Global Risks Require a Renewed Global Alignment

Entering into what will soon be the third year of the global pandemic, the coronavirus, as well as its economic and social implications, continues to pose a critical threat to the world. Uneven responses to the virus to date, continuing vaccine inequality, and stark differences in the rates of economic recovery across countries are exacerbating global global economic, political and societal risk. Uneven recovery trajectories also create the risk of prematurely declaring victory as many countries prematurely shift their attention away from the pandemic and its continued risk potential. Further, as key parts of the world revert to ‘normal’ with greater or lesser caution temporarily dormant geopolitical risks appear to be coming back with a vengeance. When these risks are considered alongside systemic long-term risks such as those related to climate change and sustainable global development, it is clear that the world is heading into a period of increasing global risk.

It is also clear, following a glance at some of the most promising potential upside scenarios for the world, these seem both less likely and less impactful than the risks, resulting in a world tilted towards downside risk. This has profound implications for the world, as well as for the global order. The resulting risk overhang weighs down global investment levels, economic growth, innovation, and progress on the SDGs, among other things, and reduces the propensity of countries to collaborate to achieve positive breakthrough for the world, leaving them to face the challenges alone.

However, the interrelated nature of risks facing today’s globalised world ensures that they cannot be managed in isolation, creating a complex challenge too large for any one country to successfully tackle on its own. With the world’s current liberal order unlikely to deliver the alignment of leadership, values and execution required to turn the world to a more positive direction, major countries will need to rethink their approaches to managing global risk. This month’s Sign of the Times looks at the key downside risks facing the world today, and some of the measures required to effectively tackle them.

Context: Rising Global Risks Driving Uncertainty

The past two years have been ones of unprecedented disruption and risk for the world. The global coronavirus pandemic has cost nearly six million lives and seen up to 70% of the global population effectively immobilised by a series of rolling lockdowns in response to resurging waves of viral infection. While the total economic cost of the pandemic has yet to be tallied, it is estimated to have cost nearly US$4 trillion in lost output to date, seen global debt increase by nearly US$40 trillion and is currently projected to cost the global economy a further US$12.5 trillion through 2024. At the same time, while much of the world’s attention has been focused on the pandemic and its management, other risks to global peace, prosperity and freedom have continued to rise that, if left unchecked, can lead to further global scale disruptions in the near future.

While 2022 has barely begun, all the signs are already pointing to the year being a potentially bumpy ride for the world driven by increasing risk across a number of areas - rising geopolitical tensions, uncertainty A cursory glance at current global opportunities and challenges upsides makes it apparent that the downside risks for the world are more profound than the upside potential, resulting in a world tilted towards downside risk. about the end of the pandemic, rising inflation, political paralysis and/or deadlock in major economies, and China’s response to its slowing economy - all point to near term risks with the potential for significant economic, political and social disruption. Taken together, and in some cases individually as well, these risks if realised pose a potentially meaningful threat to the world in terms of human security, economic development, and the long-term trajectory to a more sustainable and inclusive future.

Of course, uncertainty works both ways, and on the other side of these very real downside risks are events and initiatives with material upside potential. For example, progress on issues like global emission reductions, or regional security arrangements in Asia, radical technological innovations in say medicine that end the current pandemic once and for all or breakthroughs in next generation transformative energy sources would lead to enhanced peace, prosperity and freedom. However, even a cursory glance at the list of the risks against the upsides should make it apparent that the downside risks for the world are more profound than the upside potential, resulting in a world tilted towards downside risk.

