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tv   Counting the Cost  Al Jazeera  March 22, 2022 8:30am-9:01am AST

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further into the continent and that's when we start observing that freakishly larger, 40 degree temperature anomaly. and these events do fit into a broader patter and extreme events that we didn't think were possible. and so they, well just happens, especially in the case of the antarctic. this was something that kind of changes the way we think of the sort of climate. now our human history of observing whether it's artic is limited. so it's difficult to say whether this is a sign of things to come, or just a rather freakish events that just will be very interesting for a sciences to study. going into the future. ah, this is edge, the, let's get around now the top stories. russia says, the shopping mall, it struck in ukraine's capital was being used to store and launch rockets. at least a people were killed in the strike on monday. the city now under another curfew. as
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it fears more shelling the russian troops of fire warning shots and gas of protest this in some it was the 1st major city to come under. russian control, ukraine's president has hailed the courage of those in the crowns. what demons landscape has a meeting with russia's letting me put in is necessary to end the war. and he's ready to compromise with russia, but says any deal would have to go through a referendum, would use them. they've been diagnosed warranty, bas picky. we're talking about constitutional changes, changes to ukrainian law or whatever happens. this will not be decided only by the president. it's a long process which will be decided by the parliament and by the ukrainian nation . i have not met with the russian negotiators, but explained to her negotiators at the talks that when one is talking about changes and these changes are of historic importance,
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there is no other way around it. we will have to hold a referendum, putting the head of the red cross is going to moscow after a recent 5 day trip to ukraine. peter morris says he'll re several issues with russian officials, including prisoners of war and the conduct of hostilities. european union officials are considering imposing tough a sanctions on russia. the foreign policy chief, as accused russia of committed war crimes in ukraine's besieged city of matthew paul, president joe biden is warning american companies. russia is considering launching cyber attacks against critical infrastructure targets by this top cybersecurity aid to some u. s. companies have ignored repeated warnings to boost their online security. those all the headlines right now it's counting the cost. oh, man has a rich history, but also plays an important role in the gulf region today. out there well
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discovered that empire stretch from the radiant peninsula to east africa, built on great power. the problem that existed in the gulf was piracy. tribes was rebellion, empire, and colonization, oman, history, power and influence on al jazeera. i lose . hello, i'm sammy, is a dan. this is counting the cost analysis era. go look at the world of business and economics this week. the war in ukraine could severely impact the global economy, and the i m. f also warn the consequences could be last thing, so which countries the most at risk, the world heading into
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a new financial crisis. also this week cut off from the international financial system. russia has turned the chinese, the want to survive sanction could other governments shift away from the us dollar? this the greenback dominant in danger. crypto currency purchases in roubles have been rising and governments of worried russia could evade thank change. using virtual point, though, is unregulated money, really a fake for russians financial. why don't the war in ukraine is obviously hurting the economies of russia and its neighbor with both countries expected to experience shop with sessions this year. but the economic consequences of the war not only be felt by parties to the conflicts sweeping sanctions imposed on moscow and the soaring price of energy supplies obey could inflict pain on all the nations to. that's all of course,
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while the world economy is still recovering from that current, a virus pandemic, the international monetary fund says the war could have a severe impact on the global economy. it expects the cottage growth full cost globally. the i m f is also reduced its estimated global growth rate for 2022 to 4.4 percent in january. that's down from 4.9 percent last year. the most serious threat to the world economy is soaring, inflation, which is already at levels that haven't been seen in decades. well, that's mainly driven by the sharp rise in commodities and food prices. europe, with its heavy dependence on russian energy could be particularly hit. the ukraine war is expected to reduce your zone economic growth by as much as 2 percentage points. consumer prices in the 19 countries that use the euro zone currency hit record highs for 4 months in a row, reaching 5.8 percent in february. while the us is also at risk,
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it is expected to out perform european countries. and the conflict is also putting a fresh strain on that overs stretched global supply chain pushing up the prices of many metals. both russia and ukraine export large amounts of steel, palladium, platinum, and nickel among others. some common cause of idle factories due to a lack of components and it is poor and developing nations that could suffer the most among the challenges ahead of trade shocks, a reduction in remittances, and financial instability. but food security could be the most imminent threat. russia and ukraine are both main exporters of weights and parts of africa and the middle east could suffer severe shortages. well, to discuss all of this now i'm joined from new castle in the u. k. by klaus the stephan is the chief. you're as an economist with pantheon macroeconomics,
