Giraffe and cloudsBefore its annual Davos Summit, the World Economic Forum produces its annual ‘Outlook on the Global Agenda’, based on a detailed survey conducted primarily amongst the individuals comprising the 80-plus global agenda councils that serve as the WEF’s ‘brains trust’. The report guides Davos’ top-level deliberations.

This year 10 core global trends are identified. My focus is on the fourth most important: ‘Rising geo-strategic competition’, and what this means for South Africa.

Three regions receive particular focus: Asia, Eurasia, and the Middle East. In Asia tensions are centered on China’s growing regional and global power, in relation to Japanese and US interests in maintaining the status quo. This has multiple manifestations, from island disputes in the east and south China seas, to Chinese suspicions of western ‘meddling’ in the ‘umbrella’ youth-led protests in Hong Kong. Since these tensions involve the three largest economies in the world they bear close watching.

Of secondary importance is how Narendra Modi is repositioning India in relation to these great power dynamics, and within this whether India will grasp the nettle of market reforms in order to lay the foundation for sustained, rapid economic growth and thereby build its pillars of geopolitical power.

In Europe the key question remains how the Ukrainian situation will be resolved. That hinges on US-Russia relations with Europeans, partially excepting Germany, relegated to secondary actor status. Europeans will have their hands full with managing their own internal crises, particularly the aftermath of Greece’s imminent elections and associated potential resurgence of sovereign debt politics, and how this will relate to the political economy of imminent quantitative easing by the European Central Bank. Switzerland’s shock announcement last week that it has abandoned its cap on the Swiss franc, and the ensuing market pandemonium, is an omen of things to come.

The UK’s elections are of secondary, hardly minor, importance, and will offer important clues as to whether ‘Brexit’ is in the cards. If so, that would feed the broader trends towards European political disintegration, characterised by the rise of political extremes across the European sovereign political space. Taken together, nothing less than the future of the European integration project is at stake.

The Middle East will continue to provide a flurry of tragic mass media material. The geopolitical rebalancing taking place in the region will continue to be centered on two key trends: US retrenchment from the region and derivative re-ordering of key relationships, and the associated Saudi Arabia – Iran competition to fill the power vacuum. These will continue to manifest in the US-Iranian rapprochement and complex negotiations over Iran’s nuclear programme, with the Saudis watching closely. Part of the Saudi response toolkit includes wrestling Iran to the mat on oil prices, in order to inflict further economic pain on their regional rival. Related benefits include punishing Russia for its continued support of Iran’s ally, the Bashir regime in Syria; and taking out marginal shale oil producers in the US thus ensuring that in the medium term oil prices will rise, and Saudi Arabia’s fiscal position can be rebuilt.

Of secondary importance is the continued rise of Jihadism, centered on the Islamic of Iraq and the Levant. Its competition with Al Qaeda has already spilled over, with tragic consequences, into France this year. The scale of cyber-attacks from Islamist groups on French media outlets in recent days indicates that this conflict is set to grow and morph in unpredictable directions. It also highlights the sharp, perhaps irreconcilable, clash in values between the ‘liberal’ West and ‘intolerant’ radical Islam.

This conflict over values also manifested late last year in the events centered on Sony Entertainment’s release of ‘The Interview’, a comedy concerning an attempt to assassinate the ‘Dear’ North Korean Leader. And that connects to a central clash of values between the US and China, over the freedoms to be accorded to individuals in relation to state direction of society and the economy. This clash will intensify as China’s power grows, and a good deal of it will center on internet governance and cyber security.

These key trends raise sharp questions concerning the future of global governance. The current western liberal order rests on one core foundation: US power. In the world we are heading into the US is recalibrating its global role, an inevitable process that the Obama administration is not given sufficient credit for leading, mostly responsibly. But the US body politic has been characterised by trench warfare for years; a situation likely to be compounded on the domestic terrain by Republican dominance of Congress for the next two years. On the foreign policy terrain President Obama will have a freer hand, as he has demonstrated recently through his executive action to unfreeze relations with Cuba.

This is likely to manifest particularly in trade relations; ironically despite the Democratic Party, and with the support of Republicans. The two centerpieces are the Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership negotiations, centering on Asia and Europe, respectively. Through these processes the US is attempting a fundamental reordering of worldwide trade and investment relations centered on its regulatory preferences and economic interests. While trade negotiations are hardly new on the international stage, these two are of fundamental geostrategic significance. It is hardly an accident that China, for example, is not included in the TPP.

Relative to the weighty global trends outlined above, and some more that space constraints prohibit being addressed here, regional developments play second fiddle. Yet they are of consequence to us. Zimbabwe’s political evolution in the end game of the succession to President Mugabe will have continental, never mind bilateral, ramifications. How will it impact on our domestic politics? How involved might we need to become? How would that affect regional dynamics? In particular, how will our emerging regional strategic competitor, Angola, respond?

Further afield, Nigeria holds pivotal elections at the end of next month. Will the outcome lend itself to a renewed Nigeria-South Africa strategic ‘concert’ on the African stage? How will budding Kenya-Nigeria ties factor into this? And, ultimately, how will Africa’s numerous conflicts, from potential genocide in the Central African Republic, to Jihadist incursions in north and central Mali, and stabilising Eastern Democratic Republic of the Congo, pan out? Or will the ‘Africa rising’ narrative outweigh these weightier concerns?

So we confront a complex world, from our perch at the Southern tip of Africa. What could be on our delegation’s interlocutors’ minds in Davos?

First, our structurally entrenched, low, economic growth, and a paucity of leadership to address it, is well-known. Africa is rising, but South Africa is stagnating.

Mitigating this is the substantial opportunities associated with government’s large procurement programme. But they are increasingly difficult to access, being enmeshed in local content, government procurement, and BBBEE legislative requirements. Revisions to investor protection legislation, and the associated expropriation axe hanging over foreign private security companies are additional concerns.

Second, the growing instability in some of our key state institutions will receive corridor attention. Whether labeled ‘white anting’ or state capture by the ‘nomenklatura’, it is clear that purges are being conducted. Good governance has given way to compromised governance, in conditions of structurally low growth, high unemployment, and high income inequality. Not surprisingly political risk is perceived to be rising in South Africa.

In an increasingly polarised and unstable world, South Africa has an opportunity to stand out within a broader positive outlook for the sub-continent. Unfortunately it is unlikely our delegation will be able to sell this message, much as I wish them luck.