Global Trends by Martin
Monday 12 June 2006
An eventful week that was
Last week saw many significant
events. The number one Iraqi insurgent on the wanted last was killed
in an air-strike, but few expect the violence to let up. There was
a spat between the United States and a United Nations top official.
And stock markets in developing countries were tumbling at the end of
the week due to global trends.
It was one of those weeks
filled with significant events.
Last Thursday it was announced
that Iraq’s highest-profile insurgent, Abu Musab Zarqawi, had been killed
in an American air-strike on a house he was in.
The death of the Al Qaeda
leader was greeted with scarcely concealed glee by the coalition countries,
for it was a bright spark of good news for them in an otherwise gloomy
situation as Iraq has been fast descending down the spiral of sectarian
violence in recent months.
Though Zarqawi’s death lifted
the morale of the American and Iraqi administrations, few thought that
the violence would be reduced. On Saturday, 28 died in Baghdad from
a bomb blast.
As the Wall Street Journal
put it, the Sunni-Muslim dominated insurgency has led the Shite-controlled
government to retaliate, at times using private militias, and this has
broadened support for the insurgent groups beyond groups like Zarqawi’s.
“Meanwhile the government’s
control over the country beyond the US-fortified zone where it works
has weakened during six months of factional political wrangling,” said
the Journal, adding that the US warned that violence could even increase
if insurgents retaliate for Zarqawi’s death.
The American public’s demand
for a quick withdrawal of US troops from Iraq will increase if the violence
Meanwhile, the situation
in Afghanistan also deteriorated when riots broke out in Kabul and buildings
housing Western organisations were burnt after an American military
vehicle ploughed into a crowd and killed six people.
The riots released pent up
public resentment of the US troops (including their traffic behaviour),
and of the continued foreign presence.
The recent news exposure
of several incidents of the killing by American soldiers of innocent
civilians (including children and women) in Iraq as well as Afghanistan
has further damaged the image of the US.
The Israel-Palestine situation
became explosive again at the end of the week as Israeli missiles killed
many civilians in Gaza, causing fresh outrage.
Last week also saw a major
spat on the diplomatic front between the United States and a top United
The UN deputy secretary general
Mark Malloch-Brown made critical remarks on how the US administration
was losing friends at the UN because of its uncooperative attitude,
on how American citizens’ perceptions of the UN were distorted by some
TV talk-show, and why the US should engage with the UN in better spirit.
The U.S. ambassador to the
UN, John Bolton, responded with a blistering attack on both the UN and
Malloch-Brown. He said Malloch-Brown’s remarks had “very grave” consequences
and asked UN secretary-general Kofi Annan to censure his deputy.
Kofi, to his credit, stood
by his deputy and appealed for calm, saying, “Let’s put it behind us
and move on.”
But the spat may be a preview
of bigger battles to come. The US has led a move that the UN Secretariat
be authorized to spend only half of its annual budget, and the remainder
will be released only if there are reforms to the liking of the developed
By the end of this month
the UN’s funds will run out unless fresh spending authorization is given.
The developing countries see this is as financial blackmail, and oppose
the threat of the powerful nations to cripple the UN unless it is prepared
to dance to their tune.
As the end of June approaches,
tensions are building, with the UN facing the possibility of closing
some operations and retrenching some staff.
Last week also saw a significant
slump in the stock markets of many “emerging markets”, signaling the
start of tough times ahead for portfolio investors in developing countries.
In the past year, many billions
of dollars have flowed from abroad into the share markets of developing
countries, fuelling a boom.
But with interest rates rising
in the US and some European countries, a worldwide downturn in equities
is taking place.
Hardest hit are the developing
countries. In the past three years their share prices rose by almost
200% on average, according to an index for emerging markets. But the
index fell 21% from its high of 9 May to last Thursday. On that day
alone, share values tumbled by more than 3% in India, Taiwan, Indonesia
and South Korea.
It looks like the world financial
markets are behaving in a roller-coaster way again, with record capital
inflows into developing countries when the future looked rosy, and sudden
big shifts out when prospects look a little dimmer.
On a nicer note, the World
Cup began as the week ended. It will occupy the attention of soccer-mad
millions even as the world may be swamped by weightier concerns in the
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