The meteoric rise and success of Barack Obama, who seems set to become the next president of the United States, is indeed good news for the world as the fundamental changes being advocated are desperately needed to restore the international leadership stature of the USA. The economic and political "fault lines" nonetheless are now on the horizon.

First, the Democratic Party espouses certain policies that are not helpful to the small vulnerable economies of the Caribbean, as seen with the passage by Congress of the 2008 Farm Bill estimated to cost US$289 billion over five years. Domestic food aid along with foreign food aid account for US$200 billion and the balance of US$89 billion is for domestic subsidies, most of which will be trade-distorting.
This comes at a time when serious food shortages exist, the brunt of which is being borne by the developing nations and smaller economies in particular. This bill would surely cause the WTO Doha Development Round to stumble further and may ultimately collapse, unless improved concessions on agricultural subsidies by both the EU and US are forthcoming, which now appears to be only remotely possible.

It is reported that the US president's Trade Promotion Authority, essential to expedite passage of trade agreements through Congress, is not being renewed. Furthermore, with unemployment at an all-time high, the protection of US jobs is a primary consideration that is likely to spawn various impediments to free trade intended to keep jobs at home. These developments indicate a move to a protectionist posture that would impact worldwide exports to the US, and negotiations of new trade agreements while discouraging the further transfers of manufacturing activities abroad, as epitomised by the Ford Motor Company which recently relocated a plant to Mexico.

Another emerging "fault line" in the globalisation process is the astronomic rise in the cost of ocean freight prompted by the rapid escalation in the price of oil. This aspect was reviewed by David Jessop in the Sunday Gleaner of June 8 centred on a recent publication which included such critical observations as "the unprecedented impact of rising energy prices on the cost of ocean transport means that moving goods from one nation to another has become a bigger barrier to global trade than tariffs". It continues: "the effect of oil price rises on ocean transport is to undo the negotiated tariff reductions of the past 30 or more years. This challenge "will cause manufacturers worldwide to begin searching for low-wage locations within reasonable shipping distance of any market".

This latter observation has particular relevance for Jamaica situated about 500 miles from the US mainland, and with relative proximity to Canada which is about to negotiate a Free Trade Agreement with Caricom. It is likely that trade with Europe and the Far East would experience a deflection in favour of South and Central America, and with greater emphasis on the Caribbean.

In the Middle East, politically Israel has the potential to create twin "fault lines" by revealing it has the propensity to neutralise Iran's nuclear sites, if they become a greater threat by ignoring the United Nations directive to halt their uranium enrichment programme. An attack on Iran would likely ignite a regional confrontation that would almost certainly involve Syria and other Arab states together with an intensification of the Iraqi insurgency. Second, in the event of failure of the new peace initiative with Hamas, likely to be accompanied by an escalation of military incursions into Gaza, we could see Israel engaged on two fronts with Hamas and Hezbollah from Lebanon in support. Such a wide involvement of the region would cause a serious disruption of the world's oil supply.

The final "fault line", although others may appear over time, is the widening chasm between the US and Russia, characterised by strong rhetoric from Russia's leaders tinged with a military undertone. Vladimir Putin, when president, sternly warned the US not to erect their planned missile protective shield in the Czech Republic. The shield is perceived to be directed at Russia. Although Putin's warning was dismissed as diplomatic "sabre-rattling", it has been supported by his successor President Dmitry Medvedev.

After an interval of 18 years the West was treated to a reality check by the military exposition in Moscow that took place in May, by parading before the world the revitalised Red Army, complete with ballistic missiles. Again, this show of military might was belittled by Western observers as "outdated equipment, etc", indicating a significant underestimation of the potential for a resurgence of the Cold War if America carries out its planned missile shield, and if NATO forces eventually move into proximity of Russia's border by entering the Ukraine, which is another of Russia's concerns. If the political fissure widens between Russia and the US, which would also involve the EU, the process of globalisation could likely be derailed.

Earlier this month President Medvedev stated his current view of America as reported by the Associated Press: "Although Medvedev had not shown much of his predecessor Vladimir Putin's penchant for criticising the United States, his speech (St Petersburg International Economic Forum) showed he shares Putin's views of America as a power-hungry and sometimes irresponsible country intent on dominating world affairs."

If the Ukraine joins the EU and NATO forces move forward to Russia's border, and if Republican John McCain is elected US president, and proceeds to locate the missile shield in the Czech Republic, a Russian reaction can be expected.

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