The global recession increases the risk of an open conflict between the United States and China

Gazprom, the largest energy company in Russia and in the world, 10 days ago it reduced the capacity of the only pipeline that supplies natural gas to Europe (Nord Stream 1), and brought it to 20% of the total, after only reducing it to 40% of normal levels in early June.

The result was that the price of natural gas on the European market rose by 17% in the following five days (it went from 160 euros to 188 euros per megawatt / hour), taking it to the highest level since the first week of March this year.

This implies that the price of Russian gas in Europe has increased by more than 700% in the last yearand that the continent’s two main manufacturing countries – Germany and Italy – will certainly enter a deep recession in the second half of 2022 (according to Deutsche Bank), or at the latest in the first 3 months of 2023 in CreditSuisse’s estimate.

This happens when the US economy contracted 0.9% annually in the second quarter of the year (-0.2% compared to the previous quarter), which is added to the 1.6% contraction recorded in the first three months of 2022, it can be said that the first world economy (25.1 trillion US dollars / 25% of global GDP) would find itself in a recessionary situation in the first six months of that period.

The International Monetary Fund (IMF) estimates this. the world economy would experience a recession in the second half of 2022for the combination of high inflation (8.3% in the global system; 9.1% in the US; 9.4% in the UK and 8.5% in the euro area) with high interest rates (increase of 0.75 percentage points decided by the Federal Reserve), added to a prolonged energy crisis with record prices in the global market, caused by the war in Ukraine and the trade sanctions imposed on Russia by the United States, the United States, the European Union and Great Britain.

The Fund’s calculation is that the complete cut of Russian gas to Europe (which would take place in the second half of the year), plus a further 30% or more drop in Russian oil exports in the second half of 2022, would lead to virtually no growth. zero (0%) in both the United States and the European Union.

The Chinese economy, the second largest in the world (US $ 18.6 billion / 19% of global GDP) it grew by only 0.4% in the second quarter of 2022after an expansion of 4.8% in the first three months of the year.

It is the consequence of two months of closure of economic activities in Shanghai to counter the reappearance of Covid-19, which implies an increase of just 2.5% per year in the first half of the year.

China’s GDP subject to restrictions due to Covid-19 is 17.4% of the total, and covers a population of 247.5 million people.

That is why the global increase would be 2% per year in 2022/2023, which would be practically equivalent to a recession as it is below the growth of the world population.

It should be noted that the United States sends more than a third of its exports to Europe and more than 25% of its imports come from Europe, while China is already the main trading partner of the European Union; and the market of the People’s Republic is more important for Germany than the European one. Therefore the approach of the world recession has acquired a systemic character.

This situation has immediate political consequences in the United States, because it is an election year; and in it, 75% of Americans say the country is on the wrong track, while 65% of Democrats believe Joe Biden shouldn’t run for re-election in 2024.

For all of this, what is truly decisive for the role of the United States in the world system is that the relationship with China has reached a turning pointgiven the evidence that the third figure of the US institutional system – Nancy Pelosi, Democrat in charge of the House of Representatives – went to Taiwan and this constitutes a “casus belli” (ie an act of war) for the People’s Republic.

Had the United States backed off in the face of stern and repeated Chinese warnings, it would have been a strategic defeat of extraordinary importance for the world’s first superpower, and would entail the complete denunciation of the global order led by American hegemony by the People’s Republic. .

In the Ukrainian war, Russia has adopted a completely defensive strategyaimed at consolidating the results of the last five months, which means that, after full control of the Donbass region, where over 80% of the population is Russian-speaking, it won the conflict against the US and NATO militarily.

So, as Henry Kissinger warned two weeks ago at the presentation of his latest book, this situation forces the United States to admit defeat, or, conversely, to escalate the war with the direct intervention of its military. This is a decision that cannot be postponed beyond August / September.

In any case, in both cases, a new phase in the history of the world would enterwhere the central fact would be the open conflict between the two superpowers, next to which the War in Ukraine would mean a small detail.