Sf one event is going to dominate the year 2024, it will most certainly be the American presidential election. Barring an unexpected event, we will probably witness a new confrontation between Joe Biden and Donald Trump, the outcome of which is dangerously uncertain. A year before the election, polls carried out in key states on the political spectrum give Trump the advantage.
The election will be important not only for the United States, but also for the entire world. The outcome could depend on the economic outlook for 2024, which will itself depend in part on the evolution of the latest conflagration in the Middle East. My best guess (and worst nightmare) is that Israel will continue to ignore international calls for a ceasefire in Gaza, where more than two million Palestinians have lived in poverty for decades. What I saw during a visit in the late 1990s as chief economist of the World Bank was truly heartbreaking, and the situation has only gotten worse since Israel and Egypt imposed a total blockade in 2007 in response to Hamas taking control of the enclave.
Whatever the atrocities committed by the latter on October 7, the Arab street will not tolerate the brutality inflicted on Gaza. Under these conditions, it is difficult to see how a repeat of 1973 could be avoided, when the Arab members of OPEC organized an oil embargo against the countries which had supported Israel during the Yom Kippur War. This retaliatory measure would not really cost Middle East oil producers, because the higher prices would offset the reduction in supply. No wonder the World Bank and others have already warned that oil prices could reach $150 a barrel (135 euros) or more. This would trigger a new surge in supply-side inflation, just as that resulting from the Covid-19 pandemic is being brought under control.
Tragedy
In this scenario, Biden will inevitably be held responsible for rising prices and accused of mismanaging the Middle East. The fact that the conflict was reignited by the Trump administration’s Abraham Accords and Israel’s drift toward a de facto one-state solution will hardly matter. Whether fair or not, the regional unrest could tip the scales in Trump’s favor. A highly polarized electorate and mountains of disinformation could once again confront the world with an incompetent liar determined to eliminate America’s democratic institutions and collude with authoritarian leaders like Russian President Vladimir Putin and Prime Minister Hungarian Minister, Viktor Orban.
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