Global Risk: Disruption Without End?

Global Risk and Disruption: Key Panel Insights

• The Nature of Modern Risk

  • Global risks are now perceived as "ceaseless," with markets often panicking briefly before failing to comprehend the underlying complexity and moving on.
  • The defining characteristics of the current era are the acceleration of conflict to the "speed of light" and increased transparency via technology, which multiplies the difficulty for politicians to manage crises.
  • Geopolitics has returned as a primary driver of risk, superseding the post-9/11 focus on counter-terrorism, creating vacuums that states like Russia and China are actively filling.
  • Three non-geographic threats are identified as critical: cyber warfare (affecting infrastructure from grids to personal devices), digital disruption (potentially causing mass unemployment), and the unpreparedness for a pandemic similar to the 1918 Spanish Flu.

• North Korea and Denuclearization

  • The Kim dynasty's primary motivation is regime preservation, making denuclearization highly unlikely as it would expose the population's decades of deprivation and remove the regime's ultimate shield.
  • Secretary Gutierrez compares the probability of Kim Jong-un surrendering nuclear weapons to the probability of Mexico paying for a border wall.
  • Jane Harmon warns that the US risks giving away "equality" to an undeserving leader and potentially losing its nuclear shield or troops in the region.
  • Jim Stavridis notes that while talk is preferable to bombing, a Nobel Peace Prize for a leader like Trump is premature, as a resolution requires years of work and is not guaranteed.
  • Panelists express concern that US withdrawal from the TPP and previous failures to enforce red lines (e.g., Syria chemical weapons) encourage adversaries like North Korea to believe the US lacks commitment to long-term agreements.

• Russia and European Security

  • Russia is described as an "angry island" with a declining population, an economy reliant on hydrocarbons ("the largest gas station in the world"), and a leadership that employs "protection racket" tactics and hybrid warfare.
  • Specific flashpoints include accidental collisions in Syria and a potential Russian overreach in consolidating control over Crimea and Ukraine.
  • Peter Mandelson warns that Russia interferes in European elections by backing extremists on both the far right and far left to undermine European unity.
  • Europe is emerging from a decade of crises (financial, sovereign debt, refugee, terror, Brexit), but tensions remain regarding the health of the Atlantic alliance and the Iran deal.
  • Brexit is viewed as a strategic setback for Britain, reducing its foreign policy multiplier, diminishing its influence in international institutions, and likely leading to a downward trajectory in military spending.

• China and Trade Dynamics

  • China's economy is at an inflection point with debt reaching 250% of GDP, driven by state-owned enterprises and overinvestment in sectors like steel and real estate.
  • The US "301 mechanism" tariffs targeting $50 billion of Chinese imports for intellectual property violations are viewed as tactical, but efforts to change China's "Made in China 2025" strategy are considered a "fool's errand."
  • Secretary Gutierrez argues that the US must accept different acceptable political and economic differences rather than attempting to fundamentally change the Chinese system.
  • The South China Sea is identified as a high-risk flashpoint where China's territorial claims could lead to increased confrontation, particularly as economic growth slows.
  • The US withdrawal from the Trans-Pacific Partnership (TPP) is criticized as a major geostrategic mistake that opens space for Chinese influence in Asian trade.
  • China employs a "whole of nation" approach to advancing interests, integrating economic, cyber, and diplomatic strategies, a model the US has yet to match with a "whole of government" response.

• US Military Strategy and Policy

  • Congress faces the challenge of maintaining a military capable of handling diverse threats, from nuclear states to pandemics, without relying on the executive branch's fluctuating rhetoric or tweets.
  • Jim Stavridis and Jane Harmon agree that the US lacks a coherent, sustained long-term strategy for military deployment and alliance management since 9/11.
  • Defense spending had fallen 20% below 2010 levels two months prior to the panel, prompting a need to rebuild capability against peer competitors.
  • The Trump administration is credited with beginning to align budgets with strategy, but critics note a lack of sustained leadership and the failure to pass a new Authorization for Use of Military Force (AUMF).
  • The US is not a signatory to the Law of the Sea Convention, weakening its moral standing in disputes regarding the South China Sea.

• Leadership and the Changing Political Landscape

  • Traditional statesmanship is hindered by social media's "boom box" effect, where instant reactions and information silos prevent leaders from building consensus or gaining time for complex negotiations.
  • Leaders are now judged on "seconds," making the "speak softly and carry a big stick" approach difficult to execute without immediate backlash.
  • Peter Mandelson suggests that Trump's "predictable unpredictability" can be a diplomatic asset if backed by genuine military strength, causing adversaries to pause and think twice.
  • Secretary Gutierrez argues that leadership must be "deals in hope, not fear," contrasting current leadership with historical figures like Churchill and Roosevelt.
  • A critical deficit identified is the failure of the US to educate its public on the value of the "liberal international order," leaving the US vulnerable to isolationism.
  • Kim Jong-un's sophisticated social media management and image-shifting are noted as a significant, albeit dangerous, evolution in how authoritarian leaders manage global perception.

• The Iran Nuclear Deal

  • The potential US withdrawal from the Iran deal is flagged as a critical test for the credibility of Western negotiations and the cohesion of the transatlantic alliance.
  • Panelists worry that if the US reneges on a signed deal, it will erode trust in future international agreements and make collective sanctions policy harder to enforce.
  • The decision to withdraw would be complicated by the precedent set by Libya, where the removal of nuclear arsenals led to the overthrow and death of the leader, discouraging other nations from denuclearization.

• Cyber and Technological Vulnerability

  • Cyber threats are described as "infinitely broad," ranging from national infrastructure to personal devices, requiring agility and flexibility that current military structures lack.
  • The Internet of Things (IoT) is identified as a growing vector for attack, with experts advising caution in connecting household devices like refrigerators to the internet.
  • Digital technologies are predicted to disrupt the workforce and the economy faster than any change in the last 50 years, constituting a direct national security risk.

• Concluding Sentiment

  • The panel concludes that while the US military remains the "greatest force for good" and a stabilizing agent, rebuilding it requires bipartisan support and a recognition that military strength is a prerequisite for effective diplomacy.
  • There is a consensus that the era of "E pluribus unum" is shifting toward "E unum pluribus," with fragmentation and silos replacing the cohesive cooperation seen in the post-WWII order.
  • Despite the endless nature of risks, the consensus leans toward rebuilding military capability as the foundational step to enabling other diplomatic and strategic tools to function effectively.