The newest variant of the Coronavirus is taking much of the world by surprise. From its initial appearance to where it originated, world health experts and national governments appear to have been blindsided. Now, nations are scrambling to reestablish travel restrictions and set other measures in place to prevent the omicron variant from arriving inside their borders. With omicron having first appeared in South Africa, several nations are banning or restricting travel to and from southern Africa. Israel is going a step farther and closing its border completely to foreigners. Despite the surge in precautions and restrictions, the omicron variant is already cropping up in Europe. Most experts seem to feel it will only be a matter of time before the new variant reaches other parts of the globe.
On Friday, financial markets finished the day in negative territory, largely in response to omicron. Whether or not the slide continues this week will depend on how effective the travel restrictions are, as well as the number of cases worldwide and over time, how well the current crop of vaccines handles the new variant. The impact that omicron has on supply chain issues and other international concerns will also play a part in how global economies respond to the new variant.
As a side note, I hope everyone had an enjoyable Thanksgiving holiday. We’re officially in the Holiday Season now and Christmas is less than a month away. Where does the time go? 😊
The Chinese government is advising its citizens to maintain adequate stocks of basic necessities on hand as the winter season approaches. The Ministry of Commerce released the advisory on Monday, 1 November and it was not long before many Chinese social media users were playing the speculation game. The latest COVID-19 outbreaks and unusually heavy rainfall amounts have sparked concerns about a looming supply shortage. Some social media users believe the rising tensions with Taiwan are the reason for the advisory. There have been reports of panic buying as well, with rice, cooking oil and salt being the main products sought, and wisely so. Chinese media outlets have also published a list of recommended goods to store including instant noodles, vitamins, flashlights and a battery-powered radio. The alarm brought on by the advisory prompted state media to step in and attempt to calm the growing concerns. Economic Daily, a Communist Party-backed newspaper, told citizens on its website that the advisory’s purpose was to make certain people were prepared in the event of another COVID lockdown. Local authorities are being encouraged to make certain supply and prices remain stable through the coming winter months.
Speculation aside, there’s no doubt that China’s domestic supply problems run deeper than Beijing is willing to let on. Earlier bouts of extreme weather have driven concerns about food supplies. Shandong, the nation’s largest vegetable producing region, has suffered heavy flooding in September and October. Prices for some vegetables grown in this area have doubled in recent weeks. Then there are China’s continuing energy issues, which are far from being alleviated. A combination of high energy and rising food prices runs a risk of creating a storm of domestic unrest. Beijing is eager to avoid this scenario from becoming a reality for obvious reason.
Shortages in the United Kingdom are providing plentiful ammunition for many critics with an axe to grind. Brexit opponents were quick to lay the blame directly upon Great Britain’s departure from the European Union. Anti-Globalization activists have pointed out the dangerous vulnerability of Just-In-Time supply chains. Then there is COVID-19 where we are seeing the anti-vax and pro-mandate camps slinging blame for the shortages at each other.
The fact of the matter is we’re in a perfect storm of conditions and circumstances at present. COVID restrictions and mandates, post-Brexit teething issues and supply chain disruptions in other parts of the world have combined and brought chaos to the United Kingdom and other nations. It will be some time before normal conditions return. Even though the UK is receiving the lion’s share of media attention for its fuel and food shortages it is not the only one dealing with shortages. In the United States, most major ports are dealing with extreme congestion. Dozens of merchant vessels sit at anchor off places like Long Beach, Elizabeth, and Dundalk, waiting for extended periods of time to enter and unload. This has resulted in a growing number of shortages across a wide range of sectors in the US. Panic buying has exacerbated the situation as well.
Under normal conditions, Just-In-Time supply chains work efficiently. In short, JIT is an inventory management strategy designed to guarantee fast order fulfillment. Production starts only when an order is placed, and inventory stock shipped out as needed. The onset of the pandemic changed the dynamic markedly. Restrictions, shutdowns, and a growing shortage of workers has plagued Asia where much of the manufacturing is done. This was Patient Zero for the current disruptions, for lack of a better term.
Modern supply chains were neither designed or intended to weather a storm of conditions like the one we are seeing. Supply chains were not built for this. Their vulnerabilities have now been made abundantly clear and systematic changes are most certainly on the horizon. Before that time arrives, though, the current storm needs to be handled.
