The geopolitical risks triggered by Covid-19

Covid-19 remains the biggest challenge to humanity since WW2 with nearly 4.8 million infected killing nearly 320,000 people. The Covid-19 pandemic is breaking the status quo in many smaller countries, which might lead to a geopolitical crisis.

Lockdowns and economic paralysis have pushed the world into a deep recession which will last for several years. The low oil price will push small petro-dollar nations ruled by absolute monarchs in the Arabian peninsula into political turmoil.

These small petro-dollar states cannot continue to pump prime to ‘bribe’ the people and gain public support. The recession will exaggerate social misery forcing people to question the monarchy.

Small petro-dollar nations may transition into constitutional monarchies or republics. There is an absence of nationalism amongst most Arab people, but pan-Arabic pride is still influential. Most of these Arab states may cease to exist without their monarchy.

Potentially, the end of absolute monarchy in the Arab peninsula could hit the reset button with people reorganizing themselves into a new nation-state. A unified Arab nation may not survive as a unitary state due to tribalism so federation is a more feasible super-state structure.

The ability of monarchies to raise debt from capitalist states to pump prime and generate cash will be the only option to stem any revolt. Most Arabic monarchies will hesitate to curtail the wealth accumulation amongst its royal lineages to prevent internal coups.

Closer to home, the future of the petro-dollar state of Brunei remains a question. The debt free and tax free country has long survived exclusively on petroleum revenue. During the 2015 oil collapse, Brunei become the sole ASEAN country to suffer an economic recession.

Brunei has invoked its foreign reserve fund, the Brunei Investment Agency (BIA) to meet its revenue shortfall. Brunei has not fully replenished its reserve fund. This attempt to diversify its economy has had very minimal success.

Brunei has consistently faced budget deficits since 1988, which has drained the state’s financial capacity. Brunei will post a record budget deficit this year. However, it will not reduce any social spending to avoid any form social repercussion threatening the micro-state’s status quo.

Brunei is highly dependent on Malaysia for supplies, technical support and resources. Most Bruneian transhipment goods through Singapore originate from Malaysia. Any political repercussion in Brunei will become Malaysia’s affair as Brunei is enclaved within Malaysia.

Written by


Central Committee

Parti Sosialis Malaysia (PSM)

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