Geopolitics is likely to have an increasing impact on investor portfolios.
The existing world order, a US-centric unipolar world, is currently being challenged by rising economic and military powers.
From world order cycle analysis, we have come to understand that the most turbulent geopolitical period in history is when the world order cycle moves from a unipolar to a bipolar state.
Friction between the hegemon to retain the status quo and the rise of budding new great powers to create an independent system to conduct international trade, norms, and rules outside the US dollar could lead to more geopolitical crises.
“The existing world order, a US-centric unipolar world, is currently being challenged by rising economic and military powers”
Deteriorating geopolitics in Europe between Russia and its neighbors is a big one to watch
The Ukrainian war is coming to its year anniversary, and few would have forecasted a year ago that the war would drag on for so long claiming hundreds of thousands of lives, billions of dollars in property infrastructure damage, and creating millions of displaced people.
Here comes the kicker; With the Minsk accords in place, this war should have been averted.
A Discussion of the war in Ukraine is an uncut insight into the conflict.
The trashing of the Minsk accord has now led to the world’s great nuclear powers, Russia and the US, no longer trusting each other, which is a precarious state for global security.
“The Ukrainian war is coming to its year anniversary”
Is the Ukraine war another resource war, farmland an energy logistic hub connecting Russian Gas with western-central Europe?
Europe’s energy and security policy has been blinkered back along the US-centric road. Buying energy in USD and fortifying NATO strengthens US hegemony with the USD as the world reserve currency.
“Energy shortages have triggered chatter about blackouts this winter in Europe” – Win Investing
The war in Europe is impacting investing
War is inflationary, as men and machines engaged in war cause shortages, scarcity, and prices to rise. Food hyperinflation and shortages could get worse as the impact of Europe’s breadbasket offline takes hold in 2023. The grains in the bread on your dinner table take one year to grow from planting to harvesting. If 2023 is a bad harvest, we could see chronic global shortages of grain.
Food insecurity could put further strains on geopolitics as wheat exporters ban the export of their grain.
India’s wheat export ban in June 2022, was criticized for worsening the global food supply situation in the wake of the Ukrainian war.
Energy shortages have triggered chatter about blackouts this winter in Europe. But fortunately, the mild climate has prevented that from happening so far.
Geopolitics in Asia, particularly China, is another one to watch
Saudi Arabia considering accepting the Yuan instead of US dollars was a big story in 2022.
China’s Xi said that the summit with the Gulf and Arab League is a ‘milestone’. Indeed, it would mark the beginning of the end of petrodollar dominance. If so, this would be another event in the geopolitics cycle underscoring the end of a unipolar world.
The US is growing wary of increasing Chinese influence in the Arab world.
But Arabs are ignoring US requests to limit China ties and cut off Russia.
So from the geopolitics stage, we see China eating the US lunch on the global diplomatic stage and Russian militarism in Europe.
“Ukraine, Europe, and Taiwan, Asia, it is the same playbook on different continents” – Win Investing
The above-outlined changes will have life changes for investors.
Meanwhile, the US answer is war games, which instigate a US intervention in a possible Taiwan Strait conflict.
Center for Strategic and International Studies (CSIS), a US think tank, said the simulations indicate the US, Japan, and the island of Taiwan would suffer tremendous losses in defeating the Chinese People’s Liberation Army (PLA) if a conflict breaks out in the Taiwan Straits in 20.
In the simulations, the US and Japan lost dozens of ships, hundreds of aircraft, and thousands of service members, which would damage the US’ global position for many years, according to the CSIS report, which also predicted losses of two US nuclear-powered aircraft carriers in most scenarios and the devastation of the island of Taiwan.
The Chinese mainland would also suffer heavily, losing about 10,000 troops, 155 combat aircraft, and 138 vessels, the report claimed.
Chinese mainland experts said, according to Global Times, the ill-intended war game will only give the “Taiwan independence” secessionist and external interference forces a false vision that will lead them to their doom. On the contrary, they should refrain from any military moves, fully understand that Taiwan is a part of China, realize the deterrent in the form of the PLA, and not overestimate their capabilities.
Ukraine, Europe, and Taiwan, Asia, it is the same playbook on different continents.
So keep geopolitics on your radar, the US is waving its stick rattling a lot of people China’s population is 1.4 billion, and Russia’s 143.4 billion USD. These are not people living in mud huts. China has hypersonic missile advantages and then there is Russia’s Satan II.
Will 2023 be a milestone in geopolitics where the US realizes it is no longer the solo kingpin on the hegemon throne?
Empire in its twilight?