Pioneer Scenario Planning Team

BY MAYA GREEN

‘For each community there is an appointed term. When their time arrives, they can neither delay it for a moment, nor could they advance it.’
— Surah Al-Araf:34

The second scenario (World of Bubbles) which we formulated in the scenario planning exercise was one which contemplated a world which was much more divided. A world made up of several groupings who have an uneasy peace between themselves and are in constant competition with each other. That was the essential feature of that scenario that was developed.

Maybe, we are now witnessing the evolution of this second scenario. It looks like that the second scenario is experiencing the birth pangs of its inevitable birth. It is probable, we will be seeing the formation of the ‘BRICS Plus’ new world order — which could lead to a ‘world of bubbles’ of two or more groupings. Or it could be a different composition of countries which will evolve in the near future.

As for the third scenario, not a lot of focus was put into it during the exercise as it was “familiar territory” and one that the organisation was already well geared to navigate anyway. It was the default case scenario.

Again, to restate the hypothesis that the world is currently evolving into a world of bubbles, a term denoting a collection of different countries aligned to each other in terms of affiliation and common interests. Thus, from an essentially unipolar world, indications and pronouncements indicate the evolving dynamics of a realignment of powers and countries along lines unlike what we have hitherto been familiar with.

In this regard, I recall the lecture of one of the professors at my Wharton Management Program in July 2007 during a lecture the class of international participants from 30 odd countries. I would personally title his insightful and interesting talk as “The Around the World in Eighty Days Lecture”.

In that lecture, the Professor in question went through each country across the globe and gave his analysis of the strengths, weaknesses and opportunities or prospects of each country. He highlighted the strengths, weaknesses and prospects of each country around the world, including Malaysia. I think there were about five of us Malaysians in that batch of students.

It was at this lecture when I first heard of the term “BRICS” — referring to Brazil, Russia, India, China and South Africa, as being the ‘countries of the future’ or the countries to watch out for in terms of their evolution. He predicted the countries of the future as the “BRICS” countries. Of course, other countries such as Canada and Mexico or some African and Middle Eastern countries may also join the original countries making up BRICS and a new Group name may be coined to include all the members. Time will tell.

The current geopolitical development around the world seems to give credence to the belief or hypothesis that the world is finally evolving into a ‘world of bubbles’ where some kind of resetting and realignment will take place. The current state of the world’s affairs is pushing certain counties together into a huge grouping, leaving the rest of the world in their own bubbles or grouping or left on their own to fend for themselves. Other developments or trends are also emerging to help the push for change. If you read the news on geopolitics and current affairs, you’ll know what I mean.

It is not surprising to see or to anticipate a new constellation of countries being born and made up of the reorganisation of the prevailing pattern or order of things. Nothing is ever static or will last forever. And we are familiar with the expression that change is the real constant. The triggers to change can be multiple factors and forces at work in the background. It could be population, politics and ideology changes, technological change, natural environment change, and so on. Or it could be man’s own stupidity or greed.

For example, in terms of population size India has recently been reported to have become the world’s most populous country with a population of 1.4286 billion people and had surpassed China’s 1.4257 billion people. Even the United States comes in a distant third in terms of population size. Imagine two of the largest countries together with others like Brazil, Russia, South Africa, the Middle East and others bring part of the same bubble or grouping of countries making a huge common market.

In the global energy market, China has overtaken Japan as the largest importer of LNG. The first liquefied natural gas cargo imported into China when the Guangdong LNG terminal in Shenzhen was commissioned in 2006. And remarkably, within sixteen years, Chinese LNG imports had grown exponentially to exceed 100 billion cubic meters (Bcm) annually, or roughly 3.5 Tcf, and briefly overtook Japanese imports in 2021. China is therefore becoming important to the LNG market, and in the light of the increasing LNG supply growth in the United States, which along with demand from the rest of Asia, China is set to drive the market’s evolution in the coming years. This development was not even foreseen 10 – 15 years ago.

Lastly, the move to dedollarise has of late picked up momentum due to the perceived weaponization of the dollar. There are reports about Russia and China taking steps towards dedollarisation of their economies and other nations having been testing alternatives to reduce their reliance on the dollar. Central banks around the world, especially in China and Russia, are reported to buying gold, or have already done so in order to diversify away from the dollar.

Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America. For the first time in 48 years, Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar, while the UAE and India are in talks to use rupees to non-oil commodities in a shift away from the dollar, according to Reuters. Closer to home, in a conference in Singapore in January 2023, multiple former Southeast Asian officials spoke about undertaking de-dollarization efforts in order to protect their own economies.

The Jury Is Still Out

Despite these developments, it may be premature to see the end of the dollar’s global sovereign status anytime soon. Currently, central banks still hold more than 50% of their foreign exchange reserves in dollars. But the point is, some kind of force has been unleashed and the only uncertainty is when will be tipping point be triggered.