January’s Geopolitical Rundown

What StrategyCorp Is Watching For 

As January wraps up, the world has become a very busy place.  With half of the world’s population going to vote in elections this year, including in countries as diverse as India, Indonesia, Russia, the United Kingdom, and yes, the United States, there’s no doubt there will be many things to watch in the coming days and weeks. 

As Vice-Admiral Bob Auchterlonie recently said, sometimes Canadians are “overly comfortable” about their safety as the world changes.  Should we remain comfortable?  We’ve asked some of our experts who contribute to StrategyCorp’s Geopolitical and International Business Advisory Practice to provide the “Three Things They’re Watching” in 2024 that might not be top of the news but are worth thinking about over the course of the year. 

Peter McGovern – Former Chief Trade Commissioner, Canadian Ambassador to Italy and ADM Asia-Pacific: 

  1. Critical Minerals Strategy and China’s role: Critical minerals are non-fossil fuel minerals or minerals essential to the economic or national security of Canada.  They have no viable substitutes.  Critical minerals are essential to western economies to meet our climate change targets and move away from fossil fuels.  China controls 60% of worldwide production and 85% of processing capacity – as such, there is opportunity for countries like Canada to try and develop and “friendshore” as much critical mineral production as possible. 
  2. Misinformation and How We Address It: As noted, half the world is going to the polls this year.  Reliable and accurate information is key to making an informed decision at the ballot box.  In what will be the most closely watched election in the United States, according to Pew Research 30% per cent of all US adults under the age of 30 get their news from TikTok. At a time when the veracity of news reports and the issue of “fake news” is top of mind, it worth reminding ourselves that TikTok is a Chinese company that operates at the behest of the Chinese government.  Nobody has visibility into how algorithms on platforms like TikTok deal with disinformation or how content is judged on their end. 
  3. Climate and Insurance: Insured damage in Canada from natural disasters and severe weather events in 2023 topped CAD$3 billion dollars for the second year in a row.  The Insurance Bureau of Canada says there are about 1.5 million Canadian homes that can’t get affordable flood insurance. If risk costs for fires and floods go up much more, some places in North America will simply be uninsurable – unless governments step in, and that is truly costly. It is worth remembering that the last El Nino event in 2009-2010, in places like California, there were over 6,000 wildfires. Rates in California are now so high that many homeowners there can’t get affordable insurance.  Will the same be true in certain parts of Canada?   

Jeff Mahon – Director, StrategyCorp’s Geopolitical and International Business Advisory Practice and Former Deputy Director of Global Affairs Canada’s China Division 

  1. The Limits of US Restraint: With a new crisis or strategic maneuver taking over the headlines on a nearly weekly basis, we must wonder if the US can maintain its strategic restraint, especially when it comes to Iran. Politicization of these events increases the pressure on the Biden Administration to act, especially as more countries are adding to the noise like North Korea’s recent sabre-rattling. While we do not expect the Biden Administration to act impulsively, November’s Presidential election may usher in an entirely new composure.  
  2. Battles Over Technical Standards and Regulation: This isn’t a “sexy” headline but with traditional free trade agreements no longer in vogue, standard setting and regulatory regimes will play a behind the scenes role in driving economic integration and drawing geoeconomic battle lines. The EU, US, and China will all be throwing around considerable market power to try and lay down the rules. And despite the first two having shared market systems, they operate under different principles and approaches in this domain. Perhaps there is an opportunity for Canada to help identify common cause, while ensuring Canadian companies are positioned for international success. 
  3. Rising Political Instability in Liberal Market Democracies:  Most of the attention is on geopolitical flashpoints involving traditional regional hotspots but more attention should be placed on the pressures building fragility in liberal market democracies. Protests, labour unrest, and even mild forms of political violence may all have their unique triggers, but they reflect the pent-up fragility in our system. Rising income inequality and social media fueled polarization is making it harder to find compromise. While I believe in the resiliency of democratic institutions, we can’t take them for granted. A poorly timed crisis could set off a chain reaction with untold consequences. 