This has far-reaching implications for the world and its trajectory, as well as for the global order. The overhang of risk and and ongoing cost of managing it weighs down global investment levels, economic growth, innovation, progress on the SDGs and human progress more generally. More importantly perhaps, in terms of geostrategy, in a world weighted towards downside risk, facing a relatively lower probability of realizing positive breakthroughs relative to realizing downside risk, the upside may well fail to be pursued with the will and resources required, that is, it may appear simply not worth fighting for. In such a scenario, countries likely prioritize securing current resources over creating new ones, and this is for oneself and therefore not collaboratively, and this leads to avoiding sharing or helping their neighbours for fear of losing what they have, and this effectively redistributes risk from the rich and powerful to the poor and weak. This narrower approach to self-interest, illustrated in Figure 1 below, leads to a form of competition which reduces international cooperation to share and collaborate and this leads to a loss of funding and innovation in the very breakthroughs that could resolve the issues being fought over in the first place, retarding global progress and increasing global instability over time.

Key Event Risks Facing the World

The world at any point in time of course faces an uncountable number of risks, ranging from the marginal to the existential. Filtering against three criteria, we arrive at a much more limited number of high impact risks driving the current world scenario to tilt towards downside risk, namely materiality, the risk weighted downside potential in terms of its potential impact, susceptibility to mitigation, the degree to which the risk is unavoidable, and near-term imminence, the immediacy of the impact and the interventions needed to manage the risk.

Taking these three factors together, five key risks appear to be driving the global scenario towards a negative weighting. Each of these risks are both material and reasonably possible, if not probable, over the near term, with the cost and likelihood of the downside case far outweighing the potential positive events and initiatives. While these risks are of course amenable to intervention, they require a high degree of strategic, tactical and operational intervention and in a multi-state coordinated manner to be effective. That is, there is deep complexity in resolving the events that lead to these risks.

Downside Risks Have the Upper Hand

• • Russian Invasion and Occupation of Ukraine, Another Land War in Europe

    Russian Military Build-up Near Border

    

    Military Comparison: Russia vs. Ukraine

    

    A Downside Scenario. This scenario arises if the Biden Administration, in the face of demands from Putin that cannot be met, feels compelled to take a hawkish stance on Russia, for domestic political reasons too, leading to current efforts to resolve the ongoing crisis failing. Russia moving into a pre-emptory strike with a military invasion that quickly overruns Ukrainian defence forces. Ukraine is forced to accept a punitive peace deal that formally cedes the Crimea to Russia, creates an ‘independent’ Russian client state in the eastern Ukraine and places the remainder of the country firmly in the expanded Russian sphere of influence.

    Implications. The ripple effects of this action are far reaching and extend well beyond the military theatre of a (most likely) contained land war in Europe. Key implications include: (i) the Pax Europaea in place since the end of the Second World War is threatened by an expanded hostile aggressor on its border, reducing the stability of the EU, (ii) the harsh sanction regime that would follow would have global financial repercussions given the c.US$250 billion of cross-border loans and deposits between Russia and the West, (iii) the threat to Europe’s energy security, which depends on Russia, provides for significant economic hardship for European citizens and unrest, (iv) a direct challenge to the power and influence of the US, NATO, and the EU from an ultimately regional player in terms of economic and trading clout has strong signalling effects for others in territorial disputes, and, (v) China benefits from learning how effective (or ineffective) the West can be in a territorial conflict, while having opportunity to increase its links with Russia, deepening further the growing divide between Western liberal countries and the world’s largest autocracies.

    Strategic Risk Management. The failure of the West to integrate both Russia and China into the liberal order calls for a more fundamental look at the way ahead. The Western belief that NATO’s eastward expansion and the introduction of capitalism during the 1990s would naturally drive Russian integration has proven to be false, just as trade and capitalism have not led to democracy in China. The case for democracy and multilateralism has been complicated by the fact that 45% of Americans are not satisfied with how democracy is working in their own country,ⁱⁱ , and that 52% of Britons voted against membership of the EU, the latter won the Noble Peace Prize (with the UK in it) for establishing and enhancing peace in the only part of the world to have instigated two world wars. Until a broader, more constructive engagement between world powers is forged, Western powers (and the wider global community) will have little choice but to accept the status quo, de facto accepting Russia’s position that it has a right to act against the Threat it perceives that NATO represents. A long-term solution therefore will require credible long-term guarantees of Russia security on its western borders, as well as an effective engagement that integrates Russia into the global system of governance and security over the long term.

