We’ve hacked the global system. We’re now Russian to the edge
This is the year we will see the world order coming off the hinges, political risk advisers warn
This is the year that mounting hammer blows to the Western alliance system and the edifice of global governance threaten to bring the old order tumbling down.
“The geopolitical environment is the most dangerous it’s been in decades,” warns Eurasia Group, political risk adviser to the world’s elites, and a voice of globalist ideology.
Pax Americana is unravelling. The transatlantic concord underpinning the West since the 1950s is dying. Nato, the G7, the G20, the WTO and the EU are all in varying degrees of crisis. Vladimir Putin’s Russia has an open goal.
“Every single one of these is trending negatively. And most in a way that hasn’t been in evidence since World War 2,” it said.
Anti-liberal strongmen are tugging away at the edges in Turkey, Brazil and Hungary. Some in the twilight zones of the democratic world are drifting towards the Putin-Xi camp.
“US alliances everywhere are weakening. The limited trust that underpins the US-China relationship appears to be gone,” said Eurasia in its annual outlook.
The dystopian picture is grim enough even at this late stage of global economic expansion, which begs the question: What would happen in a deep recession with mass unemployment?
Eurasia Group warned that 2019 could “turn out to be the year the world falls apart”, although it is not the central forecast. Denouement may take a little longer.
There is much ruin in a great geopolitical order, to paraphrase Adam Smith. Once a system of values and institutions has evolved over decades, it is sticky.
“Barring bad luck (like Sarajevo in 1914), it takes years, even decades to knock down a geopolitical order. That process of erosion is under way around the world today,” it said.
It is a world in which the gloves are coming off in cyber warfare, setting off a cycle of “action and reaction” that could all too easily spin out of control.
The Pentagon’s Cyber Command is preparing for “preemptive strikes”. There are exploratory plans to give private US companies leeway to “hack back” when attacked.
In parallel, a “global tech Cold War” is closing in. States are slashing reliance on foreign suppliers wherever national security is at stake. The West is shutting out Chinese manufacturers of 5G high-speed equipment. Digital globalism is in retreat.
Donald Trump is – in Eurasia’s view – the central catalyst and accelerant for much of what is going wrong in the world. It starts in Washington.
“Damage is being done to the legitimacy of democratic institutions in the world’s largest economy,” it said.
Eurasia says House Democrats will probably move forward articles of impeachment for obstruction of justice.
This will resolve nothing. The Republican Senate will resist.
The battle will not end like Watergate, with an obedient resignation in the interests of the nation. Trump is no Richard Nixon. He will fight back tooth and claw, and precipitate a constitutional crisis.
Europe is in no fit state to step into the leadership vacuum as America turns its back on the liberal alliance system and nexus of shared values.
Fond hopes that Emmanuel Macron would scatter the hordes of rebel populism in Europe after his triumph in 2017 have been dashed.
His approval rating has dropped to 23%. He faces a national emergency from the yellow vests. His domestic and eurozone reforms are “a dead letter”.
Eurasia estimates that eurosceptic/populist forces will win 37% of the seats in the European parliament next May, up from 28% in 2014.
“The new body formed later in 2019 will be in crisis before it even gets to work. This year will be the one when populists gain real power on Europe’s largest stage,” it said.
This before the next inevitable downturn hits. When it does come the political shock absorbers will be perilously weakened. Belt-tightening will unleash a lot of deflationary demons.
“The reason many in the UK voted to leave the EU is that they recognised it wasn’t fit for purpose over the long term. On that count, they look to be right,” states the group.
The biggest tail risk is a Sino-American showdown ending in global economic slump, bitter recrimination and a cycle of escalation “into the kinetic space”.
Eurasia says relations have already deteriorated beyond the point of no return. Nor is there any workable common ground for compromise.
At stake is 21st-century technology dominance, not trade.
“Rising nationalist sentiment makes it unlikely that Beijing will ignore US provocations,” it added.
The balance of probabilities is that the world will muddle through 2019 without any of these landmines detonating. Yet the drift of events is clear.
The Western liberal order we took for granted at the end of the Cold War is under existential threat.
“We’re setting ourselves up for trouble down the road. Big trouble,” it said.
– © The Daily Telegraph