Middle East conflict adding uncertainty to trade tensions

Euronews

5 hours ago

The conflict in the Middle East will further worsen the global economic outlook, already strained by ongoing trade disputes, the managing director of the International Monetary Fund (FMI) has told Euronews in an interview.
'Being hit by a trade war has consequences. We have projected a decline in global growth by half a percentage point,' Kristalina Georgieva said, adding: 'What we witness now is more turbulence in the Middle East, which adds to uncertainty and therefore is bad for business.'
Since Donald Trump's return to power as leader of the world's largest economy, international trade has been disrupted by a wave of tariffs imposed by the US administration on its global partners.
Mexico and Canada were the initial targets, followed by a prolonged standoff between the US and China, which saw reciprocal tariffs between the pair soar to more than 100%.
On 2 April— a day he dubbed "Liberation Day"—Trump imposed tariffs on a wide range of countries, including the EU. He then declared a 90-day truce, set to expire on 9 July.
Negotiations are currently underway with the EU, which currently faces tariffs of 50% on steel and aluminum, 25% on cars, and 10% on all its exports to the US.
However, the director of the IMF, which is responsible for financial stability across the world and facilitate global trade, admitted that 'the global economy has proven to be remarkably resilient to shocks, and that resilience continues.'
In her view, economic uncertainty is becoming the new normal.
'We live in a more shock-prone world, a world of higher uncertainty,' Georgieva said, adding: 'For this world, countries need to work hard to be more resilient. Do reforms at home that would make your economies stronger.'
Georgieva, a former vice-president of the European Commission, also expressed optimism with the economic outlook despite the bleak growth figures.
She considered that the recent trade agreement between China and the US and the deal Trump has brokered with the UK to be good signs, saying: 'We are in a better place.'
In an uncertain context, she also sees opportunities to be seized—an outlook shared by the European Commission, which is pursuing a strategy of diversifying its trading partners by expanding the number of trade agreements worldwide.
'In Europe, we see an increase in bilateral and plurilateral agreements, which I expect to be a big feature of the future of trade globally,' she told Euronews, adding that it is a great moment for Europe, 'a defender of rules-based' global trade exchanges.
Exiled Belarus opposition leader Sviatlana Tsikhanouskaya told Euronews that President Aliaksandr Lukashenka "cannot be trusted at all", following a report of a planned meeting in Minsk between him and the Trump administration's Ukraine envoy.
Keith Kellogg, a longtime advisor to US President Donald Trump, is planning to travel to Belarus this week to meet Lukashenka, Reuters reported on Tuesday, citing four sources.
Kellogg has said privately that the trip could help kickstart peace talks aimed at ending Russia's full-scale invasion of Ukraine, according to two of the sources.
Two rounds of direct talks between Moscow and Kyiv failed to make progress on ending the war, now in its fourth year.
However, Tsikhanouskaya said on Wednesday that Belarus was not a place for negotiations because Lukashenka "is part of this war".
Lukashenka is a key ally of Russian President Vladimir Putin and allowed him to stage part of his full-scale invasion of Ukraine in February 2022 from Belarus.
"He's a co-aggressor and he's serving Putin's interest, and he cannot be trusted at all," Tsikhanouskaya told Euronews.
Tsikhanouskaya described Russia's war in Ukraine as a blessing for Lukashenka and that he did not want it to stop.
"(The government) is producing a huge amount of stuff for Russian army, and in this atmosphere of sanctions against Lukashenka's regime, it's a good source of income for him," she added.
"So he's not interested in peace. He maybe wants to be important in this deal, but he's not an independent actor here."
The West has imposed sanctions on Belarus over its support for Russia's war in Ukraine as well as presidential elections in August 2020 and January this year that were widely rejected by Western governments and derided as sham polls.
Lukashenka is Europe's longest-serving ruler, having continuously governed the former Soviet republic for 31 years.
Tsikhanouskaya ran against Lukashenka in the 2020 vote, and was forced to leave the nation shortly afterwards. Along with many international observers, she accused him of stealing victory from her by resorting to large-scale vote-rigging.
Minsk and Moscow have both dismissed such accusations and Western criticism of the elections overall.
In early 2020, during Trump's first term, Secretary of State Mike Pompeo became the highest-ranking official from Washington to visit Belarus in more than two decades.
However, relations between Minsk and Washington soured after Joe Biden became US president in 2021, and the US suspended operations at its embassy in Minsk in February 2022 following Russia's invasion of Ukraine.
This year, during Trump's second term, it appears that the US is attempting to improve ties with Belarus once more.
In February, US officials visited Belarus to retrieve three political prisoners, according to a report in the New York Times.
And in April, Belarus released Youras Ziankovich, a US citizen who had been jailed on allegations of plotting to assassinate the country's authoritarian leader. His supporters and Washington had called the charges bogus.
Separately, the EU's foreign policy chief warned on Wednesday that Russia poses a direct threat to the European Union and said its massive defence spending shows that the Kremlin has a "long-term plan for long-term aggression".
In an earlier interview with Euronews last week, Tsikhanouskaya said that the large-scale joint military exercises between Russia and Belarus taking place in the autumn might be a threat to NATO's eastern flank.
"Don't forget the last military drills in Belarus ended with the attack on Ukraine", she told Euronews last week, referring to the upcoming Zapad 2025 manoeuvres.