HRD Briefing 2021: Geopolitical Trends

2021 WILL BE AN UNEVEN YEAR

Key trends include regional economic downturns in most key markets apart from China as the full impact of Covid-19’s costs hit, and a heightened use of key global summits to re-establish US influence, possibly leading to increased trade and global health policy tensions. Much resetting will take place, including the inauguration of President Biden and the transition to a post-Brexit UK. Grand strategies include the EU’s ‘green Covid recovery’, increased attempts by Brazil to reassert regional dominance, and likely spikes in aggression by China over Hong Kong and the South China sea, plus border forays initiated by Russia possibly extending to the Baltics. The advent of ‘Covid Diplomacy’ will see key states, such as middle-powers like Canada and Sweden, regions like the EU, and organisations like the OECD, support the mass purchase of vaccinations for developing countries.

INTERNATIONAL SUMMITS AND ORGANISATIONS

Expect attempts by the US and the UK to reassert their post-Trump and post-Brexit identities respectively. The composition of the UN Security Council is especially interesting, with the UK (one of five permanent members) holding the February Presidency, followed by the US in March, China in May, France in July, and Ireland in September. Leaders of each of these states are likely to initiate specific strategies associated with regional and national interests, including climate change from a post-Brexit UK, and global democracy from a post-Trump US. France and Ireland may reinforce various approaches to European-based leadership.

THE US

Biden is likely to visibly resuscitate the World Health Organization (WHO) and end the impasse at the World Trade Organization (WTO) over the appellate body composition. Biden is liable to re-join key global treaties including the Paris Climate Accords and work to improve relations with NATO, possibly extending this to micro-diplomacy with the EU3 over Iran. He may also use key visits to Ireland, the UK, France and Germany, as well as Brussels, to re-establish trans-Atlantic relationships focusing on trade, climate change, democracy and fighting corruption.

UK-EU RELATIONS

The disruption of a no-deal Brexit amid the ongoing Covid pandemic has been avoided by the agreement of a Brexit trade deal on Christmas Eve. Although there will be no tariffs or limits on the amount that can be traded between the UK and EU, businesses will need to prepare for new procedures at ports. New restrictions around professional services and working rights will also need to be considered.

EU DIVISIONS

The majority of EU leaders support the concept of ‘green Covid recovery’ enabling zero carbon sustainability to underwrite post-pandemic economic revival. However, regional recovery and unity has been undermined by the stand-off between Poland, Hungary and the rest of the EU over proposals to link EU funds to the explicit observance by member states of the rule of law, deadlocking the rest of the now-overdue EU budget. While European Commission President Ursula von der Leyen may lead a breakthrough, the departure of German Chancellor Angela Merkel in 2021, and ambitions of France’s President for enhanced European strategic autonomy may deepen regional unease.

CHINA

Ongoing attempts to reclaim aspects of control over Hong Kong, attempts to reset the balance of trade with the US, and pushing ahead with the Belt and Road Initiative are likely to be China’s goals for 2021. China’s economic output is likely to hit pre-pandemic levels by Q4 or even Q3 2021, with a growth rate of between 6-8%.

This article is part of our 2021 HR Directors’ Briefing Paper. Continue to the next article: Economic Update.