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Rising geopolitical and geo-economic tensions are the most urgent risk in 2019

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The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019. These are the findings of the World Economic Forum’s Global Risks Report 2019, which is published today.

The Global Risks Report, which incorporates the results of the annual Global Risks Perception Survey of approximately 1,000 experts and decision-makers, points to a deterioration in economic and geopolitical conditions. Trade disputes worsened rapidly in 2018 and the report warns that growth in 2019 will be held back by continuing geo-economic tensions, with 88% of respondents expecting further erosion of multilateral trading rules and agreements.

If economic headwinds pose a threat to international cooperation, efforts will be further disrupted in 2019 by rising geopolitical tensions among major powers, according to the report. Eighty-five percent of respondents to this year’s survey said they expect 2019 to involve increased risks of “political confrontations between major powers”. The report discusses the risks associated with what we describe as a “multiconceptual” world order – one in which geopolitical instabilities reflect not only changing power balances but also the increasing salience of differences on fundamental values.

“With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us towards. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today,” said Børge Brende, President of the World Economic Forum.

In the survey’s 10-year outlook, cyber risks sustained the jump in prominence they registered in 2018, but environmental risks continue to dominate respondents’ concerns beyond the short term. All five of the environmental risks the report tracks are again in the high-impact, high-likelihood category: biodiversity loss; extreme weather events; failure of climate-change mitigation and adaptation; man-made disasters; and natural disasters.

Alison Martin, Group Chief Risk Officer, Zurich Insurance Group, said: “2018 was sadly a year of historic wildfires, continued heavy flooding and increasing greenhouse gas emissions. It is no surprise that in 2019, environmental risks once again dominate the list of major concerns. So, too, does the growing likelihood of environmental policy failure or a lack of timely policy implementation. To effectively respond to climate change requires a significant increase in infrastructure to adapt to this new environment and transition to a low-carbon economy. By 2040, the investment gap in global infrastructure is forecast to reach $18 trillion against a projected requirement of $97 trillion. Against this backdrop, we strongly recommend that businesses develop a climate resilience adaptation strategy and act on it now.”

Environmental risks also pose problems for urban infrastructure and its development. With sea levels rising, many cities face hugely expensive solutions to problems that range from clean groundwater extraction to superstorm barriers. Shortfalls of investment in critical infrastructure such as transport can lead to system-wide breakdowns as well as exacerbate associated social, environmental and health-related risks.

John Drzik, President of Global Risk and Digital, Marsh, said: “Persistent underfunding of critical infrastructure worldwide is hampering economic progress, leaving businesses and communities more vulnerable both to cyberattacks and natural catastrophes, and failing to make the most of technological innovation. Allocating resources to infrastructure investment, in part through new incentives for public-private partnerships, is vital for building and strengthening the physical foundations and digital networks that will enable societies to grow and thrive.”

At an individual level, declining psychological and emotional well-being is both a cause and consequence within the wider global risks landscape, impacting, for example, social cohesion and political cooperation. The Global Risks Report 2019 focuses explicitly on this human side of global risks, looking in particular at the role played by complex global transformations that are under way: societal, technological and work-related. A common theme is that psychological stress relates to a feeling of lack of control in the face of uncertainty.

This year’s report revives the Future Shocks series, which recognizes that the growing complexity and interconnectedness of global systems can lead to feedback loops, threshold effects and cascading disruptions. These “what if” scenarios are food for thought as world leaders assess potential shocks that might rapidly and radically disrupt the world. This year’s sudden and dramatic breakdowns include vignettes on the use of weather manipulation to stoke geopolitical tensions, quantum and affective computing, and space debris.

The Global Risks Report 2019 has been developed with the invaluable support throughout the past year of the World Economic Forum’s Global Risks Advisory Board. It also benefits from ongoing collaboration with its Strategic Partners Marsh & McLennan Companies and Zurich Insurance Group, and its academic advisers at the Oxford Martin School (University of Oxford), the National University of Singapore and the Wharton Risk Management and Decision Processes Center (University of Pennsylvania).

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Defense

India overreacted to the US $450 million deal with Pakistan

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India registered a strong protest with the US last week over the latter’s decision to approve a $ 450 million sustainment package for Pakistan’s aging F-16 Fleet. The US Defense Security Cooperation Agency DSCA said in a statement that the sustainment program would assist Pakistan in its campaign against terrorism with a rider that it will not affect the status quo in the region. The Biden administration has ignored the “strong objections” raised by India over the proposed foreign military sale of $450 million to Pakistan in order to sustain the Pakistan Air Force’s F-16 program.

