Goodbye 2023; Hello 2024

 

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2023 will be remembered as a tipping point year when almost all mega-trends of finance, technology, trade, geopolitics, war and climate heating showed signs of acceleration in speed, scale and scope.

. 2023 will be remembered as a tipping point year when almost all mega-trends of finance, technology, trade, geopolitics, war and climate heating showed signs of acceleration in speed, scale and scope.

You can call this a state of permacrises, a series of cascading shocks that seem to be building up to a bigger shock sometime in the future.

In finance, the year began with the collapse of Silicon Valley Bank on 10 March 2023, followed by Signature Bank. The Fed and FDIC (Federal Deposit Insurance Corporation) acted fast to guarantee all deposits to stop what is now called “Twitter Deposit Runs” against banks. In Switzerland, Credit Suisse was taken over by UBS on 19 March, after the bank lost nearly US$ 75 billion worth of deposits in three months. Swiss financial credibility was hurt when Credit Suisse AT1 (Tier One bonds) bond-holders became outraged that they should suffer write-downs ahead of equity holders.

Although prompt action by the Fed and Suisse financial authorities averted global contagion and restored calm to financial markets, the Fed hiked interest rates four times in 2023 to 5.25-5.5% to tackle inflation. This month, gold prices touched a record high of US$2,100 per ounce, signalling anticipated inflation abatement, but escalated geopolitical tensions.

In technology, 2023 marked the seismic arrival of generative artificial intelligence (AI), through the public launch of ChatGPT in November 2022. Commercialized AI is considered the next big thing after the internet, sparking off a US tech stock rally, led by the Magnificent Seven companies in AI-related software and hardware. The rally averted a year of portfolio losses in financial markets hurt by interest rate hikes.

In trade, the latest UNCTAD Global Trade Update found that global trade will shrink by 5% to US$ 30.7 trillion in 2023, with trade in goods declining by nearly US$2 trillion, whereas trade in services would expand by US$500 billion. The outlook for 2024 is pessimistic because trade issues are now geopolitical, rather than purely market-driven. Global supply chains are either decoupling or de-risking to avoid possible sanctions which have been imposed for geopolitical reasons.

Geopolitics dominated headlines in 2023, as diplomacy played second fiddle to the militarization or weaponization of everything.

The biggest risk faced by businesses today is national security risk, in case companies or financial institutions are caught in geopolitical tit-for-tat arising from binary differences in values. Where national security is concerned, the business must bear all the costs of supply chain restructuring with no questions asked, or face possible existential shutdowns.

War broke out in Gaza/Israel In October with a scale of civilian slaughter more horrific and intense than the Ukraine war, which began in February 2022. The latest war count to June 2023 by The Armed Conflict Survey 2023 (1 May 2022–30 June 2023), showed global fatalities and events increasing horrendously by 14% and 28% respectively.

The authoritative Stockholm International Peace and Research Institute (SIPRI) reported that 56 countries were involved in armed conflict in 2022, 5 more than in 2021. Three (Ukraine, Myanmar and Nigeria) involved 10,000 or more estimated deaths, with 16 cases involving 1000–9999 deaths. Expect more conflicts when natural disasters hurt food, water and energy supplies.

As 100,000 or so delegates leave the United Arab Emirates at the end of the COP28 this month, the UN painted an upbeat tone that the Conference marked the “beginning of the end” of the fossil-fuel era.  Scientists confirm that we have already passed the point of being able to limit carbon emissions for the average global temperature to remain below 1.5 degrees Celsius above pre-industrial levels.   Most studies show that if most governments fail to meet their current commitments to NetZero, the planet will be struggling with temperatures above 2 degrees Celsius, meaning more natural disasters, rising seas and/or migration/conflicts.  Every three weeks, the US has experienced at least one natural disaster costing more than $1 billion in damages.  

As one cynic said, natural disasters are where the rich just pay in money, but the poor pay in their lives.

Putting all these mega-trend micro-disasters together suggests that a mega-system disaster may be on the cards. Historically, these seismic-scale disturbances are settled through a massive recession, like the 1930s Great Depression, or wars, which wipe out debt and make everyone poorer.

