Are geopolitical tensions beginning to ease, just a little, or are we simply growing accustomed to a constant state of crisis?
There is no objective way to answer this, but a tour of the world’s key hotspots provides a glimmer of optimism.
Start with the hottest spot of all, Iraq. The speed of last April’s fall of Baghdad was testament to America’s military might, and fostered an optimistic outlook for the war against terror, global energy markets and tensions in the region. Yet, the guerrilla attacks continue unabated and the death toll is mounting. Oil production has recovered to only about two million barrels per day, which is still 20 per cent below pre-war levels – a far cry from the optimistic forecasts of a year ago.
On the plus side, the capture of Saddam Hussein has had a material impact. Moreover, the worst-case scenario for Iraq – large-scale sectarian, tribal and ethnic violence – has so far been avoided. Kurds and Shia alike, suddenly liberated from decades of Sunni Muslim oppression, have so far demonstrated patience with the emerging political process. The challenge is to keep such tensions at bay while architecting a political system out of chaos – but progress is occurring.
Meanwhile, the ripple effects of the Afghanistan and Iraq actions are touching the rest of the region. Even Syria appears to be working strategically to enhance its relations with the U.S. For example, Syria’s attempts to engage Israel in peace talks over the Golan Heights, albeit rebuffed by the Israelis, demonstrated an awareness of the new order of things. Continued good behaviour may allow the U.S. to hold off on the sanctions it is prepared to levy against the country.
In Iran, the devastating earthquake of late 2003 prompted the U.S. to offer relief aid, and its acceptance was a breath of fresh air. Iran has also agreed to sign on to the additional protocol of the Nuclear Non-Proliferation Treaty that allows surprise inspections, and to suspend its uranium enrichment activities.
These shifts are symbolically important, and if reinforced by a successful election process in February, the breath of fresh air could become a gale.
At present, the exercise of democracy is being constrained by the Council of Guardians, which is limiting electoral participation of reformist candidates. A reform-leaning compromise still looks possible, however.
And then there is Libya, which last summer suddenly accepted responsibility for the 1988 Lockerbie bombing and reached a final agreement on compensation for victims’ families. That enabled the lifting of the 1992 UN-imposed sanctions. Now, the country has opened itself to banned weapons inspections and has renounced development of weapons of mass destruction. This should permit a further normalization of economic relationships with the world in 2004, although the outright lifting of U.S. bilateral sanctions against Libya will probably take longer.
The bottom line? Around the world, from Iraq and Afghanistan to Iran, Syria, Libya, India, Pakistan and even North Korea, a vague sense of a more orderly future is emerging. It is too early to take geopolitical tensions out of business plans, but there is reason to hope.
(Stephen Poloz is vice-president and chief economist for Export Development Canada. He can be reached at spoloz@edc.ca)
