The world is facing alarming security challenges – and they are all economic
- Leaders are being distracted by ‘national security’ issues when the graver threat is a deep and protracted global recession as inflation, looming debt and financial system crises threaten starvation and unrest
This is suggestive of a world that has lost its compass, where defence secretaries rather than finance or economy ministers decide policy, and where presidents and prime ministers allow the broader public interest to be subverted to the pursuit of supposed national security.
Where economic security was mentioned during the Singapore dialogue, it was in the context of things such as defence against cyberattacks by foreign powers or the need to prevent access to sensitive technologies. This was largely irrelevant to the multiple economic issues the world faces.
This is creating a uniquely dangerous situation. The Ukraine war creates good headlines and is being given saturation coverage in the Western media. Meanwhile, critical economic and financial problems have to cede place to security issues which politicians and the public find easier to understand.
Only if and when the individual fires in the global economy fuse into a major conflagration will the world sit up and take notice. But, by then, it may be too late to avert a serious recession – or even depression – given the unique constellation of risks.
At this point, which could come sooner than many expect, the often unseen linkages between financial institutions that keep them afloat – a kind of market liquidity “train” – will create a crisis somewhere in the system, and central banks will be unwilling and unable to mount a 2008-style rescue.
Central banks and governments have used up their financial and fiscal fire power in averting recession after that global financial crisis. There isn’t enough ammunition left for them to buy off the even greater recession that is looming.
To speculate beyond this point is not a happy exercise but history is replete with examples of how major economic setbacks can spill over into conflict. That, in turn, gives rise to demands for stepped-up national security and rearmament, and we are already more than halfway there.
Maybe it is not too late to turn away from this MAD (mutually assured destruction) path but, if so, economic and finance ministers need to lobby their presidents or prime ministers furiously to give them a hearing and to stop indulging in fantasies of achieving security by force of arms.
Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs