The year that was
A review of the geopolitical risks of 2023.
Welcome to this week’s Not in Dispatches, where we look back through 2023 and examine what were considered to be the year’s major risks, and how things actually unfolded. In January, we’ll chance our arm at our own key risks for 2024, using some of the input made by you in our recent polls.
But first, a caveat. Rubbishing the claims people from the past made about the future can be amusing – whether those people made predictions in 1923 (see image above) or 2022 (see an old copy of every news magazine or consultancy thinkpiece from a year ago). But as a wise person, possibly Niels Bohr or Yogi Berra, once said: "It is difficult to make predictions, especially about the future."
And with their complex, chaotic and reflexive factors, it is especially difficult to accurately predict geopolitical events.
Predictions made in late 2022, or early 2023, were often based on the best available information at the time and applied with the best possible judgement. Further, it is far easier to criticise than to sit down and produce reasoned predictions based on unknown future events.
All the more reason, as we’ve said before, to use scenario planning, which considers a range of possibilities, or structured analytic techniques, which force a range of considerations, rather than just make probabilistic forecasts on single outcomes. And even more reason to make frequent event monitoring – as we do in our daily dispatches – part of your professional habits. After all, you wouldn’t plan your day around an annual weather forecast.
With that caveat in mind, we’ve gone through a series of major trend reports from a year ago and present a summary of the best (and worst) of them. We won’t name names, but we will outline some of the common themes.
What people thought then about now.
In late 2022, most forecasters used a usually reliable rule of thumb and extrapolated the present to the future.
The COVID-19 pandemic would be well and truly over, they predicted. Russia would lose the war in Ukraine and retreat to its borders. Europe was predicted to emerge stronger than ever. The G7 and NATO, too, were strengthening. Renewables were winning the energy revolution. American power (versus China) was unrivalled. Donald Trump was toast.
And to be generous, some of this looks more or less accurate at the other end of 2023.
We ARE mostly through the pandemic. NATO is bigger, if not stronger. And renewables are becoming cheaper (even if many firms are still unable to produce them without subsidies).
Yet some of the other common predicted risks and trends are wide off the mark.
The EU is in an economic slump, and experiencing a populist turn from Slovakia to the Netherlands. Ukraine’s resistance against Russia looks shaky as supplies from Western nations teeter. And, despite his legal woes, Trump has again emerged as the Republican favourite, if not favourite for the presidency itself.
Beyond these headlines, some other common forecasts emerged around conflict, technology, climate and the economy.
Top of many lists was the chance of the Russia/Ukraine war spilling over into a conflict involving Europe, or NATO, as well as the possibility that Russia would deploy its nuclear arsenal to defeat Ukraine.
As it turned out, the war in Ukraine has been protracted but contained. This has demonstrated the weakness of the Russian army in carrying out its strategic goals but it also demonstrates the strength of Putin’s political position. He hasn’t needed to escalate to stay in power. And while Russia has arguably lost influence in many of the states where it used to carry weight – such as Armenia, Kazakhstan and Kyrgyzstan – it has gained influence elsewhere, from India to Africa to the Middle East. And while domestically his military authorities faced a rebellion from the paramilitary Wagner Group, today Putin ends the year as politically strong as ever.
A second major risk identified by many was the possibility of widespread AI leading to mass job losses and large disinformation campaigns.
For a moment, this seemed true. When ChatGPT was launched in November 2022, it took the world by storm. Its ability to synthesise information and produce human-like text made it seem like just a matter of time before AI replaced many jobs.
Yet, at the backend of 2023, AI’s advancement seems like another incremental improvement in technology. ChatGPT, while impressive, has not yet replaced many jobs and its limitations have become apparent. AI voiceover is still a work in progress. If ‘tipping point’ means the point at which AI produces solutions or material better than what humans can, we are not quite there yet.
A third major risk for 2023 was the risk of rising interest rates and an accompanying recession.
