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Manas Chawla.vtt

English

David Penn: Hi, I'm David Penn,
research analyst with Finovate.

Yes, I always enjoy our conversations,
so I'm looking forward to having a

chat about some of the things that
are going on in the world and how they

So let's go ahead and start off with that.

How do you see some of
the geopolitical risks?

There's quite a bit, obviously,
going on in the world right now.

And importantly, I'm curious
about whether you see some of

Or do you see them escalating and
becoming even more problematic?

Manas Chawla: Yeah 2024 is a
record year for geopolitical risk.

I just came off the stage and the way
I like to think about it is 2024 is the

Much like the commodity super cycle 2024
year will be a year where geopolitical

risk will be consistently high but
not just as a   of sheer coincidence.

We'll basically have multiple systemic
vulnerabilities converging crises

And specifically what worries me most
is three crises, three wars, actually.

The war in Ukraine effectively in modern
days has become a war of attrition, right?

A war where what really matters is the
power of your military industrial complex.

And here, Russia clearly
has the upper hand.

In terms of personnel, they've
lost about 315, 000 soldiers.

In the meantime, they've mobilized a whole
other army in terms of artillery, Russia's

producing more shells every day than
the United States and Europe combined.

And and more on top of that
Western support is receding.

House of Representatives which really
doesn't look likely to go through.

So it looks like for now Ukraine will
have to go without American support.

The second war that worries me most
is obviously the war in the Middle

East, the war in Gaza, the humanitarian
catastrophe, most importantly in Gaza.

80 percent of Gazan citizens
have been internally displaced.

And it's incredibly difficult to get
humanitarian aid into the country.

And just to give you a sort of context
of the scale of that, before the

war started, you'd have about 600
trucks getting into Israel every day.

And there's also the risk of this
escalating to broader regional war

Iran and Hezbollah getting involved the
Houthis  in Yemen becoming empowered

But the third war, and I don't think most
people think of this as a war, but I do

is the United States' war against itself.

We've got a year where we have about
a third of the global population going

to the polls, but the most important
election will be in November which

is the American elections and that
will decide the fates of 8 billion

people, but it will be effectively
tens of thousands of voters in really

And from everything I've seen so
far, Donald Trump is well on his way

He's definitely got some
legal hurdles in the middle.

But a Trump presidency would be absolutely
catastrophic for the world at large.

It would thrust the world into what
I call a geopolitical recession.

But on top of that, even if he
doesn't win, I think the prospect

of half a country refusing to
accept the results of an election,

really risks tarnishing American
political institutions permanently.

So in a nutshell those are the
three things that worry me most.

Ukraine, Gaza, and the
American elections coming up.

I think one of the things that's
interesting to me is given all of

these different conflicts, I think
it's very easy for a lot of us to see

them in the very strictly political
context, the very strictly military

context, and I'm wondering for financial
services, is there, and banks and so

forth, is there a way that they should
be thinking about these conflicts?

I know, for example, issues of supply
chain, obviously very directly in the

case of sanctions and in Europe, very
directly with Houthis, for example, and

supply and the shipping that's going
on in the Red Sea, that sort of thing.

So in terms of the things that financial
services companies maybe need to be

thinking about or we need to understand
how these different geopolitical

crises pose different risks for
them, what are some of the ways that

Look, I think what matters most
is transmission mechanisms, right?

How does it affect
companies operationally?

And we always had geopolitical risk
in some sense or another, right?

There was wars in Iraq, Afghanistan,
Africa, climate change, refugee crises.

But in those years, we lived
in a world where we had three

First, you had super empowered
central banks giving markets

Then you had United States for better
or worse, effectively taking up the

Intervening in global conflicts,
not being an isolationist player.

And then third, you had a world
where globalization was the

dominant economic force, a world
that preceded the sort of mass

None of those three things exist anymore.

And the absence of those mitigating
factors, the transmission mechanisms

that translate geopolitics and
geopolitical events into risks

for financial institutions and
corporates at large are much stronger.

And so what, you know, companies really
need to do is have a top down geopolitical

Manas Chawla, CEO of London Politica, talks to David Penn about the geopolitical risks ahead of us and what to expect from key nations and political conflicts in 2024.