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International Conflict Tops List of Global Risks in 2015

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The biggest threat to the stability of the world in the next 10 years comes from the risk of international conflict, according to the 10th edition of the Global Risks report, which is published today.

The report, which every year features an assessment by experts on the top global risks in terms of likelihood and potential impact over the coming 10 years, finds interstate conflict with regional consequences as the number one global risk in terms of likelihood, and the fourth most serious risk in terms of impact. In terms of likelihood, as a risk it exceeds extreme weather events (2), failure of national governance systems (3), state collapse or crisis (4) and high structural unemployment or underemployment (5).

 

Top 5 Global Risks in Terms of Likelihood
1 Interstate conflict with regional consequences (geopolitical risk)
2 Extreme weather events (environmental risk)
3 Failure of national governance (geopolitical risk)
4 State collapse or crisis (geopolitical risk)
5 High structural unemployment or underemployment (economic risk)

 

Top 5 Global Risks in Terms of Impact

1 Water crises (societal risk)
2 Rapid and massive spread of infectious diseases (societal risk)
3 Weapons of mass destruction (geopolitical risk)
4 Interstate conflict with regional consequences (geopolitical risk)
5 Failure of climate-change adaptation (environmental risk)

In looking at global risks in terms of their potential impact, the nearly 900 experts that took part in the Global Risk Perception Survey rated water crises as the greatest risk facing the world. Other top risks alongside that and interstate conflict in terms of impact are: rapid and massive spread of infectious diseases (2), weapons of mass destruction (3) and failure of climate change adaptation (5).

With the 28 global risks that were assessed in 2015 grouped into five categories – economic, environmental, geopolitical, societal and technological – 2015 stands out as a year when geopolitical risks, having been largely absent from the landscape of leading risks for the past half-decade, returns to the fore. With geopolitics increasingly influencing the global economy, these risks account for three of the five most likely, and two of the most potentially impactful, risks in 2015. Also in this category, three risks stand out as having intensified the most since 2014 in terms of likelihood and impact. These are interstate conflict with regional consequences, weapons of mass destruction and terrorist attacks.

The risk landscape in 2015 also shows that there remains concern over the world’s ability to solve its most pressing societal issues, as societies are under threat from economic, environmental and geopolitical risks. Indeed, the societal risk accounts for the top two potentially impactful risks.

Also noteworthy is the presence of more environmental risks among the top risks than economic ones. This comes as a result of a marked increase in experts’ negative assessment of existing preparations to cope with challenges such as extreme weather and climate change, rather than owing to a diminution of fears over chronic economic risks such as unemployment and underemployment or fiscal crises, which have remained relatively stable from 2014.

“Twenty-five years after the fall of the Berlin Wall, the world again faces the risk of major conflict between states,” said Margareta Drzeniek-Hanouz, Lead Economist, World Economic Forum. “However, today the means to wage such conflict, whether through cyberattack, competition for resources or sanctions and other economic tools, is broader than ever. Addressing all these possible triggers and seeking to return the world to a path of partnership, rather than competition, should be a priority for leaders as we enter 2015.”
In addition to assessing the likelihood and potential impact of these 28 global risks, Global Risks 2015 examines the interconnections between risks, as well as how they interplay with trends shaping the short- to medium-term risk landscape. It also offers analysis of three specific cases which emerge from the interconnections maps: the interplay between geopolitics and economics, the risks related to rapid and unplanned urbanization in developing countries and one on emerging technologies.

On urbanization, the report considers how best to build sufficient resilience to mitigate the challenges associated with managing the world’s rapid and historical transition from predominantly rural to urban living.
“Without doubt, urbanization has increased social well-being. But when cities develop too rapidly, their vulnerability increases: pandemics; breakdowns of or attacks on power, water or transport systems; and the effects of climate change are all major threats,” said Axel P. Lehmann, Chief Risk Officer at Zurich Insurance Group.

