The world cannot wait for the fog of geopolitical and geo-economic uncertainty to lift. Opting to ride out the current period in the hope that the global system will “snap back” runs the risk of missing crucial windows to address pressing challenges. On key issues such as the economy, the environment, technology and public health, stakeholders must find ways to act quickly and with purpose within an unsettled global landscape.

Powerful economic, demographic and technological forces are shaping a new balance of power. The result is an unsettled geopolitical landscape—one in which states are increasingly viewing opportunities and challenges through a unilateral lens. What were once givens regarding alliance structures and multilateral systems no longer hold as states question the value of longstanding frameworks, adopt more nationalist postures in pursuit of individual agendas and weigh the potential geopolitical consequences of economic decoupling.

Beyond the risk of conflict, if stakeholders concentrate on immediate geostrategic advantage and fail to reimagine or adapt mechanisms for coordination during this unsettled period, opportunities for action on key priorities will slip away.

For much of the post–Cold War period, all but a few societies shared the aspiration of stable development in the context of formally agreed (if not universally observed) rules governed by multilateral institutions. Geopolitical challenges—from border conflicts to terrorist attacks—were often addressed through cooperative institutions and in ways that sought to minimize interruptions to cooperation for global economic progress. And some have argued that greater economic interconnectedness and interdependence in the last 20 years—fostered by multilateral institutions—has acted as a check on great power conflict.^{11 Tanious, M. E. 2019. “The Impact of Economic Interdependence on the Probability of Conflict between States: The Case of ‘American–Chinese Relationship on Taiwan Since 1995’”. 14 January 2019. Review of Economics and Political Science. https://www.emerald.com/insight/content/doi/10.1108/REPS-10-2018-010/full/html}

But new dynamics—in certain cases, underlying forces that are the result of progress over the last three decades—are causing states to re-evaluate their approach to geopolitics. Today’s emerging economies are expected to comprise six of the world’s seven largest economies by 2050.^{22 PwC Global. “The World in 2050: The Long View: How Will the Global Economic Order Change by 2050?” PWC. https://www.pwc.com/gx/en/issues/economy/the-world-in-2050.html} Rising powers are already investing more in projecting influence around the world.^{33 BBC News. “China Now Has More Diplomatic Posts Than Any Other Country”. 27 November 2019. BBC. https://www.bbc.com/news/world-asia-china-50569237} And digital technologies are redefining what it means to exert global power.^{44 Engelke, P. 2018. “Three Ways the Fourth Industrial Revolution Is Shaping Geopolitics”. 24 August 2018. https://www.weforum.org/agenda/2018/08/three-ways-the-fourth-industrial-revolution-is-shaping-geopolitics/} As these trends are unfolding, a shift in mindset is also taking place among some stakeholders—from multilateral to unilateral and from cooperative to competitive. The resulting geopolitical turbulence is one of unpredictability about who is leading, who are allies, and who will end up the winners and losers.

As states respond to the challenges and opportunities offered by today’s epochal power-shift, some view multilateral institutions as obstacles rather than instruments for promoting their interests. The challenge to these institutions is rooted in concern within some societies about globalized systems and mechanisms of cooperation—what the International Monetary Fund (IMF) dubs a “trust recession”.^{55 Lipton, D. 2018 “Trust and the Future of Multilateralism”. Introductory Remarks for the Eurofi High Level Seminar, IMF First Deputy Managing Director David Lipton, 30 April 2018. International Monetary Fund. https://www.imf.org/en/News/Articles/2018/04/30/sp042618-trust-and-the-future-of-multilateralism} According to the 2019 Edelman Trust Barometer, just one in five people believe “the system” is working for them.^{66 Edelman. 2019. “2019 Edelman Trust Barometer”. 20 January 2019. Edelman. https://www.edelman.com/trust-barometer}

The current period of geopolitical change presents opportunities—for instance, to re-evaluate frameworks in which some stakeholders have been under-represented. Yet the turbulence threatens to undermine the international community’s ability to mitigate critical global risks by multiplying the domains in which rivalries can play out and limiting stakeholders’ capacity to address global challenges. Unless stakeholders can adapt to the present—while still preparing for the future—time will run out to address some of the most pressing economic, environmental and technological challenges.

