APAC faces heightened geopolitical risk

The Asia Pacific region will probably be the most geopolitically charged region going into 2022. The era of Southeast Asia being largely predictable and a political slow burner is almost certainly over. And the high potential for security, diplomatic and public health crises in 2022 means that the region is likely to remain relatively isolated, and faces a volatile and uncertain future.

This is according to security and geopolitical intelligence firm Dragonfly, in its Strategic Outlook 2022. As governments tackle the impacts of the Covid-19 pandemic, it anticipates that many will seek stability by maintaining tighter controls on populations and on outside influence. 

The region is also the epicentre of the most globally significant geopolitical faultline. The dynamic of US-China competition is the overarching geopolitical risk in 2022, with the rest of the countries in the Asia Pacific region in many ways caught in the middle.

Growing anxieties associated with China’s claims on Taiwan are almost certain to dominate regional security concerns in 2022. Interstate armed conflict remains unlikely in the region in 2022, but the growing risk of it, amid lingering myriad impacts of the pandemic, bode negatively for regional stability. 

There is also an outlying risk of a wider economic decoupling between the US and China as competition between them intensifies, particularly with international efforts by the US to restrict China in areas of trade, technology and finance.

Such a decoupling scenario would have significant economic impacts in the region and upend attempts by countries across the Asia Pacific to balance neutral relations with both. A regional drift away from democratic governance suggests such an unsettled balance may tilt in China’s favour.

Henry Wilkinson, chief intelligence officer at Dragonfly, says: “What we forecast in 2022 are the implications of deepening systemic shifts in the international system. The rules-based international order continues to weaken in the face of waning US commitment to uphold it, disunity between democracies, and an intensifying spread of authoritarianism.

”The landscape remains extremely challenging for global businesses, and the state of world politics is highly unfavourable to meet wide-ranging threats and global risks.

“These include the impacts of the Covid-19 Omicron variant, strategic competition between the US and China, rising tensions over Ukraine and Taiwan, entrenching conflicts in Africa, widening inequalities globally, and acute and chronic environmental crises.

“Although the geostrategic outlook is generally pessimistic for 2022, chinks of positivity can be found… The strength of the global economic rebound suggests many countries and regions will emerge in bruised but reasonable shape in 2022, albeit vulnerable to wider instability and new coronavirus variants that may emerge.”

”This is a positive change from last year, but it is still not a climate where a sense of normalcy is likely to prevail.”