  • Global Inflation Crosses 10%, Damaging Already Fragile Economics of the Poor, and so Risking Social and Political Unrest

    

    

    A Downside Scenario. Global inflation already close to a 20 year high, continues to climb from a high of 4.4% in 2021 driven by surging goods prices, labour shortages, changing consumption patterns due to COVID, soaring government debt, and rising energy prices. Major central banks, fearful of interrupting the economic recovery from the pandemic, refuse to materially raise interest rates and continue their loose monetary policies, forcing more prudent central banks that are tightening policy to reverse course to avoid unacceptable currency appreciation, with global inflation crossing 10% by the middle of 2022.

    Implications. The implications are damaging to mass populations the world over with negative consequences for political stability. The key implications are: (i) rising risk of stagflation, given the key near term macro-economic risks of a resurging pandemic, energy demand imbalances, geopolitical tensions, and the resulting global supply chain disruptions, threatening to destabilise economies and governments, as it did in the 1970s, and (ii) continued monetary stimulus creating wealth for asset owners, while driving rising wealth disparities that further stoke social and political unrest, favouring far left and far right populists.

    Strategic Risk Management. Ideally, increasing investment, growth, and output to outpace inflation is the best solution, given that tighter monetary policy, unpopularly known as “austerity’, cannot be deployed without reducing growth and therefore itself causing pressures. This, however, requires sophisticated and disciplined economic management entailing the moderation of price increases and the acceleration of economic growth to outpace reflation. A new ‘Washington Consensus’, to stretch the historical analogy, seems overdue, self-prescribed by advanced industrialised countries, which face among the most significant inflationary pressures. The core elements of this include some tightening of monetary policy without sacrificing growth, investments to meet rising demands, unlocking supply chains hampered by current trade deals, accelerating alternative energy investments to compensate for losses in thermal energy sources at a time of crisis, and flexible labour and immigration policies to address labour shortages and the resulting wage pressure. This mix of measures seems unlikely to emerge easily in many Western countries given their populist challenges and anti-immigrant labour sentiments

  • Republicans Sweep the 2022 Mid-term Elections, Creating Political Deadlock, Laying Ground for a Donald Trump 2024 US Election Bid

    

    

    A Downside Scenario. This scenario arises if US President Joe Biden is unable to score (or be credited with) sufficient economic or political ‘wins’ in the first half of 2022, while continuing misinformation on issues like COVID further undermine Democrats’ credibility at the polls. Republicans win the 2022 US Mid-term elections, securing majorities in both houses of Congress, leaving Biden without the legislative support required to effectively govern, while the administration in turn stymies the Republican legislative agenda where it can. A stalemate lays the ground for the next general election.

    Implications. The US faces a defining moment in the next election in whether it represents aspirational democracy to the world and has the soft power to influence others. Trump was untrusted and unpopular among global populations with only 16% saying they had confidence in him,ⁱⁱⁱ with a knock on effect on America, and Biden’s win in 2020 brought that standing back. A return of Trump to the helm would likely ring the end of America as a great democratic power in the world’s eyes, in some ways regardless of his policies, and lay the ground for profound local and geopolitical changes. The key implications to note: (i) near complete political paralysis in the country’s ability to address its own issues of inequality, racism, healthcare affordability, and a spiralling budget deficit, (ii) an inability (and likely unwillingness) to form the coalitions required to contain China’s rise as a superpower, which cannot be checked by America alone,^iv and (iii) a continuing effort to undermine the stability of the EU, and (iv), the lack of US cooperation with or leadership of its allies to respond to major global risks, among other implications, setting back climate change and efforts to fund the poorer countries in the south of the world. The next election is more likely a barometer for the terminal decline of the global liberal order.

    Strategic Risk Management. Voters' tendency to restrain the party in power usually makes it hard for any party to retain a hold on both the White House and Congress following the mid-terms, especially when it holds the presidency as well (the last president to do so, interestingly, was Jimmy Carter at the 1978 mid-terms).^v Overcoming this challenge will require material wins, in terms of both substance and perception. As the liberal press runs negative news on the Biden administration in tandem with the right-wing press, the perception seems unlikely to improve without very big wins. Further, legislators (and social media companies themselves) will need to get serious about combatting fake news and misinformation to ensure free, fair, and informed elections going forward. Looking at America today, while innovation and business powers ahead, in politics, a positive answer seems tough to deliver on.

  • China Invades Taiwan, Implementing a Unified China Strategy

    Comparison of Chinese and Taiwanese Military Capabilities

    

    Incursions Into Taiwan’s Air Defence Identification Zone on the Rise

    (Number of Chinese military aircraft sorties reported)

    

    A Downside Scenario. Xi Jinping uses the 20th Chinese Communist Party Congress in November to further enhance power achieving effective absolute power over the country, with no potential successor, providing him with the practical ability to unilaterally commit China’s military. The weak Western response to a Russian invasion of the Ukraine, and the political troubles of the United States at home, provide Xi with the confidence to take military action against Taiwan to fulfil China’s perceived destiny and further secure his own legacy. With continually escalating military provocations against Taiwan culminating in a full military invasion, completed within less than 24 hours in the absence of international support. The island is politically integrated into People’s Republic with a military occupation and civil control similar to that employed in Xinjiang or Tibet.

    Implications. This is clearly a self-actualisation moment for China which defines it as its worst incarnation across the world stage. The key implications to note: (i) the international community, which is highly unlikely to intervene militarily, imposes severe sanctions and trade embargoes against China with significant global economic repercussions, (ii) China experiences real economic hardship that spreads to the rest of the world as global supply chains across multiple industries are severely disrupted, triggering a global economic crisis, (iii) the crisis may be significantly augmented should Taiwan choose to exercise a key strategic deterrent during the invasion, with the destruction of its semiconductor industry, responsible for over 60% of global foundry output, (iv) the Cold War against China would be accelerated and the West would have its chance to unite against China, and (v) China is expected to overtake the US GDP in 2030/31, a shift it might forfeit if the West unite effectively and work with others to isolate China.

    Effective Risk Management. Short of an appeasement strategy that would sell out the almost 90% of Taiwanese opposed to further political integration with the mainland, the only effective (external) deterrent to a potential invasion is one that ensures that China believes its long-term geostrategic loss outweighs its domestic political gain. For this to occur, China’s economic and political isolation, including its effective ejection from leadership of multi-lateral institutions, would need to be made clear to forestall any such action, would need to be severe enough to create local issues, and/or be of sufficient magnitude as to incentivise Xi’s opposers to act against him should be not stop himself. The overall plan would need to be of sufficient severity to push back the point where China becomes the world’s leading economic and financial power (currently at 2030/31) by more than a generation.^vi With Chinese strategy proven to be patient and long term, an effective Western response will need to have consequences lasting multiple decades to be effective. Such a response would require a level of global alignment not seen since the fall of Soviet Union, if not the Second World War.

  • Coronavirus Returns in a Destructive Form That Destabilises Individual and Collective Human Security, Before Heading to a Managed State

    COVID-19 Vaccine Effectiveness

    

    

    A Downside Scenario. Elation over the low fatality rate of the peaking Omicron variant leads to a scenario comprising the lapse of vaccination efforts in both developed (with 30% of the population in the EU, and 46% in the US not fully vaccinated) and developing countries (with vaccination rates below 10%),^vii thus creating a bank of large unvaccinated populations allowing the virus to spread significantly, far more easily and to mutate as it does so. A new strain emerges that is both highly contagious (like Omicron) and more lethal than all previous versions (including Delta), with a large number of mutations on the spike protein further reducing the effectiveness of existing vaccines. By way of example, a new coronavirus strain as infectious and deadly as the Spanish Flu of 1918 today would kill an estimated 100 to 250 million people globally.^viii

    Implications. Coronavirus has highlighted the significant variations in: government effectiveness (with the West fairing far worse than the East), the level and durations of lockdowns implemented and the level of deaths that peoples were prepared to tolerate (with countries like the US and the UK far more tolerant than Germany, Japan, Australia or New Zealand, for example), the definition of freedom (with many in the West valuing personal choice over collective safety), and the inability of the world’s leaders to work together to vaccinate poorer countries for either moral or self-interest reasons.

    The key implications to note are: (i) lock-down fatigued countries around the world (particularly in the West and in Western cultures) are likely to struggle to respond to the resurging waves of the pandemic, Exhaustion and elation over the low fatality rate of the peaking Omicron variant sets up the world for a ’sucker punch’ – a variant far more contagious and far more lethal than all previous versions –a new coronavirus strain as infectious and deadly as the Spanish Flu of 1918 today would kill an estimated 100 to 250 million people globally with many governments avoiding adequate containment measures for political reasons, (ii) the failure to protect in turn exacerbates the toll of infection, illness, and death, as well as further global transmission, (iii) heavy economic disruptions are likely as a result of delayed and insufficient responses, (iv) many countries around the world lack further macro-economic headroom to support their economies and resort to printing money, leading to further spiking inflation and the risk of hyperinflation, particularly in emerging markets, (v) countries with the ability to close borders, possessing self-reliance in terms of supply chains and products and services thrive, as do the sectors that serve them, and (vi) the resulting overall economic depression threatens social and economic stability with a lack of good answers from existing politicians leading to political change, which can give rise to dangerous regimes and/or laws.

    Effective Risk Management. While current data seems to confirm the predicted trajectory of the coronavirus to becoming a seasonal virus, the path and the timing of this development are unclear, and for example may take two, five or even ten years. Until such time, countries will need to manage the situation cautiously. The Delta and Omicron variants have demonstrated that the ability of global populations, and health systems, to weather recurring waves of infection is closely tied to vaccination, both in terms of reducing infections through lower viral loads and shorter periods of transmission, as well as through increased resilience to serious illness. Governments will need to, whether through incentives, education or mandates, reach near universal levels of vaccination at home, while ensuring that other countries around the world have the healthcare and financial resources to achieve the same. While the much touted answer is clear - prevent infection (simple measures such as masks, ventilation and distancing have been demonstrated to be effective across the world), provide economic support for the vulnerable, keep trading relationships and channels functioning (avoiding damaging competition and conflicts) and create environments that foster investment and innovation across the board to enable productive and fulfilling lives to be led safely - it seems near impossible to implement in fatigued countries, particularly in Western cultures.

  Significant Upsides, Not Matching the Power of Downsides

  In contrast to the major near-term risks facing the world, there are of course a series of upside events and scenarios that if realised would have a positive impact on the world and its longer-term outlook. Realistic potential ‘good news’ scenarios for the world in the coming 12 months include the following:

  • Global Community Strikes Climate Change Deal for 1.5C. Major countries come together at COP27 to agree on carbon reduction commitments that limit global warming to 1.5C, hitting global net zero by 2050.

  • Industrialised World Meets US$100bn Annual Pledge to Developing Countries. Developed countries mobilise more than US$100bn for climate action in developing countries, driving sustainable economic development and inclusion in these regions.

  • Coronavirus Strains Weaken, Medicine Advances and the Threat Recedes. Further safer COVID strains, even less harmful than Omicron, become dominant, and combined with vaccines and medical treatments, and enable the world to transition to endemic co-existence with measures to avoid penalised loss of life.

  • Continued Capital Markets Boom. 2022 continues the trend established in the previous year with equity market records being set every month in a continued boom.

  • India Crosses 10% GDP Growth. Further improvements in credit growth and, subsequently, investment and consumption drive India’s GDP for the year into double digit territory, adding another major economy to the world economy with trading relationships that enhance the whole.

A Net Downside Global Risk Outlook – and its Consequences

A closer look at the list of global risk and sources of upside highlights a number of takeaways for the world with profound consequences for not just its short-term trajectory, but with lasting implications for the global order.

