Three Gigantic Global (Imminent) Risks
Disruptive dynamics that keep me up at night
I find it easier to be worried rather than complacent. Why’s that? Because I am inevitably wrong, and I prefer to be surprised positively. I’d rather be concerned about something that doesn’t happen than to be shocked by unexpected developments. It’s in that spirit that I offer three of the biggest global risks I see on the horizon, each of which has the potential to upend the world as we know it. While I can’t comment on their likelihoods, I firmly believe these three (interconnected) developments will define the geopolitical, technology, and economic landscape over the next few decades.
The reason I chose these three risks is their timelines: each of the topics below has the potential to catalyze massively disruptive developments in the weeks and months ahead, creating ripples that will impact our world for decades. This is not to suggest that other gigantic global risks (such as climate change, inequality-driven social unrest, migration pressures, uncontrolled biotechnology, etc.) are not worthy of our attention, but rather that the following three risks appear more immediate.
US-CHINA WAR
Unsurprisingly, at the very top on my list is the escalating US-China war, the single most important geopolitical dynamic in the world today. I have explicitly used the word “war” rather than “rivalry” or “competition” to express the belief that the United States and its allies are, like it or not, already in the midst of a de facto war with China. Sure, it hasn’t turned kinetic, but it is a conflict with many fronts—a trade war, a currency war, a space race, an arms race, a technology war, and ultimately, a war of values. Don’t be fooled by rhetoric that suggests we are merely in a competition.
One of my earliest mentors who had a huge impact on my thinking was Ambassador James Lilley, who was America’s top diplomat in China during the Tiananmen Square massacre. I had the honor of being an intern for him at the American Enterprise Institute for the summers of 1993 and 1994. Among the many pearls of wisdoms he shared during the course of my two summers helping him was his strong belief that actions speak louder than words, and that in order to understand China, we need to study their actions, not their words.
Doing so is telling. The Chinese Communist Party (CCP) assured the Obama administration that it would not militarize the South China Sea, but its actions tell a different story: it has built military bases on newly-created islands. The CCP stated the education camps in East Turkestan are there to help keep China safe, but investigations by Amnesty International reveal concentration camps seeking to exterminate Uyghur and Kazakh culture within Xinjiang, leading the American government to call the situation a genocide. And let’s not forget the CCP expressions of support for climate change mitigation efforts, while its actions include frenetic building of coal-fired power plants.
There are many aspects of this US-China War that I will explore in future commentary, but for now, let’s focus on Chinese expansionism. What is the likelihood and timeline of a potential reunification effort with Taiwan? Will it involve armed conflict, and if so, will the US provide moral support, military aid (i.e. dollars), and/or military support (i.e. troops)? Is it possible that China would instead begin its expansion elsewhere? Might Japan or Australia be easier targets for the PLA, given the increasing focus on Taiwan? Or perhaps Central Asia? How will each of these possibilities affect the global economy and the ability for businesses to operate?
Other potential implications of the US-China War include the death of multilateralism (does the UN continue to serve any meaningful purpose at this point?) and rapidly increasing global competition for scarce energy, agricultural, and other critical resources. Russia’s invasion of Ukraine might also be relevant: Could it be possible that the China-Russia-Iran alliance feels the need to use nuclear weapons as defeat in Ukraine grows in likelihood?
ARTIFICIAL INTELLIGENCE
The rapid acceleration of artificial intelligence is likely to be one of the most disruptive developments of our time. It will impact the nature of geo-strategic competition, corporate competition, human interactions, and even our individual belief systems. AI will impact every industry across every geography and impact most functions. And surprise surprise, it’s also related to the first risk in that AI advancements have created a chip war between America and China.
Thinking through the many risks of AI will be the subject of future commentary, but again, I want to focus on one potential application through which artificial intelligence will disrupt our belief systems. That application is something known as deepfake technology, through which videos of real people are generated to deliver fake messages. Consider one use of the technology: ransom attacks. Imagine a video image of your spouse being held by a hostage and desperately pleading for you to send bitcoin in the next hour to meet their assailant’s deadlines. The video is so realistic that you can’t help but assume it’s real. How would you react? What if it were a phone call from your child in which she had forgotten her social security number and was at the bank needing you to read it to her? The voice on the phone is indistinguishable from her real voice that you don’t even consider the possibility that it might not be real.
