Bi-Weekly Geopolitical Report – Parsing the World’s New Geopolitical Blocs (May 9, 2022)

by Patrick Fearon-Hernandez, CFA | PDF

Don’t miss the accompanying Geopolitical Podcast, now available on our website and most podcast platforms: Apple | Spotify | Google

For more than a decade, we at Confluence have been tracking and writing about the waning commitment of the U.S. to its role as global hegemon.  We’ve shown how U.S. retrenchment and protectionism have helped erode globalization.  Factors like deregulation, falling transportation costs, improved technology, and easing geopolitical tensions following the end of the Cold War may have promoted political and economic integration for decades.  Now, however, governments across the globe are erecting barriers to trade, investment, and migration, leaving authoritarian strongmen emboldened to assert themselves.  The latest example of that has been Russian President Putin’s invasion of Ukraine.

Amid these developments, we’ve argued the world will fracture into at least two main political and economic blocs: a U.S.-led bloc consisting mostly of liberal democracies and a China-led bloc of mostly authoritarian states.  This report discusses which nations are likely to join each bloc, which will merely lean toward one bloc or the other, and which may try to stay neutral.  Based on our predicted makeup of each bloc, we describe their differing political, economic, and financial characteristics.  As always, the analysis also includes ramifications for investors.

Read the full report