Geopolitics and geopolitical risk are complex. The breakdown of the Washington consensus, an increasingly fractured global trading system coupled with huge economic and social pressures, means the next years and decades will be the most turbulent since 1945.
There will be a greater volume and a more extreme level of conflict. This will play out in increasingly vicious proxy wars, non-state actor forces & terrorism, and even directly between major powers.
Our new ‘multipolar’ world will increasingly return to a bipolar one that we were more used to 1945-1990 – the difference this time is that the power ‘balance’ that was held during the first Cold War will be much more precarious in the second one.
A militarily stronger but structurally and demographically challenged China will continue to attempt to compete with an internally conflicted US. Meanwhile, a militarily resurgent Russia looks to redefine its place in the world as it continues to seek its own identity after the collapse of the USSR.
India looks to usurp China as the preeminent driver of global growth and as a population centre, yet it still has a level of structural poverty that China started to emerge from 30 years ago.
The EU, still recovering from the legacy of the sovereign debt crisis of the 2010s, Brexit and continuing political disharmony, faces economic stagnation and severe immigration challenges. Its populations are unhappy and voting for a new wave of far-right populist governments.
Geopolitics plays out in real time. The old geopolitical theatres of Eastern & Central Europe, the Middle East, and the South China Sea see tension, flashpoints and ongoing conflicts. We now also see the potential for developing theatres in the Arctic, Antarctic and extraterrestrially in space.
Over-top all this sit the global existential threats (and opportunities) of climate change and artificial intelligence and an inverting of the demographic trends which have underpinned our economic development since the Napoleonic wars and the First Industrial Revolution.
Our economic markets will continue to be volatile. Governments will wrestle with heavy post-pandemic debt burdens, a higher interest rate and inflationary environment, and increasingly elderly and unproductive populations.
Where the years of the height of the Washington consensus will have felt like ones of abundance, the next years will see gyrating Commodity markets and greater diplomatic and military competition for dwindling resources, which will be carried by fractured supply chains.
Overwhelmed? That’s where we can help.