So far, the world has neglected to address these looming issues by either denying or postponement - printing more money and incurring more debt. Painkillers do not fix structural imbalances.

As my favourite poet TS Eliot said, the world ends not with a bang, but with a whimper. The world is in permacrises, with no one fully in charge. Democratic governance is in flux when no one can agree on the problems, let alone the solutions.

2024 will see some decisive but messy elections, especially in the US where both Presidential candidates may either be impeached or convicted by then. This cannot auger well for everyone, because 2023 marks the turning point when the US lost the respect of the Global South over its catastrophic handling of Ukraine and Gaza, both of which will be fought to the last Ukrainian or Palestinian. The morality of allowing other people to fight and die for one’s benefit shows not hypocrisy but hegemonic-scale cowardice.

The bottom line is that there is no shortage of technology or money to deal with the global existential threats of climate change and social imbalances. We cannot align policy intent (what politicians say they will do) with the reality that current policies are not delivering.

If man-made or natural calamities are looming, do we mitigate or adapt? On a single planet, we can run but not hide. So each of us must decide to do what we can, rather than relying on politicians to fix themselves, let alone our problems.

There is a wise saying about Christmas charity: give with warm hands. Do that now, or we will be giving with boiled hands or none at all.

Best wishes for 2024.

Andrew Sheng, Asia News Network

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Goodbye 2023, hello 2024 

Baying for blood, again

Nobody wants to have a war with Iran except Israeli premier Binyamin Netanyahu, so it could still happen.

IF a deeply troubling international situation suddenly looks too good to be true, it usually is just that – and so desperately bad as to need looking good.

And so it is with the positions of the permanent members of the UN Security Council (UNSC) over Israel’s push to attack Iran, a situation that can soon become much more desperate.

China and Russia have long resisted the Israel-United States axis’ efforts to recreate West Asia in its own image, or at least to its own preference. The point was driven home when, under cover of “protecting innocents” through a ceasefire and no-fly zone in Libya last year, Western countries openly attacked government forces.

Now that Saddam Hussein’s Iraq and Muammar Gaddafi’s Libya are gone, the only Muslim nation capable of standing up to the axis is Iran. But how to fashion a case against Iran that looks at least half-credible internationally?

On attack mode: If the United States still insists on staying away, without even red lines or deadlines for Iran to conform to, Israel may well go it alone and attack Iran. — EPA

 

Israel, the only nuclear-armed country in the region, does not pretend it has evidence of Iranian plans for nuclear bombs. So its best pretext is that Iran may one day have them, despite Teheran’s repeated assurances that its nuclear energy production and medical research are not a prelude to nuclear armaments.

China and Russia have no desire to see a nuclear-armed Iran either, in fact quite the reverse. Their intelligence services report that there are no grounds to assume that Iran has or even wants to have nuclear weapons.

The conclusion is shared by US and Israeli intelligence, and cited by no less than Israel’s military chief, among others. But that is “only” the pure outlook of professionals and technocrats before getting tweaked by politicians.

Israeli Prime Minister Binyamin Netanyahu seems bent on creating an imploding situation, pushing and pulling to make it want to explode and involve other countries in supporting roles. Chinese and Russian diplomats have consistently kept well clear of it all.

Sensing that Obama’s Washington had lately also been keeping its distance, Netanyahu piled on the pressure for days on end. Then his ultimatum was delivered on Tuesday: that if the US still insists on staying away, without even red lines or deadlines for Iran to conform to, Israel may well go it alone and attack Iran.

And if that happened, Washington could be made to look bad in failing to live up to its God-given mission of protecting the free world. In an election season, those kinds of terms can make a difference, and they did.

News then came the next day that Beijing and Moscow had at last “agreed” to add their weight to Western-Israeli condemnation of Iran’s attitude, if not its actions or policies. That may seem like the hitherto elusive consensus among the UNSC’s permanent five, except that it never was.

After Israel’s quiet ultimatum following long days of hard lobbying, its bottom line finally made Washington scramble – not the fighter jets, but UN diplomats in persuading Beijing and Moscow to swing their support behind an alternative approach pre-empting Israel’s further war cries.

