Political and economic stability will continue to be tested in 2021 as governments come under increasing pressure from the disruptive power of technology, terrorism, climate change, and other risks, all layered upon persistent upheaval from the COVID-19 pandemic.
The COVID-19 pandemic introduced a level of volatility into the global economy reminiscent of the economic struggle of the Great Depression and political disruption of WWII. That such unprecedented upheaval was completely foreign to and unanticipated by almost all people alive today is a testament to the relative stability of previous decades, but also a revealing indicator of the challenges governments will continue to face when it comes to leading populations through adversity. In the coming years, well beyond just 2021, the pandemic will continue to send shockwaves through the global economy, exacerbating not just resource and income disparities between countries, but also further polarizing domestic populations along gender and class lines. In part because the pandemic has laid bare the operational vulnerabilities of governments in times of crisis, we pay special attention to US national security interests in this year’s top ten geopolitical risks.
Of course, the risks inherent to the aftershocks of the pandemic will not accrue in a vacuum: in 2021 cyber security threats against nation states and private enterprise will mount, largely driven by geopolitical trends, climate change will continue to threaten political stability in wealthy and poor countries alike, the Islamic State will persist as a significant terrorist threat in locales ranging from Europe to Asia, and policy makers, especially those in the West, will struggle to reassert and redefine the role of diplomacy in resolving disputes in an increasingly tense international environment. The Middle East, South and Central Asia, and Europe are all likely to undergo shifts in their balances of power that will define regional political dynamics for decades, with Emirati Crown Prince Mohammed bin Zayed, Chinese President Xi Jinping, Russian President Vladimir Putin, and French President Emmanuel Macron leading pushes for both change and consolidation of influence in their respective spheres.
Nearly all of the aforementioned trends will complicate the US national security horizon in the coming months, but doom and gloom need not be the prevailing sentiments. In crisis, there is always opportunity, and on the cusp of a new presidential administration, the United States has a prime window to capitalize on developments across the globe, seizing the moment to expand the long term influence of American commercial enterprise and bolstering its foreign policy prospects in the process. Nowhere is this opportunity more apparent than on China’s periphery. Likewise, a looming, determinative confrontation between Big Tech and the governments of a number of open societies, the United States included, presents a chance to seriously revisit and reconstitute the relationship between large, seemingly stateless multinationals and their nations of origin, potentially shifting operational standards in a manner that better serves both national security and profit interests in the long term.
As always, the challenge of risk forecasting is that human behavior, and more precisely, human whim, remains the element that algorithmic data cannot accurately control. Governments and private enterprises must approach geopolitical risk holistically, using both human and data-based sources, in order to capture threats accurately, before they materialize into human or monetary losses. Insurance is not a solution. If the experience of 2020 illustrated one thing, it was that having fire insurance does not make the burning down of one’s house an acceptable outcome. Risk anticipation and mitigation are critical to stability in the 21st century.
1. The Underappreciated Role of Geopolitics in Cyber Security
To navigate the challenge of cyber threats successfully in 2021, leaders in both Silicon Valley and Washington must understand two things: 1) multinational corporations, particularly US tech companies, are not insulated from national security issues, and 2) global geopolitics categorically shape the cyber threat landscape.
2020 was something of a seminal moment for cyber security, with the emergence of information surrounding the unprecedented SolarWinds hack illustrating the continuing escalation of the tenacity and sophistication of nation state cyber attacks. As 2021 begins, cyber attacks are increasingly being fueled by global geopolitical tensions, with clear political, social, and cultural dimensions. It is not only governments that need to be worried about this trend: businesses can just as easily be targeted with systematic economic and industrial cyber espionage campaigns by national adversaries because information is power. National security, military capabilities, and economic prosperity can be compromised by the theft of trade secrets, proprietary data, and intellectual property housed in the private sector. Accordingly, despite not officially being public servants, corporate leaders are often faced with decisions that unavoidably impact both national security and the worldwide geopolitical landscape.
