Grey Zone Special Edition: ALCON Pacific Risks 2024
These are the risks we are monitoring for the Pacific in 2024. Understand what we are monitoring and what to expect from our reporting this year.
Evening all,
I hope you have all had a great weekend, and have managed to get outside and touch the grass amidst all the flashpoints across the world.
For those who have plugged into my Intelligence Feed on IG, we went hard on updating the initial coalition strikes on the Houthi’s in Yemen. Exciting stuff but also concerning for what this could mean moving forward in the region.
We dial in on the operational and tactical assessments of these flashpoints in our 3 x a week intelligence summaries. These give our readers forward leaning information and assessments on global hotspots, so that they are as informed as you would be if you were sitting inside an operational headquarters. For access to these, we are offering a free monthly trial - which is timely considering everything that’s going on at the moment.
To kick off the Grey Zone Situation Report (our always free and weekly geopolitical situation updates) we have summarised the key issues that we will be watching this year. Being Pacific based, these are the global strategic issues that we will be monitoring as we have assessed them as having implications for our region. We’ve kept this one brief and to the point, so you have a broad understanding of what we are looking at. This will set the tone of all future intelligence summaries and situation reports, so expect us to report on the below themes.
Have a good week and stay safe.
ALCON
As we look towards 2024, the Pacific region finds itself in the middle (well at the bottom if we think geographically) of potentially being significantly influenced by unfolding events in the Middle East, the ongoing conflict in Ukraine, North Korea's shifting alliances, and the escalating tensions between China and Taiwan. These grim scenarios present a range of challenges and opportunities, influencing the relative strategic, economic, and political harmony we enjoy in the Pacific.
Middle East Instability
The Middle East continues to play a pivotal role in global stability. The recent resurgence of conflict, particularly the Israeli-Palestinian tensions involving Hamas, and recent strikes against the Houthi’s in Yemen, marks a departure from the relative calm of the past years. This escalation not only further disrupts and chance of peace within the region but also raises concerns about broader international stability, including the Pacific.
The dilemma involving Israel, the United States, Iran, and various Gulf states has managed to contain the conflict to specific areas. However, the potential for a broader regional war remains a concern. Such a conflict could disrupt major shipping routes, particularly in the Red Sea, impacting global trade – a lifeline for many Pacific economies. The Pacific region, with its heavy reliance on Middle Eastern oil and significant trade engagements, could face economic repercussions such as elevated freight insurance rates, supply chain disruptions, and inflationary pressures.
Moreover, the conflict has the potential to exacerbate political uncertainty. The growing anti-Israel sentiment and the controversial nature of the United States' support for Israel could influence public opinion and policy in Pacific nations, potentially leading to a shift in diplomatic alignments.
The Fragmentation of Ukraine
The situation in Ukraine, with Russia's increasing control over significant portions of the country, poses a direct challenge to international security. The potential for a de facto partition of Ukraine and the diminishing Western support for the country could lead to a more fragmented international environment, affecting strategic calculations and foreign policies of Pacific nations.
The involvement of North Korea and Iran in supporting Russia introduces additional considerations. North Korea's provision of military equipment to Russia and Iran's supply of drones not only enhance Russia's military capabilities but also signal a resurgent and reimagined axis of adversaries. This development could prompt Pacific nations, particularly those with strong ties to NATO and the EU, to reevaluate their defense strategies.
The conflict also affects the transatlantic alliance, a cornerstone of the international system. The reduction in U.S. support for Ukraine is viewed with concern by European nations, and a similar sentiment could resonate in the Pacific, where many countries rely on the U.S. and see them as the beacon of security in the Pacific. If the US fails in Ukraine, what does it mean for the Pacific?
North Korea's Evolving Alliances and Regional Implications
North Korea's deepening relationships with Russia and Iran highlight strategic issues for the Pacific. The exchange of military support and technology, particularly in missile and satellite capabilities, enhances North Korea's threat to regional security in the Pacific. This is likely to force Pacific nations to pivot their security focus to the north.
The indirect support or acquiescence from China to these alliances adds another layer. China's cautious neutrality and continued engagement in trade with these nations is likely to influence regional power and how Pacific nations engage with these nations.
China-Taiwan Tensions: A Flashpoint in the Pacific
The China-Taiwan situation remains one of the most critical issues for the Pacific in 2024. Taiwan's presidential election and the potential for increased tensions with Beijing will possibly have significant security implications for the entire region. The strategic importance of Taiwan in the Western Pacific, coupled with the internal challenges faced by China, including economic distress and youth disillusionment, adds to the uncertainty.
