#BTEditorial – A dangerous entanglement looms

In one fell swoop, and without warning, the world has been plunged into another conflict, this time in the Middle East, that could engulf other nations and threaten the best-laid economic and political plans of business leaders and politicians.

Ironically, just recently, we highlighted the fact that small island developing states (SIDS) are in a constant battle to find creative ways to meet their development expectations in a world where industrialised nations seem less empathetic and want their pound of flesh in return.

We also drew attention to the inevitability of crises and that they are never too far away from our doorstep.

The global financial crisis that started in 2007-2008 added to the challenges faced by the Owen Arthur administration starved for sustainable sources of foreign exchange and foreign direct investment. It also undermined and dampened the plans of the newly elected and eager Prime Minister David Thompson in 2008.

That global crisis almost forced the collapse of several American financial institutions which had to be propped up with billions of dollars from the Barrack Obama administration who deemed them “too big to fail”.

What started as a Wall Street drama, caused contagion across the world’s financial space and entangled us in Barbados and the region. Blockbuster movies were produced based on the resulting financial mayhem; however, for us on the island, there was no acting; it was our reality.

It took nearly a decade for the country to return to “normal” though many assessed that it was indecisiveness by the last administration that prolonged the crisis’ impact on the economy.

An even worse crisis struck in 2019-2020 with the COVID-19 pandemic. It was literally the worst-case scenario. The International Monetary Fund (IMF) in its May 2020 review of Barbados was clear in its assessment.

The Washington-based multilateral institution said tourism was “expected to contract by around 40 per cent for the year as a whole—roughly four times the magnitude of the shock experienced following the 2008 global financial crisis”.

The pandemic upended many domestic and national plans. Since then, the current administration has worked through many obstacles such as the near implosion of the economy, the need to vastly expand the social safety net as a result of the pandemic, the blacklisting of our international business sector by the European Union, an unexpected and out of character weather system that damaged hundreds of homes, and the list goes on.

The economy has been revived, millions of dollars borrowed at low interest rates as leverage against further economic shock, and the IMF has offered significant support to the Barbados Economic Recovery and Transformation (BERT) programme.

Unfortunately, the Israeli situation, in which the country has declared war on insurgents in the Gaza Strip following a surprise attack on Israel Saturday morning, including the killing and the taking of hundreds of hostages, has got the world on edge.

For us in Barbados, where citizens are absolutely struggling with the high cost of living, the thought that oil prices could rise sharply and result in even higher food and energy prices is our worst nightmare.

The Ukraine-Russian war caused a rapid rise in food and agricultural supplies and had a ripple effect and caused supply chain disruptions that many had not anticipated.

The thought that other Arab countries could become drawn into the conflict due to longstanding historical and religious intersections of the fight could lead to disruptions in travel and general instability and insecurity across the globe.

The words “international terrorism” are likely to regain prominence in our thoughts, harking back to the period after the September 11, 2001 attack on the World Trade Centre in New York. That singular event changed the way we travel forever.

With a United States presidential election on the horizon, one can expect one-upmanship from American politicians, while the US government is likely to take decisions with deep political repercussions.

We are in a phase of entanglement in which small countries like us will be asked to pick a side, and that is where decisions and public statements must be clearly weighed.