At any rate, the resolution at the IAEA (UN nuclear watchdog) on Thursday would have no binding effect. If diplomatic declarations are mere symbols of policy intentions, then the proposed resolution is the most symbolic of all.

Yet at the most superficial of official levels, Israel also agrees that diplomacy should still be the first option before military action. But there is no denying that Netanyahu is gung-ho on another attack on another Muslim nation, preferably with other countries rather than Israel doing the work.

Walking the tightrope

Iran has no plan or policy for nuclear weapons, much less those weapons themselves. For Netanyahu’s campaign to target Teheran it needed to spread fear and vilification, while official texts could refer only to Iran’s attitude and posturing.

Yet despite all his huffing and puffing, or rather because of them, he is making matters worse for the entire region. Anyone in a less emotional state can see the thin tightrope he is treading.

By seeking to force Iran, a country justly proud of its history and culture, to bow to unreasonable demands, Netanyahu is only making a rebuff from Teheran inevitable. That would in turn force Israel to plummet into war, since it would also not want to lose face.

Then by making clear that the push for war “has to come now” rather than later when Iran may possess nuclear weapons, Netanyahu is confirming to Teheran that nuclear weapons work as a deterrent against foreign attacks. Even if Iran never wanted nuclear weapons before, it would be sorely tempted to seek them now.

One result is that Israeli leaders themselves are divided over an attack on Iran. Its military leaders, President Shimon Peres and Netanyahu’s own Deputy Prime Minister Dan Meridor (in charge of intelligence and nuclear affairs) are among those who disagree with him on the need to attack Iran.

Meanwhile, a top-level US report bearing the seal of more than 30 retired diplomats, admirals, generals and security chiefs advise that a war with Iran will be more painful and costly than the Iraq and Afghan invasions combined.

Previous estimates had found that an attack on Iran would only delay its nuclear programme by several months. This latest report says that a full-scale attack involving aerial bombardment, ground troops, cyberwarfare and a military occupation, among other requirements, would only delay a nuclear programme by several years, not stop it.

However, the likes of Netanyahu are determined to press on regardless. He seems to have calculated that a US election season can give him an edge by pressuring incumbent Obama to lend him unambiguous support.

Iran may also be hoping that public anxieties in the US over jobs and a faltering economy can, in an election season, constrain the urge of US hawks to join Israel. So far Teheran appears to not want to relent by appeasing the doubters.

Nonetheless, the prospect of war is still closer than anyone other than Netanyahu would wish. There are at least five reasons for this.

First, by pushing the option of a military attack to the maximum, Israeli policymakers would be loath to effect a turnaround short of a major Iranian concession. And that would be highly unlikely.

Second, Netanyahu’s primary aim is not the destruction of Iran but key surgical strikes against suspected nuclear sites. He and his advisers may well see this as “doable”, even though the consequences can easily and quickly become unmanageable.

Third, Iran is likely to retaliate in more ways than one, including through forms of asymmetrical warfare. Israel has launched “spot attacks” on Iraq’s and Syria’s installations before and got away with it, but it has never engaged a country as large and powerful as Iran.

Fourth, an attack by Israel, or jointly by Israel and the US, would immediately invite endless rounds of counter-attacks by militant Muslim groups and individuals around the world. These are just some of the consequences that are not clearly foreseeable or controllable.

Fifth, when push comes to shove, both Democratic and Republican candidates in the US presidential election are likely to side with Israel.

Once Netanyahu as Prime Minister sets the country on a war footing, even the naysayers in his own administration will feel the need to acquiesce in the national decision.

Behind The Headlines By Bunn Nagara

Western war on Iran soon?

Rising risk of Western war on Iran

GLOBAL TRENDS BY MARTIN KHOR

The new year is witnessing an escalation of a Western economic blockade against Iran while it has been claimed that Israel is preparing for a military strike. Can a war against Iran be avoided? 



THE risk of the world being engulfed in a new and dangerous war is increasing. In recent weeks, Iran has come under greater pressure over its nuclear programme, and the chances of this leading to military conflict have escalated.

