Page 63 - Monaco Economy 130-2

The Major Economic Powers Resist

the Consequences of War

by Paolo di Gaeta
Soon after the outbreak of the conflict between Russia and Ukraine in February 2022, a multitude
of forecast experts predicted the worst for the international economy.

from the the conflict zone. consumption patterns are so interconnected
Admittedly it was primarily the European that the major powers have become fully
continent that was affected, but the damage interdependent and therefore have a mutual
was bound to spread worldwide through the interest in working together to overcome
domino effect. any problems that may arise. In this day and
More than two years later, while this war is still age, this mutual interest can no longer be
raging and other conflicts have been rekindled overlooked by the current leaders at the helm
in the Middle East, in the areas where the major of these global giants, because there is no
economic powers are based - North America, longer any political ideology, extreme left or
Western Europe and Asia – the economy has extreme right, to distort logical common-sense
Paolo di Gaeta
continued to move forward after a few hiccups. reasoning. This was not the case during much
In their view such a high intensity conflict on In fact, as production sites for oil, gas and of the 20 century, when even the balance
th
the doorstop of the European Union and the raw materials of all kinds around the world of the nuclear threat could be disrupted by
NATO zone could only be synonymous with have expanded considerably over the last four ideological blindness. Of course, one might
a widespread crisis, with the consequential decades, other geographical supply routes for argue that the Chinese government still
return to mass unemployment and rampant energy resources and raw materials have been proclaims itself to be communist. But that's
inflation, due to the inevitable difficulties in rapidly put in place to compensate for what was just window-dressing to hide the obvious.
transporting energy resources and many of the no longer coming from the conflict zones where It is quite simply an autocracy whose aim
raw materials essential for economic activity the fighting is raging, and while inflation, after is to produce and generate as much wealth
an initial threatening as possible to meet the needs of its huge
surge, now seems to population. The prevailing ideology in the world
be under control. today is the pursuit of well-being.”

T h e E f f e c t of Mutual Interests
Interdependence But wouldn't it be overly optimistic to assume,
This situation comes now that the major powers have become
as no surprise to economically interdependent, that there could
Paolo Di Gaeta, never be a nationalist upsurge of the kind seen
a s p e c i a l ist i n in Russia that could upset this balance?
international finance “It's true that Putin and the Chinese President
who has never been have had meetings, and that the latter has
among the doomsday affirmed the unshakeable friendship between
analysts. “Given that his country and Russia,” continues Paolo Di
the confrontations Gaeta. “An assertion that could be seen as
are not taking place threatening in the West, given the ongoing
on the territories of war in Ukraine. But at the same time, this
the major powers same President is proclaiming just as loudly
themselves, it was that his nation is first and foremost a pro
to be expected that peace power. This is a way of making it clear
they would find ways that China does wants to avoid confrontation
to compensate for because it is in business with everyone! Two
th e d is r u p t i o n facts should be mentioned that illustrate this
caused by wars that state of affairs: on the one hand, the European
remained localised,” Union is Beijing's largest market and, on the
he comments. “Today other, 75% of US treasury bonds are held by
production, trade Chinese sovereign wealth funds. So it is vital
flows, financing for China's wellbeing that its best buyer and its
me t h od s a n d main debtor stay in the best possible shape”.

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