Macroeconomics

2024: Which Direction Is the World Heading?

2024: Which Direction Is the World Heading?

In 2024, many countries with important roles in international affairs are facing uncertain elections.

The United States is entering what may be the most difficult election period in its history. Will President Joe Biden, whose physical and mental fitness many have called into question, be able to run the final mile to his party’s nomination? Or will the Democratic Party be forced to rally around Kamala Harris at the last minute, largely out of desperation? Republicans face an even less predictable outlook. Trump’s fate remains uncertain, and his candidacy is still in question. His would-be alternative, Ron DeSantis, is fading from the media spotlight, while Nikki Haley, a dark horse just a few weeks ago, is starting to emerge as a serious contender. The problem for the U.S. in 2024 is that, given the election-year environment, the focus will be on campaigns and spin, while the real state of affairs will be pushed under the rug for as long as possible. Likewise, only a firmly established government has the power to enact major changes, so it is hard to expect this fractured Democratic leadership to bring any significant policy changes to the table.


The United Kingdom is also facing what is considered the toughest general election it has experienced since at least the Suez Crisis of 1956. The Conservative Party is losing public favor, while the Labour Party appears unable to seize the opportunity for a major comeback. The prospect of a hung parliament, with Labour forced to depend on the Scottish National Party (SNP) to form a government, signals a period of uncertainty for strategic decision-making.

 
In the European Union, the Netherlands already lacks a stable government and is likely to remain that way for months as the coalition-building process drags on. In Germany, the EU’s economic heavyweight, the unstable coalition led by Chancellor Olaf Scholz could collapse at any moment, while the right-wing Alternative for Germany (AfD) waits in the wings, ready to capitalize on the migrant crisis and public discontent over what many see as overly lenient policy. Even France now looks headed for a period of instability as Macron’s shaky coalition wavers, with his government unable to secure a majority in parliament. The prospects for a parliamentary dissolution and snap elections keep growing. Similar to Germany, France made major mistakes in accepting migrants without expecting meaningful assimilation into society. This has now led to deep divisions across the board, from civic life to politics.


In Russia, President Vladimir Putin appears set to cruise to victory in his bid for a new presidential term. But even there, the election is likely to trigger a thorough reshuffling of the ruling elite, including senior officials and the inner circle of oligarchs. After all, the thinly veiled failure in Ukraine has to be pinned on someone – someone other than Putin.

 

The only major power that appears stable at the moment is the People’s Republic of China. But there too, President Xi Jinping seems more focused on managing an economic slowdown and cleaning house within the party than on wading into international problems that promise nothing but trouble. China has not clearly positioned itself as an ally of Russia, but it could exploit the crisis to step up military activity around Taiwan and forge closer cooperation with Iran over oil and gas infrastructure.
In 2023, the list of countries without a clearly established government was limited to Syria, Libya, Somalia, South Sudan, and, according to some, Afghanistan. In 2024, Sudan, caught in a war between rival military factions, will certainly join that category, while Myanmar, with areas under the control of expanding Karen guerrilla forces, is heading in the same direction.

 
Unfortunately, it is unlikely that 2024 will bring any real peace to the world stage. In Ukraine, both sides – Russia and NATO – appear locked in a stalemate that keeps them in conflict. The war in Gaza will continue into 2024. Even once Israel achieves its military objectives – namely, the dismantling of Hamas’s military machine and the release of Israeli hostages – it is unlikely to stop before achieving all of its goals, because if not now, then when. Meanwhile, the war in Gaza has already reverberated as far as northern Yemen, still under Houthi control, and parts of Lebanon, fully controlled by Hezbollah. Fighting involving Iran-backed militias in Syria and Iraq, with elements of U.S. support, is also likely to take on broader dimensions. There are signs that both Russia and Turkey are preparing for larger-scale military action to secure the parts of Syria under their control.


On the other hand, the Islamic Republic of Iran could become a bigger factor in 2024, given its geostrategic location as well as its importance to the world’s oil supply. Iran is also increasingly collaborating with China, and it’s safe to say the Americans are not pleased about it, as shown by the presence of several destroyers in the Mediterranean.


The UN Security Council is likely to remain inactive for the foreseeable future, while the Secretary-General, having stumbled over the war in Gaza, has lost much of his authority as a peacemaker in international conflicts. At the close of COP28 in Dubai earlier this month, there was a lot of talk about a return of multilateralism. But that may be nothing more than wishful thinking.
The coming year looks set to bring a further decline in multilateralism and a rise in bilateral efforts to address economic and security problems. In some cases, a “lone ranger” approach is finding more and more supporters. Hungary under Viktor Orbán, for example, is defying the EU by hosting a Chinese electric vehicle manufacturer to compete with European carmakers. Despite an agreement to align immigration policy, EU member states are developing divergent strategies that are likely to lead to diplomatic clashes in 2024. The European Union is known for its sensitivity around equality and democracy, and for embracing “everyone regardless of origin or faith.” But that approach is increasingly proving to have been a mistake.


Orbán in Hungary and Duda in Poland did not accept the EU standard on accepting refugees, a decision that is now proving to have been a sound one. Even though they lack the cheap labor that would let the elite live more comfortably, both countries generally enjoy a peace not seen elsewhere in the EU. Almost everywhere, we are already witnessing a return to the narrowest possible concept of national interest. Fear of dependence on potentially hostile or unstable powers has pushed many countries, especially within the EU, to lean toward economic nationalism and abandon the argument of “comparative advantage.” France, for example, has just unveiled a plan for self-sufficiency in several areas, particularly pharmaceuticals, microchips, and electric-vehicle batteries. Likewise, France has revived cultivation of several plants used in the textile industry. Although the road there is a rocky one, this is actually a good thing, since it could spark an industrial revolution in Europe in which production returns “home” instead of depending on cheap-labor countries abroad like China and Vietnam.

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