Economics and Energy

China believes that Taiwan is an inalienable part of China and that Taiwan is part of its territory and routinely threatens to invade it to prevent Taiwan's formal independence. On Saturday 18th of February 2023, China's top diplomat Wang Yi said, at the Munich International Security Conference: "Taiwan has never been an independent country, nor will it be an independent country in the future. This is the status quo of the Taiwan issue”. As greater and more aggressive Chinese military exercises outside Taiwan become the norm, there are rising concerns of a full-blown cross-strait crisis with severe military and far-reaching economic repercussions for the global and Chinese economy. A China-Taiwan conflict will have a worse effect than the Russia-Ukraine war given the economic and industrial power that the two countries possess.

During the initial outbreak of Covid-19 in 2019, China stunned the international community by confining more than 11 million inhabitants of Wuhan to their homes. Since then, China has maintained the same practises, including them into its Zero-Covid policy. Border controls and lockdowns on the coronavirus have disrupted supply chains and slowed the flow of trade and investment, causing China’s economy to slow down. China has adhered to its zero-tolerance approach to the virus for nearly three years, despite the fact that this policy has caused immense economic harm and public dissatisfaction. Therefore, it is important to shed light on the effects of the Zero-Covid policy on the Chinese economy and the measures that need to be undertook by the government after its abandonment of the policy to revive its economy.

In February 2023, the European Union (EU) agreed to set a price cap on Russian refined oil products at $100 per barrel. The EU also set the price cap on Russian crude oil at $45 after setting it at $60 per barrel in cooperation with the Group of Seven (G7) countries in early December 2022, according to a periodic review every two months.   The European decision aims to control energy prices generally and stop price fluctuations that have affected global markets since the Covid-19 pandemic and the following events, particularly the commodity supercycle and the Russian-Ukrainian war. Furthermore, the Europeans aim to cut off the funding sources from the Russian federal budget that funds the military operation in Ukraine. In 2021, Russia exported oil worth around $212.4 billion of its $492.3 billion total exports to the rest of the world.   In response, the Russian government issued a decree on December 28, 2022, prohibiting the export of crude oil and petroleum products to countries with imposed price caps. Europe is the third-largest oil importer in the world after China and the United States. Conversely, Russia ranks first on the list of suppliers to the European continent while ranking second worldwide regarding oil exports. Therefore, we track in this article how the price cap decision may alter the global energy transmission paths.

Following the First and Second World Wars, the world order was founded on open international trade to ensure peace and security. Where the major powers realized that the two world wars occurred as a result of international competition over resources and markets, and therefore the Bretton Woods system came intending to establish a stable international monetary system that encourages global economic cooperation. Its main objective is to avoid the destabilising effects and competitive devaluations of currencies that were used in the period between and before the two world wars, to provide a framework for the free international exchange of goods and services, and to promote economic growth and stability in the long term.

The Russian-Ukrainian war created significant uncertainty in the world’s energy markets and disrupted trade relations between the second-largest energy exporter and the second-largest energy importer. This disruption strongly signals a shift in the global energy supply chains, as indicated in a previous analysis. In the short term, Europe is expected to turn to the Arab Gulf to fill the gap left by the lack of Russian energy products.   However, in the long term, Europe will need to find sources that are highly sustainable, affordable, and less harmful to the environment than oil. This is because petroleum usage is incompatible with the European Green Deal (EGD), which aims to achieve carbon neutrality for the entire European continent by 2050. Furthermore, the EGD seeks to reduce greenhouse gas emissions from the mainland by around 55% below 1990 levels by 2030, which is unattainable with continued oil usage.   As a result, Europe will turn to its neighbours, particularly those in North Africa, who possess a variety of energy sources that can help it achieves its objectives and guarantee energy sustainability. Thus, this article explores Europe’s energy requirements and assesses the potential of North Africa’s energy resources to meet these requirements.