Pakistan’s arch-rival India has voiced “serious objections” to the US plan for Foreign Military Sales (FMS) worth $450 million for hardware, software, and spares for the F-16 fighter jet during official meetings with US Assistant Secretary of State Donald Lu in Delhi.

In widely published comments, Indian External Affairs Minister S Jaishankar said last week that the US was not “fooling anybody” by claiming the equipment was for counterterrorism operations. Recently Indian foreign Minister cut short his trip to the US, and without attending his pre-scheduled meetings and returned back to India in protest. His behavior was unprecedented in the diplomacy world and considered an overreaction.

Prime Minister Modi is upset too and sources close to his are guessing a severe reaction from him. Unconfirmed, but a possible reaction may include cancellation of defense agreements with the US, and exclusion from “Quad” – an anti-China alliance with the US, Japan, and Australia. The Indian ideology of intolerance, extremism, and nationalism is the real threat to the region.

As a matter of fact, India has been hijacked by extremists and any extreme reaction is expected at any moment. There was a time in history when India was known democratic and secular state. But, now, under the leadership of Prime Minister Modi, all extremist political parties and groups under the umbrella of the BJP are ruling India.

The extremist and fanatics are implementing their agenda of eliminating minorities and transforming India into a “Pure Hindu State”. Especially with Pakistan, a traditional rivalry exists and they cannot see any improvement in Pakistan. 

Pakistan was in the American club for almost Seven Decades and enjoyed very cordial relations with the Western world. Whereas India was a close ally with the former USSR. Although Pakistan was a close ally of the West, yet was facing the toughest sanctions too. However, there is a realization in Washington and a visible policy shit was witnessed recently. Pakistan always welcomes and desires the restoration of traditional friendship between the West and Pakistan.

The US claims the proposed sale to Pakistan does not include any new capabilities, weapons, or munitions, but it would be hard for New Delhi to digest such claims and remain complacent. Interestingly, the fleet of F-16s has been part of the Pakistan Air Force since the early 1980s. Pakistan has always used the US-supplied defense systems in its defense only. The F-16s in their arsenals have been no exception. In February 2019, after the Indian Air Force launched its air strike on Balakot, Pakistan came to deploy its F-16s to target Indian military bases close to the Line of Control.

Apart from Pakistan, the US has sold F-16s in many countries like Bahrain, Belgium, Egypt, Taiwan, Denmark, Netherlands, Poland, Portugal, Thailand, Turkey, etc. However, South Asia remains a highly volatile region. The US has been sitting on the sale of F-16s to Turkey based on security concerns in the Mediterranean region, which makes the Pakistan agreement all the more intriguing.

Department of State spokesperson Ned Price has said the relationship Washington had with Pakistan “stands on its own,” responding to criticism from India over a proposed US sale of F-16 aircraft sustainment and related equipment to Islamabad.

Answering a question about Jaishankar’s comments, the state department spokesperson said on Monday Washington did not view its relations with India or Pakistan “in relation to one another.” “These are both partners of ours with different points of emphasis in each, and we look to both as partners because we do have in many cases shared values, we do have in many cases shared interests,” Price told a briefing. “And the relationship we have with India stands on its own; the relationship we have with Pakistan stands on its own.”

There are positive signals and it seems the traditional relations between the US and Pakistan will be restored soon. Our relations are not any threat to India or any other nation, but, for promoting regional peace, stability and development. We are partners in peace, development, and the total welfare of humankind.

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Military Aspects of Russia’s Stance in the Arctic

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In the midst of a deepening multidimensional crisis in contemporary international relations, it is increasingly important to ensure a nation’s survival. The latter can be construed as the resilience of national economy under a long-term instability of the global markets, restricted trade-economic and investment opportunities, unfair competition and transport blockade. Furthermore, the national political system must be capable of ensuring a normal flow of social activities as well as of protecting the vital interests from a wide range of challenges and threats. The Arctic accounts for a third of Russia’s entire territory and, according to Russian President Vladimir Putin, new Arctic and northern territories will be attached to Russia in the decades to come.

Expansion in the Arctic

The fact that the Arctic and subarctic regions are already generating at least 10% of the GDP and about 20% of Russia’s export, with a significant potential for further growth in absolute indicators, could be used as a reference data highlighting the importance of Russia’s “Arctic third”. Today, 17% of all Russian oil, 80% of natural gas and about one third of fish are produced in the Arctic belt. The continental shelf is rightly considered a strategic stockpile of explored mineral resources to secure hundreds of years of prudent consumption. The Northern Sea Route (NSR), for all the complexities and controversial points in its operation, is a real working sea lane for commodity transportation. In 2021, this artery was used to deliver a record 33.5 million tons of cargo, with liquefied natural gas (LNG) and gas concentrate accounting for one third of transported freights. By 2024, the traffic volume may reach 80 million tons, and by 2030 – up to 110 million tons, largely due to oil projects and booming coastal voyages.