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good to have you with us. so many experts now comparing the current situation to the $900.00 seventy's energy crisis to the come out. so the lehman brothers, do you see any of those similarities? well, i mean, if we're very lucky, it could be a combination of both, right? because you have the specter for russian default that could be like li men and you certainly have the, the 1970 style supply side driven inflation. i mean, at the moment i'd say we're more sort of towards the 900 seventies in the way that, you know, demanding the economy strong. and then we've had pretty much since cobit hit, we've had a string of supply side shops in the economy. the worn ukraine is now an additional supply shock rusher is one of the biggest, if not the biggest commodity corner in the world. so, but i mean, you can't, you just said, if i'm lucky, this could be both. that's huge. all we on the verge of another major global
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financial crisis, that's not our baseline, but certainly we are now dealing with events where things can get out of hand. very quickly and where i think no one knows exactly what the ramifications will be. right. so a russian servant. busy default could, could obviously send other markets in a tailspin, we already have stressed financial markets. so we're certainly now in the, in a, in a, in a rather precarious situation. obviously, policies being tightened, although again, that could change. but at the moment, you know, policy support has been withdrawn because of high inflation. so we have a downside risk to growth. inflation is very high, which constrains policymakers at least in the near term. so yeah, now suddenly the risk of something adverse happening is suddenly rising. i would say, you mentioned inflation, then the i m f is expected to reduce its full costs. are we heading towards the perfect scenario for stagflation or we are in speculation now, i think, i mean,
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if you look at for costs in general over the last 3 months, and i would say this is going to continue for the next 3 months. also with reference to your comment now and i'm f inflation forecast will be ratcheted up because as you, as we economist start to factor in and quantify what, what the increasing commodity prices mean for inflation over the next sort of 6 months. if you will. inflation forecasts will have to go up, but growth forecasts will have to go down. so again, whether we're. a selling into a global recession, we don't think that so of course that's probably sort of miles deflation. but in so far as goes. busy the idea that inflation is growing up or growth is slowing. and you know, that's what's happening and you know, that is that felician, why was huge, will that mean for less developed countries for countries which are already struggling, jordan lebanon to new z. i mean, countries which subsidize the basics of life, like electricity prices and so on. how they deal with this challenge. while
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economies like that are in a very tight spot now because they will be hit very hard by the kind of inflation we're seeing now. and food prices basic commodities, whereas it developed economy. so a little bit more shield towards that a because they're richer but, but also because their consumer price indices are not sensitive to towards these kinds of, of price increases. so i would say that, you know, we do know them the consequences of effectively if you will, shutting the russian economy in this case, out of the global economy. and the ramifications that have on, on different commodity most in an environment where it commodities and inflation already was kind of holding out. yeah. that could have quite significant consequences for, for some of the economy. you mentioned there was lead to lots of depend on, on, on, on imported goods in some from stuff. of course, the economy also produce a lot of their own stuff. but again, some of them are still dependent on, on inputs. what about china?
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china is gross full costs, so going down it costs the least of energy going up. how's this going to impact shooting pings, policies, while thing for china as a sort of a balance? the situation are politically, of course, they will feel that the extent to which there is now a winding rift between the east and west. they feel that they might, will be able to, to become sort of a center point and in the east than in the eastern part of this they will trial because to, to politically exploit that situation. but economically, yeah, i mean, chinese growth is already on the pressure. they have a huge issue and the problem 2nd, which is affecting large parts of their economy at the moment. and so in that context, the fact that global growth now seems to be to, to be slowing in the context of, of, of an inflationary shock. and, and withdrawal of support in general. that's certainly not a favor, certainly not a benefit for china. but generally, in terms of the sort of view politics, i think maybe, you know, china will feel that they have opportunity to, to, to, to make, make a few points. you mentioned developing, you mentioned,
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developed countries a moment ago as talk about europe, the continent risking recession right now. guess they, it is. i mean that again, we don't think years will fall recession, but we suddenly we recently found their full cross for the 2nd half the year reflecting high inflation, a hit to real incomes, less monetary policy support as the suddenly that's a risk. i mean, i would say that the, the upside in years when is the fiscal support, governments are asked to. busy covered in particular where of course they've helped the economy a lot. i think that will be quicker to, to rush to support economy here. you know, i think we will see direct subsidies for especially low income households in the context of, of protecting them from, from higher energy prices. i think we'll see big investments front lower than defense spending, which also, you know, has a suits that also boost u. p. growth in short term, we'll see big investments in energy infrastructure, which also could be front loaded. so i think the private sector suddenly now will