To navigate the challenge of cyber threats successfully in 2021, leaders in both Silicon Valley and Washington must understand that cyber attacks can no longer be perceived through the lens of technical, financial, and legal implications alone. The cyber threat map is interwoven like a complex tartan. Being able to anticipate when Iran is feeling pressured and likely to act out, or which autocratic leader is likely to turn the internet off in a country when political tensions rise, is just as important as making sure corporate information is shared securely. Both public and private sector leaders need intelligence about how geopolitics are likely to shape the cyber threat landscape, taking into account the clear political, social, and cultural dimensions that are essential to any effective, comprehensive cyber preparedness plan.
2. The Intersection of Climate Change and Political Stability
In 2021, climate related geopolitical risks are most likely to accelerate along two trend lines: 1) regulatory or legislative changes aimed at fossil fuel intensive industries, and 2) extreme weather events that disrupt supply chains and upend infrastructure.
At the beginning of 2020, climate change as an international political issue was on track to continue its upward trajectory on the priority list for national leaders and multilateral institutions. However, the emergence of the black swan event that is the COVID-19 pandemic, and the fiscal measures implemented in response, coupled with historically low oil prices, accelerated calls for channeling government resources toward sustainability initiatives with unprecedented urgency. Understanding the geopolitical implications of climate change can be challenging because risks must be understood both in present terms and on a much longer time horizon that extends decades into the future. As a result, effectively hedging against climate risks from a political and economic perspective requires a multi-pronged approach that utilizes risk forecasting and considers vulnerabilities across a range of timelines and thematic arenas.
In 2021, for investors, climate related risks are most likely to emerge in the form of regulatory or legislative changes aimed at fossil fuel intensive industries or disruptions to supply chains, and the market volatility that often stems from growing geopolitical risks. This includes conflict escalation as climate change magnifies resource scarcity in a number of regions around the globe. However, for businesses with tangible assets and ordinary citizens in the course of daily life, extreme weather events pose the most imminent risks, upending infrastructure, agricultural yields, and supply chains.
3. Digital Disruption 2.0
In 2021, open societies will find themselves in an increasingly precarious position, as formal political institutions struggle to react effectively to civic mobilization catalyzed by social media platforms and other disruptive digital technologies.
By 2020, the concept of digital technologies as inherently unbiased conduits for information sharing had been shattered. In recent months, geopolitical events have magnified the capabilities of Big Tech to influence public discourse, while civil and political institutions have struggled, quite visibly, to keep pace. These trends will continue to gain momentum in 2021, as traditional communication pathways and democratic processes are sidelined by algorithms designed to keep individuals engaged, but not necessarily informed. In particular, open societies which promote and, to varying degrees, protect the free distribution of information will become increasingly unstable, with threats to national security and domestic stability emanating from the same digital spaces. In the year ahead, the risks posed by digital disruption will stem largely from the inability of governance institutions to efficiently and effectively contain or restrain foreign and domestic actors who have mobilized social media to further their own, frequently nefarious, objectives. Consequently, challenges are likely to manifest in three arenas: 1) the persistent propagation of disinformation by malign actors seeking to amplify existing public discord, 2) increasing polarization of populations, and 3) the continuation of both legitimate, non-violent public protest as well as destructive civil unrest.
4. The Persistent Threat of the Islamic State
In 2021, one of the most significant global geopolitical risks will continue to be the pervasiveness of the Islamic State’s ideology and the resulting persistent, worldwide threat of terrorist attacks.
Twenty years after 9/11, the Western security apparatus is still largely operating within the “Global War On Terror” framework, focusing on targeting big name terrorist brands by eliminating leadership and clearing out geographic safe havens. While the Global War on Terror approach can claim some successes, the problem is that it simply does not work in an era characterized by diffuse networks. Nor does it recognize the biggest threat — and challenge — to counterterrorism strategy: you can’t kill an idea. The decade of the 2010s was the deadliest on record, with over 182,000 people killed by terrorism; more than double the tally from the 2000s. The numbers are staggering, but so too is the geographic dispersion of deaths from terrorism. Since 2013, Islamic State (IS) affiliated groups and individuals have perpetrated more than 3,000 attacks in 48 countries outside of Iraq and Syria, with 382 attacks in 27 countries conducted in 2019 alone. While IS has been severely weakened, it has not been eliminated. On the contrary, IS’s global network has become increasingly deadly, shining a giant spotlight on the strength of its ideology and particular style of terrorism. Though this diffuse spread of ideas has seen the bulk of terrorist activity now concentrated in South Asia and sub-Saharan Africa, the jihadist threat in Europe is no less real and will not subside in 2021.
