As we find ourselves on the threshold of the year 2023, you might look back and assess the past year as being stressful and disrupting. If that’s the case, it is time to brace yourself. Our balancing act towards a multipolar order is going to become even more precarious and nerve-racking.
According to the International Monetary Fund one-third of the world’s economy will be in recession in 2023. The impact of the war between Russia and Ukraine on the energy and food markets will lead to a rethinking of our global supply chains and governance. The Biden administration’s CHIPS and Science Act marks a new chapter in great power competition focused on securing access and gaining leverage on strategic ‘dual-use’ technologies. While entering the long and complex process of decarbonizing the economy, climate change will become a national security threat, will further trigger resource conflicts, food and energy shortages and force great-power competition. Meanwhile a war between China and Taiwan is unfortunately, still on the table and North-Korea has launched another intercontinental ballistic missile.
Business can no longer afford to ignore geopolitics. Global companies are assumed political entities, they will have to take on this responsibility while also securing energy supplies, restraining inflation, ensuring supply chain resilience, guaranteeing security, rebalancing the distribution of wealth, while also achieving sustainability. It seems inevitable that (geo)politics and cultural values will lead to supply chains becoming more and more local and regional. Against this background markets and governments should be regarded as complements, not as substitutes.
The geopolitical implications of reshaping the world’s economic framework are yet to be determined. Placing our economies on a safer and more sustainable footing requires a new balancing between markets and governance, with enough room for nations to make varying choices depending on their needs and values. Strong nations need to take the lead domestically and to collaborate internationally. Transitions lead to insecurity and instability. Transitions put pressure on the way we relate to each other, who we identify with and on our social contract.
At the same time, we are approaching Christmas and closing of the year. A time to get together with friends and family, sharing food and drinks, to celebrate past, present, and future. This Annual Report contains food for thought, as we focus on some of the highlights of 2022 and on future developments in the world. Through this we hope to look ahead to a brighter future beyond the gloom of the daily headlines.
At HCSS we do not pretend to know the future, to solve all highly complex problems with our analyses, or to instantaneously improve the relations between nations or mankind in an age of great-power competition, technology breakthroughs and climate change. But we expect that our fact-based analyses contribute to an increased understanding of the future path of the world and to provide ideas of how governments, businesses, and individuals, can help to make this world a better and safer place to live in.
The HCSS team wishes you a very merry Christmas and a happy New Year!
Authors: Patrick Willemsen and Alessandra Barrow, with special contributions by Rob de Wijk, Paul Sinning, Han ten Broeke, Frank Bekkers, Laura Birkman, Paul van Hooft, Irina Patrahau, Saskia Heyster and Arthur Laudrain.