Syrian insurgents reach Damascus suburbs as residents flee or stock up on supplies

DUBAI: The debt problem is not one that only the US is facing — it is a world debt problem that China, Europe and many countries are confronting, according to Ray Dalio, founder of Bridgewater Associates.

During a session conducted by TV host, Tucker Carlson, at the World Governments Summit on Wednesday, Dalio said: “If you have that debt problem, you exacerbate the great conflict that’s going to happen. You create political instability. It’s a geopolitical problem.

“Climate is costly, roughly $8 trillion a year on climate, so it’s a financial thing, and now the question is this new technology and how are we going to handle that and how do we make the most to raise productivity or what is it used for. Is it used for conflict?” 

Carlson said: “You have run one of the biggest hedge funds in the world for a long time, and in order to do that you have had to think about the rest of the world in a systematic way … in doing that, you have developed this framework for understanding what’s happening now and what’s going to happen.”

Carlson then asked Dalio to discuss the five trends that he had looked at to consider what was going to happen next.

As a global macro investor for 50 years, the Bridgewater Associates’ founder said that he discovered that he needed to study history. By doing so, he observed five major forces that operate in a big cycle.

The first is that “we have a big debt issue globally, that is very important… that is a force, a financial force.” 

The second, he said, is the internal order and disorder force that goes in a cycle in which there “is greater and greater gaps and conflicts between the left and the right and populism that forces a great conflict like a civil war.

“I believe we are in a form of a civil war now, that’s going on within countries,” he said.

The third force is the great world power conflict that occurs “when a great power runs the world order and then there is a rising power that challenges that, you have a great power conflict: US-China.”

The fourth force is that throughout history, acts of nature — “droughts, floods and pandemics — have killed more people than wars and have toppled world orders more than anything else.”

The fifth big force is “man’s inventiveness, particularly of technology.”

Dalio said: “Everything that we talk about, everything that we are looking at, falls under one of those and they move in a largely cyclical way and that is the framework that we are now living out.”

Giving his sense of the scale of global debt, Dalio said that “it’s now unprecedented in all of history” and went on to explain how it worked, saying “there is a supply-demand situation.

“The way the debt cycle works is, think of credit, and our credit system as being like a circulatory system, that credit brings buying power, brings nutrients to all the system … but that credit that we buy things with, that we buy financial assets, goods and services with, creates debt.

“That debt accumulates like plaque in a system that begins to have a problem because it starts to squeeze out spending, for example the US budget, about a trillion dollars a year now goes to pay interest rates. Over the next year we are going to have over $9 trillion debt that we have to pay back and roll forward hopefully.”

So there is a supply demand issue with this debt, “one man’s debts are another man’s assets.” Dalio added: “if those assets don’t provide an adequate return, or they feel there is risk in those assets, there is not enough demand for that debt, there is a problem … that problem is that interest rates then start to rise, and those holders of the debt begin to realize there is a debt problem, and worse, on the supply and demand, that they have to sell debt.”

Dalio said that the US would run a deficit of about 7.5 percent of GDP “if the Trump tax cuts are continued,” which he expected.

“That deficit needs to be cut to 3 percent of GDP… all policymakers and the president should have a pledge to get it to 3 percent of GDP, because otherwise we are likely to have a problem,” he said.

PARIS: Western allies and Arab countries are gathering in Paris on Thursday for an international conference on Syria to discuss the country’s future after the fall of former Syrian president Bashar Assad and amid uncertainty over the United States’ commitment to the region.
It’s the third conference on Syria since Assad was ousted in December, and the first since President Donald Trump’s administration took over in the US.
Trump’s controversial decision to freeze foreign assistance has raised concerns in Syria, a country that had depended on hundreds of millions of dollars in aid from the US and now left in ruins by a civil war.
The Trump administration is pulling almost all USAID workers out of the field worldwide, all but ending a six-decade mission meant to shore up American security by fighting starvation, funding education and working to end epidemics.
While many Syrians were happy to see the rule of Assad come to an abrupt end in December, analysts have warned that the honeymoon period for the country’s new rulers may be short-lived if they are not able to jumpstart the country’s battered economy.
An end to the sanctions imposed during Assad’s time will be key to that, but sanctions are not the only issue.
Billions in aid needed
More aid is crucial to achieve a peaceful reconstruction during the post-Assad transition. The country needs massive investment to rebuild housing, electricity, water and transportation infrastructure after nearly 14 years of war. The United Nations in 2017 estimated that it would cost at least $250 billion, while some experts now say the number could reach at least $400 billion.
With few productive sectors and government employees making wages equivalent to about $20 per month, Syria has grown increasingly dependent on remittances and humanitarian aid. But the flow of aid was throttled after the Trump administration halted US foreign assistance last month.
The effects were particularly dire in the country’s northwest, a formerly rebel-held enclave that hosts millions of people displaced from other areas by the country’s civil war. Many of them live in sprawling tent camps.
The freeze on USAID funding forced clinics serving many of those camps to shut down, and nonprofits laid off local staff. In northeastern Syria, a camp housing thousands of family members of Islamic State fighters was thrown into chaos when the group providing services there was forced to briefly stop work.
A workshop bringing together key donors from the Group of Seven leading industrialized nations, the United Nations and key agencies from Arab countries will be held alongside the conference to coordinate international aid to Syria.
Doubts over US support
Uncertainty also surrounds the future of US military support in the region.
In 2019 during his first term, Trump decided on a partial withdrawal of US troops form the northeast of Syria before he halted the plans. And in December last year, when rebels were on their way to topple Assad, Trump said the United States should not ” dive into the middle of a Syrian civil war.”
Now that Syria’s new leader Ahmad Al-Sharaa is trying to consolidate his power, the USintentions in the region remain unclear.
A French diplomatic official confirmed the presence of a US representative at the conference, but said “our understanding is that the new US administration is still in the review process regarding Syria, it does not seem (the US position) will be clarified at that conference.” The official spoke anonymously in line with the French presidency’s customary practices.
The commander of the main US-backed force in Syria recently said that US troops should stay in Syria because the Daesh group will benefit from a withdrawal.
Since Damascus fell on Dec. 8 and Assad fled to Moscow, the new leadership has yet to lay out a clear vision of how the country will be governed.
The Islamic militant group Hayat Tahrir Al-Sham, or HTS – a former Al-Qaeda affiliate that the EU and UN consider to be a terrorist organization – has established itself as Syria’s de facto rulers after coordinating with the southern fighters during the offensive late last year.
French organizers said the three main goals of the meeting, which is not a pledging conference, are to coordinate efforts to support a peaceful transition, organize cooperation and aid from neighbors and partners, and to continue talks on the fight against impunity.
The conference takes place at ministerial level. Syria’s interim foreign minister Asaad Al-Shibani has been invited and it will be his first visit to Europe.
Speaking this week at the World Governments Summit in Dubai, United Arab Emirates, Al-Shibani underlined the new government in Damascus’ desire to improve relations with the West and get sanctions on Syria lifted so the country could start rebuilding after the ruinous, 14-year war.