The global economy is showing signs of vulnerability (see Chapter 2, The Fraying Fundamentals). At the time of writing, the IMF expected growth to be 3.0% in 2019—the lowest rate since the economic crisis of 2008-2009.^{77 IMF (International Monetary Fund). 2019. World Economic Outlook, October 2019: Global Manufacturing Downturn, Rising Trade Barriers. Washington, DC: IMF. https://www.imf.org/en/Publications/WEO/Issues/2019/10/01/world-economic-outlook-october-2019} At a time when global coordination in the form of more efficient trade could help boost growth, trade has instead been turned into an instrument for rivalry. The World Trade Organization (WTO) projected that growth in merchandise trade will slow to 1.2% in 2019 from 3.0% in 2018.^{88 WTO (World Trade Organization). 2019. “Global Trade Growth Loses Momentum as Trade Tensions Persist”. Press Release, 2 April 2019. World Trade Organization. https://www.wto.org/english/news_e/pres19_e/pr837_e.htm; “WTO lowers trade forecast as tensions unsettle global economy”. Press Release, 1 October 2019. https://www.wto.org/english/news_e/pres19_e/pr840_e.htm}

While there was progress late last year towards a “Phase One” US-China trade deal,^{99 Reuters. 2019. “Factbox: What Is Actually in the U.S.-China ‘Phase One’ Trade Deal?” 16 December 2019. Reuters Business News. https://www.reuters.com/article/us-usa-trade-china-details-factbox/factbox-what-is-actually-in-the-us-china-phase-one-trade-deal-idUSKBN1YK1QT} tensions between the two have harmed the economies of both countries and the global economic outlook as well: the tensions could cost US$700 billion in lost output in 2020^{1010 Georgieva, K. 2019. “Transcript of International Monetary Fund Managing Director Kristalina Georgieva’s Opening Press Conference, 2019 Annual Meetings”. 17 October 2019. International Monetary Fund. https://www.imf.org/en/News/Articles/2019/10/17/tr101719-transcript-managing-director-kristalina-georgieva-press-conference-2019-annual-meetings}—almost the amount of GDP lost by the entire European Union due to the financial crisis (US$757 billion between 2008 and 2009).^{11 11 World Bank Open Data. “GDP (constant 2010 US$) - European Union, 2007–2018”. The World Bank. https://data.worldbank.org/indicator/NY.GDP.MKTP.KD?end=2018&locations=EU&start=2007} The Organisation for Economic Co-operation and Development (OECD) warns, “Escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide.”^{1212 OECD (Organisation for Economic Co-operation and Development). 2019. “OECD Sees Rising Trade Tensions and Policy Uncertainty Further Weakening Global Growth”. 19 September 2019. Organisation for Economic Cooperation and Development. https://www.oecd.org/economy/oecd-sees-rising-trade-tensions-and-policy-uncertainty-further-weakening-global-growth.htm} Respondents to the Global Risks Perception Survey do not expect overall economic tensions to cease—over 78% of them see “economic confrontations” increasing in 2020 (see Figure 1.1).

In late 2019, UN Secretary-General António Guterres warned that a “point of no-return” on climate change is “in sight and hurtling toward us”.^{1313 Manzanaro, S. S. 2019. “COP25 in Madrid: UN Secretary-General Guterres Says Planet Is ‘Close to a Point of No Return.’” Euronews. 3 December 2019. https://www.euronews.com/2019/12/02/live-un-leaders-and-delegates-arrive-in-madrid-for-the-climate-change-summit} Respondents to the Forum’s Global Risks Perception Survey also are sounding the alarm. For the first time in the history of the survey, climate-related issues dominated all of the top-five long-term risks by likelihood among members of the Forum’s multistakeholder community (see Figure 1.2). And members of the Global Shapers Community—the Forum’s younger constituents—show even more concern, ranking environmental issues as the top risks in both the short and long terms (see Figure III, The Global Shapers Risk Landscape).

