Most Dangerous Waters in the World Are in the Mediterranean 

James Stavridis – Bloomberg 
Read the full article here 

There are three reasons Mr. Stavridis outlines to argue that the Mediterranean is the most dangerous waters of the world. First, Greece and Turkey have long standing grievances stemming primarily from the discovery of large deposits of oil and natural gas in the eastern Mediterranean region. This summer, we witnessed the escalation of tensions when Turkish oil exploration vessels and drilling ships, escorted by Turkish Navy warships, crossed into what Greece considers its territorial waters. Second, adding to the turbulence is the use of the eastern Mediterranean as a transit zone for Turkish and Russian warships sending arms to opposing sides in the Libyan civil war. The European Union (EU) has condemned Turkey’s move into Greece’s territorial waters and is trying to enforce an arms embargo on the Libyan conflict. In June, France and Turkey came very close to initiating a major military incident over the Libyan conflict. France outwardly supports the claims of Greece and Cyprus and has called upon the rest of the EU to stop Turkey’s aggressive actions. Finally, the third point of contention is between Greece and Turkey over Aegean territorial disagreements. Greece would like to extend its nation’s territorial sea claim over its islands on the western, Italian side of Greece. Turkey has warned Greece that if it tries extending its claims eastward, it would be cause to go to war. 

Mr. Stavridis is of the opinion that the entire scenario is pushing Turkey into the hands of Russia. Turkey is feeling increasingly isolated and pushed away from both NATO and the EU. The issue is exacerbated by the perception in the Middle East and Europe that the US is disengaging from the region instead of acting as a mediator between Turkey and the Greece-France-Cyprus trio.

The Corporate Zombies Stalking Europe

Martin Sandbu – Financial Times
Read the full article here

While the prospects of another virus-induced economic downturn in Europe remains a worrying possibility, the damage already done to European balance sheets is equally troublesome. The steepest downturn in generations has created a “zombie economy,” with many companies forced to run down cash reserves and take on increased debt. This has a twofold effect on economic performance. First, corporate investment could be cut by as much as half as companies scramble to cover their debt. Second, for businesses whose revenue primarily goes into debt service, the best they can hope for is to delay insolvency. This has created an urgent need to recapitalize much of corporate Europe, preferably from the injection of new equity.

Beware What Comes After the Easy Money Binge

Michael Mackenzie – Financial Times
Read the full article here

A combination of ultra-loose monetary policy and huge government spending has created a euphoric rally in financial markets, especially in large US technology companies. At the same time, these aggressive policies have punished investors sitting on the sidelines, as fixed-income yields were sliding even before the pandemic and now look remarkably poor, even when compared to a below-average 5% annual return on the S&P 500 over the next five years. Financial history shows that these kinds of policies tend to leave their economies languishing in their wake – for instance, China’s massive post-crisis spending led to an equity bust in 2015 from which the nation’s equity market has struggled to recover. In the US, a federal budget deficit of $3.3T and Fed balance sheet of $7T have encouraged a glut of corporate debt, fueled by expectations of a loose monetary policy encouraging inflation and employment against some of that policy’s potentially nastier consequences. While there is hope that the markets will be able to sustain the current valuations through a substantial recovery of earnings growth and productivity, the possibility of depressed returns remains.

Alternative Futures of Geopolitical Competition in a Post-COVD-19 World (Part I of II)

Kara Cunzeman, Dr. Mazwa Maziad, Jason Schenker, and Lt Col Jake Sotiriadis – NSI
Read the full article here

The speakers listed above gave an overview of their Global Futures Report as part of a panel discussion. Lt Col Sotiriadis began the discussion by speaking about the need for strategic foresight as we navigate out of the Covid-19 pandemic. Society must become inherently comfortable with operating in an “uncertain” environment. He stresses the need to adopt a systems-based approach to futures thinking because alternative futures can defy accepted probabilities and baseline assumptions. In the Global Futures Report, the authors outline four futures: 1) Transformation – “Biohegemony to Biosupremacy”, 2) Systemic Collapse – “The New Warring States Period”, 3) Discipline – “Authoritarian Regionalism”, and 4) Continued Growth – “Endemic Disruption”. Mr. Schencker added four potential futures as it relates to Covid-19’s impact on supply chains and US-China trade relations: 1) The “kumbaya” future where there is no longer any power competition, 2) trade relations between the US and China improve, 3) continuing down the path of “best frenemies” which includes moments of tension and moments of peace, and 4) the initiation of proxy wars where supply chains are severely disrupted and nations fall apart. Covid-19 has brought attention to nations’ dependency on global supply chains, producing levels of resource insecurity that may leave an impact on families for decades to come. Companies have also become quite concerned about their supply chains’ vulnerability. 

The pandemic has also had a large impact on the space industry which is of a high level of importance to the US due to its integration with commerce and defense. Though exciting advancements were being made before the pandemic, many commercial space companies have since filed for bankruptcy. The pandemic has also revealed that one cannot currently build a spacecraft without relying on overseas parts. The four scenarios Ms. Cunzeman presented in her space analysis were 1) a continuation of the ongoing power plays in space and lack of international norms, 2) the order and control scenario in which there is a cooling period of geopolitical competition as countries become inwardly focused, 3) a space ice age in which the effects of the pandemic continue or another pandemic begins, and 4) a period of high-tech, high-spirit solutions in which the US recognizes the importance of space and therefore does not make budget cuts and there is an increase in international stability. Finally, Dr. Maziad concludes the panel discussion by explaining the fault lines emerging within the Middle East and post-Covid futures. In a status-quo scenario, the Turkey-Qatar pan-Islamic alliance, which relies on the Muslim Brotherhood and other non-state actors to change-up Middle Eastern governments and replace them with Islam supporters, will continue and proxy wars will continue to wreak-havoc on the region. In an increased order and control scenario, Dr. Maziad predicts that countries will become much more inward-looking. In the case of a systemic breakdown, we may see a collapse of pan-Islamist agendas and the old status quo. Finally, in the transformation scenario, the Middle East would become a post-World War II scenario with more militarized, defensive, and economically-disintegrated states. 

Covid-19 and an Atmosphere of Distrust Pose Grave Risks to America’s Election

The Economist
Read the full article here

While the likelihood of widespread voter fraud in the upcoming presidential election remains low, concerns remain on both sides of the political aisle regarding election interference and voter suppression. With both parties portraying this year’s election as one of existential importance and a slew of pervasive doubts swirling around the authenticity of the race, a significant percentage of Americans doubt the election will be held fairly. President Trump has contributed to the furor, especially in his condemnation of mail-in voting. Nonpartisan voting integrity organizations have noted that the intense distrust in the electoral process may be doing as much or more damage than actual interference. Changes intended to mitigate voter suppression have met with resistance, all while Covid-19 dramatically restructures how November 3rd will play out. Election forecasters have outlined several different scenarios for the election; most predict a Biden win (with about a 1-in-7 chance of a Trump win), but given the significant portion of Biden voters who have indicated that they will be voting by mail, the full results of the election will likely not be clear on election night. The article concludes with an allusion to the 2000 Bush-Gore race, in which the Supreme Court decided to stop the vote recount in Florida, effectively giving Bush the race. In Gore’s concession speech, he called on Americans to “unite behind our next president” and let “the very closeness [of the contest]… serve to remind us that we are one people with a shared history and a shared destiny.” In such divided times, the need for unity has rarely been more pronounced.