A recent article in New York Times magazine revealed that senior Israeli leaders were preparing for a strike on Iranian nuclear facilities in 2012.

The United States has intensified its initiative on trade and financial sanctions on Iran.

Republican candidates for the Presidency have been using high anti-Iran rhetoric.

And there is the possibility in a Presidential election year that the incumbent President may start a war to gain popularity.



In his State of the Union speech last week, President Barack Obama said he would take no option off the table to prevent Iran from getting a nuclear weapon.

Europe recently announced an embargo on Iranian oil. The European Union foreign ministers decided there would be no further oil contracts between its member states and Iran, and that existing oil delivery deals would be allowed to run only until July.

These actions are purportedly aimed at preventing Iran from developing nuclear weapons. But Iran has insisted its research programme is for developing nuclear power, not weapons.

And there is no evidence that it is in fact developing, or intending to develop, weapons.



There is a danger of dramatic escalation of the present conflict through one of various scenarios, such as an Israeli attack on Iran (with or without United States assistance or approval) or an incident in the Persian Gulf involving Western and Iranian ships.

The US has doubled the number of aircraft carriers near the Persian Gulf, while French and British warships recently accompanied the aircraft carrier USS Abraham Lincoln into the Gulf.

These developments are creating the conditions for a slide into a catastrophic war.

On Jan 25, the New York Times carried an article – “Will Israel attack Iran?”– by Israeli journalist Ronen Bergman, an analyst who interviewed Israel’s Defence Minister Ehud Barak, vice-premier Moshe Ya’alon and others.

“After speaking with many senior Israeli leaders and chiefs of the military and the intelligence, I have come to believe that Israel will indeed strike Iran in 2012,” wrote Bergman.

This determination to strike comes despite many difficulties, listed by Bergman.

Iran has dispersed its nuclear installations throughout its vast territory, and Israel has limited air power and no aircraft carrier.

Even if an attack were successful, Iran would be able to rebuild the damaged or wrecked sites. And Iran had declared that it would strike back if attacked.

There is of course irony and double standards in this situation.

While Israel and the West decry the consequences if Iran obtains nuclear weapons capability, it is well known that Israel itself owns many nuclear weapons.

And while Iran is often accused by the same countries of sponsoring terrorism, Iran itself has been the victim of terrorist attacks and economic and technological sabotage.

Bergman’s article provides many details of many of the covert actions taken by Israel against Iran.

The Israeli secret service Mossad was given “virtually unlimited funds and powers” to stop the Iranian bomb through a five-front strategy that involved “political pressure, covert measures, counter-proliferation, sanctions and re­­gime change”.



The moves against Iran include boycotting of financial institutions, the use of computer viruses to disrupt the operations of the nuclear project, tampering with components and the supply of faulty parts and raw materials, explosions at various facilities, and the assassination of several Iranian nuclear scientists.

The article implies that Israel has been involved in, or approves of, these actions, although it does not explicitly admit to them.

Meanwhile, Iran insists it is not intending to develop nuclear weapons, and there has been no evidence that it is doing so.

Iran’s enemies are fearful it will develop a technical capability for developing weapons as it pursues its nuclear energy programme.

Nuclear physicist Yousaf Butt, a former Fellow in the Committee on International Security and Arms Control at the US National Academy of Sciences, and scientific consultant for the Federation of American Scientists, has said Iran was not doing anything that violated its legal right to develop nuclear technology.

Under the Non-Proliferation Treaty, it is not illegal for a member state to have a nuclear weapons capability or option.



If a nation has a fully developed civilian nuclear sector, it, by default, already has a fairly solid nuclear weapons capability, and several countries that do not have weapons, do have this capability.

Meanwhile, Jim Lobe of Inter Press Service reported that several influential foreign policy figures in the US (who used to be Iraq war hawks) were speaking up against military action on Iran.

“We’re doing this terrible thing all over again,” wrote Leslie Gelb, the president emeritus of the Council on Foreign Relations and previously a Iraq-war hawk.

