Each week our scan collects weak – and less weak – signals…
World – Two major developments should more particularly be underlined this week, the first related to world order and further threat to the U.S. Dollar supremacy and the second to the potential forthcoming anti-Bashar al-Assad Saudi-Turkish attacks in Syria.
First, there is the impact of the lower oil prices on petrodollars, with potential second order effects on the supremacy of the U.S. dollars as international currency, and then again potential consequences on American power and world order. As underlined in Bloomberg’s article (see “Oil-Rich Nations Are Selling Off Their Petrodollar Assets at Record Pace” in the Weekly), currently analysts are divided in two schools of thoughts. According to the first one, the impact of the diminishing petrodollars will be extremely reduced, considering other types of liquidity and flows of USD. On the contrary, the second school underlines the psychological impact of the drop.
It should be added to Bloomberg’s analysis the increasingly repeated blows given to the USD supremacy for at least a year (see Risks on the USD supremacy, 27 March 2014), with a rising numbers of barter deals (e.g. Russia Iran, “Russia confirms Iran oil-for-goods swap, no signs seen” 14 April 2015, “What About The Dollar: Russia, Iran Announce $20 Billion Oil-For-Goods Deal” 2 April 2014), mammoth deals in national currencies (Russia China in May 2014 “The Russia-China Gas Deal: Implications and Ramifications” Sept/Oct 2014), swap deals (China Russia e.g. China Offers Russia Help With Currency Swap Suggestion Dec 2014, Argentina China, Nov 2014; China South-Africa April 2015; see also Liao and McDowell “Redback Rising…” 2013?, taking a longer historical perspective on the issue, etc.) to which should be added the new Asia Development Bank (e.g. “France and Germany join UK in Asia bank membership” March 2015).
What we are thus most probably witnessing is a sustained attack on the financial and monetary order of the Washington consensus, with the possibility to see the latter end. The world order, including geopolitically, as a result, will most probably become increasingly very different.
The second crucial development is the possible joint Saudi-Turkish intervention in Syria against Bashar al-Assad, that would involve Turkish troops in Syria with Saudi air support (see Huffington Post article in the Weekly “Saudi Arabia, Turkey Discussing Unlikely Alliance To Oust Syria’s Assad”). Obviously, how exactly this will take place and notably how many forces will be involved will matter to estimate the possible impacts. Nonetheless, we are fully in a dynamic of escalation and spread of war. It would seem that the worst potential effects – such as extreme polarization around religion with rising extremism – may only be avoided if hard-core alliances are not endeavoured, and thus if rulers manage to treat each issue, threat or theatre of war relatively independently, even though actions somewhere impact other issues as well as the overall situation.
Accessorily – unless it is not accessory at all? – note that in both cases, Saudi Arabia plays a leading and preponderant role. Should we wonder, of course as a fully alternative hypothesis, if we are not seeing here emerge a “new” strong power – of a type involving network and leadership – on the world stage?
Economy – Very interestingly in the light of the anti-Iran geopolitical actions that are taking place in the Middle East, it would seem, according to Bloomberg, that financial investors completely ignore what is happening in the region and are “betting” on Iran, focusing exclusively on the probable end of sanctions. We may wonder if these early financial strategic investments signal the primacy of finance over geopolitics, belief in this primacy (which does not mean the belief is correct), evaluation that the situation will stabilize before it reached a point of no return and/or impacts Iran further, or simple ignorance of facts and dynamics because traders are not used anymore to pay attention to geopolitics and war.
Environment and Energy – Dr Daum, among other issues, points out that “there is an interesting article in Climate Progress about the “winners” from changing climate. The article discusses several changes that on the surface appear seemingly small, but that may have large consequences. One of these is the brain eating amoeba, Naegleria fowleri which is expected to thrive as US lakes increase in temperature.” The article underlines notably the link to rising epidemics and tropical diseases. We could further enlarge the scope and look at the potential impact such changes could have on plants. For example, we could wonder if the spread of the xylella fastidiosa bacterium in Europe, which kills olive trees and could also have a disastrous impact on other types of trees, is not related to climate and biodiversity changes (see e.g. “The killer bacterium olive trees found on a plant to Rungis“, 15 April 2015; “EU divided over Italy’s olive tree disease“, Mar 28, 2015). Needless to say, the likely impacts of the disease in terms of food security on the one hand, economic activity for whole sectors are immense.
The Weekly is the scan of The Red (Team) Analysis Society and it focuses on national and international security issues. It was started as an experiment with Paper.li as a way to collect ideas, notably through Twitter. Its success and its usefulness led to its continuation.
The information collected (crowdsourced) does not mean endorsement but points to new, emerging, escalating or stabilizing problems and issues.
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Featured image: “C-band Radar-dish Antenna”. Licensed under Public domain via Wikimedia Commons.