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probably face lower, have to grow at a slower pace because inflation cindy is going to sap some of that and momentum. but i think governments are going to try to offset that. of course that's just going to give any more just gonna push even more on inflation in some sense. you know, if there's one thing i'm certain about is that inflation will continue go higher. everything else is sort of a little bit uncertain. what about the us? we can't talk, we can't not talk about the world's largest economy. how resilient is the u. s. economy through all of this? some say, well it would take all price is going north of $200.00 a bow before the u. s. is pulled into refreshing. what do you think? while that's the good news, we think the us economy is relatively silly into this. you know, consumers have bots are stored up savings their little bit further away from, from, from the situation in europe in general. so yes, they will import, obviously inflation by higher energy prices. but also remember, this is a really, really important point. the u. s. economy is different now because the u. s. economy has a big oil producing such itself by shale,
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which means that as all prices go up, yes, it affects the u. s. consumer negatively, but they have a lot of savings, but it also boosts and energy cap. so this old story in which, you know, all prices go up and that immediately his us growth is not necessarily the same anymore. we think that, you know, there, there could be even be a positive correlation between high oil prices and capex, investment and growth in the u. s. because you'll see all production spot pick up. so the u. s. is resilient, that's very good news for the global economy. because obviously that will become, i mean, if the u. s. economy does well, you know that already there means that the global economy is on a relatively decent footing, even if you have witness elsewhere. all right, thanks so much for good talking to you. thank you for talking. the sanctions imposed by the west on russia are reviving an old debate home by the countries should hold dollar base central bank reserves. if the, the worry is they may lose access to those reserves when they need them,
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the most favorable fall of the west, the russian government has been at risk of defaulting on its debt. now, because moscow doesn't have the money, actually, it does, but it can't access almost half its foreign reserves, which have been frozen by western capital. russia says it's made $117000000.00 in interest payments. it owes to investors. but the money could be blocked by the u . s. the russian finance ministry says the nation would try to pay in roubles if this happens. moscow has a 30 day grace period in which the government should pay up. if it doesn't, that would constitute a default. it would be the 1st time the country failed to meet its financial obligation since the $917.00 bolshevik revolution. while russian banks and firms are increasingly turning to china's currency, the won as they faced isolation from the west land v t. b, bank is offering
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a chinese currency savings account with a maximum interest rate of 8 percent. others are also looking to start using china's union pay system for credit cards off the visa, mastercard suspended operations in russia. the dollar has been the world's reserve currency since the bretton woods agreements. in 1944, russia held $100000000000.00 or 16 percent of its foreign reserves in us dollars. as of june 2021. another 32 percent was held in euro's and the country's been trying to reduce its holdings of us dollar denominated assets. in recent years, it sold off all of its us treasuries. in 2018. moscow also held over a $120000000000.00 worth of gold mold and its actual dollar denominated holdings. the commodity is effectively its primary holding, given the loss of access to dollars in euro's. the u on is the world's 5th largest
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reserve currency. central banks held at least $319000000000.00 us dollars worth of you on reserves. in the 3rd quarter of 2021. some economists say there's an effort on the way to build an alternative financial system to that dominated by the us. they say that you are together with golden crypto currencies are likely to gain market share at the expense of western currencies. well, to discuss this, i'm joined now by timothy ash. he's a senior emerging market sovereign strength just that blue by asset management joins us now from london. good. heavy with also has the one become rushes new dollars. it becoming rushes new door. i don't buy i think what's interesting about this crisis is the unwillingness of, of the chinese to bankroll russia and to kind of help the russian circumvent sanctions. and we've seen that kind of across the board. i mean, you know,
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lots of criticism of sanctions from the west and there in effectiveness. but actually the financial sanctions that have been lobbied sofa and the energy is not really been sanctioned. it's quite incredible that companies just do not want to transact with russia, including for energy because of the financial sanctions. the bottom line is the dollar is still king. alright, but regardless of how willing the chinese are on not, is this trust global disc destruct growing in the us dollar. because russia is not the 1st country that's been deprived access to its assets. we have, we've had iran, north korea, the tati bomb and so on. i don't think so. i mean, you know, what's again notable is ofac the us treasury in the western sanctions machine is just so so powerful that what this shows is you may, you may find alternative ways to transact, but in the end, western sanctions will find you in all these companies the chinese bank,
