Financial crisis is greatest threat to international security

By Reuters Staff
November 12, 2008

Paul Rogers is Professor of Peace Studies at Bradford University and Global Security Consultant to Oxford Research Group. Any views expressed are his own.

Paul Rogers

Unless global responses are made to the current economic crisis, the biggest threat to international security will be the impoverishment of hundreds of millions of people, leading to radical and violent social movements that will be met with force, resulting in still greater conflict.

Oxford Research Group’s 2008 International Security Report, The Tipping Point?, published on 13 November, points to some improvements in security in Iraq in the past year as well as the potential for major changes in US policy in South West Asia with an incoming Obama administration.  It also finds that the recent deterioration in East West relations after the Russian intervention in Georgia in August can be reversed, but its main conclusion is that it is the global financial crisis that is now the most dangerous threat to international security.

With the G20 meeting due in Washington on 15 November, all the indications are that the response to the crisis of the most powerful states will be to focus narrowly on immediate issues, with calls for improvements in international financial cooperation involving:

•    An effective early warning system.

•    A more effective framework for transnational responses.

•    An independent “college of supervisors” to provide systematic monitoring of the world’s major companies and financial institutions.

These may well be useful responses to the immediate crisis but they have little or no relevance to the wider global predicament.  Instead, the opportunity should be taken to introduce fundamental economic reforms which reverse the wealth-poverty divisions that have got so much worse in the past three decades.

Most of the benefits of these decades of economic growth have been concentrated in the hands of a trans-global elite community of about 1.2 billion people, mainly in the countries of the Atlantic community and the West Pacific, but with elite communities in the tens of millions in countries such as China, India and Brazil.   At the same time, improvements in education, literacy and communications in recent decades have increased the awareness of many marginalised people of this unjust distribution of wealth.

On present trends many hundreds of millions of people among the poorest communities across the world will suffer most.  This is likely to lead to the rise of radical and violent social movements, which will be controlled by force, further increasing the violence.   The intensifying Naxalite rebellion in India and the substantial problems of social unrest in China are early indicators.  Responding to the crisis in a manner which places emphasis on improving emancipation and reversing the widening of the global socio-economic divide is therefore the most important task for the next twelve months.

Trade reform aimed at improving the economies of third world states, coupled with debt cancellation and substantial aid for sustainable development are all required as a matter of urgency if we are to avoid a much more divided global system in which the majority of the world’s population is marginalised, and increasingly resentful and bitter.

We can either respond as a global community or as a narrow group of rich and powerful countries.  The choice we make in the next few months will do much decide whether the world becomes more or less peaceful over the next ten years.

24 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

This analysis is nothing new as far as the trends of thousands of years of history go. When the “me” impulse overcomes the “we” impulse to the point that it creates a dysfunctional, unjust concentration of wealth and comfort in the hands of a minority, while consigning the rest to poverty, bad health, and early death, it is only a matter of time before the anger bubbles up from the masses. This is not ideology, it is fact. The countervailing crackdown then results in a period of social destruction that sets society back, sometimes for centuries. The anger and bitterness unleashed from such conflicts can endure for many generations.

What is interesting to contemplate is that why in this age of information that the obvious futility of Bush/Cheney style corruption on behalf of their elitist friends is not hammered with the kind of retribution normally reserved for mass murderers. Because untrammeled greed and corruption unleash the forces of mass-murder from which the world’s population will be suffering far into the future. The only way out is to reinstate justice as the foundational principle. Bring those responsible for this situation to book. Otherwise, who will ever again take seriously the claims of western democracies to be under-girded by justice?

Posted by Jonathan Cole | Report as abusive

I think it would be very beneficial if we had leadership which could promote a mindset whereby we didn’t think of it as us versus them. When underdeveloped nations begin sharing in the wealth to a larger degree we all win. I think that we should concentrate more on showing the voters in wealthy nations how much they can benefit by supporting development in the poorest nations of the world.

Posted by Michael Anderson | Report as abusive

Hooray for Mr Thompson’s eloquent comments

I think its time we start taking responsibility for our mistakes rather than blaming others. The disparity in the economic status between the rich and the poor has not channged much since 200 years ago. We should look towards Japan as the best example for a balance between the rich and poor people. It is so because instead of blaming others people first take responsibility for their actions. People around the world have become lazy. This is especially so in America and Europe. Just like global warming affects the whole world no matter where it is originating from, economic downfall is not concentrated to one country or region.

I hope people (especially the rich) will become aware of this fact. Economic balance is the only way forward. Lets be a little lesser selfish.

Posted by Anurag Sharma | Report as abusive

so much accountable capital risk; so much U.S. government push to extend mortgages injudiciously; so much inept and altered record keeping; so much top exec pay-out, notwithstanding great aggregate loss.
Many proposals are being considered that do not involve stipulation, and firm management of how bail-out funds are spent. There seems so little emphasis accorded reviews of the history of companies who transact in billions weekly, so that nefarious practices are overlooked, with so little time to rectify the threat of global recession. The scary part of this is that to me, there seems no solution.

