A Belgian fighter from the Democratic Forces of Syria holds a cigarette in his mouth inside a military vehicle in Ghazila village after taking control of the town from ISIS forces in the southern countryside of Hasaka, Syria, February 17, 2016.
A Belgian fighter from the Democratic Forces of Syria holds a cigarette in his mouth inside a military vehicle in Ghazila village after taking control of the town from ISIS forces in the southern countryside of Hasaka, Syria, February 17, 2016.
Rodi Said / Reuters

It did not take long for 2016 to show its colors. Revelers toasting in the New Year hoping for a fresh, less volatile political and economic environment have already been disappointed, one month in. In the next eleven, there will be no respite from the accelerated challenge to established orders in geopolitics and business.  

We live in an Age of Insurgency. Today, in business and in politics, disruptive forces regularly and rapidly emerge to upset the status quo and wrong-foot the powers that be. To be sure, many of the forces behind these trends have been with us a while; indeed, some predate the global financial crisis of 2008. For some time, we have been living with China’s rise, the Internet, radical jihadist movements, revanchism in Russia, and bad blood between Sunnis and Shia. How ironic that many of these forces began brewing to full strength during the 1990s, a period, Cold War thaw aside, we might otherwise have called relatively stable. To most policymakers and business chiefs, the idea of global terrorist networks striking at the heart of the West’s capital cities, or shadowy criminal networks hacking into the world’s leading intelligence or corporate servers, sounded more like science fiction than a forecast of fact.

GUERRILLA CAPITALISM

Today, the pace at which all of these factors frustrate and unnerve both business and political leaders is breath-taking. Financial news outlets trumpet the spread of companies such as Uber and Airbnb, usurpers in stodgy sectors unused to change. By harnessing extraordinary advances in computer processing power, they can run lean, outsourced operations that move rapidly around the globe, exploiting regulatory models designed for a different era. This new form of guerrilla capitalism, made possible by a step change in technological capability and a genius for innovation, will wreak havoc in other sectors that are just as ill-prepared as the taxi and hotel businesses.

And not just in consumer sectors. In the energy business, fracking went from lurking at the margins of the industry to confronting the assumed economics of traditional producers in just a few years. Fracking is now the greatest challenge to the dominance of the world’s swing oil producer, Saudi Arabia; this will be the state of play for years to come. The ability of the shale industry to adjust production, even as it takes a clobbering from the collapse in prices, is typical of a new type of company: more mobile, more agile, and with the kind of flexibility that leaves the behemoths of the oil and gas industry struggling to reinvent themselves.

THE NEW GEO-INSURGENCY

The new insurgent model—makeshift, audacious, and willing to seek out unconventional funding— applies as much to Libyan militia gangs as it does to Palo Alto start-ups. It goes beyond organizational theory right to the pinnacle of power. Take the U.S. presidential primaries: a wave of insurgent populism is propelling Republican and Democratic outlier candidates into serious contention. A mainstream candidate may well prevail, but in both parties, the establishment has been served notice.

In China the need for the leadership to be in firm control is paramount. The wild gyrations of the Shanghai stock exchange in 2015 and the first weeks of this year reminded the political establishment that forces beyond its immediate control are at work. Here, too, the timing is sublime. The task of adjusting the economy to an era of lower and different growth—process that has been likened to performing open heart surgery while the patient is running a marathon—makes the leadership particularly nervous of triggering large-scale popular discontent at a delicate moment.

China’s anti-corruption drive will continue to rattle provincial titans, State Owned Enterprises (SOEs) and international companies. A similar, if more transparent version of this anti-corruption trend is on display in Brazil, where a newly empowered judicial branch is pursuing allegations of corruption waged at state oil giant Petrobras that spread into the highest echelons of society. Once, this sort of anti-corruption investigation would lose momentum before touching Brazil’s elite. Today, an angry electorate is carrying the cause to the core of the state. Impeachment proceedings against President Dilma Rousseff are under way.

In geopolitics, Russian President Vladimir Putin has been disrupter-in-chief. Russian foreign policy is built on a strategy of disruption—a skilful ability to unsettle the West in eastern Ukraine, Crimea, and Syria with the aim of restoring Russia’s international prestige. Putin and Foreign Minister Sergei Lavrov will continue to out-maneuver their geopolitical opponents. In spite of genuine popular support at home, however, the parlous state of Russia’s hydrocarbon-fed economy cannot be ignored forever. Putin may be a brilliant tactician, but he faces a series of dramatic strategic challenges.

BEYOND THE PALE

Lurking outside the world of state-level politics and business are the malevolent disrupters. First among them is the Islamic State (ISIS), risen from the remains of al Qaeda in Iraq to take jihadist extremism to new horrible heights. ISIS has proven an adaptive organization that will continue to confound the forces arrayed against it. Even if ISIS can be contained militarily in Iraq and Syria, it is able and willing to extend beyond ‘the caliphate’ and strike cities in western Europe and, through radicalized sympathizers, the United States. Sadly, more of the same can be expected.

Less murderous but still pernicious are the cybercriminals who, on a daily basis, and often with few resources other than those available to tech-savvy teenagers, are able to penetrate the defenses of the world’s biggest corporations and government institutions. It’s no wonder that state-sponsored cyber teams can do enormous damage.

Behind all this disruption sits the biggest potential disrupter of all: the possibility of another financial crisis. With the Fed’s trajectory pointing upward, a new twist on global financial contagion cannot be ruled out. Listen in the background to the pleas of emerging markets, whose currencies have lost as much as 50 percent of their value in the past year. China’s slowing economy, too, will weigh heavily on the commodities producers who fuel it, as will Saudi Arabia’s determination to keep oil prices low and debilitate high-cost producers from the marketplace.

As always, solutions—or at least diplomatic palliatives—could emerge if Presidents Barack Obama, Xi Jinping, and Putin took the initiative. But the dialogues necessary to tackle issues such as the Syrian civil war, state-sponsored cyber espionage, and global monetary policy require major concessions and significant political courage. As this era of disruption sinks roots into the psyche of political and business leaders alike, such grand bargains look unlikely for the time being.

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  • RICHARD FENNING is Chief Executive Officer of Control Risks, the global political, integrity and security consultancy. The firm’s annual forecast, RiskMap 2016, can be found on the Control Risks website
  • More By Richard Fenning