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et cetera. the desperate to avoid been caught in secondary sanctions. so even if there are these alternative payment mechanisms, you know, the ofac will find you eventually you will be hit by the secondary sanction. so it doesn't really solve the underlying problem that you, you, evident to library sanction because of its bad behavior. ofac is going after you and companies simply do not want to be caught in the fiery line of oh fuck, maybe we should focus a little bit now. on the sanctions and just how unprecedented all the sanctions now in russia, but think failing its reserves, its foreign currency reserve. well, pretty remarkable. i mean, you know, no one expected the c, b, r to be sanction central bank. it's kind of unheard of, you know, when it came so quickly, i mean, i remember the week, you know, that week there was a research paper i think on the wednesday or thursday, highlighting that this was an option. those intense negotiate or intense discretions, i know on the saturday in washington around it. and then it was done on the sunday . i mean, utterly remarkable,
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but devastating for russia. russia thought it was in this, this untouchable position with 640000000000 of f x resist. it could withstand anything, the west through it and then then oh fuck you know, dropped the bombshell sanctioning the cb, our reserves and it put a huge weight of those reserves beyond their reach that got gold, i guess in, in the vaults. they've got physical cash. there are obviously some, some swap lines with the chinese, but if the chinese, i think, are reluctant really to help them out very much again, this idea, you know, they don't want to be caught in secondary sanctions for helping out russia. so, you know, it's put, rush really incredibly difficult place on the bridge. brink of default, the financial markets of all totally collapse. it's extraordinary. you know, 95 percent loss in, in value across the board, equities bombs, and the currencies come under massive, precious russians because of these sanctions are a lot poorer today than they were a month and
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a half ago because the putins actions and notable i think there is they did not expected the throne as generally reduced exposure to russia. the biggest holders of russian assets are since himself. they believed the rhetoric. but despite that, despite the unprecedented nature of targeting a central bank, as you just explain for us, you don't think you don't agree with those analysts say this could be a turning point. this could be the birth of a new monetary order. i don't think so. you know, i mean, what are russians dashing for? what does the guy, what does the guy in the street moscow want to get his hands on? it doesn't want to get his hands on the wire. or, you know, he wants to get his hands on dollars. you know, the so come maybe quit co counsel vegetable currencies use of currencies shot up on february 24th. well maybe, but you know, it's hard still to, to track transact and in anything you know significant with crypt so and i think oh
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fuck is coming up the crypt. so in the crypt, so he's going to be used to break sanctions crit, so we'll feel the weights of western financial sanctions as well. all right. what about gold? you mentioned gold. there was the possibility that the russian ruble becomes, well, even at least the facto backed by gold now, well, you know, it doesn't really, it doesn't result the underlying problem that even if you come transact, even if it's legal to transact with russia and trade with russia, people do not want to, people do not want to take the ethical risk of transacting with, with coatings, russia because of what is done in ukraine. i think good talking to you. thanks so much timothy. my pleasure. as another asset seen as an alternative medium of international exchange to the dollar is crypto currency. many governments are worried, the digital coin could provide a hidden brute for sanction russians to preserve their wealth, the virtual moneys unregulated, and it bypasses the international banking system,
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which of course is key to enforcing those sanctions. and the exchanges have come under pressure to address violation sons. they've resisted several calls to block russian uses as a whole ad are not yet legally obliged to do so. however, the major crypto currency exchange is like buying that say they will comply with sanctions and abide by the law. but there are thousands of smaller, less strict exchanges, which could step in and allow the transactions, the crypto currency research firm chi co says the average trade sizes bitcoin ruble transaction hit a 10 month high on february 24th in russia invaded ukraine. it's estimated more than 17000000 russians, all 12 percent of the population invest in crypto currency. russia ranked 18 this worldwide in terms of crypto currency adoption. it had the 3rd largest share of
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overseas transfers after turkey and ukraine. russian entities that are under sanctions have been accused of using ransomware attacks for revenues. the block chain tracking firms analysis says around 74 percent of that income, all $400000000.00 went to entities that could be affiliated with russia last year. for joining me now is kind of part of the chief investment officer at credit link dot a. i an artificial intelligence enabled credit asset management company. she joins me from singapore. good, happy with her. so kyra can crypto cards to provide an alternative to the u. s. dollar, do you think at this point, the centralized crypto currency definitely to want to not provide an opportunity for us. daughter, you are sorry, still backed by the world's most largest and powerful economy, as well as the trade and financial flows. crypto does not provide such backing at this point. having said that,