5. Macron and the Future of the European
2021 is poised to be an inflection point in the history of the European Union (EU), and the level of success French President Emmanuel Macron is able to achieve resetting France’s social, economic, and security trajectory will be an indicator, more broadly, of the EU’s future.
As 2020 began, the European Union (EU) was already approaching critical mass with respect to numerous social, economic, and political pressure points: migration, climate change, aging populations, digital disruption, debt crises, the rise of far right movements, shifting relationships with foreign powers, terrorism, and growing disparities in EU member economies. The EU’s management (or lack thereof) of the COVID-19 pandemic exposed a number of inconvenient truths about Europe’s future as a cohesive union, including the heightened importance of national identity and the social and economic contract between a state and its citizens. Germany’s post-Merkel future is uncertain and the United Kingdom is preoccupied by the immediate aftermath of Brexit. In contrast, French President Emmanuel Macron is stepping into a leadership role that is becoming increasingly global. He should be supported and applauded for his willingness to have tough conversations about challenges that are not going to simply go away — a feature that sets him apart from many predecessors. Macron should also be lauded for acknowledging not only that the social contract between state and citizens needs to be reconceived, but that it is also not a one-way transaction. Progress will not be just about the state doing more, but about the state doing some, and the people — French people of all religious stripes, including Muslims — doing their part as well.
6. UAE Up, Saudi Arabia Down
Building upon a foundation laid in 2019 and 2020, the United Arab Emirates is poised to capitalize on a year of shifting alliances and strategic maneuvers in the Gulf that is likely to position it as the prime Sunni Arab power broker in Middle Eastern regional politics for decades to come.
In 2020, with events ranging from the collapse of oil markets in the spring to the United Arab Emirates’ (UAE) landmark normalization of relations with Israel, the trend of Emirati ascendance we identified in December 2019 gained critical momentum. Now, at the beginning of 2021, the changing dynamics of Gulf politics remains in critical focus not because we expect any major shakeup in the regional pecking order, but because, now that the foundation has been laid, the next 12 months will mark a period of shifting alliances and strategic maneuvers that is likely to position the UAE as the dominant Sunni Arab power broker in Middle Eastern regional politics for decades to come. Though Saudi Arabia will remain an economic heavyweight, the growing weight of its transgressions will continue to shift international attention. Saudi Arabia will not be officially isolated, but it will become increasingly irrelevant as cost-benefit analyses in Washington, New York, London, Tel Aviv, and elsewhere dictate that a better return on diplomatic, financial, and military investment can be achieved by working with other regional partners, prime among them the UAE. In some ways, the UAE’s behavior is no better than Saudi Arabia’s, and the UAE and Saudi Arabia will retain close ties. Nevertheless, a number of the UAE’s recent policy choices stand in stark juxtaposition to those of its largest neighbor, expanding opportunities to capitalize on Saudi Arabia’s errors and enabling it to gradually build more distance and bolder strategic independence on the world stage.
7. The Relentlessness of Putin
With 2021 set to be a pivotal year for Vladimir Putin, Russia’s adversaries will be challenged to balance how their own national security and foreign policy resources are devoted to legitimate events that dominate headlines versus those that aren’t easily perceived by the naked eye.
2021 will be a pivotal year for Russian both at home and abroad, with anticipated events poised to have a determinative impact on Russia’s trajectory for years, if not decades, to come. With Putin’s omnipresence — the visible and invisible hand — as the defining feature of Russia’s strategy, how domestic political rivals and international leaders ranging from US President-elect Biden to Syrian dictator Bashar al-Assad maneuver in and around his path will significantly shape the global geopolitical landscape for future generations. For Russia’s adversaries, the United States included, the challenge will be to balance how national security and foreign policy resources are devoted to legitimate events that dominate headlines versus those that aren’t easily perceived by the naked eye.