Yet, although immediate multilateral and multistakeholder coordination is needed to address global warming (see Chapter 3, A Decade Left, and Chapter 4, Save the Axolotl), global fracture—most recently exhibited at the 2019 UN Climate Change Conference COP25 in Madrid—and a growth in nationalist policies risk preventing meaningful action.^{1414 Temko, N. 2018. “COP24: Nationalism and the Challenge of Climate Change”. The Christian Science Monitor. 27 November 2018. https://www.csmonitor.com/World/2018/1127/COP24-Nationalism-and-the-challenge-of-climate-change}

States are adapting to one of the most dramatic effects of climate change—the melting of Arctic ice—not by redoubling efforts to prevent further environmental degradation, but by exploiting the region for geostrategic advantage. The Arctic Council, which for more than 20 years has served as an important multilateral mechanism for collaboration among the eight Arctic States, is under stress. A new cold war is developing as countries—including China, Norway, Russia and the United States—compete for fish, gas and other natural resources; for the use of new shipping lanes; and to establish a strategic footprint in the region.^{1515 Shea, N. 2019. “Scenes from the New Cold War Unfolding at the Top of the World”. National Geographic. 8 May 2019. https://www.nationalgeographic.com/environment/2018/10/new-cold-war-brews-as-arctic-ice-melts/} Russia and China have prioritized developing the Northern Sea Route, with the latter dubbing its initiative the “Polar Silk Road”.^{16 16 Reuters. 2019. “Maersk Explores Arctic Shipping Route with Russia”. Reuters Business News. 14 June 2019. https://www.reuters.com/article/us-arctic-shipping-maersk/maersk-explores-arctic-shipping-route-with-russia-idUSKCN1TF0WW#targetText=Russia%20has%20made%20developing%20the,route%20the%20northern%20Suez%20Canal}The U.S. Department of Defense released its Arctic strategy in July; that document did not mention climate change but did present a strategy in which the “end-state for the Arctic is a secure and stable region in which U.S. national security interests are safeguarded.”^{1717 Office of the Under Secretary of Defense for Policy. 2019. Report to Congress: Department of Defense Arctic Strategy”. June 2019. https://media.defense.gov/2019/Jun/06/2002141657/-1/-1/1/2019-DOD-ARCTIC-STRATEGY.PDF}

Both sets of respondents to the Global Risks Perception Survey—the multistakeholder community and the Global Shapers—identify cyber-related issues, such as cyberattacks and data fraud or theft, within the list of top 10 long-term risks (see Figure 1.2). Indeed, while the growth of digitalization offers opportunities that can best be captured through coordinated approaches among stakeholders, it also creates areas in need of coordinated solutions.

One such area is artificial intelligence (AI). According to the UN’s International Telecommunication Union, it will take “massive interdisciplinary collaboration” to unlock AI’s potential.^{18 18 ITU (International Telecommunication Union). 2017. AI for Good Global Summit: Report. June 2017. International Telecommunication Union. https://www.itu.int/en/ITU-T/AI/Documents/Report/AI_for_Good_Global_Summit_Report_2017.pdf}But because AI can also bring significant risk, multilateral cooperation is needed to address challenges such as security, verification, “deepfake” videos, mass surveillance and advanced weaponry.