China's domestic challenges, such as the distressed property market and political leadership turbulence, could lead to unpredictable political maneuvers in the coming year. Youth disillusionment in China, fueled by economic crises and policy frustrations, could manifest in various forms, potentially affecting social cohesion and stability within China. The CCP's likely response, focusing on patriotic education and online censorship, may not adequately address these underlying causes of discontent.
In terms of U.S.-China relations, as always the situation is tense. The November summit between Xi and Biden provided a temporary respite, but underlying structural tensions persist. While outright conflict is unlikely, the potential for "wolf warrior" diplomacy and election interference remains a concern. These dynamics are closely watched by Pacific nations, as any significant movement towards reunification, peaceful or otherwise, will almost certainly require special attention and action from Pacific states.
The Taiwan Strait is a significant potential flashpoint in the region. Taiwan's strategic location and its symbolic importance to the CCP make it a key issue in China's foreign policy. Beijing's ambition for reunification is not just about territorial control; it's also about securing a strategic advantage in the Western Pacific and bolstering Xi Jinping's legacy. Any significant movement towards reunification, whether peaceful or forceful, would force nations like Australia and New Zealand to take a stance (likely aligned with traditional partners) with significant flow on impacts.
Key Assessed Impacts for the Pacific in 2024
Economic Implications and Opportunities
The Pacific region, with its diverse economies, stands at the intersection of these global events. The economic implications are manifold. For instance, the Middle East's instability could lead to higher energy prices, affecting the many Pacific nations dependent on oil imports. The situation in Ukraine, with its potential to disrupt global grain supplies, could also have a ripple effect on food security in the region.
However, these challenges also present opportunities for Pacific nations to diversify their economies and energy sources. The push for renewable energy, driven by climate change concerns and the instability of fossil fuel markets, could accelerate. Nations like Australia, Indonesia, and Malaysia, rich in critical minerals, could see increased foreign investment, boosting their mining and processing industries.
Strategic and Military Realignments
The Pacific's strategic landscape in 2024 is likely to be shaped by these global tensions. The growing military capabilities of North Korea, backed by Russia and Iran, could prompt nations like Japan, South Korea, and Australia to bolster their defence systems. This could include increased spending on military hardware, enhanced cybersecurity measures, and deeper security collaborations with allies like the United States.
The China-Taiwan tensions could also lead to a rethinking of military postures in the Pacific. Nations may seek to strike a balance between economic ties with China and security alliances with the United States. The role of regional organisations, such as ASEAN, in maintaining stability and mediating conflicts could become increasingly significant.
Diplomatic Challenges and Alliances
Diplomatically, Pacific nations face the challenge of navigating turbulent political waters marked by heightened U.S.-China rivalry, North Korea's unpredictable behavior, and the Middle East's enduring conflicts. This environment may lead to stronger regional alliances and new diplomatic initiatives aimed at maintaining peace and stability.
The role of middle powers in the Pacific, such as Australia, Japan, and South Korea, could become more prominent as they seek to mediate tensions and promote dialogue. These nations are also likely to find themselves in the position of balancing their economic interests with China against their security interests with the United States and other Western allies.
Impact on Trade and Global Markets
The Pacific region's trade and economies will almost certainly be impacted by these global events. Disruptions in the Middle East and Ukraine will lead to shifts in trade routes and partners. Pacific nations may look to diversify their trade relationships and reduce dependency on volatile regions.
The potential for increased sanctions against Russia and the involvement of North Korea and Iran in global conflicts could further complicate international trade. Pacific nations, particularly those with strong economic ties to China, Russia, or the United States, may need to identify ways to mitigate the impacts of western sanctions against these countries. This situation could lead to a reevaluation of trade policies and the exploration of new markets.
Environmental and Climate Change Considerations
Environmental issues and climate change remain critical for the Pacific region, especially for low-lying island nations. The instability in global politics will likely hinder the attention required to combat this. Pacific nations might also leverage their positions to advocate for stronger global action on climate change, emphasising the direct impact of rising sea levels and extreme weather events on their communities.
Societal and Cultural Impacts
The societal and cultural impacts of these global events should not be underestimated. The disillusionment among youth in China, the humanitarian crises in the Middle East, and the displacement caused by the conflict in Ukraine could lead to significant demographic shifts, including migration patterns. Pacific nations might experience an influx of refugees and migrants (especially to countries like Australia and New Zealand), prompting a need for comprehensive immigration policies and humanitarian assistance programs.