New disparities in a changing world

People were queuing this afternoon to get into the most expensive shops in a well-to-do area of Brussels. The other shops, normally patronised by the medium-income people had almost no customer. And then, there was this incredibly sad sight of closed restaurants and bars and a big hotel, a huge tower, completely empty. For me, it was a vivid example of how the crisis is seriously affecting some segments of society whilst others are just returning to their old habits, as if the past were back. But it is not.

A very unequal new world

One of the most damaging consequences of the pandemic will be the augmentation of social inequalities. Some people will not be particularly impacted by the economic crisis that results from the measures taken to combat the Covid-19. They will experience no real change in their lifestyles. But the others, many of them, will see their income disappear or be dramatically reduced. They will be the new poor, finding themselves in desperate conditions. Their numbers will reach new heights, causing a totally distorted social reality and extreme instability. Such a situation will be explosive. The new poor are not used to navigate the poverty waters. They will feel left behind. We should expect if nothing is done to mitigate the misery, a very serious political challenge.

Lots of billions lost to flu

Today, we are challenged again to reflect about resources, availability of wealth and how vast amounts of money can be spent wisely or just evaporate. It is also a call to reflect about priorities, decide on the appropriate ones and how to fund them. More concretely, all this is about uncertainty and its impact on capital markets, on short-term decisions and, in the end, on the minds of people.

Today’s uncertainty is about the coronavirus.

More concretely, almost every stock in the STOXX 600, the largest European share index, are trading since this morning in negative territory, in the red, as the specialists say. This represents around 180 billion euros the investors have lost during the day, just today. This is about 2% of the entire capital invested in those companies. But it is a lot of money that has faded away.

The investors are pessimistic about the impact of the virus and the capacity to control its transmission. A friend from the East Asia region told me that, in the current state of world affairs, “when China sneezes, the rest of the world catches the flu virus!” It is not exactly like that. But for sure the Europeans that negotiate in the capital markets got high fever today.

We should be much wiser

The international political tensions keep deepening. And they have a major negative impact of trade and investment. We seem to be going back to the international environment that prevailed for several decades after World War II. Around 1985 there was a change to a more constructive engagement. We are now going back to destructive confrontation. The weapons that are being used might belong to the economic realm. But a confrontation is spiralling process and it can therefore make use of other means, inclusive the military ones. To believe that war is something of the past is an idealistic view. Today´s events in Ukraine show that war in Europe is still seen by some as an option. The big difference with 1945 is that in today´s world the means of destruction are much greater. Can we keep that in mind? 

The African Ellipse of Instability

I was asked by the media a number of questions about the recent developments in the Central African Republic (CAR). I have advised them to read the research paper I published last year, under the sponsorship of NUPI – the Norwegian Institute of International Affairs –about the instability in that region of Africa. I mentioned, in particular, the “ellipse of instability”, an expression I coined to describe the security risks that exist in a vast no-man’s land along the borders of Chad, Sudan, CAR, South Sudan and the Democratic Republic of Congo.

The paper is available at the following link:

http://english.nupi.no/content/download/308614/1068211/version/1/file/NUPI+Report-SIP-7-Angelo-McGuinness.pdf

I suggest the reader to have a look at it.