INDOWORK.ID, JAKARTA: I quote Emmanuel Macron’s statement. “In a spirit of great friendship, we will say to our American and Norwegian friends: ‘You are super, you supply us with energy and gas, but one thing that can’t go on for too long is us paying four times more than the price you sell to your industry. That is not exactly the meaning of friendship.”
Former German Chancellor Angela Merkel, more straightforward: “It is very rational to get gas pipeline, including from Russia, that was cheaper than LNG. Even in the Cold War, Russia was a reliable energy supplier.”
Merkel put it that way, when the German government called on its people: “Stop whining. Get ready for winter in the dark. Wear a two-layer sweater. Provide candles and flashlights” Germany’s inflation in September 2022 was recorded at 10.9%
For the sake of political loyalty, the people must be prepared to be sacrificed!
It doesn’t take economics to know that the root of inflation is war. Supply chain disruption due to embargoes, restrictions and protectionism. Energy and food scarcity is driving up all prices. The shutdown of various industries became a spiral that raised inflation further. Economic growth slowed down.
All these diseases want to be treated with only one prescription: monetary tightening. Viruses that cause disease are untouchable. The side effects of the ineffective drugs are no less bad. The economy is slowing down. The US dollar has gone up insanely. Likewise the yield on debt securities. Developing countries with high external exposure (large foreign debt, small foreign exchange reserves and dependence on imports) are increasingly suffocating
It does not require economics to identify the root of the problem and the solution to it. But yes it is. Political loyalty – under the guise of friendship – dulls common sense and dies.
Let’s pray that Indonesia is smarter. The political upheaval, which was very expensive and energy-consuming, is now getting intense. Sectarians are even destructive at times.
Yet in order to survive, we must continue to spur production. Stimulate the creation of added value. Maintain smooth distribution. Increase efforts to be self-sufficient in energy and food. Reduce external dependencies.
*) Written by Hasan Zein Mahmud, Special Editor of Indowork.id