From a military perspective, Russia’s presence in the Arctic is contingent upon the physical deployment of strategic nuclear forces in this region, along with strategic non-nuclear capabilities to prevent individual or collective aggression by other nations. The area’s importance is proved by the fact that the national leadership has raised the status of the Northern Fleet by turning it into a military district. The Northern Fleet’s united strategic command (USC) is called to ensure the integrated security of Russia – unified management of all forces and means across the vast expanse from Murmansk to Anadyr. The USC includes the Air Force and Air Defense Army as well as a special Arctic brigade (the plan calls for the formation of at least two such brigades). The key bases of the Arctic forces—Polar Star on Wrangel Island, Arctic Trefoil on Franz Josef Land and Northern Clover on Novosibirsk Islands—back the presence of combat troops throughout the entire area of responsibility.

What is most important in the Arctic?

The phrase “ensuring integrated security from Murmansk to Anadyr” implies a rather long list of possible items. As per the Strategy for Developing the Russian Arctic Zone and Ensuring National Security through 2035, among the key priorities is the uninterrupted supply of strategic commodities as well as the smooth operation of transportation routes Arkhangelsk – European part of Russia and Anadyr – Kamchatka – Sakhalin – Vladivostok.

In the meantime, several military perspectives can be added to the economic dimensions. Undoubtedly, Moscow seeks to prevent objectionable uses of the NSR and the Russian Arctic zone by taking anti-access and area denial measures. Key for the Russian leadership is retaining, under any circumstances, of the strategic strike capability in the form of missile-carrying submarines and long-range aviation with guaranteed use when required. Developing submarine, air and missile defense in the Arctic is also perceived as extremely important in bolstering the national defense potential. The implication is that the Northern Fleet must be capable of assisting the Baltic Fleet on NATO’s eastern flank, while also interacting with the Pacific Fleet in case any threat emanates from the Asia-Pacific.

Direct and explicit threat

The threats and dangers faced by Russia in the Arctic can be divided into those that already exist and prove out to the fullest extent already today, as well as those that can significantly aggravate the situation in the future. However, if the current problems are ignored rather than solved, the situation will inevitably deteriorate, which will call into question the effective protection of national interests in the Arctic.

Thus, the facts that infrastructure development in the Arctic is lagging behind the real needs of the nation and regions; that ships, aviation and electric power are in short supply; that there is no permanent emergency rescue service, and communication is unstable—are definitely a cause for concern. The said shortfalls cripple the continuous operation of civilian and military facilities in the Arctic, needed to boost socio-economic development and the national defense potential.

It should be borne in mind that the high pace of global warming and ice melting may result in a situation where navigation in the Arctic will be possible without icebreaker support already by 2045. Under these circumstances, the research, commercial and, inevitably, military activities of foreign nations in the Arctic will roar ahead, apparently giving Russia a headache.

With the global consensus on universal responsibility of mankind to the Arctic, attempts by representatives of the Collective West to challenge Russia’s Arctic status and their denial of its Arctic shelf claims appear absolutely irrelevant. However, a results-oriented settlement of the disputes—for instance, within the Arctic Council—is complicated by the practice of establishing closed cooperative frameworks. In particular, in line with the logic of “denying Russia’s claims,” we see the redoubling of efforts to transfer the agenda of multilateral cooperation in the Arctic to exclusive platforms like Nordic Plus, where Moscow is not even invited.

The accession of Finland and Sweden to NATO apparently threatens Russia’s interests in the Arctic, given that the Alliance may one day deploy military assets in their territory, including strike capabilities. The mounting potential for conflict in the Arctic, due to a predictably higher intensity of air-force and naval operations conducted by the U.S., UK and other NATO member states, compels Russia to constantly increase the combat power of its Armed Forces in this region. Bolstering the military component of security is fraught with high costs, but Russia is clearly not ready to sacrifice its commercial and infrastructure projects. Therefore, urgent adaptation of the Arctic strategy is needed, to develop a comprehensive approach and to determine the hundred-percent accomplishable and feasible objectives.

Special objectives

The Russian leadership has identified a number of top priorities to strengthen its influence in the Arctic. For instance, consistent effort is needed to delineate the outer perimeter of the continental shelf that would be recognized by the international community; however, given the current confrontation with the collective West, this can hardly be accomplished in the near future.

