nuclear deterrent), is - as Prime Minister Marin pointed out - thinking about the issue incorrectly.
Emerging Markets Come Back
Another thing that has happened since 1945 is that the economic and demographic power of countries outside Europe and North America has risen enormously. I have written before about this shift in power politics and economics, with the West ruling for now, but only just. Over recent decades many countries have started to borrow from international investors by issuing bonds in hard currency (in most cases US Dollars). The effects of global inflation, rising US interest rates, supply shocks, the strong Dollar (and therefore weak local currencies) has made much of the last year very negative for the developing economies. However, speaking with people in the market it seems that the smart money has made money in “EM” debt this year: lending to the right countries and companies has proved to be a success for all involved, and even the hard-pressed sovereign bond market showed a strong return to positive territory in November.
I am an optimist, and despite the gloomy news cycle, I would like to think that not many things need to go right for the global economy to get back in a positive mode: US inflation coming down, China abandoning the excessive harshness of its Zero Covid policy, and even the start of serious attempts to stop the conflict in Ukraine. Let’s all hope.
Be good, everybody.
Duncan