Tuesday 7 January 2020 6:00 am

Five political risk predictions for a new era

Dr John C. Hulsman is senior columnist at City A.M., a life member of the Council on Foreign Relations, and president of John C. Hulsman Enterprises. He can be reached for corporate speaking and private briefings at www.chartwellspeakers.com.

As Jules Verne’s unmatchable adventure Around the World in Eighty Days so eloquently put it: “Anything one man can imagine, other men can make real.” 

Fresh off my firm’s victorious analysis of both Brexit and the outcome of December’s British General Election, we sincerely hope that the new year continues to affirm for us Verne’s pious prayer for any first-rate geopolitical analyst. 

The developments between the US and Iran are of course taking centre stage in the opening weeks of 2020, and merit a full column all on their own. But it also pays to take a more long-term view of the year, and consider what some of the main geopolitical stories will be.

So without further ado, here is our main political risk prediction for the coming year, along with four other teasers that will do much to define the nascent age we find ourselves in. 

First and foremost, Washington and Beijing are now in the opening stages of a Cold War for dominance in Asia that will come to define our new era. 

Forget the “success” of the December 2019 Phase I agreement between the US and China — this amounts to little more than a truce in what remains an ongoing trade war. 

While it did cool the 17-month trade war between the world’s two most powerful economies, upon closer inspection it is so much less than meets the eye. 

Yes, the Trump administration put off announced December tariffs and slightly modified older ones, while the regime of Xi Jinping agreed to sharply increase its purchases of American farm products over the next two years. But “no new tariffs for soybeans” is not about to settle the structural differences brewing between the world’s sole superpower and its only possible near-term peer competitor. 

The basic reason for this is less the fault of any single statesman than the reality of two unbridgeable differences. China, with its very different state-centric model of capitalism — a construct that the US finds inherently unfair and not in tune with global trade rules — is not about to change its heretofore successful system because America does not like it. 

President Xi, in continuing to promote his “China in 2025” state-centric economic vision, shows no signs of abandoning the economic model which has pulled 800m Chinese out of abject poverty and made his proud country a great power once again. 

As such, there is no Phase II deal, and the “breakthrough” of December is merely a truce in what historically amounts to an ongoing economic battle for supremacy between the two powers. 

If Beijing is not about to budge on economics, the US is surely not going to voluntarily surrender its geopolitical advantage in East Asia. Here, Washington and Beijing have a fundamental state of being problem: the US is the greatest power in the region, and China wants to be the greatest power in the region (as it has been traditionally). 

No amount of honeyed words, diplomatic skill, or changing the subject can alter this basic geostrategic fact. 

If you accept that the US understandably will not give up its dominant position without a fight — coupled with China’s equally understandable refusal to radically alter its economic system — you have only one political risk conclusion to reach. The US and China are in the first stages of a Cold War that, more than anything, will shape the coming era. 

Beyond that, here are our other major 2020 geopolitical predictions, which will be teased out in subsequent columns in this paper. 

First, the one last hope for the EU is French President Emmanuel Macron besting the French street over pension reform and quickly finding an able German interlocutor to at last embark on European-wide economic reform. Barring that, Europe will continue its downwards geopolitical slide. 

Second, the key to post-Brexit success for the UK is not the trade deal with Europe, but whether Boris Johnson can, over his full five-year term, negotiate free trade deals with the Anglosphere (Canada, Australia, New Zealand, the US and India). If he does so, Brexit will be seen as an historical success. If not, then a failure.  

Third, as the Democrats continue to commit acts of political self-harm (impeachment) and move left of Trotsky on the issues — ranging from reparations for slavery, the Green New Deal, Medicare for all, and decriminalising illegal immigration — Trump will be re-elected President of the United States in November. 

And finally, the North Korean crisis will turn septic again this year, raising the threat of yet more instability in Asia, the seat of most of the world’s future economic growth, as well as much as its future political risk. 

Like Phileas Fogg and his loyal friend Passepartout, I hope that we can once again journey around the planet together this coming year, seeing its beauty and fascination, as well as its tragic limitations.

Main image credit: Getty

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