8. The US and China: A Race for Influence
In 2021, China will continue to seek consolidation of regional influence through transactional diplomacy, and the United States would be wise to take advantage of opportunities in countries on China’s periphery that could advance geostrategic security and commercial interests, all while pushing back against Beijing.
With growing awareness and recognition in Washington that China currently poses the most significant long term threat to American civilization, competition between the two powers will intensify in a number of thematic arenas and regions over the coming year, even if the tenor of the exchange shifts. Given developments in the last four years, the incoming administration would be wise to take advantage of opportunities in a number of China’s peripheral countries that could advance US geostrategic security and commercial interests, all while pushing back against Beijing. The experiences of India, Taiwan, Mongolia, Kyrgyzstan, Kazakhstan, Vietnam, and Laos all offer valuable lessons on China’s economic and policy missteps and future intentions, but also reveal conditions that are ripe for strategic US political and economic investment in the coming year.
9. The Displacement of Traditional Diplomacy
The past four years have witnessed a meaningful departure from the norms and customs that defined international diplomacy in past centuries, leaving Antony Blinken, incoming Secretary of State, with a challenge: how to strike the right balance between embracing the prevailing trends, which have led to a number of indisputably positive developments, and transitioning to a modus operandi that accounts for a wider array of geopolitical concerns and ratchets down tensions in the process.
As former Deputy Secretary of State Antony Blinken prepares to take the helm of American diplomacy, the world looks vastly different than it did when he previously left office. While the basic organizing principles of foreign affairs remain the same, the past four years have witnessed a meaningful departure from the norms and customs that defined international diplomacy for much of the 20th and early 21st centuries, with such changes most visible in shifts in communication techniques, expanding use of technology (transparent and unacknowledged) and accompanying growth in the role of technology companies in diplomatic processes, and a rise in overt transactionalism. The Trump Administration certainly contributed to the ascendance of these new trends, but it did not act alone in accelerating them. Rather, its seemingly unconventional approach entered the world stage at a moment when the global audience, dominated by figures such as Xi Jinping, Mohammed bin Salman, and Vladimir Putin was uniquely receptive to a revised, often digitized and confrontational form of realpolitik. This reality leaves Antony Blinken, and many of his European counterparts who are eager for change, with a challenge: how to strike the right balance between embracing the prevailing trends, which have led to a number of indisputably positive developments, and transitioning to a modus operandi that accounts for a wider array of geopolitical concerns and ratchets down tensions in the process. Developing strategies for meeting this challenge is not an academic exercise for the policy elite: it is a critical process that will have profound consequences for asserting and retaining international influence, both for countries and their private sectors. For American companies in particular, it will substantially affect long term access to markets in Asia, Africa, and South America.
10. The Long Term Impacts of COVID
The first rounds of vaccine rollouts have given the world a sense of optimism, but unfortunately, with the continued discovery of variants and uneven impacts of the pandemic, populations should expect the year ahead to look a lot more like 2020: The Sequel than life before the pandemic.
The ways in which the historic Covid-19 pandemic has intersected other geopolitical risks will leave a lasting imprint on 21st century life, permanently altering everything from daily routines to global supply chains to the development of technology. The challenge for most in 2021 will be to look beyond the politicization of the pandemic and to recognize that COVID-19 and other, future pandemics must be accounted for in government and enterprise risk protocols. With recent evidence suggesting that some variants may be resistant to existing vaccines and a rollout schedule that is slow and uneven, it is overly optimistic to expect that a sufficient percentage of the global population will be vaccinated even by the end of 2022. Countries that lag behind will struggle to rejoin the international economy. The implications of this endless game of whack-a-mole are huge and will include a retardation of global economic activity, making international trade riskier and foreign direct investment more complicated. Increases in other forms of morbidity and mortality are likely, as are rollbacks in recent gains in female empowerment. By 2024, some parts of day to day life will resemble the experience of 2019, but in the meantime, humanity must face 2021 with realistic expectations. Simply waiting for a return to “normal” will leave businesses and individuals ill-equipped for what are certain to be permanent changes to the way society operates and ill-prepared to anticipate, let alone take advantage of, geopolitical opportunities that will emerge as a result of the pandemic.