Global Issues, Special Reports

On the eve of 2024.

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None of the forecasts at the beginning of the year* alerted us to the outcomes we experienced. The widely anticipated recession didn’t happen; the U.S. economy is growing with low unemployment and decreasing inflation. Growth across many economies has proven surprisingly resilient, except for China.  The war between The United States and its NATO partially active allies against Russia in Ukrainian territory is about to end in a defeat for them, but especially for Ukraine, with an unrevealed number of civilian and military casualties and domestic political frictions. As they were unable (or unwilling) to keep funding Ukraine, they are now seriously considering seizing Russian Central Bank (Sovereign) assets held frozen in Europe to provide an alternative stream of funding for Kyiv “consistent with international law”. This has pushed and increased commercial exchange between Russia, China, and India to the benefit of those countries, all members of BRICS.

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The war between Israel and its ally, the United States, against a faction of the dispersed Palestinian authority called Hamas was unforeseen by them despite their permanent state of alert, an extended intelligence gathering spy network including high tech sensors, cyber warfare, collateral damage reduction protocols, robotics, unmanned and autonomous intelligence, surveillance, and reconnaissance systems, and human spies. The October 7 attack revealed the vulnerabilities of their allegedly terrorist and missile-proof security system, controlled by a government in disarray whose priorities were in assembling an autocracy with limitless powers. 

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The conflict has extended beyond their territory as it has created a rise in antisemitism in many countries, especially among the young, as well as a rise in Islamophobic incidents. Genocide should be condemned everywhere and against any group of humans regardless of geographical, political, or historical context, considering its devastating long-term impact on individuals, families, and communities, be it in Myanmar, Tibet, China, Cambodia, Bangladesh, Iraq, Darfur, Congo, Rwanda, Somalia, Kurdistan, Burundi, Zimbabwe, Bosnia, Israel, Palestine, or against the Uyghurs, Yazidis, Hutus, Rohingyas, Pygmies, Tutsis, Bosnyaks, Jews, or Palestinians.

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    Somehow, the geopolitical conflicts are a consequence of the lack of global leadership that, until recently, was unquestioned. Eliminating Hamas completely seems unlikely, and to make things worse, Iran-backed Houthi rebels in Yemen are stepping up their attacks on American military vessels as well as commercial transit on the Red Sea, causing a disruption in the supply chain while Hezbollah and other Shia militant groups in Iraq, Syria, and Lebanon are ready to jump into the conflict if not already in the middle of hostile actions; an extension of war seems inevitable. The extremists on both sides reject the two-state solution: those who control Israel, who instead want to extend its realm over the West Bank and Gaza, and for whom the day after the war ends is not in its calendar despite the advice and insistence of its main allies, oppose that option. It looks like the conflict between Hamas and the radicals in Israel is about to escalate, becoming a conflict between the Arab world and Israel.

Image: on the Financial Times

2024 will be loaded with elections in 64 countries, whether presidential or parliamentary (including in China, Russia, Ukraine, Taiwan, Israel, the UK, India, Iran, South Korea, Venezuela, North Korea, Siria, the United States, and Mexico), representing around 49% of the world population. In the United States, by mid-March, “Super Tuesday” will take place, advancing the votes of the presidential primaries in more than 50 percent of the States, giving a strong indicator of the likely eventual nominee of each political party. The Republican Convention will take place in mid-July.

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The United States is experiencing a high degree of polarization; the anti-Trump activity is equally intense among Republicans as it is among Democrats, who quietly hope that President Biden will move aside and clear the way for other Democrats with the potential to win the presidential election, to get the nomination and contend to succeed him.  According to credible polls, just 37% of Americans approve of Biden’s performance, more than 70% of likely voters say Biden is too old for the job, and about 65% of voters don’t want him to be president again.

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There is an emotional issue of the utmost importance: electoral campaigns do not speak to the rationality of voters but to their emotions. It is the perfect terrain for cultural battles in which populist logic can triumph. The ‘other’ to which authoritarian populists refer as the root of all evils, enables everything as justified to fight it: disinformation, expanding executive power, or weakening the judiciary. They come to power by democratic means, but when it does not favor them, they try to crush it.

