Geopolitics was not widely viewed as a key trigger for the turmoil in international financial markets this month. However, several potential political fissures might yet emerge in 2024, including in the Middle East, bringing greater economic disequilibrium in their wake. Take, for example, the conflict in Gaza, which could yet descend into a full-scale regional war involving Israel and Iran. The most immediate context to this is Tehran’s pondering of a response to the recent assassinations of Hamas political chief in Tehran and a senior Hezbollah commander in Beirut. US National Security Council spokesperson John Kirby said this week that Iran might carry out imminent retaliatory military operations against Israel. He warned that “we have to be prepared for what could be a significant set of attacks” potentially greater than the assault in April in which Iran targeted Israel with 300 missiles and armed drones. As the US builds up its military assets in the region, there are not only growing doubts about the possibility of securing a long sought ceasefire agreement between Israel and Hamas, despite continuing peace talks in Qatar, there is certainly a growing, real possibility of a wider regional war. With Iran’s religious leadership under heavy internal pressure to respond with force, traditional assumptions long made about Tehran’s military posture might have become more fragile. One of these assumptions is that Iran prefers to fight its wars via proxies. However, the regime might now be positioning itself for a confrontation that is more hands-on and does not only rely on proxy forces such as Hezbollah, Hamas, Islamic Jihad or the Houthis to carry out its strategic aims. As Tehran contemplates its next step, a key risk for all sides is miscalculation. This in a region in which geopolitics have been upended since Hamas perpetrated a major terrorist attack in October last year that was Israel’s worst intelligence failure for decades. Despite recent rises in crude oil prices, there has still not been any extensive discussion of the possibility of an oil shock of the kind experienced in 1973-1974, in which prices nearly quadrupled in less than a year after Arab oil-producing nations imposed an embargo in response to US support for Israel during the 1973 Arab-Israeli War. The risks in the Middle East are only one ingredient in a larger cocktail of potential global fissures. The macro context for this is that for decades there has been a long cycle of globalization and geopolitical stability, but now a new, riskier era appears to have dawned — so much so that experts increasingly predict a broader “polycrisis” emerging as a result of the growing number of overlapping challenges. Such an assessment suggests we are living in an era of successive, interconnected disruptions in which a permanent sense of crisis is the new normal. This has implications not only for politics but for financial markets as well. Further significant volatility could be on the horizon. We are living in an era of successive, interconnected disruptions in which a permanent sense of crisis is the new normal. Andrew Hammond The global fractures right now include health risks in the post-pandemic landscape, technological challenges such as the global information technology meltdown last month, the climate crisis, and economic inequality. Security challenges include the ongoing war in Ukraine, the continuing threat from international terrorism, and North Korea having acquired nuclear weapons. While some in the financial markets appear not to have geopolitical risks foremost in their minds right now, such international turbulence has been a recurrent feature for a number of years. Several market commentators have been asserting for some time, at least since about 2016, that geopolitical risks are at a post-Cold War high. That was, of course, the year in which anti-establishment populism, fueled by an anti-globalization mood, might have reached its apotheosis, so far, with the election of Donald Trump as US president, and the UK voting to leave the EU. What was so striking about both of those events was that the actions of two countries previously known for political stability, and as traditional rule makers in the international order, caused the world to become more uncertain. In this landscape, there might not be any easy answers to efforts to address the present array of crises. But it is sometimes forgotten that there have been some successes. One example is the global climate change deal in Paris in 2015. While the agreement was far from perfect, it nonetheless represented a welcome shot in the arm for efforts to tackle global warming and, crucially, a new, post-Kyoto treaty framework was put in place. Moreover, the review framework of the agreement means that countries can toughen their responses to climate change, especially if the political and public will to tackle the problem increases. So Paris was a potentially very important stepping stone and what is now needed is for well-informed lawmakers from across the political spectrum to help ensure effective implementation of the agreement and hold governments to account so that it truly delivers. In terms of potential solutions to the emerging polycrisis, there is inevitably much focus on whether or not the US will step up to the plate. However, China, one of the countries that is a bystander to several current crises, could also have a big bearing on whether things get better or worse. Beijing’s rise to power has the potential to be either a growing source of tension with Washington and the wider West or, just possibly, the start of a more fruitful partnership. A growing bilateral rivalry is certainly the most likely scenario for future relations, rather than an increasingly cooperative relationship. However, there remains an outside chance that a different future might be possible in which there is more cooperation on softer issues, such as climate change, and less tension generated by harder issues, such as security. The trajectory of this bilateral relationship will therefore perhaps be the single most important uncertainty in the late-2020s. While the prospect of greater Western collaboration with China is widely dismissed, the outside chance of a more cooperative relationship might yet offer the prospect for a different global future. Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.