In the 21st Century, North Korea has demonstrated an almost uncanny ability to always land on its feet no matter the challenge faced. This has especially held true since 2011 and the death of Kim Jong Il. The ascension of his son Kim Jong Un to the position of Dear Respected Leader led to a wave of warnings from analysts and observers around the world forecasting an imminent collapse of North Korea ‘in the near future.’ These predictions have become commonplace ever since, popping to the surface in the wake of North Korean nuclear tests or reports of worsening conditions inside of the country. It’s fair to say the North, and Kim have dodged a number of bullets over the last ten years. To the point where it would appear North Korea has nine lives. Saber rattling, economic downturns, food shortages and political crises have been cited as events which could lead to a collapse. The North has weathered all of these at one point or another, sometimes in rapid secession.
There are multiple entrants from that pool of crises in play at the present time, creating an unprecedented, ambiguous dynamic. As well as a new one: Global pandemic. Despite official claims coming out of Pyongyang, COVID-19 did land in North Korea at some point. The spread of cases in the past year, and the course of action taken by the North Korean government to combat it has certainly led to a more unpredictable situation for the hermit kingdom. COVID forced lockdowns and borders to be closed, which led to an increase in economic hardship and food shortages. Continued UN sanctions have also played a role, as has the rash of typhoons the North has experienced in the past two years. The end result has been a North Korea sagging deeper into crisis.
As a rule, North Korean leaders never openly reveal hints about problems the nation is dealing with unless the situation is approaching dire status. Thrice this year, Kim has spoken publicly about the situation in the North, even going as far as making comparisons to conditions in the late 1990s at the height of the North Korean Famine. Naturally, this has brought about questions and concerns about how bad conditions in the North are and might become in the near future. Regional analysts are attempting to downplay the crisis North Korea is facing, pointing out that conditions are not as bad as in the 1990s and predicting China will do what is necessary economically to keep the country afloat and stable. In fact, China and North Korea are expected to resume cargo train service later this month. A positive development to be certain, but one that might not become reality at all, or if it does, may not have the impact anticipated.
So, this is the situation facing North Korea at present. Certainly enough to bring on a national collapse under certain circumstances. While the North has an admirable track record when it comes to getting itself out of tight spots, nothing lasts forever. Eventually, Kim and company will find itself in a position it cannot extricate itself from. That could occur in the next month, or years down the line. The point of this month’s project is to examine how a North Korean collapse can come about in the near future. In the next project entry next weekend, we’ll discuss why a North Korean collapse is considered a nightmare scenario by so many. Specific collapse scenarios will also be discussed briefly and then in depth later in August.
As North Korea celebrates Victory Day, the 68th anniversary of the Korean War, its leader Kim Jong Il appears to be girding the nation, as well as the rest of the world indirectly, for what might lay ahead. At an address made before thousands of North Korean citizens Kim compared the global pandemic’s effect on the country to what it experienced during the war years of the early 1950s. “We are faced with difficulties and hardship caused by the unprecedented global health crisis and prolonged lockdown no less challenging than how it was during the war.” He then went on to assure the populace that the future will bring better days. “Just like the generation of victors… our generation will continue this beautiful tradition and turn this difficult decisive period into an even greater new victory.”
In recent months, Kim Jong Un has not shied away from pointing out the urgency of the current situation for North Korea. As was the case yesterday, he has used his speeches to acknowledge the situation in his country. Part of this has stemmed from a desire to prepare the populace for more stringent times ahead. Along with this, Kim is also attempting to warn the world that without the suspension of economic sanctions North Korea faces a tumultuous future which could hold ramifications for the rest of the world.
South Korea has recognized the writing on the wall and extended an olive branch to Pyongyang. On Tuesday, Seoul announced that the Koreas have agreed to restore inter-Korea communications channels as the first step towards improving relations. Observers believe the North is also maneuvering to use the move as a stepping-stone to obtain aid to deal with COVID-19. In the past, the South Korea has expressed a willingness to provide vaccines to North Korea if requested. No such request has come from Pyongyang yet. However, with Kim likening current conditions in his country to what they were at the height of the Korean War, it might only be a matter of time before he reaches out.