Invasion, incompetence and inflation are three words that have characterised 2022
Opinion
Editorial
Times of Malta
Times of Malta
The Russian war on Ukraine has defined 2022 but COVID is again rearing its head in China. Photo: AFP
By most measures, 2022 was a tumultuous year. A few words encapsulate what billions of people worldwide have experienced: massive disruption to their daily lives. The year was filled with economic, political and social disorder the extent of which has not been experienced for at least four decades.
Some of the remarkable events that characterised 2022 are likely to have lasting effects on politics, trade and international relations for many years to come.
Few analysts predicted that Vladimir Putin would invade Ukraine. Once the Russian army had crossed the border, many had no doubt it would overrun Ukraine within weeks and that geopolitical tensions would then ease. We now know, of course, how wrong these perceptions were.
The ongoing war has triggered a worldwide energy and food crisis, with the morally necessary EU and US sanctions against Russia a contributory factor. Not only were the supply chains of these critical commodities disrupted but high inflation threatened the livelihoods of millions who could not cope with the cost-of-living burden.
Even if the Ukraine war were to end in the coming weeks, international relations will not return to where they were a year ago. Sweden and Finland formally submitted applications to join NATO in May as the enthusiasm for neutrality shrunk in the face of the Russian expansionary threat.
For the same reason, Germany and the UK will be spending more on their security. The era of detente is practically over and the winds of another cold war are chilling east-west relations.
If there is a plus side from war, Russia’s violent disregard for civilised norms has prompted an outpouring of solidarity with the endlessly suffering and courageous people of Ukraine as well as a unity in the West arising from the recognition that, with leaders like Putin still around, democracy, peace and stability cannot be taken for granted.
Invasion is not the only defining term of 2022. Incompetence, of the political sort, is another. It describes the chaos that gripped the UK this summer. After Boris Johnson was kicked out and replaced by Liz Truss, financial markets passed their own vote of no confidence in the Conservative Party leadership by dumping Britain’s sovereign debt.
In China too, a combination of one-man decision-making, hard-headed resistance to the use of Western vaccines and a misguided U-turn in lockdown policy has seen COVID explode, posing a renewed threat to the wider world exactly three years after the virus first emerged.
Besides invasion and incompetence, one needs to add inflation to the mix. Central bankers admitted they had underestimated the threat of inflation in their quest to stabilise western economies. At last, they started to take action to protect vulnerable households from the devastating effects of rapidly rising prices.
The Federal Reserve raised interest rates seven times with a total increase of 425 basis points and signalled it will continue to raise rates in early 2023. The European Central Bank is likely to catch up as its rate increases have not been enough to bring inflation down to the targeted two per cent.
As most EU countries continue to struggle with slow growth, rising interest rates will only make their challenge to promote economic prosperity that much more daunting.
Meanwhile, the European Parliament scandal has again shown how urgent it is for the EU to restructure its governance.
One hopes that in 2023, the collective will of governments and leaders that favour democratic governance and international order prevail over those whose personal and national hubris blinds them to the common global good.
By most measures, 2022 was a tumultuous year. A few words encapsulate what billions of people worldwide have experienced: massive disruption to their daily lives. The year was filled with economic, political and social disorder the extent of which has not been experienced for at least four decades.
Some of the remarkable events that characterised 2022 are likely to have lasting effects on politics, trade and international relations for many years to come.
Few analysts predicted that Vladimir Putin would invade Ukraine. Once the Russian army had crossed the border, many had no doubt it would overrun Ukraine within weeks and that geopolitical tensions would then ease. We now know, of course, how wrong these perceptions were.
The ongoing war has triggered a worldwide energy and food crisis, with the morally necessary EU and US sanctions against Russia a contributory factor. Not only were the supply chains of these critical commodities disrupted but high inflation threatened the livelihoods of millions who could not cope with the cost-of-living burden.
Even if the Ukraine war were to end in the coming weeks, international relations will not return to where they were a year ago. Sweden and Finland formally submitted applications to join NATO in May as the enthusiasm for neutrality shrunk in the face of the Russian expansionary threat.
For the same reason, Germany and the UK will be spending more on their security. The era of detente is practically over and the winds of another cold war are chilling east-west relations.
If there is a plus side from war, Russia’s violent disregard for civilised norms has prompted an outpouring of solidarity with the endlessly suffering and courageous people of Ukraine as well as a unity in the West arising from the recognition that, with leaders like Putin still around, democracy, peace and stability cannot be taken for granted.
Invasion is not the only defining term of 2022. Incompetence, of the political sort, is another. It describes the chaos that gripped the UK this summer. After Boris Johnson was kicked out and replaced by Liz Truss, financial markets passed their own vote of no confidence in the Conservative Party leadership by dumping Britain’s sovereign debt.
In China too, a combination of one-man decision-making, hard-headed resistance to the use of Western vaccines and a misguided U-turn in lockdown policy has seen COVID explode, posing a renewed threat to the wider world exactly three years after the virus first emerged.
Besides invasion and incompetence, one needs to add inflation to the mix. Central bankers admitted they had underestimated the threat of inflation in their quest to stabilise western economies. At last, they started to take action to protect vulnerable households from the devastating effects of rapidly rising prices.
The Federal Reserve raised interest rates seven times with a total increase of 425 basis points and signalled it will continue to raise rates in early 2023. The European Central Bank is likely to catch up as its rate increases have not been enough to bring inflation down to the targeted two per cent.
As most EU countries continue to struggle with slow growth, rising interest rates will only make their challenge to promote economic prosperity that much more daunting.
Meanwhile, the European Parliament scandal has again shown how urgent it is for the EU to restructure its governance.
One hopes that in 2023, the collective will of governments and leaders that favour democratic governance and international order prevail over those whose personal and national hubris blinds them to the common global good.
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