The World Around Us
January 7, 2022
Future-Gazing into 2022: Part 1

With 2021 behind us, many are now focusing on what we can reasonably expect over the next 12 months. In this regard, individuals, businesses, organisations and governments are scanning the horizon to look for threats and opportunities. This process would be easier if we had a crystal ball however, in its absence, we would have to make do with intelligent guesses. Globally, there are four big issues which are likely to dominate significant parts of 2022. These include the novel coronavirus (COVID-19) pandemic, geopolitical tensions in Eastern Europe and tensions in the South China Sea.

Into its third year and multiple variants, the novel coronavirus is not so novel anymore. With many low-income countries lagging behind in vaccinations, high levels of vaccine hesitancy in countries which have adequate supplies, and the emergence of deadlier or more easily transmissible variants, public health systems around the world will continue to feel the weight of COVID-19. By all indications, the pandemic and its health and economic impacts will persist beyond 2022. Fortunately, apart from vaccines, other treatments are emerging, such as monoclonal antibody and antiviral treatments.

In Eastern Europe, geopolitical tensions are bubbling again. In 2014, Russia invaded and then annexed Crimea from Ukraine. Today, Western intelligence agencies estimate that as many as 100,000 Russian troops have been amassed along the Russia-Ukraine border. Western intelligence agencies believe that Russia could launch a military incursion or invasion into Ukraine in early 2022. For its part, Russia has accused Ukraine of building up half its army – approximately 125,000 personnel, in Eastern Ukraine, alleging that the Ukrainian government is planning to attack areas controlled by Russian-backed separatists. Russia has also accused the US and its North Atlantic Treaty Organization (NATO) allies of supplying arms to Ukraine and stoking tensions in the region.

Amidst the accusations and counter-accusations flying in Eastern Europe, there is a real risk of military conflict between Russia and Ukraine which could spill over into a much broader confrontation involving nuclear armed Russia and NATO. For now, the US and its allies are talking up economic sanctions, rather than a military response to Russia. Also on the positive side, the lines of communication are open between the US and Russia which hopefully would help to dial back tensions and lower the chance of a miscalculation.

In the South China Sea, tensions have been ratcheting up for the better part of the last decade. There have been skirmishes between Chinese and Philippines vessels, the construction of artificial islands by China, and freedom of navigation exercises by the US and its allies. However, more concerning over the past few months has been a more difficult relationship between China and Taiwan. In 2021, China increased the size and scope of its intrusions into Taiwan’s air defense identification zone, thereby raising concerns that it was rehearsing for an invasion of the island.

Any conflict between China and Taiwan is not likely to be contained between these two. Instead, it is likely to draw in other countries, notably the US and possibly other regional allies such as Japan and Australia. The potential certainly exists for these tensions to be magnified in 2022, even if they stop short of direct military confrontation. Nonetheless, increased tensions carry the risk of miscalculation which could also lead to open conflict.

Of course, a military confrontation in Eastern Europe or in the Taiwan Strait would be good for no one. Apart from the cost to be counted in human lives, such conflicts will severely disrupt global shipping, logistics, supply chains and energy. At a time when much of the world has to grapple with inflation and economic dislocation, a major conflict in Europe or Southeast Asia would only compound these challenges.