Kenneth Pollack, whose 2002 book on Iraq was cited frequently by hawks before the Iraq invasion, argued not only against any further escalation, but also suggested that the US-EU sanctions were proving counterproductive.

Princeton University professor Anne-Marie Slaughter argued that the West and Iran were playing a “dangerous game of chicken” and that the West’s current course “leaves Iran’s government no alternative between publicly backing down, which it will not do, and escalating its provocations”.

“The more publicly the West threatens Iran, the more easily Iranian leaders can portray America as the Great Satan,” wrote Slaughter, formerly director of policy planning under Secretary of State Hillary Clinton.

It remains to be seen if cooler heads will indeed prevail so that a new war against Iran is avoided.

How Israel turned itself into a high-tech hub?

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By Katia Moskvitch Technology reporter, BBC News, Tel Aviv

WATCH: How did Israel establish itself as a fertile ground for hi-tech start-up companies

When a grey-haired grandmother clutching a smartphone mounted the stage at Montreal's Start-up Festival this summer, young Israeli entrepreneur Guy Rosen knew he had pocketed a very special award.

His company, Tel Aviv-based Onavo, offers an application that shrinks mobile phone data to help users save money - and appeals to any age. That made Onavo the winner of the Grandmother's Award for best start-up, judged by tech-agnostic ladies in the later stages of life.

Standing in his office in Tel Aviv, Mr Rosen recalls the moment: "They went on stage and said: 'We love Onavo and we understand what it does... it is such an easy app to understand' - we just save money, that's it, period, they loved us."

Guy Rosen is one of Israel's many young, enthusiastic entrepreneurs who, fresh out of the army, decided to set up a tech firm.

Tiny Israel, a country embroiled in conflicts for decades, has managed to transform itself from a stretch of farmland into a high-tech wonder.



Formula for success 

Israel currently has almost 4,000 active technology start-ups - more than any other outside the United States, according to Israel Venture Capital Research Centre.

In 2010 alone the flow of venture capital amounted to $884m (£558m).

The result: high-tech exports from Israel are valued at about $18.4bn a year, making up more than 45% of Israel's exports, according to the Central Bureau of Statistics.

Israel is a world leader in terms of research and development spending as a percentage of the economy; it's top in both the number of start-ups and engineers as a proportion of the population; and it's first in per capita venture capital investment.

Not bad for a country of some eight million people - fewer than, say, Moscow or New York.

Serial entrepreneur Yossi Vardi says there is a whole blend of factors responsible for turning Israel into a start-up miracle. He himself has invested in more than 80 Israeli high-tech firms - among them the first web messaging service ICQ. He sold many of them to technology giants such as AOL, Microsoft, Yahoo and Cisco.

For high-tech firms, Israel offers much more than beautiful beaches
 

"If you look at how this country was created, it was really a start-up on the large scale," says Mr Vardi, who has been dubbed the godfather of Israel's high-tech industry.

"A bunch of crazy people came here, to a piece of desert, trying to pursue a dream of 2,000 years."

Over just a few decades, Israeli start-ups have developed groundbreaking technologies in areas such as computing, clean technology and life sciences, to name a few.

"Look at... agriculture, at the defence industry, at the universities here," says Mr Vardi.

"The high-tech is a popular story right now, the internet gave it a lot of visibility, but the story of the culture and the spirit is part and parcel from the kinds of the cultural genes of [the Israeli] people."

“Start Quote

These entrepreneurs are thinking big, they are trying to build global businesses, trying to create something huge”

Saul Klein Index Ventures
 

Government's role
 

But there is more to this start-up scene than certain aspects of Israeli culture - the lack of hierarchy, a constant drive for individualism, regular risk taking. The government played a key role in the rapid rise of this start-up nation.

"The government jump-started the industry," explains Koby Simona from Israel Venture Capital Research Centre.

One was the creation of the Yozma programme in 1993, a so-called fund of funds set up to invest in local venture capital funds that would channel money into new technology firms.

Soon numerous start-ups dotted Israel's industry landscape, and venture capital funds mushroomed all over the country - a blooming industry that quickly attracted foreign investors.

Israel's defence forces are also boosting entrepreneurship.

