February 16, 2023

While we have primarily focused on economic and financial challenges in our last few newsletters, we narrow in on some important geopolitical trends shaping the global world order. First, we analyze the domestic and external challenges facing European politics, which if improperly managed could lead to regional disorder and instability. Second, we take a look at an apparent slowdown in China’s famous Belt & Road Initiative which has been its vehicle for spreading its political and economic influence throughout the developing world. Third, we take a brief pause in our geopolitical assessments to catch up on the latest happenings in the AI space. Finally, we review the significant risks Israel’s far-right government is posing to democracy in the region and to the Israel-Palestine conflict.

As Challenges Mount, Can Europe Correct Its Course?

The Editors, World Politics Review

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The Liberal European order of the post-Cold War era, which has been under attack in recent years, has maintained its integrity while managing new and existing challenges. Anti-EU populism has been a major threat internally to Liberal Europeanism, particularly after the 2010 debt and 2015 migrant crises; however, the threat has subsided in recent years in countries such as France, Slovenia, and the Czech Republic, particularly under French and German leadership. Nonetheless, threats persist both domestically and externally. Illiberalism in countries such as Poland and Hungary has taken root, with Meloni’s Italy potentially joining that faction. Externally, Russia has become a significant threat after its invasion of Ukraine. While the invasion has served to bolster NATO and transatlantic unity, including with the US under President Biden, questions remain as to its sustainability. The question of China too is relevant, as the EU seeks to balance competition with cooperation in that relationship. While there is cause for optimism within the EU, it remains to be seen whether the EU can continue to overcome its internal divisions, while managing its external threats.

China’s BRI Slowdown

China’s Belt and Road to Nowhere

Christina Lu, Foreign Policy

Belt and Road Meets Build Back Better

Keith Johnson, Foreign Policy

China’s much-touted Belt and Road Initiative (BRI) appears to be losing steam. The broad idea of the BRI was to export China’s industrial overcapacity and to boost Beijing’s global clout by lending to developing countries and constructing massive infrastructure projects. However, lending has slowed and many projects are stalled, most likely due to Covid and China’s own economic troubles. Support abroad has waned, as many nations accuse the BRI of being a ‘debt trap’ that would force governments to give up significant assets, like strategic ports, to Beijing. All the while, the West has begun similar initiatives, like the American “Build Back Better World” and the European “Global Gateway.” While the programs are advertised as being an alternative to the BRI, questions arise about their competitiveness. The high standards and transparency demanded of these Western programs may be unattractive to developing nations strapped for time and money. Additionally, it’s not clear that the sponsors of these initiatives can work in synergy, rather than compete against each other. Beijing, in the meantime, is reorienting towards a more careful approach, focusing on small projects and multilateral efforts to shore up the foundering BRI. 

How to Cut Through the AI Hype

Eric J. Savitz, Barron’s

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The viral success of ChatGPT has prompted a response from Wall Street, with Microsoft’s investment in OpenAI appearing to pay dividends. Microsoft revealed a new version of its search engine, Bing, containing natural-language capability, with market-shaking implications, especially for Google. Currently, Google maintains 93% of the search market, while Bing has 3%. Recently, however, Microsoft’s new software and Google’s exhibition of Bard, a similar type of tech, has some investors and analysts leaning towards Microsoft. With search advertising accounting for about $200 billion of revenue, around $163 billion of which went to Google last year, the ramifications may be significant. Still, opportunities exist surrounding AI outside of the search engine context. IBM continues to integrate AI technology into its core business models, while the trend towards AI in general has potential upside for both Nvidia and Advanced Micro Devices (AMD). Other companies, such as Adobe and Meta, are likewise pointing towards the potential benefits of AI integration into their products. Nonetheless, investors ought to remain wary, as AI technology has been in the works for decades, with the fruits of that labor only just recently showing potential.

Will Israel’s far-right regime usher in a Third Intifada?

The End of Israeli Democracy?

Eliav Lieblich and Adam Shinar, Foreign Affairs

The Third Intifada?

Daniel Byman, Foreign Affairs

Israel’s most right-wing government ever threatens to derail the country’s democracy and the fragile peace between Israelis and Palestinians. Benjamin Netanyahu, A.K.A. ‘Bibi’, recently celebrated a large electoral victory and has built a government determined to weaken Israel’s judiciary. The attacks on the courts from Israel’s right-wing come as Bibi himself faces corruption charges. The new government has announced plans to erode checks and balances by increasing the power of the executive and significantly weakening the Supreme Court, which the far-right has accused of overstepping its mandate.

Fueling this drive towards authoritarianism is the ever-broiling conflict between Israel and Palestine. While announcing the plans to weaken the judiciary, Bibi stated that Jews had exclusive rights to all the land in Israel, a killing blow to any concept of Palestinian rights. This comes during an uptick in Israeli-Palestinian violence, with 2022 being the deadliest year of the conflict since the second intifada ended in 2005. In 2023, terrorists killed seven at a synagogue in Jerusalem following an Israeli raid in a refugee camp that killed nine Palestinians. The far-right government, which supports the annexation of the West Bank and increased settlements, increases the tensions, creating a downward spiral in relations. Support for a two-state solution has plummeted and with no signs of significant change, the Palestinian Authority’s backing has dissolved. Without any change in course, the country is hurdling headlong into a crisis unseen since the second intifada.