Geopolitical tensions are high, putting global economy at risk, UN Secretary-General says

Geopolitical tensions are high, putting global economy at risk, UN Secretary-General says

The state of global geopolitical tensions is high, and this is having an impact on the global economy, Antonio Guterres, Secretary-General of the United Nations, told CNBC’s Sara Eisen on “Squawk on the Street” from the World Economic Forum at Davos on Thursday, CNBC reports.

“It’s the highest I have seen since taking office at the UN,” the Secretary-General said, noting there are a confluence of factors at play. These include the U.S.-Iran conflict, terrorism, cyberthreats and the dysfunction between the world’s main superpowers.

Recently, “We were on the verge of war in the Middle East,” he said, referring to the U.S.-Iran conflict. Tensions in the region escalated in early January after Iran’s top military general, Qasem Soleimani, was killed in Baghdad by an American airstrike. Tehran retaliated by firing ballistic missiles at U.S. targets in Iraq, but both parties appear to have stepped back from further military actions.

“You can imagine the dramatic consequences this would have had in the region — and for the global economy if this escalated,” Guterres said. “Now it’s important to create a platform for discussions between both countries to avoid another incident.”

Already, European countries have announced that they are going to bring a formal complaint to the UN Security Council that Iran has violated the nuclear deal, which could trigger more sanctions, he said.

“At the same time, we have a dysfunctional relationship among the world’s three greatest powers, which makes it more difficult to find a quick solution to crises that are popping up all over the world — in Afghanistan, Libya, Syria, Yemen and other areas in Africa,” the UN Secretary noted.

He said terrorism is progressing and the risk of nuclear proliferation is rising. “We live in a difficult period where geopolitical tensions are also having an impact on the economy because they generate trade tensions,” Guterres said.

But he is a bit more optimistic with the signing of the Phase One trade deal between the U.S. and China. The deal takes steps to root out several practices that irked the White House and bipartisan members of Congress, including intellectual property theft and forced technology transfers, in exchange for Chinese market access, according to text released by the White House. It also details a $200 billion increase in Chinese purchases of U.S. goods over two years — a priority for Trump.

“It’s a good first step, but the problem is not solved,” the UN Secretary-General said.