As it turned out, the global economy was more resilient in 2023 than most had expected, particularly in the first half. Jobs data, consumer spending, and GDP growth remained higher than expected in the US and several other advanced economies. Inflation remained far more problematic than initially predicted – with rising costs a feature of advanced economies throughout 2023 – but as the year comes to a close this too is moderating.
However, for many emerging markets, inflation has remained sticky just as export-led growth models have come under strain.
In Argentina, this has led to mass immiseration and the election of a populist radical. In Lebanon, it has led to an even more fractured society and a resurgent (if slightly risk-averse) Hezbollah. Turkey, having re-elected Erdogan who has assembled a new economic team, is only now beginning to see a turn for the better. Food costs in India and Southeast Asia are hurting the urban poor. In Africa, price-linked hunger has gotten worse. Inflation in Venezuela, Sudan and Zimbabwe is now at over 200% annually.
A fourth major risk was China, including the risk of a conflict over Taiwan, real estate problems affecting the global economy, or a centralisation of power leading to overreach.
These risks have somewhat materialised. In early 2023, Xi Jinping’s zero-Covid strategy was followed by a very abrupt lifting of restrictions, with damage to both public health and the economy. The property sector’s debt overhang carried into a sustained slump. A stray Chinese weather balloon over North America brought with it the premonitions of World War III.
Meanwhile, Xi stoked tensions in the South China Sea, kept amassing troops along the contested Indian border, and ratcheted up talk over Taiwan.
But while tensions in the South China Sea and over Taiwan have seemingly increased, they haven’t materialised into devastating action (unless you count laser pointers, pseudo-fishing armadas and water cannons). In fact, despite China’s more bellicose position on strategic matters, it has been quietly trying to find accommodation on trade and technology, driven by its relatively poor economic performance domestically.
And moves to maintain dialogue with key partners, particularly the United States, saw the careers of several senior ‘wolf warriors’ come to an abrupt and often mysterious end. In November, Xi and Biden met at APEC and agreed to resume high-level military communication between the two countries, a positive and welcome development no matter whose side you’re on.
Finally, large-scale involuntary migration and climate change were cited as two other key risks for 2023.
On this, the pundits were on the money. The year 2023 has been called by many scientists the “hottest on record” (albeit depending on which records). Large-scale migration has been seen from Central America to North Africa to Eastern Europe.
However, it was not climate-related migration that took hold in 2023, but conflict-related migration. Mass displacement continued throughout Ukraine in 2023, with now roughly 8 million people displaced. In the Democratic Republic of the Congo, an estimated 6 million people have fled their homes, as the rise in attacks on civilians by non-state armed groups increases.
Coups in Mali and Niger amid ongoing insurgent wars have meant more people have sought refuge in other parts of the country and across borders, including in Europe.
In Afghanistan, the Taliban takeover has compounded a disastrous humanitarian crisis, with half the population now stuck in poverty and aid agencies unable to easily operate. The expelling of Afghan refugees from Pakistan, meanwhile, has put more people on traditional migratory routes to Iran, Turkey, and Europe.
And while the Israel/Hamas conflict has led to 1.7 million displaced within Gaza, for the moment, few have been unable to cross the border into Egypt or Israel to escape. The year 2024 may see a different story.
The effect of mass migration continues to impact politics in host countries too. In Europe and the UK, xenophobic sentiments have taken hold, with several leaders in Europe actively espousing restrictive immigration policies. And even in countries with ostensibly left-leaning governments – including the US, Canada and Australia – immigration targets are being re-examined and tightened.
Many, if not all these themes are continuing into 2024. A handful of wildcards or ‘black swan’ events – from the takeover of Nagorno-Karabakh to the Hamas attacks in Israel to the threat against Guyana – are said to have come from left field, but these too form part of a larger pattern (e.g., the challenge to the US rules-based order; cost of living pressures; a distracted Europe and Russia).
It’s inherently impossible to know what the black swans will be in 2024 (even if most appear obvious in hindsight), but we’ll leave our thoughts on those for the new year.
We’ll be back next week for a final Not in Dispatches.
The Geopolitical Dispatch team.