Pre-Coronavirus Geopolitical Risks Not in Quarantine
From North Korea, to the Middle East, to a festering Cold War, geopolitical risks remain, and deepen.
If we think back to the summer of 2019, the status of geopolitical tension in the world was high. Trade wars between the United States and China, a wounded and provocative Iranian regime, and a North Korean regime still shooting rockets over the heads of neighboring countries. Or, back to January 2020, when the provocations and threats of the Iranian regime led to the killing of it’s top war lord and designated terrorist Qassem Soleimani by the United States, convincing many that we were on the brink of World War III.
That was all before the advent of SARS-CoV2, the Wuhan coronavirus, whose fearful spread has led to the largest societal disruption in the West since World War II.
Naturally, much of the world’s focus has been on the pandemic, but that doesn’t mean the extant geopolitical flash points were diminished. In fact, they’ve been simmering more and more, promising that even a world freed of COVID-19 fears will be one of historically heightened international tension and risk.
North Korean dictator Kim Jong Un has been presiding over further missile and rocket launches in recent months, the latest coming at the end of March, in which multiple short-range ballistic missiles were launched, landing in waters between the Hermit Kingdom and Japan. At this point, these launches have become routine, and increasingly less provocative as far as global media is concerned.
But earlier this week, reports emerged that Kim Jong Un had complications during surgery which landed him in critical condition. Suddenly, the risk of succession in an oppressive and volatile rogue state has come into play, and the emerging consensus is that Kim’s trusted advisor and sister, Kim Yo Jong, is next in line if the dear leader dies.
While South Korean and Chinese sources have downplayed the rumors about Kim’s health, even a small potential of power transitions in such a rogue nation is worth paying attention to, as we’ve no clue about the leadership style of possible heirs and what that could mean for regional stability. Kim Yo Jong maybe a favorite of Kim’s, but the North Korean power and cultural structure has historically prioritized masculinity in leadership roles. So IF Kim died, there very well might be a struggle for power in North Korea, despite the best laid plans.
Now, no one really expected this geopolitical hotspot to cool off while the world dealt with a pandemic, but even less people expected crude oil prices, the the region’s life blood, to go to zero…and then keep going. The oil price war involving the Saudis and Russians, and the financial market implications it has for the whole world, is something we’ll cover in further detail for subscribers soon, but such price shocks create the backdrop for nearly all significant actors in the region.
The Islamic Republic of Iran, the world’s leading state sponsor of terrorism, sits on approximately 13 percent of the world’s proven oil reserves, and even though sanctions spearheaded by the United States have blunted production and sales in recent years, the regime still relies heavily on oil proceeds from sales to China and others for revenue. With crude oil prices slashed by some 70 percent, that means enormous pressure on an already strained regime, and THAT means the probability of desperate actions increases markedly.
In recent days, the U.S. Navy reported one of its ships being swarmed and harassed by nearly a dozen Iranian gunboats while sailing in the Persian Gulf. U.S. President Donald Trump made clear what consequences would come from further escalation, tweeting that the U.S. Navy has been instructed to ‘shoot down and destroy any and all’ Iranian gunships that harass U.S. ships in the gulf.
That’s the kind of tit-for-tat that may have spiked oil prices a year ago. Was that part of the motivation now that oil prices are so low? Perhaps; either way, this is another example of a geopolitical flash point that has in no way receded due to a novel coronavirus, and we should expect these tensions to worsen as low oil prices persist.
Moreover, we’ve not even mentioned the ongoing conflict in Syria, or the increasingly audacious policies of Turkey in the region. The latter, led by a virtual dictator in Recep Erdogan, has taken advantage of chaos to increase power and influence internally, within the region, and beyond.
Earlier this year, before the coronavirus chaos was in full effect in the West, Erdogan was threatening to flood western Europe with millions of refugees from the Syrian Civil War. Reports of Turkish armored vehicles bulldozing Greek border barriers to let refugees through have been common. The threats have come whenever the Turkish strongman feels he isn’t getting what he wants from the European Union in way of financial assistance. The COVID-19 crisis may have covered up our memory of the EU migrant crisis, but it certainly did not eliminate the risk. It may have even compounded it.
Cold War 2.0
This is one category of political risk that has not been taken out of focus because of the COVID-19 pandemic. Rather, the clash of the world’s two most influential powers maybe in the spotlight more than ever as the United States becomes an epicenter of a novel coronavirus that first emerged in Wuhan, China.
Before the pandemic panic settled in, the world was had already mired in a protectionist trade war that was distorting and disrupting commerce all over the world. While the tolls of the virus mitigation policies have made trading 25 percent tariff announcements between the world’s two largest economies seem like tame problems to have, it has only exposed how deep the diplomatic divide is.
There is growing confidence in the United States that the novel virus was first unleashed accidentally from a Wuhan laboratory specifically dedicated to studying such viruses. Then, U.S. sources believe China engaged in a cover up about the extent and nature of the virus that put the rest of the world at a deadly disadvantage.
China is being sued in class actions, and even by states, for culpability in the contagion. Some experts look at China’s handling of the coronavirus, within the context of its long term plan for global hegemony, is a weapon of war. These are suggestions that, if proven true, would deserve stuff consequences according to the U.S. President.
If we thought the tension between the U.S. and China was palpable before, it moves through the advent of the Wuhan Virus Pandemic like a sound wave through an amplifier. In aggravating an already building economic, political clash that had the world on edge, it has further exposed a cultural clash between preeminent global powers that will shape global relations and power structures for the next 50 years.
While the world media focuses on the immediate and obvious fallout of COVID-19 pandemic, these issues (and many more) have not been subject to any geopolitical quarantine. Rather, outside the parameters of our current public health tunnel vision, the world’s geopolitical tinderboxes have become that much more explosive amid the likely economic depressions being caused by pandemic mitigation policies.
When we’ve finally ‘flattened the curve’ here in the United States, we’ll step back to witness economic depression fueling desperation and geopolitical devolution exceeding anything we would have thought imaginable just one year ago.