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As for Donald Trump, his campaign is strongly reinforced by the large-scale involuntary migration that during 2023 amounts to over 3 million illegal border crossings and counting causing turmoil in areas where they mostly concentrate. This is a result of the lack of opportunities in their countries due to the incompetence of their leaders, combined with corruption and tolerance for the activity of organized crime forcing entire communities to leave their homes and towns to save their lives. The flow is so massive that it makes one wonder whether it is intentional to help Trump win the support of those who otherwise would not vote for him.

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Donald Trump’s reelection would represent several years of chaos and instability that will surely be reflected in his foreign policy and, domestically, a threat to its democratic institutions. This turmoil will be reflected in the global economy and destabilization in various regions of the world. He brought a transactional, mercantilist attitude to interactions with allies as he continued to act as when he was a real estate developer trying to maximize profits at the expense of everything; he never had a clue of what statesmanship was about. Hence, with no prior experience in government, his views of foreign nations were based on his personal relationships with their leaders and on trade imbalances. If one autocrat ordered the killing of a U.S.-based journalist, his government would look the other way, provided the autocrat would spend several billion on US-made weapons and military hardware.

Composite Image: Associated Press/Virginia Mayo; Nicolas Asfouri – Pool/Getty on businessinsider.com

On November 5, 2024, the President of the United States and the future of the rest of the countries in the hemisphere, the European Union, and NATO will be defined. Somehow Trump, who faces as many as four trials on everything from accounting fraud to subverting American democracy, represents a threat to the country’s constitution and its checks and balances, as he will likely stack appointments with cronies and ignore limits on presidential powers operating with accomplices in Congress and state legislatures to prepare the field to reject the outcome in case he loses again. Recent polls reveal that 38% of Americans approve of his four years as president, and 60% don’t want him back in the White House. So far, he leads all other Republican 2024 presidential candidates by more than 30 points. Quoting Kishore Mahbubani, “Even with the best social science tools at its disposal, the American establishment still can’t figure out the sources of the anger that is leading so many Americans to vote for Trump. A bitterly divided society can no longer serve as the “shining city on the hill” for the rest of the world.” (Financial Times, December 12, 2023).

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“Justices know that Mr. Trump has built a large political following and is marshaling his followers to turn against the justice system for indicting him, to intimidate law enforcement officials and court personnel, and anyone else who gets in his way. They are aware that he will whip his die-hard followers into a frenzy against the Supreme Court itself, just as he unleashed his followers to try to bend Congress to his will on Jan. 6. The justices’ challenge is to not twist the law in a craven effort to appease an authoritarian movement that sees violence as the answer, win or lose. A state supreme court has found that Donald Trump engaged in an insurrection in his efforts to overturn the 2020 election by inciting a violent mob to attack the Capitol and is therefore disqualified from serving again as president. Even if the ruling is eventually overturned, “the bell cannot be unrung”. (Jesse Wegman, Member of the Editorial Board of the New York Times).

Photo: Rachel Mummey for The New York Times on nytimes.com

The U.S. Presidential election will also have an effect on Canadian politics, where the Liberal Party and Prime Minister Justin Trudeau, after eight years of governing, are at their lowest in recent polls, and a Trump-alike Conservative Party leader is ahead in the polls, even though the next election is scheduled to take place during the Fall of 2025, but could come sooner. The effect of increased interest rates represents a serious blow as 74% of Canadian homeowners will renew their mortgages within a year and a half, putting them on the path of default. The same with Mexico, where the most complicated issues in the bilateral relationship relate to illegal border crossings, out-of-control fentanyl trafficking, money laundering, and flirting with Russia and China, all of which are rich campaign material. Just recently, the Republicans in Congress conditioned economic and military support to Ukraine on a strong adjustment of the border with Mexico to combat migration and fentanyl trafficking.

