In this interview with Cyba Audi from Asharq Business Bloomberg, Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Harvard Kennedy School and the Center on Global Energy Policy at Columbia University, discusses the world’s major milestones in 2021.
Christof says that the most important subjects of 2021 are politics, economy and society.
In global politics, a clear trend of deglobalisation prevails and a creeping return of military threats emerges. These two trends can be shown in the escalating tensions between China and the West on Taiwan, the formation of the trilateral security pact between Australia, the United Kingdom and the United States (AUKUS), the falling of Afghanistan under the Taliban Rule due to the US withdrawal, and the deployment of Russian troops near the Ukrainian borders. These separate events indicate the inability of world powers to cooperate and address big problems such as Covid and climate.
On the economic front, soaring inflation has been the star and central banks around the world have been facing a dilemma between increasing interest rates (to curb inflation) or not (to stimulate economic growth). Up to this point, the European Central Bank (ECB) is the biggest player that still didn’t acknowledge the risks of inflation and didn’t increase interest rates. On the other hand, the Bank of England reacted promptly by increasing interest rates, whereas the US Federal Reserve announced it will do so in 2022. If the ECB fails to react, European economies will suffer from stagflation, a combination of reduced economic growth and high levels of inflation. Other major economic events include the global increase in corporate income taxes on multinationals and disruption in supply chains (particularly in Europe and China), where the latter delays the healthy economic recovery.
Christof further adds that looking at macro-societal developments we find that climate change pledges haven’t been achieved and Covid-19 is still a problem for emerging economies. A divergence can also be seen at the micro-level, where some can fly to space and a majority who aren’t able to access vaccines.
The overall picture is of a world of intensifying rivalries, of declining US influence and in some cases of declining democratic systems. All these indicators combined negatively impact the global economy.