Historic face-to-face Between Trump and Kim Jong Un

ArticleDeflationJune 12, 2018 - 6:17:47 AM

Historic meeting between the United States and North Korea, assessment of the negative impact of human activity on the international economy, great instability within the government of the second largest OPEC member.

Historic face-to-face Between Trump and Kim Jong Un.

US President Donald Trump and North Korean leader Kim Jong Un met in Singapore for their much anticipated summit. This is the first time that the two countries' leaders have met, after years of nuclear opposition and tension.

The US side has told the CNBC that it is committed to achieving its goal of full and verifiable denuclearization of North Korea. This South Korean nuclear weapons program has become a threat to Seoul and Tokyo but also to the American continent.

On the other hand, the United States has mentioned a reduction in international sanctions and even possible economic aid. North Korea, however, also wants to negotiate guarantees on the future of its political system and border security.

Whatever the result, this summit is seen as a real diplomatic breakthrough. Yet many experts told the CNBC that Washington made a mistake because it legitimizes Kim's regime and puts him on an equal footing with Trump.

The situation is very complex, and in the past the South Korean government has stated that it would accept denuclearization only if the US military presence in South Korea is interrupted, but also if the US regional nuclear umbrella is deactivated, which is not really envisaged by Washington.

Even if the North Koreans come out of the summit saying that they are going to denuclearize themselves, it guarantees almost nothing if it is not checked closely by the United States which is already monopolized by the Trade War opposing it to the Chinese government.

Human Activity : The Largest Scourge for the World Economy.

According to a survey by Lloyds Banking Group, man-made threats including stock market crashes, cybercrime and interstate conflicts pose a greater threat to the international economy than natural disasters.

According to Lloyd's'City Risk Index' created in collaboration with Cambridge University, these risks have an estimated annual impact of $320 billion of global gross domestic product (GDP). They pose a much greater economic threat than hurricanes, floods, earthquakes and volcanoes.

The index measured the impact of 22 threats (man-made and natural) and showed that 279 major cities around the world risk losing an average of $546.5 billion in economic output each year. This includes $320.1 billion for man-made risks and $226.4 billion for natural disasters.

The collapse of financial markets has been identified as the main threat, putting $103.33 billion of total GDP at risk. The second biggest risk is interstate conflict with a loss of $80 billion. Next come storms with an estimated threat of $62.59 billion, followed by the human pandemic, civil conflict, sovereign default, floods, earthquakes and commodity price shocks, which represent the top ten remaining risks.

The Second Biggest OPEC Producer in Difficulty.

Following recent election in Iraq, political divisions over the outcome threaten OPEC's second largest oil producer who finds himself on the brink of an institutional and constitutional crisis.

Iraq's oil policies are reconsidering, and this will have a negative impact on contracts and investments in Iraqi oil.

The Parliament ordered a manual recount of the ballots, after outgoing Prime Minister Haider al-Abadi, whose coalition was only third in the elections, declared that there had been irregularities in the electronic counting of votes.

In addition, a significant proportion of newly elected legislators have stated that Iraq could be better without OPEC, and that the country should be allowed to export as much oil as it wishes.

Some of the newly elected legislators are even calling for a review of recently signed oil contracts, which could worsen the investment climate at a time when Iraq is developing its industrial sectors and infrastructure such as oil refineries.

If the government of OPEC's second largest producer does not quickly regain stability, oil prices and markets may quickly suffer the consequences.

BUNKER GROUP

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