E24
GOODBYE 2011
Saturday, December 31, 2011
2012 could prove even wilder ride than 2011 THE ancient Mayans attached special significance to 2012, possibly the end of time. That has spawned a rush of apocalyptic literature for the holiday season. But you don’t have to believe the world is about to end to realise that next year contains perhaps the widest range of political risks to the global economy in recent history. With elections and leadership changes in the most powerful countries — Europe in crisis, ferment in the Middle East and worsening economic hardship driving unrest and discontent everywhere — 2012 could be just as volatile as 2011, if not worse. The current year may yet carry a sting in its tail, with worries over the euro and jitters over a possible Israeli strike on Iran likely to keep financial markets and policymakers on tenterhooks all the way to the New Year. More than three years after the collapse of Lehman Brothers prompted the worst financial crash since the Great Depression, economic turmoil looks to be driving political upheaval in what could become a particularly disruptive feedback loop. Economic stresses — from rising food prices to worsening economic hardship in the developed world — were at the heart of many of 2011’s political stories. As they intensify, political volatility, gridlock, confrontation and conflict — whether domestic or international — look set to worsen. “It’s going to get worse before it gets better,” said Jonathan Wood, global issues analyst at London-based risk consultancy Control Risks. “If you look at what’s been driving events this year, none of the factors has gone away and many of the economic drivers are still growing.” Presidential elections in the US, France and Russia and the dual transition of power at the top of China’s Communist Party will add to the uncertainty. They may make it harder for political leaders to find compromises or push through tough policy choices. GROWING GRIDLOCK? That, many analysts warn, brings with it a mounting risk of political gridlock coming just as the world needs leadership most. The failure of the US Congressional ‘super committee’ to agree on how to reduce the budget deficit may be a sign of things to come domestically in many countries. President Barack Obama faces a tough re-election bid, whomever the Republicans choose to challenge him, because of a sluggish economy, 8.6 per cent unemployment and a squeeze on the middle classes due to fallen home and stock prices. A fragile global consensus forged at a 2009 summit of leaders of the Group of 20
major economies may be gone decide to go beyond covert for good, replaced by what Ian sabotage with a military strike Bremmer, president of political that could spark retaliation risk consultancy Eurasia Group, against oil supplies in the Gulf. calls a rudderless ‘G-zero’ world. “The bigger wild card out Top of the list of 2012 risks for there is an Israeli attack on many analysts is the unresolved Iran’s nuclear facilities and sovereign debt crisis in the euro elements of regime control,” says zone. Thomas Barnett, chief strategist If the 17-nation European of political risk consultancy single currency is to survive in Wikistrat, saying neither its current form, its members the Israeli nor the Iranian will have to confront harsh leadership looks inclined to economic adjustments and back down. “The setting here seismic political reform. Last is scary... something has got to week’s Brussels summit, the give in this strategic equation.” 16th since the start of the twoEven if the world avoids a year-old crisis, was billed by devastating shock such as a some as the last chance to save Middle East war or a European the euro. breakdown, many analysts fear While eurozone leaders and the business of politics and some non-euro states agreed policy-making could become to forge a closer fiscal union increasingly difficult around the with stricter budget discipline, world. the outcome fell short of With economic growth slowing guaranteeing the euro’s ultimate and unemployment creeping up, job creation going... We (also) survival. most analysts believe the risks have probable ongoing unrest At worst, 2012 could still see of social unrest will continue in Europe and the ongoing a disorderly breakup bringing to rise across much of the transition in the Middle East with it a chain of defaults, developed and developing world. and North Africa could be quite bank runs and civil unrest, “We have all the problems unstable.” not to mention a savage global you’d expect from economic In the dying days of the year, economic shock worse than that hardship. At some stage we other long held assumptions of of 2008. will have rising food prices stability have be thrown into Ultimately, however, many which are always destabilising question -- not least by the rising believe the euro will endure and we have a question over tide of protest against Russia’s — although not without colossal whether China will overheat,” Vladimir Putin. The one strains as it tries to reconcile says Elizabeth Stephens, head certainty for 2012, many believe, very different economies such as of credit and political risk at is more of the unexpected. Germany and Greece. London insurance brokers “2011 was a nightmarish “The greatest single risk is Jardine Lloyd Thompson. year to be a policy maker or an obviously the euro zone but it “Even a fall of one or two investment portfolio manager might also be the risk that is percentage points of GDP but it was a great one to be a sorted out the