The rapid pace of innovation in emerging technologies, from synthetic biology to artificial intelligence, also has far-reaching societal, economic and ethical implications. Developing regulatory environments that are adaptive enough to safeguard their rapid development and allow their benefits to be reaped, while preventing their misuse and any unforeseen negative consequences is a critical challenge for leaders.
John Drzik, President of Global Risk and Specialties at Marsh, said: “Innovation is critical to global prosperity, but also creates new risks. We must anticipate the issues that will arise from emerging technologies, and develop the safeguards and governance to prevent avoidable disasters.”
The report also provides analysis related to global risks for which respondents feel their own region is least prepared, as well as on the global risks on which they feel most progress has been made over the last 10 years. It also presents for the first time country-level data on how businesses perceive global risks in their countries. Moreover, the report features three examples of risk management and resilience practices related to extreme weather events.

The Global Risks 2015 report has been developed with the support of Strategic Partners Marsh & McLennan Companies and Zurich Insurance Group. The report also benefited from the collaboration of its academic advisers: the Oxford Martin School (University of Oxford), the National University of Singapore, the Wharton Risk Management and Decision Processes Center (University of Pennsylvania), and the Advisory Board of the Global Risks 2015 report.

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Defense

The world arms sales market

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New data from SIPRI’s Arms Industry Database, released last December, show that arms sales by the world’s twenty-five largest defence equipment and military services companies totalled 361 billion dollars in 2019. This is an 8.5% increase in real terms in arms sales compared to 2018. All this emerged from the studies by the Stockholm-based International Peace Research Institute founded in 1966.

In 2019 the top five arms companies were all based in the United States: Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics. These five companies together recorded 166 billion dollars in annual sales. In total, twelve U.S. companies rank among the top 25 for 2019, accounting for 61% of total sales.

For the first time, a Middle East company appears in the top twenty-five. Edge, based in the United Arab Emirates, was established in 2019 from the merger of over twenty-five smaller companies. It ranks twenty-second and accounts for 1.3% of the total arms sales of the top twenty-five companies. This demonstrates that oil revenues in the Near and Middle East are also invested in businesses that produce jobs and money, and are not just accumulated for the personal expenses of the ruling elite. Edge is an example of how high domestic demand for military products and services, combined with the desire to become less dependent on foreign suppliers, is driving the growth of arms companies in the Near and Middle East.

Another newcomer to the top twenty-five list in 2019 was L3Harris Technologies (ranking tenth). It was created by the merger of two U.S. companies that were both in the top twenty-five in 2018, namely Harris Corporation and L3 Technologies.

The top twenty-five list also includes four Chinese companies. Three of them are in the top ten: Aviation Industry Corporation of China (AVIC, ranking sixth), China Electronics Technology Group Corporation (CETC, ranking eighth) and China North Industries Group Corporation (Norinco, ranking ninth).

The combined revenue of the four Chinese companies in the top 25 list, which also includes China South Industries Group Corporation (CSGC, ranking twenty-fourth), grew by 4.8% between 2018 and 2019. Chinese arms companies are benefiting from the People’s Liberation Army’s military modernisation programmes.

Conversely, the revenues of the two Russian companies in the top twenty-five, namely Almaz-Antey and United Shipbuilding, declined between 2018 and 2019, for a combined total amount of 634 million dollars. A third Russian company, United Aircraft, lost 1.3 billion dollars in sales and dropped off the top 25 list in 2019. Domestic competition and reduced government spending on modernising the Russian Navy were two of the main challenges for United Shipbuilding in 2019.

After the United States, the People’s Republic of China recorded the second largest share of 2019 arms sales by the top twenty-five companies, accounting for 16%.

The six Western European companies together account for 18%. The two Russian companies in the ranking account for 3.9%. Nineteen of the top twenty-five arms companies increased arms sales in 2019 compared to 2018. The largest absolute increase in arms sales revenue was recorded by Lockheed Martin: 5.1 billion dollars (11% in real terms). The largest percentage increase in annual arms sales (105%) was reported by French manufacturer Dassault Aviation Group. A strong increase in export deliveries of Rafale fighter aircraft pushed Dassault Aviation into the top 25 arms companies for the first time.

