Like giant waves breaking on the shore line, external shocks to the world economy just keep on rolling in – first the pandemic, then Vladimir Putin’s invasion of Ukraine, and now a war in the Middle East, possibly sparking a much wider, all-embracing, inter-regional conflict.
There followed a crippling series of wars, and an age of growing economic and financial instability, the consequences of which we are still living with today. ’s right to exist, an extraordinary milestone in a region racked by conflict and seething resentments.was able to puncture this supremely complacent view of the future. The rout was more about market rates simply coming into line with official policy rates than anything more sinister, IMF officials insisted. Events in the Middle East have once again rendered their predictions meaningless.
Yet in a world ever more defined by fragmenting, centrifugal forces, the breakthrough on resources was about the best that could be said for this one-time standard-bearer of the multilateral principle. The IMF must feel like it’s swimming against the tide. Any role it has to play in policing the region is therefore dictated more by moral, strategic and domestic political concerns these days than economic self-interest.
In such circumstances, things could admittedly easily spiral out of control. The Strait of Hormuz could be blockaded by the Iranians, cutting the world off from Saudi crude supplies, Iran’s friends in Yemen, the Houthis, could try to destroy Saudi refineries, and so on. The effect on the oil price, and indeed the wider economy, would then be much bigger.