Image: CHAD HIPOLITO AND ADRIAN WYLD /The Canadian Press on the financialpost.com

The worldwide process of de-dollarization is advancing, a sign of the U.S. losing influence, be it in oil markets or other commodities, as more sales are now being transacted in non-dollar currencies. Also, there has been a global tendency towards pulling away from the U.S. Dollar as the world’s reserve currency since the end of the Second World War, and many countries have switched their Sovereign reserves to gold holdings and other assets. The U.S. Dollar has been the foreign exchange reserve of choice for Central Banks; 70% of total global reserves were held in U.S. Dollars in 1999, but according to the International Monetary Fund, the Dollar’s share in global foreign exchange reserves fell to under 60% in the fourth quarter of 2021. Saudi Arabia has been very active in this regard by not only accepting but fostering the use of other currencies in its oil trade.

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As for the U.S. economy, even though some of the wisest gurus foresaw a deep recession with high inflation and lots of bankruptcies and unemployment, the situation is abnormally good considering not only the omens but the painful experiences lived after 2008. The FED is on alert, watching for signs of recession, walking a fine line between taming inflation and sending households who stretch to meet monthly bills, mortgages, and rent over the financial precipice. So far, inflation is receding despite a booming mood in the economy. The market predictions of the opinion leaders were wrong; everything went upside down: what was supposed to collapse skyrocketed, and what was supposed to climb to heaven, went down badly.

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Will Daniel explains, “But as the year went on, economic data pleasantly surprised Wall Street, leading Bank of America’s Chief U.S. economist Michael Gapen to begin shifting his recession forecast. In June, Gapen argued that instead of facing a mild recession as early as the fourth quarter of 2023, the U.S. was likely to fall into an even more tame “growth recession” in 2024. Then, in August, he scrapped the recession call altogether because of the resilience of the labor market and consumer spending amid the Fed’s aggressive rate hikes. Parroting some Beatles lyrics, Gapen titled the note where he detailed his new, more optimistic forecast: “Imagine no recession, it’s easy if you try.” (Quoted by Fortune).

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Everyone the world over was expecting a stubborn recession, with inflation receding no sooner than mid-2024. Instead, booming consumer demand fueled economic growth while inflation responded positively to the FED’s monetary decisions. The alarms to “brace for impact” were false. The tone changed from emergency landing to soft landing. Economists and market analysts continue to search for credible and rational answers to the unexpected turn of events. Macroeconomic theory is being re-engineered and retooled with novel algorithms trying to discover the magic that caused these results. If anyone is not completely confused, it is because is not well informed. Yet, not everywhere.

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China is another story. The impact of the commercial war with the U.S. has been deep and continued, and it combined with domestic issues such as an aging population, a lower fertility rate, a severe excess construction of housing that remains unoccupied, decreasing manufacturing and exports, a massive young, college-educated generation unable to find employment, stagnant domestic demand for goods and services, declining property prices thus household wealth, and credit insolvency of several financial institutions given the defaults of lenders and developers. Despite leading the BRICS group and enhancing its membership in other countries and regions, hence improving its bargaining power in international economic affairs, for the first time in decades, the Chinese economy grew at a much lower rate than it used to, fueling speculation about a downturn of colossal proportion, setting an avalanche of capital from high earners flying out of its reach, turning foreign investment negative.

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On top of it, the disappearance or untimely death of top officials whose loyalty to their leader was in question and their replacement with provincial small-town bureaucrats with long-time proximity to Xi, whose major qualification is unquestionable loyalty to the “people’s leader” (sounds familiar with Mexico’s AMLO) assuring his control of t ‘s Politburo and in turn, of the political apparatus of China. Yet, its world-class infrastructure, highly educated workforce, and political stability are not enough to change the trend of its decaying economy suffering deflation, decreasing exports, high indebtedness, bankrupt local governments, and weak domestic and foreign demand.

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Mexico is a country highly polarized where organized crime has increased its territorial control. These factors obviously inject a level of uncertainty into the country’s economy and governance. An analytical review of the National Institute for Statistics (INEGI) ‘s population census revealed that in the last 20 years, a total of 680 municipalities out of 2,457 in the country (27% of the total) have been abandoned due to drug cartel violence and the remaining, 231, that is 9%, are unlivable due to violence; this means 27% of the country has become ghost towns. During the 2021Mexico’sm elections: 36 candidates and 102 politicians in general were assassinated. No matter what the outcome, the worsening of a climate of bitterness and hatred could be the worst thing that could happen to Mexico in 2024.