Posted by Dallas Talley | Report as abusive

“Most of the benefits of economic growth have been concentrated” not in the hands of 1.2 billion people but in the hands of 2-3% of those 1.2 billions. Maldistribution of wealth is endemic in the first world and is a direct product of “progress” and “growth”. Primitive societies abhor such distortions of humane community. This fact is abundantly attested in anthropological literature. Suppressing such facts is not a solution. On the contrary.

Great. Another bright idea from Europe. Share the wealth with the developing world. Are there any advocates of free enterprise left in the West?

Posted by Dan | Report as abusive

It’s obvious that rich should share their opportunities with poor. Not jus to give them money, but to help to earn them. The problems of poor countries are clear: wars, authoritarian and inefficient government, low level of education, lack of technologies and infrastructure, economic and social barriers imposed by developed countries, unfair allocation of wealth.

“Great counties» are lacking resolution to make efforts on solving these problems. It’s because the prime motives for Great countries are increasing power, raising rates of production, GDP growth, magnifying wealth, expanding markets. The leaders of these countries don’t care of looking beyond their tenure. They try to avoid answering the question what would be the next, in a bit farther prospective.

So, the problems of immigration, intercultural and interreligious dwelled in wealthy societies, corrupting them and spoiling. The next thing looming – is war.

Posted by Raaassotto | Report as abusive

The Western governments are financially stretched out to bail out their own economies, it is fanciful to waste billions on Africa.
The continent is rich but the uncontrolled greed and corruption that are causing miseries to the millions. Look at Mugabe and Mobutu and even Congo today

Posted by ed | Report as abusive

So much for the Nash Equilibrium, I guess everyone would have to use it by international agreement for it to work. I differ from the author in that I do not see the economic correction as a Security Threat and put forward that this is exactly the wrong light to see the economic challenges and is exactly the type of mindset in the US that caused the International Financial Crisis.

Maybe it is time for better thinking and not these emotional reactions, that are ultimately an innate desire for finger pointing at US Leadership in causing the financial crisis.

However Blame Sharing and recognition of the problem for what the problem is, a signal that there are flaws in the global trade systems that have eminated from the US heightened security environment, will speed solution and recovery.

This blathering article drawing more unfounded fear is not helpful in analysing the problem.

solution is very simple.. need courage..
dont reward those investment bankers who has committed crime
regulate your financial system with hard rules and make CEO accountable/ punish them
avoid too much greed
develop saving culture in society rather consuming too much
LAST ..PRACTISE YOGA..TO AVOID DEPRESSION

Posted by RAM PRAKASH | Report as abusive

We have read this story very close and the comments. Here is what I see. We looking to our government to fix a problem that has been created over many years. The Federal Reserve has put 1 trillion dollars in the economy last summer, our tax return, and now 700 billion to bail out the financial institutions who contributed the most to this economic problem. In the grand scheme of things, this is the same as put a band-aide on a severed leg.

The Fed has lowered interest rates, lowest in history, but companies could not pay back a principle payment, so it won’t matter if they drop it to 0%. The news out now is, that our government has backed away from the bad assets. Why? (think about this)
Greed in this country has bankrupted this nation. I read economist all day long, I don’t have to tell you how educated these people are. The one thing they all agree on, they don’t know what will fix the economy. The United States is bankrupt, but nobody is telling us that, if they did there would be an instant revolution against the our government, and they know that. I don’t look for them to come clean.
I am not a hide in the bunker type person, that would be ignorance gone to sea, but they are not telling us the truth.
If we are looking to Washington to walk us out of this mess, we will be greatly disappointed.

Dominick from WSOP&NE

This article is not constructive. Granted that the world trade system is dysfunctional. The premise was that third world countries would export their way out of poverty. What we have seen is increased concentration of wealth and the relegation of pollution associated with manufacturing to the countries less able to justify the expense of cleaner technologies.

The one who needs debt forgiveness is the USA. Scratch that – what we really need to get back to work and export products the rest of the world wants. It is morally indefensible to have over consuming Americans bankrolled by the still impoverished third world.

When “developing” countries export at a lower equivalent price (more affordable for foreigners) that is the equivalent of dumping.

Posted by Jeffrey Tischler | Report as abusive

i’m still wondering what the New Money will be called.

The Amero, The Canadio, or the Mexicoco?

Posted by simon | Report as abusive

While the alarm that Paul Rogers has sounded might look like an exaggeration to many, one has to take it seriously. I wrote recently on the President-Elect Barack Obama site–and I think a comment on another site, that a stronger, healthier and more stable economy is the foundation of a stronger national security. When then Sen. Barack Obama made the point during his presidential bid, linking economy to national security, many didn’t seem to pay attention to him. Yet, he was making a very pertinent point.