I’m not a biologist or medical practitioner, but I’m pretty confident that our finely tuned human perception systems are not ready to deal with this reality-shattering possibility. Who and what will we trust? How can we know anything is actually true in the virtual world? Will such a breakdown of basic perception lead to other unforeseen problems? Can governance structures such as democracy survive in such a world?
One of the most interesting commentaries on the risks emerging from AI is a talk by Tristan Harris and Aza Raskin of the Center for Humane Technology. They were major contributors to The Social Dilemma, the docudrama about social media risks that has been watched by more than 100 million viewers in 190 countries in 30 languages. Here are some highlights of the AI Dilemma that I hope entice you to watch; I promise it won’t be a waste of your time.
“2024 will be the last human election”
“Loneliness [will] become the biggest national security threat”
“50% of AI researchers believe there’s a 10% or greater chance that humans go extinct from an inability to control AI.”
US DOLLAR DYNAMICS
The third topic that keeps me up at night is the US dollar, or more specifically, its global reserve currency status. Because most of the world’s reserves are maintained in US dollars, the appetite for American debt is almost inexhaustible, allowing America to borrow more, spend more, and do more than otherwise possible. Further, given most trade is settled in US dollars, there seems to constant demand for the greenback. Other global powers, noting the “exorbitant privilege” conferred on America by the US dollar’s role, are now actively seeking to displace it.
A couple of years ago, I had a chance to speak with Ambassador Kishore Mahbubani (video of my conversation), former President of the UN Security Council and a leading Singaporean diplomat. At the time, he had just published a book titled “Has China Won?” and we had a spirited discussion about mistakes both sides had made and the outlook for potential conflict. One of the biggest mistakes America had made, he suggested, was the weaponization of the US dollar against America’s rivals and enemies. It’s incentivized countries around the world, and especially China, to encourage the use of and to develop new non-dollar currencies, he claimed.
Recently, we’ve seen more frequent news about a BRIC currency (BRIC is a term that referred to Brazil, Russia, India and China). Leaders from the emerging market nations have noted a new currency would protect their countries from sanctions should they find themselves in disagreement with the United States. While news like that might normally be dismissed as the normal banter against the dollar that has existed for decades, it has been more noteworthy as it took place in the context of several other developments.
Consider the following:
In March 2023, Brazil and China agreed to begin using the Chinese Yuan to settle bilateral trade between the two nations.
In the wake of US sanctions on Russia following its 2022 invasion of Ukraine, India accepted delivery of Russian oil and paid for it in Russian rubles.
India recently signed an agreement with Malaysia allowing for bilateral trade to be settled in Indian Rupees; the country has also issued statements calling for the use of INR more broadly in the use of trade settlement.
In March 2023, China accepted a delivery of liquified natural gas (LNG) and paid for it in Chinese yuan, the first time it had not settled hydrocarbon imports in US dollars.
In summary, every one of the BRIC countries has been increasingly (and publicly) making gestures to move off the US dollar. It’s also worth noting that the Russian news outlet RT recently announced that a new BRICS (the “S” is for South Africa, inconsistently included) currency, backed by gold, would be launched later in August 2023.
If global faith in the US dollar were to ever be lost, the entire global economy would face a jolt of readjustment that would threaten the very viability of the US economy. And even if this new gold-backed currency does gain traction, it will take years before corporate leaders (and other stewards of large pools of capital) would be willing to park tens of billions of dollars in another currency. Is a new global currency an imminent possibility? Certainly. Will it have immediate consequences? Perhaps. Might it have long-term ramifications? Definitely.
OPPORTUNITY WITHIN RISK
Every risk is accompanied by tremendous opportunity… and the three risks I highlight here are no exception. Leaders who take the time to understand a wide range of potential outcomes for ambiguous developments will be better positioned to successful navigate the uncertainty plaguing our world…and doing so will not only generate a better understanding of the risks, it will also help identify opportunities.
About
Dr. Mansharamani is a global generalist who tries to look beyond the short term view that tends to dominate today’s agenda. He spends his time speaking with leaders in business, government, academia, and journalism…and prides himself on voraciously consuming a wide variety of books, magazines, articles, TV shows, and podcasts. LinkedIn twice listed him as their #1 Top Voice for Global Economics and Worth profiled him on their list of the 100 Most Powerful People in Global Finance. He has taught at Yale and Harvard and has a PhD from MIT. He is also the author of THINK FOR YOURSELF: Restoring Common Sense in an Age of Experts and Artificial Intelligence. Follow him on Twitter or LinkedIn.