1. The downside potential for the world in terms of damaging peace, prosperity and stability far outweigh the impact of any upside. Compared to the risks, the upside factors are on balance either less likely to occur, are ephemeral in their impact, and in some cases (such as the recession of COVID or continued equity market growth) are already ‘priced in’ as they form part of the ‘base case’ planning assumption.

2. For the upside scenarios to be realized, likely requires the global risks to be sufficiently well managed to free-up leadership time and resource. For example, no global climate deal is likely to be struck in a world where Russia and China are in conflict with the West, and India will struggle to or not achieve double digit GDP if a fourth deadly wave of the pandemic forces severe prevention measures. The resulting downside weighting of global risk has been clearly recognised: 89% of respondents to the World Economic Forum’s annual global risk survey perceived the short-term outlook for the world to be “volatile, fractured, or increasingly catastrophic."^ix

3. The world’s major risks are interrelated, potentially triggering and amplifying each other. Further, these risks are of course equally tied to a web of additional risks that on their own are less probable or less impactful than the major risks above, but cumulatively can have a significant impact on the world. For example, disrupted oil markets (and spiking prices) following a Russian invasion of Ukraine will impact Middle Eastern politics and security, particularly Iran’s willingness to strike a new nuclear deal, while China engulfing Taiwan might embolden Kim Jong Un in Korea to accelerate its missile program.

   

4. Competing on avoiding downside risks is a zero-sum game for the world. Given the pressing nature of the risks, policy makers are likely to be focused on the downside. 89% of respondents to the World Economic Forum’s annual global risk survey perceive the short-term outlook for the world to be “volatile, fractured, or increasingly catastrophic”.The achievement of the upside cases is unlikely to secure the will and resources to prevail, they will seem “not worth fighting for”, most certainly not in advance of the global risks being addressed, leaving countries to compete on avoiding downside risks, fighting over a finite pool of current resources, in a zero-sum game. And this competition clearly reduces the world’s ability to manage its greatest risks.

5. Proactive risk management ultimately requires international collaboration. This leaves countries with only two viable strategies: firstly, building resilience for themselves to mitigate the impact of risks in the recognition that they cannot be adequately managed if consensus has to be reached or resources shared, and secondly, working multi-laterally within a global order to reduce risk for the world. The former appears to have the ‘advantage’ of being something that can be relatively quickly executed by richer countries and victory declared relative to others and minimises short term losses while creating enmity and a lack of trust, While the latter has the potential to reshape the paradigm from loss minimisation to positively impacting peace, prosperity, and freedom in the world, allowing countries to focus on creating upside scenarios for the common interest, it requires leadership and shared values and interests to prevail.

Changing the World Scenario, Intractable Problems and Challenges

The barriers to achieving the level of collaboration required are significant, with failure leading to something far narrower and poorer along with a breakdown of the world order. Working together to solve for political, economic, social and security risks requires alignment on a number of fronts, which is currently lacking. The world therefore requires a shared understanding of the nature of the risks and of what good looks like in terms of managing them, a joint plan of action to address these risks that recognises that countries contributions to the plan will not be equal, and will change over time, and the agreement of a mechanism to share the risks and the cost of their solution in an equitable way.

Stepping back, it is clear that the current global order and the world’s leading multi-lateral institutions will be unable to deliver the above. While this order has presided over the most peaceful and prosperous Given the continuing conflicts within and between countries across the world, it appears that the pandemic killing 6 million people remains an insufficient incentive for the world to pursue a broad peace, strive for prosperity and embrace freedom period of time in global history, the order that was put in place largely in response to the Second World War (and during the Cold War) has failed to adapt to the challenges facing the world today, including global inequality, a state capitalist but authoritarian China, the transition to a digital world, and climate change, which were all not anticipated by the architects of the current order and seem to lie outside of the system’s ability to address them. Is clear that the current world order has been in decline for a number of years due to both external and internal pressures,^x and it will need to be replaced entirely with a new order if the world is to address the challenges it faces.

