Turkey’s Earthquake, Ukraine’s Second Year and a Banking Shock: The Quarter That Tested Global Stability

Jamaica Homes Global Conflict & Caribbean Impact Review | Published 3 April 2023 | Reporting Period: 3 January – 2 April 2023

Quarterly Briefing

• A 7.8-magnitude earthquake strikes Turkey and Syria on February 6; more than 50,000 killed in the deadliest disaster in the region in a century.
• Russia’s war in Ukraine enters its second year on February 24; Germany and the United States agree to supply main battle tanks to Kyiv.
• Ukraine fighting focuses on Bakhmut, where Russian and Wagner forces grind through months of brutal urban combat.
• Silicon Valley Bank collapses on March 10 in the largest US bank failure since 2008; global markets wobble.
• Iran’s protests, triggered by Mahsa Amini’s death in September 2022, continue into early 2023 before security forces reassert control.
• Jamaica’s tourism sector beats pre-pandemic arrival records; inflation remains sticky despite Bank of Jamaica tightening.

Prologue: A Quarter of Natural and Man-Made Catastrophe

The first quarter of 2023 opened with Russia’s invasion of Ukraine entering its second year with no end in sight, and closed with a cascading crisis in the global banking system that briefly threatened financial market stability. Between those bookends came the deadliest natural disaster in two decades: a devastating earthquake that killed more than 50,000 people in southern Turkey and northern Syria on 6 February, levelling eleven provinces and exposing in a single terrible morning both the scale of what a major seismic event can do and the difficulty of humanitarian response in a conflict zone like Syria. For Jamaica and the Caribbean, the quarter reinforced a now-familiar pattern: the world’s crises are multiplying faster than its capacity to resolve them, and the cumulative effect on global commodity prices, freight costs and development finance continues to squeeze small island economies.

The Turkey-Syria Earthquake: Catastrophe on a Historic Scale

At 4:17 a.m. on 6 February, a 7.8-magnitude earthquake struck the Gaziantep province of southern Turkey, followed nine hours later by a second 7.7-magnitude tremor. The two quakes affected an area stretching from the Mediterranean coast to the Syrian border, encompassing eleven Turkish provinces and parts of northwestern Syria already devastated by twelve years of civil war. More than 160,000 buildings were destroyed or severely damaged across Turkey alone. The official death toll exceeded 50,000 by the end of February — Turkey’s deadliest earthquake in modern history and the most lethal natural disaster globally since the 2010 Haiti earthquake.

Syria’s northwest, controlled partly by opposition forces and partly by the government of Bashar al-Assad, experienced severe devastation with limited access for international aid. UN agencies and NGOs reported that the combination of the disaster with active conflict, sanctions restrictions and infrastructure collapse made humanitarian access in northwestern Syria uniquely difficult. Tens of thousands of Syrians had already been displaced by conflict; the earthquake added hundreds of thousands more to the displaced population.

The earthquake’s Caribbean impact was indirect but meaningful. Turkey is a significant regional power, a NATO member and a major facilitator of the Black Sea Grain Initiative that has kept global wheat prices lower than they would otherwise be. The disaster temporarily reduced Turkish government capacity to maintain its mediating role in the Ukraine conflict and its broader diplomatic engagement. For Jamaica, any disruption to the grain initiative — which Turkey brokered and must periodically renew — carries direct implications for flour and food import costs. The earthquake also demonstrated once again the financial vulnerability of Caribbean economies to natural disasters: the costs of Kahramanmaraş province’s rebuilding alone will absorb international development finance that might otherwise reach the Caribbean.

Ukraine Enters Year Two: Tanks, Bakhmut and the Long War

The 24 February anniversary of Russia’s full-scale invasion passed without either side achieving the breakthrough that might end the war in the near term. The most significant development of the quarter was a decision by Western allies to supply Ukraine with main battle tanks: Germany reversed its long-held position and agreed to deliver Leopard 2 tanks, and the United States announced it would send M1 Abrams. These were weapons systems that NATO capitals had resisted providing for months, citing escalation risks. Their commitment signalled that the Western alliance was settling in for a prolonged conflict support role.

The battle for Bakhmut — a salt-mining city in Donetsk Oblast that had been the focus of Russian and Wagner Group operations since the summer of 2022 — continued its grinding, attritional character through the quarter. Russian forces, led primarily by Wagner, gained incremental ground at enormous cost in lives on both sides. Ukrainian commanders debated whether the city’s military value justified its defensive cost. President Zelensky argued that the battle was grinding down Russian and Wagner forces, even as casualty figures mounted. As April 3 arrives, Bakhmut is still contested, though Russian forces control most of it.

For Caribbean economies, Ukraine’s war in its second year continued to shape the price of nearly everything: oil, gas, wheat, sunflower oil, fertiliser. PETROCARIBE, the Venezuelan oil diplomacy programme that once provided subsidised fuel to Caribbean nations, has been effectively defunct since US sanctions tightened, meaning Caribbean importers bear international prices without subsidy for most purchases. Jamaica’s fuel import bill, while lower than the extraordinary levels of mid-2022, remained well above the pre-war norm.