Despite the need for a common set of global protocols, AI has become a new frontier for competitive geopolitics. In 2017, Russian President Vladimir Putin said, “Whoever becomes the leader in this sphere will become the ruler of the world.”^{19 19 Maggio, E. 2017. “Putin Believes that Whatever Country Has the Best AI Will Be ‘the Ruler of the World’”. Business Insider. 4 September 2017. https://www.businessinsider.com/putin-believes-country-with-best-ai-ruler-of-the-world-2017-9?r=US&IR=T}China has strongly encouraged companies to invest in AI, making it a national security priority^{2020 Allen, G. C. 2019. Understanding China’s AI Strategy: Clues to Chinese Strategic Thinking on Artificial Intelligence and National Security. Washington, DC: Center for a New American Security. https://s3.amazonaws.com/files.cnas.org/documents/CNAS-Understanding-Chinas-AI-Strategy-Gregory-C.-Allen-FINAL-2.15.19.pdf?mtime=20190215104041}; AI is a pillar of its current five-year plan (2016–2020) for science and technology development and its “made in China 2025” industrial plan.^{2121 Dai, S. and A. Shen. 2018. “‘Made in China 2025’: China Has a Competitive AI Game Plan But Success Will Need Cooperation”. South China Morning Post. 1 October 2018. https://www.scmp.com/tech/article/2166177/made-china-2025-china-has-competitive-ai-game-plan-success-will-need} In the United States, the Defense Department’s Joint Artificial Intelligence Center recently requested that its budget be tripled to US$268 million,^{2222 Ashizuka, T. 2019. “Pentagon Seeks to Triple AI Warfare Budget to Meet China’s Rise”. Nikkei Asian Review. 4 October 2019. https://asia.nikkei.com/Business/Aerospace-Defense/Pentagon-seeks-to-triple-AI-warfare-budget-to-meet-China-s-rise} citing the rapid development of AI capabilities by China and Russia as a reason for urgency.

There is some progress. Already, stakeholders are coming together to design shared protocols for AI. The World Economic Forum’s Centre for the Fourth Industrial Revolution has worked with the government of the United Kingdom to formulate guidelines for more ethical and efficient procurement of AI. These guidelines will be piloted in countries across Europe, the Middle East and Latin America. And, in May 2019, the OECD’s 36 member states adopted Principles on AI—the first common set of principles that governments have adopted—to promote AI “that is innovative and trustworthy and that respects human rights and democratic values.”^{2323 OECD (Organisation for Economic Co-operation and Development). “OECD Principles on AI”. Organisation for Economic Co-operation and Development Going Digital Project. http://www.oecd.org/going-digital/ai/principles/} However, challenges remain. Eleonore Pauwels of the United Nations University Centre for Policy Research warns that “the resurgence of nationalist agendas across the world may point to a dwindling capacity of the multilateral system to play a meaningful role in the global governance of AI.”^{2424 Pauwels, E. 2018. “The New Geopolitics of Artificial Intelligence”. 15 October 2018. World Economic Forum. https://www.weforum.org/agenda/2018/10/artificial-intelligence-ai-new-geopolitics-un/}

Geopolitical turbulence related to trade tensions and technological rivalries is part of a larger risk for the global community—the risk of the United States and China decoupling. Together, these two countries account for over 40% of global GDP,^{2525 IMF (International Monetary Fund). “GDP, Current Prices”. IMF Data Mapper. International Monetary Fund. https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD} and they are the world’s leading innovators.^{2626 Schoff, J. L. and A. Ito. 2019. “Competing with China on Technology and Innovation“. 10 October 2019. Carnegie Endowment for International Peace. https://carnegieendowment.org/2019/10/10/competing-with-china-on-technology-and-innovation-pub-80010} They are also the world’s top two emitters of greenhouse gases.^{2727 Friedrich, J., M. Ge and A. Pickens.2017. “This Interactive Chart Explains World’s Top 10 Emitters, and How They’ve Changed”. 11 April 2017. World Resources Institute. https://www.wri.org/blog/2017/04/interactive-chart-explains-worlds-top-10-emitters-and-how-theyve-changed} Expanding the global economy, addressing climate change and realizing the full benefits of technology, therefore, depend on their ability to coordinate as part of a common global system that is capable of including other stakeholders.

