Remember the Little Things (in Geopolitics)

One of the major premises of this newsletter is that minor variables in geopolitics can often have far-reaching and long-lasting impacts (such as the gin and tonic helping save the British Empire). With that concept in mind, it would behoove analysts to go into 2024 thinking about those possibly smaller variables having much larger impacts. Naturally, the vast majority of analysts and security professionals are already mulling over the possibility of war with China over Taiwan, the continued conflict in Ukraine and Israel, the balkanization of technology, and threats to the supply chain (see here, here, and here). But are they thinking about Argentinian economics, the end of kidnappings by the ELN in Colombia, Naxalite terrorism in India, the use of the DSA by the EU, or Angola leaving OPEC? Probably not (though kudos to analysts following such issues). To help everyone prepare for not just the larger variables but also the smaller ones, this week we will look at seemingly smaller problems occurring that have real potential (though lower likelihood) of impacting larger geopolitical concerns.

Many Mickles Make a Muckle

The Department of Defense has done similar exercises for their quadrennial reviews in attempting to assess the future of geopolitics (see picture below). Essentially, the major oscillations in geopolitics and war have typically started with an issue no one foresaw because of their low probability (sometimes referred to as black swans). Take for instance the book ends of the 20th century that started with World War I and ended with the beginning of the War on Terror. World War I had several long-term causes, including the unification of Germany, competition with Britain, nationalism, and a decline in the balance of power. However, its proximate cause was when a nationalist terrorist assassinated the Archduke Ferdinand in 1914, sparking a conflagration that wiped out tens of millions of people and set the stage for World War II.

Similarly, 9/11 and the War on Terror had underlying causes that only a few people observed as important. The United States supported a proxy war in Afghanistan against the Soviet Union, and this helped embolden an Arab contingent of mujahideen who would turn their ire against America because of our stationing troops in Saudi Arabia, opposition to Saddam Hussein, and support for Israel. Al-Qaeda was motivated by these alleged grievances, and failures within the United States (walls between intelligence agencies, lack of flight security, and poor assumptions about terrorist capabilities) allowed 9/11 to happen. America would respond with God’s wrath, invading Afghanistan and Iraq while also using force globally to neutralize many terrorist threats. Altogether, geopolitics radically changed from these smaller variables (nationalist terrorists in Serbia and Islamist terrorists in Afghanistan).

The Threat of Terrorism

The examples above offer a guiding principle when it comes to minor variables and larger geopolitical impacts. Terrorism should always be top of mind for analysts and security professionals, but they should also remain realistic about the threats. Within the last 150 years, fewer than 5,000 Americans have died from terrorism; during the Troubles from 1960-1998 in Ireland about 1,700 civilians died; in all of Europe including Ireland and the UK, terrorists killed about 11,300 people in almost 19,000 attacks from 1970-2016. Compare this to other forms of death per year (as opposed to over decades): around 40,000 car deaths per year in the US, 1,700 in the UK, and 20,00? in Europe; around 1.9 million people die from cancer per year in the EU, and in the US that number is about 600,000; when it comes to suicide, there are about 50,000 in the US per year and 47,000 in Europe. As you can see, there are far, far fewer deaths from all of terrorism than other causes of death. But why then does terrorism matter so much for geopolitics even from smaller groups?

Terrorism is politically motivated violence or the threat of violence against non-combatants in order to spread fear for policy change. Two important parts of that definition are why terrorism matters. First, it is political, which means terrorism is an act of war against the state in which it happens. Second, it deliberately spreads fear. Most people do not incorporate terrorism into their risk calculations for life, and so deaths from terrorism appear to be chaotic and arbitrary. Due to these factors, governments usually respond with significant force (hence World War I and the War on Terror), and that’s what changes geopolitics. Hamas’s terrorist attack against Israel in October also falls into this category.

There are several terrorist movements globally that threaten regional stability depending on how governments respond to attacks. Naxalites in India are consistently committing attacks, and they account for the vast majority of left-wing terrorism. Right-wing terrorists in the United States and Europe are increasing, and it is highly likely that such attacks will take place in 2024. If the US or Europe attempt to crack down on right-wing causes because of those attacks, then there will be protests and extremist opposition that could alter the politics of each place. Narco-terrorism is on the decline in South America, but in Africa there are several internecine conflicts in places like Sudan, Uganda, Kenya, and Somalia. Each of these could lead to intervention by the West or ECOWAS should the attacks be bad enough. Analysts will want to keep terrorism firmly in mind for risks in 2024, even by smaller, seemingly insignificant groups.