Martin RustSenior Advisor to StrategyCorp’s Geopolitical and International Business Advisory Practice 

  1. Democracy At Risk?: Half of the world’s population will go to the polls in 2024. Given the global turmoil, most analysts see democracy being put to the test this year, with some serious challenges in important parts of the world, such as the US, China, Russia, and parts of the Arab world. Demographics are shifting and younger voters have different, ideological demands, driving them either to stay home, or to fuel radical agendas, on either side of the spectrum.  Hang on to your hats! 
  2. Anxiety in the “C” Suite:  According to Fortune, 72% of CEOs fear losing their jobs. 91% of CFOs fear losing their jobs. According to PWC, 45% of CEOs believe their company will not be viable in ten years.  These indicators tell a story of the impact of global turmoil on the business leaders today.  Decision makers are struggling with outdated business models, levers they cannot pull, and toolboxes full of tools that are no longer relevant or useful.  They will need to pivot quickly, and into areas that are not familiar.  
  3. “Rule #1, It’s about the money” (as attributed to former Senator, the late Hugh Segal): In a world of conflicts, in many different regions, multiple elections, the world’s largest economies stalling under staggering debt, major indicators on the edge, it is difficult to see how and where the money is going to come from to support the infrastructure required to keep countries afloat.  Politicians like to make big promises in election years, on top of previous promises in areas like climate change, immigration, health care, and education, where many western countries are rapidly falling behind. There simply isn’t enough money in the system to pay for it all and the ability to borrow it in the future is dwindling daily, especially with costly wars dragging on.  Being a finance minister is going to be a difficult job! 

Arif Lalani – Former Canadian Ambassador to UAE, Iraq, Jordan, and Afghanistan 

  1. Artificial Intelligence and Governance:We will be watching to see how the world moves away from a binary “good or bad approach” to one based more on application and regulation.   Canadian and global companies will want to monitor and to help shape what that governance structure looks like.   
  2. Electric Vehicles and Connection to Critical Mineral Supply Chains.  As my colleagues have noted, Canada’s goal in being a world leader in electric vehicle and battery production means we are going to need to figure out what Canada can and cannot do when it comes to critical mineral production.  The result will be important for our economy and what options we have in the near future both here and abroad.  
  3. Greater Role for Business in Solving Policy/Regulatory Issues: Increasingly, the business community is playing a greater role globally in helping to solve policy and regulatory issues on which governments seem to lack expertise. In Canada’s case, the legislative and regulatory process around Bills C-11 and C-18 demonstrated where governments are and where reality lies when it comes to regulating online news and content. 

Garry Keller – Former Chief of Staff to Canada’s Foreign Minister 2011-15 (also published in The Hub earlier in January) 

  1. China’s economic dip: The Chinese economy experienced a downturn over the course of 2023. The reality of falling exports, weak demand, increased “friendshoring” and the decline in the property market (see real estate developer Evergrande) will be something to watch.  As well, the re-election of the Democratic Progressive Party to Taiwan’s presidency earlier this month means the cross-straits relationship will continue to impact regional security decisions. 
  2. The Canada-India relationship: Given how the bilateral relationship has deteriorated over the years, coupled with Prime Minister Trudeau’s accusation in the House of Commons of Indian involvement in the Hardeep Singh Nijjar murder, plus Prime Minister Narendra Modi’s upcoming re-election campaign, Canada-India relations will continue to be important to watch, especially for Canadian industry and business. 
  3. BRICS expansion: Impactful or much ado about nothing? This month we saw the BRICS alliance welcome five new members: Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). They join Brazil, Russia, India, China, and South Africa. Given that founding member Brazil is scheduled to host the G20 this year, and Saudi Arabia and the UAE are playing an important role in the world economic and political order, how does BRICS membership impact the “democratic West,” especially how does the United States deal with these three players?   

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