However, the trend today is not one in which these two countries are just competing across common domains but one in which each is looking to design its own systems—its own supply chains, 5G networks and global investment institutions. Already investment flows between the two have dropped,^{2828 Congressional Research Service. 2019. “U.S.-China Investment Ties: Overview and Issues for Congress”. In Focus. 28 August 2019. https://fas.org/sgp/crs/row/IF11283.pdf} each has moved to restrict technology from the other,^{2929 Yang, Y. and N. Liu. 2019. “Beijing Orders State Offices to Replace Foreign PCs and Software”. Financial Times. 8 December 2019. https://www.ft.com/content/b55fc6ee-1787-11ea-8d73-6303645ac406} and some analysts predict China will look to reduce its dependence on the US dollar by holding more foreign currencies.^{3030 Khan, Y. 2019. “China Aims to Reduce Its Dependence on America by ‘Decoupling’ from the Dollar, ANZ Bank Says”. Market Insider. 18 November 2019. https://markets.businessinsider.com/news/stocks/china-diversifying-away-from-dollar-reserves-due-to-trade-war-anz-2019-11-1028695801}

Even if the current trade tensions cool, we risk heading towards an era in which the two countries disentangle their economies and create barriers between one another. While leaders in Beijing and Washington have expressed disapproval of an economic decoupling, the policy measures being put in place are paving a road towards that destination.^{3131 Wang, O. “Chinese Economists Warn Beijing to Prepare for Decoupling from US”. South China Morning Post. 7 July 2019. https://www.scmp.com/news/china/article/3017550/chinese-economists-warn-beijing-prepare-decoupling-us}

A return to a kind of cold war or iron curtain economic landscape would fundamentally change the way in which global business and security have functioned over the past three decades. Countries would need to decide which economic system to be part of—something many have already said they do not want to do—and businesses would have to develop separate protocols.^{3232 Stromseth, J. 2019. Don’t Make Us Choose: Southeast Asia in the Throes of US-China Rivalry. Foreign Policy at Brookings. https://www.brookings.edu/wp-content/uploads/2019/10/FP_20191009_dont_make_us_choose.pdf}

The decline of economic integration would also remove what many see as a check against outright conflict.

As the outlines of the next geopolitical era start to emerge, there is still uncertainty about where the distribution of power will settle and from where influence will emanate, but a snap back to the old order appears unlikely. If stakeholders attempt to bide their time, waiting for the old system to return, they will be ill-prepared for what lies ahead and may miss the point at which key challenges—economic, societal, technological or environmental—can be addressed. Instead, longstanding institutions must adapt to the present and be upgraded or reimagined for the future.

There are signs of adaptation in the creation of new institutions designed to function in this turbulent geopolitical climate. One example is the Franco-German “Alliance for Multilateralism”, a group of nations working to boost international cooperation in areas such as disarmament, digitalization and climate change.^{3333 DW (Deutsche Welle). 2019. “Germany Launches Alliance for Multilateralism”. DW News. 26 September 2019. https://p.dw.com/p/3QJOO} Another is the African Continental Free Trade Agreement, which will bring together the 55 member states of the African Union to form the largest free trade area since the formation of the WTO.^{3434 TRALAC. 2019. “African Continental Free Trade Area (AfCFTA) Legal Texts and Policy Documents”. Resources. TRALAC Trade Law Centre NPC. https://www.tralac.org/resources/by-region/cfta.html} Narrower, issue-specific, ad-hoc “coalitions of the willing” are proliferating—including Asian regional trade and investment instruments, the “Quad” (consultation among Australia, India, Japan and the United States), and the Global Coalition against Daesh. While aiming to address collective priorities, however, such adaptive approaches run the risk of being less effective because they lack the legitimacy of broad-based multilateral institutions. Still, they point to the need for continued coordination and partnership during an unsettled time.