Geopolitics Executive Briefing (Sixth Edition): Strategic Intelligence

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The Middle East conflict continues to grab the headlines, whether in terms of the immediate impact of the conflict in the region or the implications for global energy markets and inflation. However, the current Middle East conflict is part of a broader shift to a more fragmented, multipolar world order. Indeed, this is the second global economic shock in the last four years and underlines the need for companies across all sectors to pay much greater attention to geopolitics.

This is the latest edition of the Geopolitics Executive Briefing. This includes an update on the Middle East conflict, as well as examining how this conflict fits into the broader picture of geopolitics. Spillovers from this conflict could include the increased risk of nuclear proliferation, as well a deepening rift between the US and Europe. It also adds a new dimension to the developing superpower rivalry between China and the US, where economic weapons are the instrument of first recourse. The report includes updates and analysis on all the major geopolitical hotspots and risks factors, ranging from the war in Ukraine, to trade wars, to events in the South China Seas.

Scope

This edition of our quarterly geopolitical briefing series is published three weeks into the global economic shock resulting from the US-Israel attack on Iran-with, at the time of writing-glimmers of light amid deeply uncertain outcomes. This is the second such shock in four years, triggered by a war of choice. There could hardly be a more powerful illustration of the case-rehearsed on the next page-for companies and investors to pay constant attention to geopolitics.

Key Highlights

The Middel East war’s first particular illustration of geopolitical risk has a bearing on the duration question. The war stemmed from a patron-client dynamic in which the client state (Israel) wielded decisive influence. This counter-intuitive pattern (‘the tail wagging the dog’) is always worth watching for. The related lesson relevant to the war’s duration is that even such a powerful driver as this (i.e. ‘Israel First’) can quickly be supplanted by another and contrary motive—in this case, the oil price surge resulting from Iran’s retaliatory chokehold on the Strait of Hormuz threatening defeat for President Trump in this November’s mid-term elections. His priority has accordingly shifted from supporting Israel to finding the optimal risk-reward balance of coercion and inducement to end the (clearly

unanticipated) Iranian threat to Gulf shipping. A final specific lesson is the value of deterrence for mitigating geopolitical risk.

Reasons to Buy

Gepolitics is now a key issue for companies across all sectors. Undersanding the risk environment is more crucial than ever.

Table of Contents

Executive Summary

Geopolitics outlook

Risk factors

Sector implications

Global economic outlook

Appendices

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