quickest,” says (gross domestic product) could political analyst,” says Newton. Alastair Newton, a former be enough to really question “I’d certainly expect the same British government official social stability if they can’t keep for next year.” — Reuters. who is chief political analyst at Japanese bank Nomura. “But even if that happens then you’re still going to have very low growth and a rise in social unrest in the southern eurozone in particular and across Europe in general. Even in the best case scenario, 2012 looks pretty rough.” For others, the Middle East remains the most important area to watch for potential disruption to the global economy. Almost a year after the beginning of the ‘Arab Spring’ democracy movement, the region remains in political flux with untested Islamist parties winning power across north Africa and Syria’s uprising slowly turning towards outright SOUTH AFRICA, HERE WE COME: This file picture taken on March 30, 2010 shows the Karoo ArrayTelescope construction site, part of the MeerKAT Project, in the Northern Cape. civil war. The combined collecting area of all these antennas will add up to one square kilometre.The telescope will be operated and monitored remotely from Cape Town, where the operations CONFLICT, UNREST and science centre will be located. South Africa is ready to host the world’s most powerful radio telescope, the Square Kilometre Array (SKA) in southern Africa. Following an initial After the fall of several identification of sites suitable for the SKA by the International SKA Steering Committee in veteran Western-backed Arab 2006, southern Africa and Australia are the finalists.A consortium of the major international rulers, the withdrawal of US science funding agencies, in consultation with the SKA Science and Engineering Committee forces from Iraq is seen as the (SSEC), will announce the selected site for the SKA in 2012. latest sign of the diminishing influence of Western powers in a region they dominated for some 200 years. In the resulting vacuum, regional powers such as Turkey, Saudi Arabia and an isolated and perhaps more erratic Iran appear in increasingly open confrontation. Western intelligence estimates that Iran is moving closer to a viable nuclear weapon have a shorter timeline, and some analysts say 2012 could be the year when Tehran’s enemies
AWESOME: Comet Lovejoy is seen at dawn over Santiago Dec 22, 2011. Comet Lovejoy was first discovered on November 27 by Australian amateur astronomer Terry Lovejoy and was classified as a Kreutz sungrazer, with its orbit taking it very close to the Sun, passing a mere 140,000 kilometres from the Sun’s surface. With 2012 around the corner, a similar comet called comet Elenin has been linked to several doomsday predictions and being blamed for triggering earthquakes and shifting Earth’s rotation axis.
Highlights 2012 ? The London Olympic Games and presidential elections in Russia, France and the US are among the main events in 2012. Here is a look at what else the year has in store. JANUARY 1 - EUROPEAN UNION: Denmark takes over the bloc's rotating presidency. 1-15 - ARGENTINA, CHILE, PERU: The Dakar Rally. 21-Feb 12 - GABON, EQUATORIAL GUINEA: Football's Africa Cup of Nations. 25-29 - DAVOS, Switzerland: The 42nd World Economic Forum (www.weforum.org). FEBRUARY 6 - LONDON: Diamond jubilee of Queen Elizabeth II, marking the 60th anniversary of her accession to the British throne. 19 - GREECE: Legislative elections. 26 - HOLLYWOOD, US: The 84th Oscars ceremony (www.oscars.org). MARCH 2 - IRAN: Legislative elections. 4 - RUSSIA: Presidential election. APRIL 22 - FRANCE: First round of presidential election. MAY 6 - FRANCE: Second round of presidential election. 12-Aug 12 - YEOSU, South Korea: The 2012 world expo, themed "The Living Ocean and Coast" (www.worldexpo2012.com). 16-27 - CANNES, France: The 65th fi lm festival (www.festival.cannes.com). 15-22 - CHICAGO: Group of Eight (G8) summit (www.chicagog8.com). 20-21 - CHICAGO: North Treaty Organisation (Nato) summit. JUNE 8-July 1 - POLAND, UKRAINE: Euro 2012 football championships. 10, 17 - FRANCE: Legislative elections. 18-19 - LOS CABOS, Mexico: Group of 20 (G20) summit. 20-22 - RIO DE JANEIRO: World conference on sustainable development (www.earthsummit2012.org).
FUTURE IS BRIGHT : Aurora borealis, or no over Finnmark durin g the 1,000 kms Finnm rthern lights, fill the sky on March 13, 20 11 ar race, in Finnmark co unty in northern Norw ksloepet, the world’s northernmost sled dog ay. Experts predict tha shine at the brightes t the northern nights t levels seen for 50 ye will ars in 2012.
JULY 1 - EUROPEAN UNION: Cyprus takes over the bloc's presidency. 1 - MEXICO: Presidential election. 27-Aug 12 - LONDON: The 2012 Olympic Games. AUGUST 27-30 - TAMPA BAY, US: The Republican convention will choose its candidate for the US presidential election. SEPTEMBER 8-9 - VLADIVOSTOK, Russia: The annual summit of the Asia-Pacific Economic Cooperation (Apec) forum. (http://apec.org). Late Sept - AFGHANISTAN: The planned withdrawal of 33,000 US surge troops, a third of the American contingent. OCTOBER 12-14 - TOKYO: The annual meetings of the International Monetary Fund and the World Bank. STOCKHOLM: Announcement of winners of the Nobel Prizes (www.nobelprize.org). NOVEMBER
INCREASING MODERNITY: Vehicles drive past buildings on a freeway leading to the international airport in Panama City Dec 8, 2011, Panama’s growing high-rise buildings are gradually transforming the city into a modern metropolis.
6 - WASHINGTON: US presidential election.