This process of change promises to be a difficult and long one, particularly in the absence of a disastrous trigger like the Second World War, which left 75 million dead and shattered three of the world’s ten largest economies.^xiIt seems that the pandemic killing six million may not be quite enough. However, if it is enough to spark a rethink, the actions ahead need to start with a pact to collaborate internationally in good faith, building a new consensus on values, goals, processes, and institutions to gradually shape a global order for the 21^st century in a process that will likely take a decade or longer.

Conclusion

Given the time and effort it will take to shape a new global order, the global community will need to work toward the achievement of a number of important interim steps, both to tactically manage the near terms risks that will not wait for a new order to emerge before coalescing, and to strategically serve as points of agreement upon which a comprehensive global consensus regarding a future order can be built. These interim goals include the following:

1. Avoiding conflicts and de-escalating confrontations in the absence of agreed upon mechanisms, which may require the granting of concessions in the short-term while avoiding the establishment of precedents for future conflicts.

2. Underwriting security for major countries and regions, which in the absence of shared goals may have diametrically opposing security aims, which in turn will require significant compromises by all parties.

3. Addressing inequality and driving mass inclusion across the world in the absence of adequate global institutions empowered to manage the allocation of resources. Closing the c.US$40 trillion gap to meeting the SDGs related to people and prosperity by 2030 will require either innovation to deploy such capital at scale for profit, or significant wealth transfers at concessionary rates of return.^xii

4. Managing long term sustainability and climate goals to ensure that stated 2050 emission targets are not out of reach by the time a new global order is established, by closing the US$22 trillion gap to funding the climate related SDGs through 2030.^xiii

5. Rethinking the way capitalism, globalisation and free trade function to to efficiently allocate the world’s US$400 trillion of liquid assets, providing incentives to innovate and take risk, share rewards with those that cooperate, and to raising others to be participants such that inequities are managed and divisions are avoided.

If the world can achieve these goals over the next decade, it will have a stable basis on which a new global order can be formed. This order in turn can provide it with a basis from which to drive positive outcomes for the world, providing the possibility of a focus on driving peace prosperity and freedom for the remainder of the 21^st century in a series of breakthroughs. While this process is clearly a tall order, it is the only one that is likely to deliver long term sustainable benefits to the world. In its absence, even if the world were able to achieve a series of standalone breakthroughs, in the absence of global coordination, these breakthroughs would not be shared to ‘level up’ the world, and so the world would continue with inequity, migration, conflict, and other continued risks to further progress.

History has shown that while breakthroughs can solve certain issues, they often create entirely new The world’s deeply intertwined problems require deep collaboration, for which recent history does not bode well … without forging a new global pact, a Pax Globalicana, that allows for shared values and actions the world will not effectively manage the transition to a more equitable digital age future issues that need to be addressed. Nuclear armament and its resulting mutual assured destruction have successfully avoided war among the world’s superpowers but has also created existential risk for the world as the technology falls into the hands of others. The defeat of the Soviet Union allowed America’s dream of democracy, capitalism, and market economies to spread across the world, but the lack of accompanying political integration with Russia has driven security risks and the resurgence of authoritarianism in the former communist bloc. And the growth of digital technologies has driven global economic growth and technological progress but also led to deindustrialisation and economic dislocations around the world. Unless the world can collaborate on future breakthroughs, the accompanying risks will not be adequately addressed.

The world is clearly entering a time of increased risk and instability, where the downside risk to the world outweighs the potential gains from near term upside scenarios. The natural tendency of countries in such times is to reduce international cooperation and compete to manage risk in zero sum games. Given the interrelated and global nature of today’s risks however, countries will need to resist these tendencies and collaborate in order to effectively address risks and turn the global scenario into a positive one where new breakthroughs can be made and enjoyed by all. Given the nature of today’s major risks, including the weaknesses in the global liberal order, a long and challenging process of reinvention lies ahead for the world’s institutions, alliances and even values.

Notes