Jamaica Homes Global Conflict & Caribbean Impact Review | Published 3 January 2019 | Reporting Period: 3 October – 2 January 2019
Quarterly Briefing
- Saudi journalist Jamal Khashoggi is killed inside the Saudi consulate in Istanbul on October 2; the murder of a Washington Post columnist triggers a global crisis over Saudi Arabia’s Crown Prince Mohammed bin Salman and tests the limits of US-Saudi relations.
- Oil prices collapse from a four-year high of approximately $86 in early October to below $50 by December, driven by a surprise surge in US production, Saudi overproduction and fears of slowing global demand.
- Democrats win control of the US House of Representatives in the November 6 midterm elections, setting up two years of divided government and a new era of investigative oversight of the Trump administration.
- Yemen’s warring parties sign the Stockholm Agreement on December 13, including a ceasefire in the port city of Hodeida, the country’s main humanitarian lifeline.
- The US government enters a partial shutdown on December 22 after Congress refuses to fund President Trump’s proposed southern border wall; the shutdown continues at the time of publication.
- Brazil’s far-right presidential candidate Jair Bolsonaro is elected on October 28 and takes office on January 1, signalling a sharp rightward turn in Latin America’s largest economy.
Prologue: The Quarter Geopolitics Turned Personal
The final quarter of 2018 was defined, above all, by the murder of a man. Jamal Khashoggi walked into the Saudi consulate in Istanbul on 2 October — the day before this reporting period began — and was killed. Over the weeks that followed, the story of how and why he died became one of the most consequential geopolitical episodes of the year: a reckoning over Saudi Arabia’s power structure, its relationship with the United States, and the impunity with which autocratic regimes believed they could treat dissent wherever it appeared in the world. Alongside that, oil markets turned sharply lower, removing one source of financial pressure on Caribbean economies even as the broader global slowdown concerns that drove the price fall presented different risks. A divided US government entered the new year paralysed by a budget standoff. And the world’s seventh-largest economy elected a populist nationalist who expressed admiration for military dictatorship. Jamaica and the Caribbean entered 2019 watching all of these developments with attention born of economic dependency on the geopolitical weather.
The Khashoggi Murder and Its Aftermath
Jamal Khashoggi, a Saudi journalist, former royal adviser and Washington Post columnist who had become increasingly critical of Crown Prince Mohammed bin Salman, entered the Saudi consulate in Istanbul on 2 October 2018 to obtain documents related to his planned marriage. He was never seen alive again. Turkish officials, who had placed listening devices in the consulate, leaked detailed accounts of what had occurred inside. Saudi Arabia initially denied Khashoggi had been harmed; then claimed he had died in a fight; then acknowledged he had been killed in a premeditated operation. Saudi prosecutors later sought the death penalty for five individuals while simultaneously shielding the Crown Prince from accountability. The CIA reportedly concluded that Mohammed bin Salman had personally ordered the killing.
The consequences were significant but limited. Major corporations and governments withdrew from Saudi Arabia’s Future Investment Initiative conference in October. The US Senate passed a resolution blaming MBS and voted to end US support for Saudi operations in Yemen. President Trump resisted pressure to take stronger action, citing the value of arms sales and the Saudi relationship. No meaningful sanctions were applied to MBS personally. The episode demonstrated that the US-Saudi relationship could absorb a murder of exceptional public visibility without fundamental rupture. For Caribbean observers, the Khashoggi affair illustrated the degree to which national interest calculations can override human rights concerns even in the world’s most prominent democracies.
Oil’s Sharp Reversal and Caribbean Implications
In early October, Brent crude traded near $86 per barrel — its highest level since 2014 and a price level that had been adding significantly to Jamaica’s import costs. The subsequent collapse was dramatic: by Christmas Eve, Brent had fallen below $50 per barrel, a decline of more than 40 per cent in under three months. The causes were multiple: US shale oil production had reached a record high of over eleven million barrels per day; Saudi Arabia and Russia had increased their own output in response to earlier US pressure; and investors were revising downward their forecasts for global economic growth and therefore oil demand. OPEC+ agreed in December to cut production by 1.2 million barrels per day, but markets reacted sceptically.
For Caribbean oil importers including Jamaica, the price reversal provided a welcome reduction in the fuel import bill. The fall from $86 to $50 represented a material difference in the hard currency Jamaica required to purchase oil, and would feed through to reduced electricity generation costs and, eventually, lower inflation. It also illustrated the chronic vulnerability of the Caribbean’s oil-dependent energy system: the direction of oil prices is determined by geopolitical and market forces entirely beyond the region’s control, and a reversal would be equally swift.
US Midterms and the Coming Years of Division
The November 6 midterm elections returned Democrats to control of the US House of Representatives with a net gain of 40 seats. Republicans held the Senate. The result set up the divided government that is now entering its effective start: the House under Nancy Pelosi will have subpoena power over the executive branch, control over appropriations and a platform for investigations into matters including the Mueller inquiry’s conclusions, the president’s financial affairs and his administration’s policies. For the Caribbean, the implications are primarily indirect: a divided Congress is less likely to pass major legislation affecting trade, immigration or foreign assistance, though existing relationships under these headings remain in place. The status of Temporary Protected Status holders and DACA recipients — issues of direct concern to Caribbean diaspora communities in the United States — remained unresolved as 2019 began.
Yemen Ceasefire and Latin America’s Rightward Turn
The Stockholm Agreement of 13 December, brokered by UN Special Envoy Martin Griffiths, provided the first genuine pause in Yemen’s devastating war. The agreement included a ceasefire in and around the port of Hodeida, through which approximately 70 per cent of Yemen’s humanitarian aid flows. The ceasefire’s durability was immediately uncertain — previous ceasefires had collapsed — but its existence represented the first serious diplomatic progress in a conflict that had produced the world’s worst humanitarian crisis, with over 14 million people facing famine conditions. The ongoing war had maintained upward pressure on oil prices through the year and continued to destabilise the Arabian Peninsula.
Jair Bolsonaro’s election in Brazil on 28 October represented a profound shift in Latin American politics. Bolsonaro had expressed admiration for Brazil’s military dictatorship era, promised to roll back environmental protections in the Amazon and signal a much harder line on crime and security. His election, following those of right-wing governments in Argentina, Colombia and elsewhere, contributed to a broader rightward reorientation of the hemisphere that would affect CARICOM’s relationships and regional dynamics in ways not yet fully apparent.
Looking Ahead
The US government shutdown that began on 22 December over border wall funding is the immediate political problem: with Democrats now controlling the House and unwilling to fund the wall, the shutdown could extend for weeks or months. Beyond that, the Mueller investigation’s final chapter, the continuing Venezuela crisis, the unresolved North Korea nuclear question and Brexit’s March 29 deadline all demand resolution. For Jamaica, 2019 opens with improved oil prices, solid tourism momentum and a disciplined fiscal programme — but in an international environment that has rarely been more unpredictable in living memory.
Jamaica Homes Global Conflict & Caribbean Impact Review is published quarterly, examining how wars, geopolitical tensions and major international crises have shaped Jamaica, the Caribbean and their economies.
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