The Sipri report also examines the international presence of the 15 largest arms companies in 2019. These companies are present in a total of 49 countries, through majority-owned subsidiaries, joint ventures and research facilities. With a global presence in 24 countries each, Thales and Airbus are the two most internationalised companies, followed closely by Boeing (21 countries), Leonardo (21 countries) and Lockheed Martin (19 countries).

The United Kingdom, Australia, the United States, Canada and Germany host the largest number of these companies.

Outside the North American and Western European arms industries, the largest number of foreign corporate entities is hosted by Australia (38), Saudi Arabia (24), India (13), Singapore (11), United Arab Emirates (11) and Brazil (10).

There are many reasons why arms companies might want to establish themselves abroad, including better access to growing markets, collaborative arms programmes or policies in host countries that link arms purchases to technology transfers.

Of the 49 countries hosting foreign industries in the top 15 arms companies, seventeen countries are low- and middle-income ones. Southern countries seeking to restart their arms production programmes have welcomed foreign arms companies as a means for benefiting from technology transfers.

Chinese and Russian arms companies in the top 15 list have only a limited international presence. Sanctions against Russian companies and government limits on takeovers by Chinese companies seem to have played a role in limiting their global presence.

All these data were collected by the Sipri Arms Industry Database founded in 1989. At that time, it excluded data for companies in Eastern European socialist countries, including the Soviet Union. The updated version contains 2015 data, including data for companies in the People’s Republic of China and the Russian Federation. An archive of the first one hundred data sets for the period 2002-2018 is available on the Sipri website (www.sipri.org), while for the first twenty-five ones it has been updated with the latest available information.

Arms sales are defined as sales of military goods and services to military customers at national and international levels. Unless otherwise stated, all changes are expressed in real terms. Comparisons (e.g. between 2018 and 2019 or between 2015 and 2019) are based on the groups of companies listed in the respective year (i.e. the comparison is between different groups of companies).

For 2020-2021, Sipri is releasing its dataset on arms sales of the world’s largest companies along with the results of a mapping on the internationalisation of this industry. For this reason, a new dataset was created, including 400 subsidiaries, joint ventures and research facilities linked to the top fifteen arms companies in 2019. Data sources included corporate investment documents, information on company websites, public records and newspaper and magazine articles.

To be included in the mapping, an arms industry must have been active for the majority of its fiscal year, as well as be located in a country other than that in which its parent company is headquartered and also (i) produce military goods or provide military services to military customers; (ii) produce or provide services for dual-use goods to military customers.

This is the first of the key data handovers in view of the publication of the next Sipri Yearbook in mid-2021. Before that, Sipri will release its data on international arms transfers (details of all major international arms transfers in 2020), as well as its data on global military expenditure (comprehensive information on global, regional and national trends in military expenditure). We will inform readers of all this in due course.

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Defense

Aman-2021 Naval Exercise: Maritime Diplomacy

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Pakistan has hosted Aman-2021 biannual multi-national naval exercise(Feb.11-16) that has been the focal-point for Indian media particularly due to the significance of this naval drill . The prime disposition of this naval exercise was that, it was conducted in peace times, therefore no country can misperceive the exercise.

Secondly, the objectives of the Aman-2021 are quite clear that;

  • The exercise aims to contribute to regional stability
  • The exercise is a united resolve against the threats of terrorism, piracy and other related threats to maritime domain
  • This exercise is likely to enhance interoperability between the regional as well as extra-regional navies. It also will bridge the gap between regional and extra-regional naval forces to unite against a common threat

Pakistan navy has been remarkable in bringing 45 countries’ naval forces together .Some of the notables are the U.S., Russia, China and Turkey.