Military service is compulsory, but besides regular military units, the army also has designated hi-tech units, where computer-savvy conscripts are constantly prompted to come up with innovative ideas in disciplines such as computer security, cryptography, communications and electronic warfare.

"The military enables young people in certain units to get technological skills, to run large technological projects at a very young age, where they need to improvise in order to get fast solutions," says Prof Niron Hashai from the Jerusalem School of Business Administration at Hebrew University.

Once back in the real world, many military alumni use the newly acquired experience to launch their own technology start-ups.

Tel Aviv has several high-tech hubs: Herzliya is popular with international tech giants; Rothschild Boulevard is home to many young start-ups
 

And then, of course, there is Jewish immigration - a key driver of the country's economy since its foundation.

The biggest and the most important wave of immigration came from Russia, says Prof Hashai.

"Many were very smart people with technological background," he says.

"Maybe they were not so much entrepreneurs, but when these guys meet Israeli-born guys, many interesting things happen."

Lost decade 

The first start-up boom of the 1990s lasted just a few years though. When the global dot.com bubble burst in 2000, the fortunes of Israeli venture capital started to decline.

Today, industry insiders speak of a lost decade.

Waze, a web community-based GPS app, has been extremely popular in the US and Israel ->

 

Still, venture capital continued to flow into the country, and now investors are reaping the rewards.

During the past two or three years, all around Tel Aviv a new generation of start-ups has begun to emerge, ready to prove that Israel's high-tech industry is back in business.

Take Takadu, a company founded in 2008 that offers smart water infrastructure monitoring, remotely detecting leaking pipes in real-time all around the world. One of Takadu's customers is Britain's Thames Water. When a water pipe in London bursts, chances are that it will first be spotted by a computer in Tel Aviv.

Another example is Boxee. The five Israeli founders decided from the get-go to headquarter the company in Delaware in the United States, but locate the company's research and development office in Tel Aviv.

Boxee tries to provide the missing link between content on television and the internet. Once you connect Boxee's small shiny black cube to your TV, it will also link wirelessly to your home network. With a remote control, you can then browse and watch all online content on the big screen - not just your movies, YouTube videos or web TV, but also videos uploaded by your friends to Facebook, Twitter and other social networks.

Shortly after its launch in 2008, Boxee's little box could be found in more than two million homes across the US, Canada and the European Union, says Tom Sella, one of the firm's co-founders.

Then there is Waze - a firm that has developed a free app that turns your smartphone into a web community-based GPS device.

It will guide you through a city's road labyrinth, but combines the map with updates from other users - or "wazers" - from traffic jams to construction works to accidents.

Silicon Boulevard 

The bright Middle Eastern sun may be setting slowly, painting Tel Aviv's roofs in warm shades of red, but one part of the city will continue to buzz for many hours.

Tel Aviv-based start-up Onavo offers a free smartphone application that shrinks a phone data to help users save money - and appeals to any age

This is Rothschild Boulevard - also known as the Silicon Boulevard, home to the offices of many hot start-ups such as Face.com and Soluto.

Some of them do not mind following in the footsteps of ICQ, 5Min, LabPixies and others, who have been scooped up by international tech giants.

Take the Gifts Project, for instance, set up by a handful of young enthusiastic employees sharing a tiny office with a balcony that looks out to Rothschild Boulevard and sports a huge logo of a pink pig. They've just been bought by the world's biggest online store eBay.

Others want to strike out on their own. One of them is Soluto, a firm that aims to make computers more user-friendly and crowdsources technical support that helps computer users anywhere in the world, for free.

Whatever their strategy, it seems that they are here to make an impact.

"These entrepreneurs are thinking big, they're using the latest web technologies, they are trying to build global businesses - they're not satisfied by building something small, they're really trying to create something huge," says Saul Klein, a Tel Aviv-based investor working for British venture capital fund Index Ventures.

"I think the new Israeli technology scene is almost rebelling against the last 10 years, where Israel for many years has underdelivered.

"This is Rothschild Boulevard - and I believe this is the place to watch."

Many foreign companies set up their research and development hubs in and around Tel Aviv

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