To preclude the waning of Russia’s posture, it is vitally important to develop the deployment infrastructure, to ensure operational preparedness of the territories, to equip the Russian Armed Forces with special Arctic-adapted weapons and hardware, and to put some boots on the ground (e.g., in the Spitsbergen archipelago). Apart from countering military threats, preventing extremist and terrorist activities as well as monitoring of emergencies is also extremely important.

Specific measures taken to achieve the identified objectives include the integrated development of seaport infrastructure and shipping lanes in the NSR waters, namely the Barents, White and Pechora Seas, establishment of a maritime operations headquarters to manage navigation, as well as the maintenance of military assets in six areas of the Arctic. The efficiency of the NSR economic uses and facilitation of Russia’s Armed Forces will allegedly be provided by building rescue, hydrographic, pilot and cargo ships (including those powered by gas motor fuel), as well as nuclear icebreakers like Arktika and Leader. To meet military and civilian needs in communications, authentication and hydrometeorology, a high-elliptical space system and an underwater fiber optic line are being created.

An equation with many unknowns

The promotion of Russian interests in the Arctic is fraught with certain difficulties, mainly related to multiple scenarios and uncertainty regarding the plans, penchants and activities of other nations.

Amidst the cessation of investment and technological cooperation with the West, the key transport, energy and infrastructure projects in the Arctic need to be revisited. The emphasis on interaction with Asian partners (primarily China, India, ASEAN and countries of the Middle East) is undoubtedly justified by the logic of forming a workable alternative to Western domination. However, the most important financial, technological and logistical issues are yet to be addressed, to ensure reliable and uninterrupted operation of the NSR and Arctic projects.

Not all the initiatives are fully feasible, or they may take too much time to pan out. For example, the port of Arkhangelsk appears to be the most important “growth point” not only for the Russian Arctic, but for international cooperation as well. Yet, its profound and quality upgrading will be contingent upon the deeper involvement of foreign stakeholders and partners. However, it is highly unlikely that the Arctic Council, Barents Council and Northern Dimension Partnership will resume their normal operations in the short-term outlook, and so Russia should promote a significant part of its ideas bilaterally as well as within the SCO and BRICS frameworks.

The intensification of Russia’s border disputes with Canada and Denmark over the Lomonosov Ridge, with Norway in the Barents Sea (despite the treaty signed in 2010), and with the United States over the seabed delimitation near Alaska, cannot be ruled out either. In general, creating hotbeds of tension along the entire perimeter of Russia’s borders is compliant with NATO’s behavior patterns, so attempts by NATO member states to partially obstruct Russia’s access to the Arctic potential should be expected.

Snow Dragon

The position of some nations, having extensive interests in the Arctic, but lacking direct access to this region, remains a great unknown. China, for example, has expressed its willingness to join the ranks of the “great Arctic powers” and has declared the Arctic a sphere of its national interests. In 2018, a White Paper on Arctic Policy was published, where the key strategic point is creating the “Ice Silk Road”. The 14th Five-Year Development Plan of China also emphasizes the potential of the Arctic.

Beijing hardly intends to lay any claims to the Arctic belt, but the Chinese interpretation of harnessing the transportation and resource potential is somewhat different from how Russia sees it. In particular, China does not rule out independent economic activities outside the exclusive economic zone and tends to consider the Arctic latitudes as falling under the UN Convention on the Law of the Sea. The Chinese also carry out robust investigation of the ice and seabed, increasing the coverage of the BeiDou Navigation Satellite System in the Arctic, and have not yet given up on joint research, communication and economic projects with European partners.

At the same time, Beijing also aims at developing cooperation with Russia in the Arctic, including participation in major resource and transportation projects, such as the mining, processing and transportation of coal, metals, oil and gas, as well as the construction of the deep-water seaport Arkhangelsk. The Chinese side is also interested in gaining access to seafood fishery in the Arctic.

The lack of rivalry and dissent between the Russian and Chinese leadership in the Arctic seems to be the key point bringing the two nations together. Overall, nothing in Beijing’s doctrinal papers on the Arctic policies directly conflicts with Moscow’s interests. In the meantime, careful coordination of plans and actions will be required to avoid ambiguity, the dispersion of forces, and to focus on the principle of mutual benefit.

From our partner RIAC

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Mobilization Won’t Save Russia from the Quagmire

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photo:© Vitaly Nevar/TASS

When Moscow waged war against Ukraine in February, few expected Russia to end up in a quagmire.  The Russian military failed to achieve its goals, while the Ukrainians fought bravely to defend their nation.  The recent pushback in the Kharkiv region further proved that Russia could not achieve its military goals under the current situation. 