All major nations want their influence in the Indian Ocean Region(IOR) due to its strategic chokepoints and the Sea-Lines of Communications(SLOCS) that are vital maritime routes between ports, used for trade ,logistics and naval forces. Indian Ocean is one of the vital global trade arteries accounting for more than 80% of world’s oil shipments passing through this region. This region has world’s fastest growing economies and a home to 2.7 billion population. This region is lucrative market for multinational corporations but rise of Asian economies has got competition with European economies. The IOR is supra-rich in natural resources that is why during colonial times, colonial powers preferred to colonize countries in this region. This region’s natural resources are equivalent to combined with rest of the world. In short, this region is the most significant due to its political, economic, strategic and geological features. That is the primary reason, great powers wish to maintain their influence in the region.

Aman-21 exercise has provided participating countries with an opportunity to demonstrate naval strength. Russia, U.S., and China are largest navies in the world and they are collaborating under on a single platform(Aman-21).Russia’s participation with NATO members makes this naval exercise very special because the former has not done so since the 2011 ‘Bold Monarch’ naval exercise -off the coast of Spain.

All the participating navies are gathering under the slogan “togetherness for peace” and despite having differences between them, some of the countries are uniting to thwart threats to maritime security and stability. Some of the scholars are terming Pakistan navy’s maritime diplomacy as a huge success. As the number of participating countries grew immensely due to the message of peace that Pakistan navy is promoting. Though, the primary objective of the exercise is to counter threats of hybrid warfare, piracy, drug trafficking, arms trafficking, human smuggling, terrorism and climate change.

At the sidelines of the Aman-21, Pakistan navy organized 9th international Maritime Conference (IMC)2021 in Karachi. Advisor to Prime Minister on National Security, Dr.Moeed Yusuf stated “Pakistan’s blue economy has the potential of billions of dollars but it is earning around $200 million from ocean resources.

Pakistan navy aims to contribute more in regional peace and stability by transforming itself into a blue water force equipped with state of the art technology (surface, airborne, submerged, unmanned) to play a greater role in the IOR. Pakistan’s strategically located Gwadar port is in close proximity of the Strait of Hormuz, which is a vital area for world’s developed nations due to oil transit chokepoint and it connects Middle East with South and Central Asia.

India always sees Pakistan’s efforts for promoting regional peace with a greater doubt. India’s relations with Pakistan plummeted after Modi government revoked Article 370 and 35-A, altering Jammu and Kashmir’s autonomous status. Indian media did a lot of propaganda regarding Pakistan’s successful naval exercise. Even one of the Indian magazine The Week captioned “ Pakistan’s navy chief visits Russian warship. worry? “It also claimed that Pakistan’s navy chief Admiral Mohammad Amjad Khan Niazi visited the Admiral Grigorovich. The Admiral Grigorovish is a frigate that has the capability to carry missiles, torpedoes, anti-submarine, anti-air and anti-ship guns. Pakistan’s naval chief was given the tour of weapon system and communication equipment on board the ship. This naval exercise has been an opportunity for navies to demonstrate their professionalism and showcase their weaponry.

As the Aman-21 was concluded Iran and Russia started a two-day naval drill in the northern part of Indian Ocean. India also joined the naval exercise without any proper invitation and due to diminutive participation of Indian navy, it could not make that strategic impact that was thought by India. Now some of the Indian media outlets deny India’s participation in the Iran-Russia naval exercise. India’s efforts to neutralize the strategic impact of Aman-21,evaporated and Aman-21 naval exercised concluded with achieving desired objective of bringing 45 naval forces together under the slogan of “togetherness for peace”. Pakistan’s efforts for promoting regional peace and stability will bear more fruits after the China-Pakistan Economic Corridor’s completion and regional connectivity for collective good.

