{"id":1077,"date":"2022-10-26T09:33:47","date_gmt":"2022-10-26T09:33:47","guid":{"rendered":"https:\/\/mpelembe.net\/?p=1077"},"modified":"2022-10-26T09:33:47","modified_gmt":"2022-10-26T09:33:47","slug":"four-scenarios-for-a-world-in-disorder","status":"publish","type":"post","link":"https:\/\/mpelembe.net\/index.php\/four-scenarios-for-a-world-in-disorder\/","title":{"rendered":"Four scenarios for a world in\u00a0disorder"},"content":{"rendered":"

David Bach<\/a>, International Institute for Management Development (IMD)<\/a><\/em><\/span><\/p>\n

Chinese leader Xi Jinping\u2019s recent speech<\/a> to the Communist Party Congress could be one of the most consequential of the decade. He told the audience \u2013 and the world \u2013 that his economic growth-crushing zero-COVID policy is here to stay, and that Beijing is more determined than ever to reunify with Taiwan, peacefully if possible and by force if necessary.<\/p>\n

<\/p>\n

We are living in a moment of deep geopolitical rifts and extraordinary economic uncertainty, epitomised by Xi\u2019s pronouncements. The world is clearly not reverting to some pre-COVID status quo. Instead, a combination of underlying forces has upended the previous world order and ushered in a period of profound disorder. <\/p>\n

I want to look at four of these forces \u2013 the deterioration in US-China relations, Russia\u2019s war in Ukraine, populism and inflation \u2013 to construct some political-economic scenarios for the next two to five years. Any list of destabilising global forces is necessarily incomplete. I won\u2019t consider climate change or biodiversity loss (arguably the greatest challenges facing humanity), a possible COVID resurgence, the impact of artificial intelligence and other disruptive technologies, or the role of rogue regimes from Iran to North Korea. <\/p>\n

Instead, I\u2019m focusing on the areas that I believe will have the greatest impact on global business over the next several years \u2013 particularly because of their expected interaction. <\/p>\n

1. Russia\u2019s war in Ukraine<\/h2>\n

Not only did Russian troops fail to subdue Kyiv quickly as both the Kremlin and many western observers had assumed, Russia looks increasingly likely to lose the war \u2013 the mobilisation of reservists and nuclear sabre-rattling notwithstanding. <\/p>\n

There are three reasons for this. First, the extraordinary poise and courage of the Ukrainian people, armed forces and leaders. Second, utter chaos on the Russian side. And third, the remarkable unity across the west that has provided Ukraine\u2019s troops with sophisticated weapons, training and intelligence while slowly crippling Russia\u2019s economy via boycotts and sanctions. Western businesses<\/a> made important contributions as hundreds pulled out of Russia, stranding assets and foregoing profits. <\/p>\n

Western unity faces its greatest test this winter if gas supplies in Europe<\/a> run low and sky-high energy prices accelerate an expected slide into recession. Individual European governments may well waver<\/a> over Ukraine if confronted by angry and cold voters. <\/p>\n

Of course, Europe\u2019s dependence on Russian gas is self-inflicted. As recently as 2014, only about 20% of EU gas was Russian. By early 2022<\/a>, it was almost 40%. Despite loud warnings from Washington, Germany, the continent\u2019s largest economy, actually increased its dependence after Putin\u2019s illegal annexation of Crimea. <\/p>\n

Berlin viewed Russian gas as cheaper and more sustainable than alternatives.
\nGreater reliance also fitted a German foreign policy doctrine vis-a-vis the Soviet Union\/Russia dating back five decades called wandel durch handel<\/a><\/em>: change through trade. While dangerously naive in hindsight, a similar philosophy informed US policy toward China until recently, creating dependencies that are not vastly different.<\/p>\n

2. US-China relations<\/h2>\n

For four decades following then US president Richard Nixon\u2019s groundbreaking trip<\/a> to China in 1972, the US sought better relations with Beijing via closer economic integration. Things began to change<\/a> during Barack Obama\u2019s second term, in response to Xi Jinping\u2019s muscular posture at home and abroad, before subsequently rupturing with Donald Trump\u2019s trade war. <\/p>\n

If anything, the Biden administration has accelerated the switch from cooperation to confrontation via beefed up security alliances<\/a> in the region with countries like Australia, export controls for advanced technologies such as microprocessors<\/a>, and de facto defence commitments to Taiwan<\/a>.<\/p>\n

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