Thatcherism Redone

Argentina’s new President Javier Milei has come to power to hopefully tame the myriad of problems that Argentina faces when it comes to employment, inflation, and debt. He is a devout libertarian, and his administration is currently seeking several changes to the size of government, taxes, and the currency. Of course, Milei is not the first government leader to use supply side economics and monetarism to tame inflation and bring economic stability. Ronald Reagan did this in the United States, but a more apt comparison to Argentina today is the United Kingdom in the 1970’s, especially the Winter of Discontent that saw blackouts, dead bodies and trash piled in the streets due to labor strikes, massive inflation, and a truly weakened Britain. Marget Thatcher came to power in 1979 to solve these problems, and she immediately set out to the task. However, as brilliantly as she handled these problems, Thatcher was only able to because of the Falklands War that saved her politically. Monetarist reforms always create pain in the short term, sometimes for years (“the medicine is hard”). Thatcherism did not start to work until 1985, but then the benefits lasted through the 2000’s. Milei will face a similar path, and if he cannot fully implement monetarist policies because of how long they will take to work (or goes too libertarian), then Argentina could face a financial crisis that will engulf the region. He will need the resolve, though, not to U-turn.

Argentina is not the only country facing such problems (it is just the only one to elect a leader like Milei). Egypt, Ghana, Ethiopia, Kenya, Lebanon, Pakistan, Sri Lanka, Tunisia, and Zambia all face debt crises (see here and here). Debt crises matter because they can lead to regional contagions (e.g., Asia in 1997), and a financial crisis is extremely hard to overcome considering many of the necessary tools were already used during the pandemic to stave off the worst economic problems. Analysts should make it a point to follow these countries and others based on their economic performance and debt problems because they could quite easily have a much larger impact on geopolitical concerns.

Other Issues

There are too many issues going on globally to fully delineate all of them, but here is a sampling of other smaller issues that analysts should consider monitoring that could impact their clients if they were to spiral out of control:

• The EU is deliberately targeting US technology companies under the Digital Security Act and Digital Market Act, and members of the US Congress have started to take note of this problem. This has a distinct possibility to lead to a trade war.
• There will be more elections globally in 2024 than in any year in history. Each of these elections increase the risks of protests, extremism, and shifts in foreign policy.
• The foreign ministers of Burkina Faso, Mali, and Niger have met to try and create a confederation based on economic interdependence and collective security. This?Alliance of Sahel States seeks to solidify the group and work out the specific details of how the organization will operate with the primary goal to have mutual defense against external threats.
• Former President and current Republican front runner Donald Trump has stated that?he will end?the Pacific trade deal currently being negotiated by President Biden. This could further shift the US out of the Indo-Pacific.
• The Biden administration?announced steps?to free up parts of the wireless spectrum for the needs of advanced technology. Their steps include repurposing spectrum presently used by the federal government along with a study of more than 2,700 megahertz of spectrum to repurpose.?Technological advancement will happen based on minor regulatory changes like this.
• Panama is experienced?mass protests?in 2023 over the government’s decision to grant a new 20-year license to the Canadian firm First Quantum Minerals. The Central American country accounts for 1.5% of the world’s copper output, which is a critical component in electric car batteries. Protests in such places could disrupt the supply chain, technology, and geopolitical competition.

These are only a sampling of seemingly minor issues that each have the potential to change the geopolitical landscape. Importantly, not every issue will impact every client, but the point is for analysts to assess minor variables and issues to monitor and track in 2024 that has the potential to impact their clients and corporations. Do not just focus on the major issues everyone can notice. Being a good analyst means looking past the obvious and extraneous to see clearly what others miss.

As this is the last newsletter for 2023, I wanted to take a moment and thank everyone who has participated in the intellectually rewarding journey Geopolitics and Gin has been. I was surprised early on that it was so well received, but it has meant the world to me that people continue to read my thoughts each week. Your readership is truly appreciated. May the new year be auspicious and magnanimous for each and every one of you, and I look forward to continue this journey with you.