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Defense

Indo-French Bonhomie is Destabilizing South Asia

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India is rapidly increasing its weapons capability in order to threaten and coerce Pakistan so that latter could submit to India’s hegemonic designs. Such hegemonic aspirations not only threaten South Asia’s regional equilibrium but also take entire region to the brink of nuclear brinkmanship. Some of the Western countries are eager to sell their weaponry to India and in particular, France has taken the weapons sale to an entire new level by selling nuclear-capable fighter jets to India. This is unprecedented from a Western country which is also signatory to the Nuclear Nonproliferation Regime (NPT). Selling of such weapons to Modi regime is worrisome not just for South Asia but entire global peace and security.

One of the major contributors to Indian arms buildup is France, which has provided technologically advanced conventional and strategic weaponry to India. India largely depends on foreign assistance to acquire weapons and over the period of a decade, Indo-French defense cooperation has strengthened. It is because both countries have convergence of interests when it comes to strategic policy in the Indo-Pacific region. However, this convergence is destabilizing the South Asian region, and contributing to security challenges for Pakistan.

Indo-French strategic partnership mainly spans in the fields of defense, nuclear and space. In the first week of January 2021, India and France held their annual strategic dialogue, led by Indian National Security Advisor Ajit Doval and Diplomatic Advisor to French President Emmanuel Bonne. It is interesting to see that France is not only following Indian footprints in the Indo-Pacific region but it’s also been vocal about India’s entry into Nuclear Suppliers Group (NSG), a global body which controls global nuclear commerce. France is also at forefront regarding India’s seat at high tables of UN Security Council.

This is ironic and disappointing in the sense as to how a member of civilized world community like France neglects Indian atrocities in the Indian illegally Occupied Jammu and Kashmir (IIJO&K). Indian atrocities in occupied Kashmir are no more a secret. Entire world community condemned PM Modi’s illegal annexation of disputed territory. France reaction was awful to the core. Instead of mediatory role, France called Kashmir as India- Pakistan bilateral issue. France put a blind eye on number of UN Resolutions which clearly state Kashmir as a disputed territory. India has violated those resolutions, but irony lies in the fact that France wants India to be part of very prestigious body whose resolutions means nothing for it.

India’s relationship with France is not confined to one domain of defense; rather it includes energy cooperation, cyber security, space exploration and other areas of strategic convergence. Their strategic partnership also focuses on bilateral cooperation in combating terrorism. It is ironic to note their selective choosing of terrorism. France remains oblivious to India’s state sponsored terrorism in Pakistan and persecution of Kashmiri Muslims. France’s silence on such matters not only put a question mark on its global standing but also shows how countries like France lose moral grounds just for the sake of some economic incentives. This moral bankruptcy is unimaginable and condemnable.

South Asia is a fragile region. Massive arms import and weaponization of India has direct ramification for Pakistan’s security calculous. In order to match increasing conventional superiority with India, Pakistan may be compelled to participate in arms race fueled by countries like France. France’s defense industry and its strategic collaboration with Indian defense firms also pose a serious threat of technological reverse engineering. At the same time, there is no clear indication of end user agreement on French weapons in India. Whether there would be any end-user agreement is yet another question.

There’s no second thought that, France is actively fueling India – Pakistan arms race. India has been buying arms and ammunitions for decades and remains the world’s topmost importers for last many years. Indian imports of weapons from France have risen by 75%, making latter the third largest supplier of arms to India in last 5 years. France is exporting weapon systems to India, which are not only conventional but also have strategic implications. The application of such weapon systems also varies from air to land to sea. This clearly signifies that France is destabilizing the region.

The Indo-French Strategic Partnership is being deepened at the expense of regional balance of of power in South Asia. The already fragile strategic stability in South Asia is under assault from France’s massive arms transfer to a revisionist India. French sale of sophisticated military technology to India, at this scale, is further deteriorating the regional stability and eroding global norms and rules.  There must be an end to this frenzy which is being run in the name of “strategic partnership”. France needs to realize the severity of the situation created by its weapons sale to an aggressor before it gets too late.

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