Mexico’s growth in 2023 is expected to be around 3.6 percent. It combines a significant increase in private investment, in the order of 25.6 percent, but also 24.7 percent in public investment. It should be emphasized that the part of the investment that corresponds to companies represented 88.9 percent of the investment made, while 11.1 percent came from the public sector. The year of the “super peso” ended with a 14.90 percent appreciation of the Mexican currency against the U.S. dollar in the international currency market, its highest appreciation” since records began in 1976. One of the reasons, if not the main, is the structural rise of remittances, doubling over five years to over $60 billion, comfortably covering the trade deficit and becoming the most important source of foreign currency. One of the reasons for the fantastic increase in remittances is that many more Mexicans have emigrated to find the opportunities not available at home, combined with the widespread violence of organized crime.

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Mexico’s leader, AMLO, has proven that he can be above the law, controlling the executive branch as well as Congress and part of the judiciary, tampering with the appointment of officers in the autonomous bodies that enforce transparency, accountability, and fair elections. To validate the 2024 election, the Electoral Tribunal (TEPJF) requires seven magistrates. Today it only has five. There is an enormous interest in delaying the appointment of the two missing magistrates. They seek to sabotage and dismantle what is left to carry out their outrages without any restraint. If AMLO was sure of the triumph of his candidate and of winning a majority in the new congress, he would be doing exactly the opposite to legitimize his victory.

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Mexico has plenty of brilliantly conceived laws; the problem is it lacks mechanisms and institutions to enforce them, and the enforcer is not independent; he responds to the executive. If it was otherwise, perhaps the Chief Executive and the Chief Enforcer would be indicted by now. A culture of “tolerados” (the “tolerated” outlaws allowed to operate) prevails in the country. There is a dissonance from wanting something that, under the current system, is impossible to obtain.

The result of five years of a schizophrenic model of government is a miracle. It is because, despite their best effort, they were incapable of destroying an economic engine fueled by exports to its northern neighbors/partners thanks to a trade agreement envisioned and orchestrated twenty-nine years ago by the now-demonized neoliberal regime, which, at the same time, created the institutions that foster and support the development of democracy. The cannibals who govern came to power thanks to those institutions that they are now determined to destroy. They don’t care about the poor as long as the alms they give ensure their votes, that is all they care about. Actually, they want the largest number of poor possible.

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The official statistics show that there are more people in extreme poverty than there were before they assumed office. Also, there are many who went from middle class to poverty. And yes, also, there are some who went from rich to billionaire, even if at the expense of the public treasury, as they owe billions in taxes that they refuse to pay with no consequences. This regime resembles what Robert Kaplan mentioned, referring to Henry Kissinger: they represent the forces of anarchy attempting to overthrow a legitimate national political system, as imperfect as it is.

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One chapter of The Art of Being Human by the Netherlander Rob Riemen consists of a letter from the author to his Mexican students: “Autocrats rule as false messiahs, and since you can never build a just and harmonious society with demagoguery, propaganda and lies, a civil war is inevitable. Speaking of ‘false messiahs,’ to me, your president, López Obrador, is an archetypal example of that species.” (Quoted by Pablo Hiriart on El Financiero, December 22, 2023). What prevails is the deterioration caused by a sick man, surrounded by looters, incompetent, small-town, ignorant, and revengeful people.

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The only possibility to save Mexico from becoming an autocracy is to remove this ruling faction. Mexico is experiencing a successive coup d’état, a concatenation of deliberate acts to destroy the republican checks and balances, strangling institutions by cutting their budgets, hence disabling the National Electoral Institute (INE) in an electoral year, the National Institute of Transparency (INAI) to prevent accountability of the white elephants which are presumed to be flagship projects of this administration, slashing the budget of the Federal Judiciary to prevent its efficient operation, and attacking Justices, magistrates, and judges, accusing them of corruption without the slightest hint of its authenticity, let alone evidence. AMLO will go down in history because his hatred and resentment provoke discord and poison the souls of both his supporters and opponents. No wonder in the first nine months of this year, there have been 355 massacres in the country, according to the NGO Causa en Común

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*Published Forecasts for 2023:


SEPGRA Political Analysis Group.

Further Reading: