GEOPOLITICS

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GEOPOLITICS

Geopolitics refers to the effects of Earth’s geography including human and physical aspects on politics and the relations between countries in the international system.

It is also a method of studying foreign policy of a country in order to understand, explain, and predict its international political behavior through geographical variables.

The focus is generally on political power that link to geographic space, in particular, territorial waters, land mass and territory in correlation with diplomatic history of a country.

What are the main elements of geopolitics?

Sea power. It is believed that the greatness of a country’s sea power is highly associated with the strategic location of the sea, choke points, canals, straits and the conducive control of the sea and in term of naval strength. According to WDMMW, the US has the most powerful navy in the world followed by China, Russia, Indonesia, South Korea, Japan, India, France, UK, Turkiye and Italy.

Air power. A country must also possess air power – defines as the ability to project military power through the control and exploitation in the air facilitated by the four core roles of air power, that is, control of the air; attack ability; intelligence, surveillance and air mobility. Data by worlspopulationreview.com has shown that the US has the largest air force in the world with 5,217 aircrafts, followed by Russia 3,863, China 1,991 and India with 1,715 aircrafts.

Land power. In geopolitics, land power is defined as country(s) with huge land masses and territorial area and subsequently to the airspace it controls. Russia is the biggest country in the world, followed by China, Canada, USA, India and Brazil while France maintains the largest maritime and territorial area mainly in the Pacific.

Military power. Military power, in geopolitics, refers to a nation having a powerful army and the ability of the country by threat or force to gain and sustain control over its land, resources and people and by size. Data by wisevoter.com shows China has the largest army in the world with 2 million, India 1.46 million, the USA with 1.39, North Korea with 1.28 million and Russia with almost a million army personnel.

Diplomatic power. Oversea diplomatic representation is always an important indicator for a country’s diplomatic power due to the role played by embassies in promoting a nation’s foreign policy and according to Lowy Diplomatic Ranking 2022, the top countries with the highest number diplomatic missions abroad are: China 171, USA 167, France 161, Germany 153, Japan 151, UK 151, Turkiye 147, Russia 144, Brazil 138, South Korea 128, India 125, Italy 122, Spain 115 Sweden 107 and Switzerland 103 missions.

Technological power. A country’s geopolitical power is also determined by its advancement in technology and and the number technological expertise it has and according to the US News, Japan has the most technological expertise in the world followed by South Korea, China, USA, Germany, Singapore, UK, Russia, Switzerland and Canada.

Infrastructural power. A country must have the infrastructural power or the capacity of to enforce policy either political, economic or social throughout its entire territory. It includes road, airport, ports, water and electricity supply. According to the ranking by usnews.com countries with highest infrastructural power are Germany, USA, Japan, UK, France, South Korea, UAE, Canada, Sweden, Netherlands and China.

Power of currency. The US dollar has been a dominant currency because USA has dominated the global economy since WW II and due to its attractiveness in the global financial market that offers a high degree of liquidity advantages. Other strong currencies include the Euro, Swiss francs and UK pound while China’s renminbi is also growing quite rapidly in the global financial markets.

Power of language and communication. Language is also an instrument of power and in a globalized world with multilingual societies, knowledge of languages is paramount in facilitating communication, business, economic, politics, diplomacy and all social activities. According to Ethnologue, the most spoken language is English with 1.5 billion speakers, Mandarin 1.2 billion, Hindi 605 million, Spanish 560 million, Arabic 350 million, French 310 million, Bengali 275 million, Portuguese 270 million, Russian 260 million, Indonesian/Malay 260 million, Urdu 230 million, German 140 million and Japanese 130 million speakers.

Power of the internet. Internet has become the most important and powerful instrument for communication and for spreading news and knowledge in the 21^st Century replacing the print media, radio and television. Data from Statista estimates the total number of internet users globally is 5 billion users and the highest is China with 1 billion users (74% of its population), India 840 million (60%), USA 320 million (93%), Indonesia 200 million (72%), Brazil 165 million (77%), Nigeria 140 million (64%), Pakistan 130 million (61%), Russia 130 million (90%) Bangladesh 130 million (75%) and Japan 120 million (95% of its population).

Knowledge and mental power. A country must also have the knowledge and mental power to maintain its top position in the world as per saying of the famous proverb “Knowledge has the ability to conquer the world”. It is not only a source of intelligence but it gives the country name, fame, strength, power, money, position as knowledge is the ultimate power.

Power of higher education. Power in the international system is obviously linked to a country’s academic advancement in particular the tertiary or university education and ranking by timeshighereducation.com shows the top 20 universities in the world are 1. Oxford 2. Harvard 3. Cambridge 4. Stanford 5. MIT 6. California Institute of Technology 7. Princeton 8. University of California Berkeley 9. Yale 10. Imperial College London 11. Columbia 12. ETH Zurich 13. University of Chicago 14. University of Pennsylvania 15. John Hopkins University 16.Tsinghua University China 17. Peking University 18. University of Toronto 19. National University of Singapore and 20. Cornell University.

Power of tourism. Many countries in the world offer a captivating blend of history, culture, natural beauty, and unique experiences that entice millions of international travelers each year. According to wisevoter.com, the top ten most visited countries per year are 1. France 120 million 2. Mexico 52 million 3. USA 46 million 4. Italy 39 million 5. Spain 37 million 6. Hungary 32 million 7. China 31 million 8. Croatia 22 million 9. Turkiye 10 million and 10. Denmark 16 million.

Soft power. In global politics, soft power is the ability to spread influence, appeal and attraction through popular culture, political values, mass media. movies and foreign policies, as developed by Joseph Nye, a Harvard professor. In terms of 2023 soft power ranking, as developed by brandfinance.com, the top ten is USA, UK, Germany, Japan, China, France, Canada, Switzerland, Italy and UAE.

Power of the movies. Movies play an important role in promoting entertainment and geopolitics with the highest movie producing countries in the world are Nigeria (Nollywood) (2,500 movies) followed by India (Bollywood) (2,000 movers), China (850 movies), Japan (640 movies, USA (Hollywood) (600 movies), South Korea (820 movies), France (350 movies) and UK with (240 movies).

Oil power. Oil is an undisputed source of political and economic power and the top seven crude oil producers and their percentage shares of world crude oil production in 2022 were: USA 14.7%, Saudi Arabia13.2%, Russia12.7%, Canada 5.6% Iraq 5.5%, Iran 5.2% and UAE 5%.

Food supply. Particularly in the current problems of global food crisis, countries with abundance supply of food stand out and according to the World Food Organization (WHO), the top 10 countries with the largest production and supply of food are USA, China, India, Brazil, Russia, France, Mexico Japan, Germany and Netherlands and surprisingly most are industrial economies.

Power in outer space. The space war has begun and the countries with the highest objects sent to the outer space, according to www.visualcapitalist.com are USA 5534, Russia 3611, China 731, UK 516, Japan 300, France 130, Germany 114, Canada 82 and Luxembourg 52 with objects.

Nuclear power. Five nations of the world: China, France, Russia, UK and USA are allowed by the UN under the Non Nuclear Proliferation Treaty (NPT) to possess and develop nuclear weapons and undoubted they are the most militarily powerful states on Earth.

Stable government. Stable government is the hallmark of political power of a state and the most politically stable countries in the world, ranked by perception and developed by the Wharton School of the University of Pennsylvania are 1. Switzerland 2. Canada 3. Netherlands 4. Denmark 5. Norway 6. Sweden 7. Australia 8. New Zealand 9. Germany and 10. Finland.

What are the geopolitical risks in 2023 and beyond?

Geopolitical risk (GPR) is defined as the risk associated with security threats, economic threats. war threats or military build-ups between nations or countries that disrupt the usual peaceful conduct of International relations.

Global economic slowdown. The period from 2018 is the weakest global economic slowdown which include the global financial crisis and the acute phase of global Covid19 pandemic. Many CEOs, investors and economists remarked that 2023 as the year when a recession would hit.

Supply chain problems. The supply chain problems are far from over which effect all aspects of global markets and pose challenges to key industries including food supplies, microchips and motor vehicles and energy supplies that impacted many nations of the world rich or poor..

Global conflicts. The current global conflicts continue to pose a significant geopolitical risk in 2023 with no sign of immediate resolution and apart from humanitarian crisis, it gives rise to greater risk exposures in capital flows, trade and commodity markets worldwide.

Danger of de-globalization. The world is becoming less connected and less globalized especially in the economically powerful states due to abundance of local products and solutions, border controls and a lack of free movement of goods and services.

Climate degradation. One of the biggest geopolitical risks of 2023 is climate risks that have far-reaching impacts on national security and global stability and the effects of climate change are already apparent in the form of extreme weather events, floods, drought wild fires and heatwaves. rising sea levels and growing poverty in developing countries. The world must therefore be fast in negotiating and implementing climate-related policies and agreement to reduce greenhouse emissions.

High energy risk. Global scale energy risks brought by sanctions and supply problems have caused increased concern for energy security worldwide and this remains a top 2023 geopolitical risk which is heavily felt in Europe after losing access to the gas from Russia for household use and industries.

Pandemic fallout. The social and economic impact of the Covid19 pandemic is still being felt and a possible future pan/pandemic can not be ruled out in particular the emergence of new viruses or diseases and this uncertainty means the risk of future lockdowns and manufacturing disruptions remains.

Surging food crisis. High debt levels, rising interest rates, surging food, energy prices and global conflicts are among the factors threatening to start the biggest food crisis in almost half a century not only in Europe but also in the Middle East, Africa and Asia..

Sovereign debt crisis. The world is facing one of the biggest sovereign debt crisis putting financial pressures to almost 30% the government finance of emerging markets mainly by the COVID pandemic, increased subsidy spending and debt servicing costs.

Cyber-attacks. The growing geopolitical risk which is becoming larger, more intricate imposing threat to individuals, organizations and countries is none other than cyber-attacks that bring risks to energy supplies, power grids, water supply, transportation systems and overall national security that may include the loss of life and economic damage.

Stock market jitters. The stock market is entering the second half of 2023 with positive momentum but analysts say the outlook is uncertain amid financial sector turmoil, high inflation, effects of the global conflicts and the three years of COVID.

US-China trade relations. The US-China trade relations have become more complex in recent years effecting global trade and supply lines and both are seen committed to pursuing a policy of engagement but the risks of hardening relations remain.

Stress on banks and financial institutions. The high sovereign debt in many countries led higher budget deficits, currency meltdown, limited portfolio inflows and the increased likelihood of sovereign debt restructuring and default will expose banks to substantial losses..

Global migration. The world is facing an acute human migration due to conflicts, starvation and forced migration estimated by the UN to be 120 million people by mid 2023 with Turkey and Lebanon receiving the highest at 3 million each while Pakistan and Uganda at 1.5 million refugees each.

New Cold War. Interestingly, the Cold War or the political and strategic tensions between the superpowers are a main indicator of political tension and the current international events in the world indicate the high probability of a New Cold War.

How to handle risks in international business?

Build company resilience plan. It is vital for companies to build a resilience plan before the political troubles begin by adopting and effective crisis management strategies ahead of the potential political event.

Adopt multi-country approach. It is good to consider doing business with multi-countries to reduce the risks that may include political violence, currency inconvertibility, expropriations and non-payment or contractual problems and to diversify company portfolios.

Protect balance sheet. Credit and non payments always follow political risks of a particular country and it is advise-able to protect the balance sheet rather just physical assets.

Address the global migration problems. The UN must address the global migration of people especially into Europe as the number is now over 21 million people that impact businesses in many refugee-hosting countries.

Strengthen the banking sector. Banking provides services to the population and to businesses and banking nowadays is very important and active in the economic development of a country. If in a country, the banking system is effective, efficient and disciplined it brings about a rapid growth in the various sectors of the economy and to foreign companies..

Help from the IMF. The IMF provides broad support to low-income countries through policy advice, capacity-building activities, and concessional financial support, providing at below-market interest rates as the IMF’s USD3 billion financial assistance to support Sri Lanka’s economic policy and reforms.

End conflicts. The UN must be forefront to resolve by peaceful settlement the current world’s geopolitical conflicts that caused untold humanitarian problems including deaths, forced migration and physical destruction to towns, infrastructure and villages.

Get help from home government. Investors and CEOs must obtain help from their home governments to shoulder the impacts of the political events on their foreign investments. Governments must also take two necessary steps including: 1. diplomatic actions with the host government to safeguard its investments and 2. improve investment incentives at home with various grants and loans; fiscal incentives, tax holidays, reduced tax rates and other subsidized incentives.

“Knowledge will give you power, but character respect.” – Bruce Lee: martial artist, actor.

Abdul Halim Saad is head of Asia Pacific Risk Consultancy, studied politics at LSE, peace studies at Bradford and taught international politics at Sultan Idris Education University and the Institute of Diplomacy and Foreign Relations, Malaysia. (Article No.133). ++

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