Silicon Valley Bank and Global Financial Stress

On 10 March, Silicon Valley Bank — the 16th-largest bank in the United States and the primary financial institution for a large portion of the American technology startup ecosystem — was seized by US regulators after a bank run that began when it disclosed large losses on its bond portfolio. The loss was a direct consequence of the US Federal Reserve’s aggressive rate-hiking cycle: SVB had invested heavily in long-duration bonds at low yields; as rates rose, those bonds fell in value; when SVB attempted to raise capital to cover the gap, confidence collapsed. Two days later, Signature Bank was also closed. Credit Suisse, which had been under prolonged stress, required an emergency rescue merger with UBS facilitated by Swiss authorities.

For Caribbean economies, the SVB collapse was a reminder of a critical structural vulnerability: the region’s banking sector, and the remittance corridors that connect it to North America, are sensitive to financial stress in US institutions. Though the immediate crisis was contained by US government deposit guarantees and emergency Fed facilities, the episode revealed that the rapid rate-hiking cycle had created hidden fragilities in the financial system. Any repeat of 2008-style financial contagion would sharply reduce US household income, diaspora remittance capacity and Caribbean tourism demand simultaneously.

Iran and the Middle East

The protests that erupted across Iran following the September 2022 death of Mahsa Amini in morality police custody continued into early 2023, making them the most sustained challenge to the Islamic Republic since the 2009 Green Movement. By January and February, security forces had reasserted control in most cities through arrests, executions of convicted protesters and saturation policing. Human rights organisations documented more than 500 deaths in the crackdown and thousands of arrests. International condemnation was widespread; Iran rejected it as interference.

The protests’ suppression did not eliminate the underlying political and economic tensions in Iranian society, and observers assessed that the regime had emerged weakened even in its victory. For the Caribbean, Iran’s internal politics matter primarily through the oil price channel: any escalation involving Iranian oil infrastructure or the Strait of Hormuz has an immediate and severe impact on global petroleum markets and thus on Caribbean fuel import costs. Iran’s nuclear negotiations with Western powers remained stalled throughout the quarter, maintaining the underlying risk of a military escalation that could produce exactly that kind of spike.

Haiti: The Security Situation Worsens

Haiti’s gang-dominated security crisis continued without resolution through Q1 2023. Prime Minister Ariel Henry’s transitional government remained in office without a constitutional mandate or popular legitimacy, governing by decree and dependent on international diplomatic support for its survival. Gang coalitions, particularly the G9 Family and Allies and its rival groups, expanded their territorial control across Port-au-Prince. The UN reported that gang-related homicides reached a record high in 2022 and showed no sign of decreasing in early 2023.

A CARICOM and internationally backed proposal for a High-Level Transitional Presidential Council was being developed during the quarter as a framework for broadening governance and preparing for eventual elections. Jamaica remained one of the most active CARICOM members in Haiti diplomacy, contributing expertise to the transition negotiations and pressing for international security support. The proposal to deploy a multinational security force remained under active UN discussion, though agreement on the mandate and funding had not yet been reached.

Jamaica: Tourism Record, Inflation Persistence

Jamaica’s economic performance in Q1 2023 was mixed but broadly positive. The tourism sector celebrated a milestone: total visitor arrivals for the 2022–23 winter season exceeded pre-pandemic records in several key metrics, confirming that Jamaica’s tourism recovery was not just complete but accelerating. The Jamaica Tourist Board reported strong forward bookings through the summer. Hotel occupancy rates in Montego Bay and Ocho Rios were tracking at or above 2019 levels. The economic multiplier effects — through employment, food purchasing, ground transport and related services — were flowing through the wider economy.

The challenge remained inflation. The Bank of Jamaica’s policy rate, raised to 7 per cent in 2022, was beginning to slow economic activity in rate-sensitive sectors, particularly housing. Inflation was declining but slowly, held elevated by sticky food prices — themselves a product of the Ukraine war’s commodity disruption — and by utility cost pressures. The BOJ signalled it would maintain its current rate stance through at least the first half of 2023. For the housing market, the combination of elevated construction costs and higher mortgage rates was compressing affordability for first-time buyers, even as investor demand for real estate assets remained strong.

Looking Ahead

The second quarter of 2023 opens with Ukraine’s counteroffensive expected but not yet launched, Haiti’s security mission still undeployed, and global financial markets still processing the implications of the SVB crisis and the Fed’s continued tightening. The Middle East’s underlying tensions — centred on Iran’s nuclear programme, Israeli-Palestinian violence in the West Bank and Lebanon-border exchanges — could escalate rapidly. The world’s conflict load has never been heavier in the post-Cold War era, and the Caribbean’s exposure to its economic consequences is structural rather than temporary.

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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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