The Russian government takes a new procedure.  President Putin has called for partial mobilization, commissioning the reserved forces and those previously served.  Meanwhile, the Russian government has decided to launch referendums for the occupied areas to join Russia.  Any attacks on those territories in the future could be considered total war and potentially trigger nuclear weapon use.  

It is vital to notice this is only a partial mobilization, only recalling reservists.  However, many Russian politicians and nationalists have called for total mobilization.  Yet, a mobilization, whether partial or complete, is not a prescription to improve Moscow’s performance on the battlefield.  The mobilization, in reality, could further drag Russia into a quagmire. 

Russia does not have the political leverage it had before, home and abroad.  Total mobilization will not change Russia’s diplomatic stalemate.  The war united European countries quickly.  While Russia accused Ukraine of attempting to join NATO, Finland and Sweden have applied to become NATO members, bringing NATO close to Saint Petersburg.  A total mobilization is unlikely to threaten Europe and forces it to change its policy.  Instead, it will further push the European countries to unite in facing Russian aggression.

Even the countries with which Russia has a closer relationship have different opinions.  Indian prime minister Modi has told President Putin to take the path of peace and stop the war in a recent meeting.  India has a close relationship with Russia, and Modi’s criticism is a significant blow to Putin.  Even Central Asia countries have also expressed no interest in Putin’s aggression.  Kazakhstan has clearly stated that it will neither send its military to fight in Ukraine nor recognize the independence of Donetsk and Luhansk. A total mobilization and an escalation of the war will further alienate Russia and its allies. 

Domestically, a mobilization could further drag Putin down with his popularity.  Chechnyan president Kadyrov, one of Putin’s close allies, has criticized the war’s progress, reflecting the contrary opinions among Russian elites.  On the everyday citizen level, Putin has also become unpopular.  Immediately after the mobilization was introduced, Russian anti-war groups called for national protests

Militarily, the Russian war machine is not the Soviet Union military that the world trembles.  The Russian army has needed a significant upgrade since the collapse of the Soviet Union.  The chaos after the collapse of the Soviet Union and the economic crisis has dramatically weakened the Russian armed forces.  The failure in the two Chechnyan Wars is the most obvious evidence.  Putin managed to upgrade a portion of the military equipment and provided a better salary to the personnel.  The Russian military still performed decently during its operation in Syria. 

Yet, the scale of upgrade it needs is far from what Kremlin has offered, and the war further dragged the Russian military capacity.  Before the war, Russia chose not to produce and deploy the most advanced tanks because of the lack of money, and the T-14 tank ended up being a showpiece in the military parade.  The corruption within the Russian military is still a problem, leading to the lack of resources directed for military upgrades. 

That’s why Russia still uses the Soviet military legacy in combat.  The Russian armored forces now have to use T-64 tanks from their storage because of the significant loss at the initial stage of the war.  The recruits this summer were only trained for a month before being sent to the frontline.  As for the newly mobilized forces, despite the previously served reservists, it still takes time and equipment to prepare them for operation.  Russia has neither of those, let alone the conscripts are also a part of the reserved forces, making them even more ineffective on the battlefield. 

Moscow’s financial situation to sustain a mobilization remains a big question.  Despite the excellent performance of the Russian Ruble in the currency market, Russia’s economy will still face severe challenges.  Teachers are now required to donate to the war effort, a sign that the war effort is far from successful.  As the announcement of mobilization comes, Moscow’s stock index drops dramatically.  While the sanctions did not work as expected, the Russian economy suffered from the effects.  The banks also reported significant losses in the year’s first half. 

The international price of natural gas and oil has also come down from its peak since European countries finished stacking up their supply earlier.  Meanwhile, UAE and Kuwait are planning to expand their production capacity of natural gas and oil.  Russia’s source of income is far from stable as prices drop and exports and production decline for Russia.

War is a costly activity.  In previous operations in Syria, Russia’s daily cost is around 2.4 to 4 million US dollars.  That was a minor operation with mainly air force participation.  With all forces in action and the war dragging on for more than 200 days, the expenses mounted.  It is believed that the first week of war alone cost Russia 7 billion dollars.  The Kremlin’s decree says that the newly assembled forces will be paid corresponding to the existing personnel.  With that high expense, how will Russia be able to pay for the new troops?  How will Russia be able to replace the equipment and supply its forces?


Moscow believed that by sheer force and lightning warfare, Kyiv would bow down to Moscow.  However, this dream ended with a valiant effort from the Ukrainians to defend the country.  Further mobilization may provide the short-term manpower that Russia needs, but it will not save Russia from the predicament.  The bleak reality in politics, the military, and the economy has made mobilization anything but a save.  

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