I do not have the credentials of a national security expert. That fact notwithstanding, using common sense, anyone can come to the realization that one of the threats to national security is a weak economy that falls apart. While we generally talk about an economy, multiple threat vectors can spring from a collapsing economy and create a chaotic, hard to control situation.

For instance, terrorists could exploit such a seismic situation by becoming fishers in newly troubled waters. They could easily infiltrate already vulnerable Third-World countries, and start staging deadly assaults from such newfound niches. They would do that knowing that neither Washington, nor the rest of the Western capitals had adequate resources to respond to new threats emanating from satellite spots around the globe. They could easily manipulate hungry and desperate youths in these nations, by luring them with petro Dollars or petro Euros they have amassed, and turn them into new suicide bombers.

Again, I know that such an assessment might seem too gloom, too pessimistic and too alarmist. However, I am putting this analysis into actuality, by developing realistic scenarios.

Jean-Pierre E. Mbei MBAIS, MS)

Posted by Jean-Pierre Erick Mbei | Report as abusive

I had a Russian social-economics teacher who said that peasants generally did not revolt if they were well fed. I believe the broad concept is correct in the developing world. But I think among the major killers of poor countries are environmentalists who said that Western countries should pay more for fuel and who should participate in elaborate carbon taxation schemes. So food staples were converted to ethanol. Then there are the happy-go-lucky yes-people who insist on saying that the economy is never headed into a recession. So there is a build up of supply – and we have the production of unwanted goods and services leading to a severe decline when the inevitable rationalization hits. Good intentions can cause world hunger. Positive attitudes – to the extent of us becoming happy cartoon characters – can cause enormous suffering. What we need in the world are more pragmatic people.

Posted by Don | Report as abusive

It seems to me that if we did assume as a world community that we are all one and there is enough we begin behaving as if we are all one we allow sustainability. That would be functional and would require us to adapt to a new way of relating. The behavior of justice does not fit into functionality and has not served us in our history to change anything. It is therefore not functional. Adapting would cause us to focus on what would serves everyone and focus on sustaining what ever change is necessary. The function of this is to see everyone as a part of who we are and to serve in that vain. Our responsibility would shift to taking care of each other, supporting each other, and sharing with each other. This is sustaining in that we would not have to fight to have what we want or to take what is not ours. There would be not point in such behavior. The world economy would have a completely different purpose and impact.

Posted by lisa rutherford | Report as abusive

I believe the only solution would be to make the people productive and happy again, all of them, and at the same time revive businesses. How you do that, bring the prices of all goods now, to reasonable levels affordable to all and get rid of the greed of some corporations. Simple as that. Some people are making serious money, money that they dont need and if they made a percentage less, this would go the ´´not have´classes and countries…. Then education would come. But the top of the pyramid doesnt want this…

Posted by Vasilios Liaskos | Report as abusive

The shift of power to those who work frome those who just own and earn.

Posted by Raaassotto | Report as abusive

Maybe one of the reasons the world’s economy is spirally into a deeper hole is because.. its in denial. Plain and simple. The sooner every country accepts that fact.. and starts the recession, the reforms and the job cuts as Singapore is doing.

The hole might just stop growing bigger.

Posted by Adriano | Report as abusive

As abstract of former comments, the capitalist system has plunged. The solution for this, indeed a new socioeconomic system, is away of our hands, and any worldwide leader will can do anything. The human historic process evolutes according its proper laws. At this time, only marxist theory can explain the capitalism collapse. However, ¿where go the world? On near future, the classes fighting will increases, and the politics systems will collapse too. Only after, a new worldwide economy could be stablished.

Posted by Luis Rodolfo Cabrera Juárez | Report as abusive

mr andersons comment is right on target. but this idea should also be applied within the united states. we would all benefit if the standard of living was raised for the lowest among us. the actions of desparate people would be muted if we removed their desparation.

Posted by raymond tasillo | Report as abusive

Well put Jonathon Cole. History is replete with examples of societies subjected to abject poverty that eventually rose up in violence. I.E.,Roman mistreatment of Goths, Franc looting of Constantinople on the way to the holy land to loot it as well, fascist and democratic Europe colonizing Africa and the Middle East, ad nauseum… Much of the violence that still exists in the world today, finds it’s roots in endured oppression from decades and centuries past.

Given Mans propensity for war, the great unfortunate lesson of history is “Might is Right”. I find, debating the merits of different monetary, political and religious policies and philosophy, quite often descends into propaganda serving only to divide people and and kindle anger. The need for cooperation amongst all Nations and Peoples has never been more urgent. Humanities troubles are only just beginning and can only be solved with a sustained effort of common sense pragmatism by all People.

Posted by Anubis | Report as abusive

I couldn’t agree more Michael Anderson. Who posed the question ” Is it not better to give than receive?”. I would certainly like to know how the CEOs, CFOs and CAOs of corporate America feel about this concept?

Posted by Anubis | Report as abusive