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a digitalized currencies and perhaps via that like keep though could replace usd to some extent and we had seen them some tests already rolled out in china. we're by the p. b, o is see, has a huge digitalized un that has been ejected into digital. well, that's the use case for such money. could make sense in the event of natural disaster or even with the current ukrainian prices. or can it go any distance in helping countries like russia to evade sanctions? i think it's difficult to use quick till to rain sanctions, because if a look at the size of fresh air economies forente by 1.7 trillion, whereas the entire market capitalization of group though, is 1.8 trillion. so crystal does not have the capacity or the death to allow russia to evade sanctions. and, or maybe maybe not all the sanctions. can it be helpful? i mean, august, as you pointed out, the volume does simply doesn't cover all of russia's needs, but can it go some length? to some extent, i would say yes. and if we look at righteous decision to allow crypto transactions
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earlier this year, although there was a lot of debate around pending crypt though, we could insinuate that perhaps that decision was influenced by the ukrainian nation. and we can't rule out. maybe there was some sort of tip of the only gar, closer boots in that, and you may want to move some of your assets to keep the markets. what can government stew to is for activities with crypto currency they considered to be illegal. it's a bit tricky to monitor. i mean, of course, governments can deal what they always do, which is imposed more regulation b in the form of transaction reporting or transaction, or a taxation or even straight outstanding. but generally, the marketplace as we're crypto is trade that are already regulated one way or the other. meaning that those marketplaces operate in heavy li, regulated jurisdiction such as the u. s. or the u. and the end points are regulates as meaning. if you want to do crypto transactions, you have to use a major currency such as the euro, or the u. s. the against it. or we saw
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a huge optic in crypto transactions on february, the 24th from russia. what are people using it for? if, as you said, there is, it's kind of limited in terms of how far it can go to help with sanctions evasion. i think we could be seeing the 1st real use case for crypto with this side, ukrainian crisis as a lot of individuals, as the less entities are moving some of their money and some of their assets into crypto. so crypto could be proved to be a store of wealth at this point in time, although we can't really do any actual transactions equip doyle. so this could trigger individuals just average savers increasingly looking towards crypto currency, not just sanctioned oligarchs. i would say so and looking at the comments coming from, let's say coin based in some of the other markets. sh. they have said pretty, pretty straightforward be they are not going to pan russian individuals doing
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transactions on their markets because they feel they can't penalize individuals and others agree with that. but having said that, limited access to the end points, let's say the dollar and the euro definitely puts a bit of hold on entering crypto for regular russians or it's been great talking to you. thanks so much kyle. thank you so much. that's our show for this week, but remember, you can get in touch with bounced fire twitter, use the hash tag a j, c c. when you do or drop us in a mouth, county, the cost to down to 0 dot net. it's our address is more for you on line of al jazeera dot com slash c t. c. take you straight to on page, which has individual reports, links, and entire episodes for you to catch up on. that's it for this division of counting the cost. i'm sammy's a ban from the whole team here. thanks for joining us. the news and al jazeera is next
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from the al jazeera london broadcast center to people in thoughtful conversation. prestige is all about trying to get a superior reputation, unprompted uninterrupted, where we find the most profound similarity is not actually in our classes living relative, but it's a much more distant connection. part one of right who will fool and psychologist nick la, honey, they're going to be a corporate species because it, he beat each other up and threaten each other on the side studio be unscripted on elvis era. water scarcity has become a major global issue. the demand is going straight up and the supply is going straight down, turning an essential natural resource into a commodity traded for profit. just because it's life doesn't mean it cannot be priced. what about the guy that can't afford it? that guy told me it's water. al jazeera examines the social, financial, and environmental impact of water, privatization notes of water on al jazeera ah
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al jazeera with no i'm rob matheson and doha, the top stories on the al jazeera ukrainian president vladimir zalinski. he says his forces will not lay down arms and cities devastated by bombardment and the capital key. at least 8 people have been killed. auto shopping mall was destroyed in a missile strike rob with bright reports. this was the moment the war came to a shopping center and it keeps suburb and turned it into a smouldering ruin. instantly, with a multiplex theater, fitness club stores and fast food restaurants. it was a big, droll for surrounding apart.


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