Geopolitical Risk Assessment and World War III Scenarios: Takeaways from Zelikow 2024

Genevieve Signoret & Delia Paredes

(Hay una versión en español de este artículo aquí.)

One reads so often that “geopolitical risks are heightening” that the words can lose their punch. But we’ve come to believe that in fact they have heightened, they can heighten further, and in an extreme case may lead to a world war. Further, that we have a lot to learn about assessing geopolitical risk. Hence, we’re working on the skill. Assiduously. And today share with you what we learned recently from a long piece by historian Philip Zelikow[1] called Confronting Another Axis? History, Humility, and Wishful Thinking.

The Gist

Zelikow finds strong parallels between the anti-American partnership among China, Iran, North Korea, and Russia facing the United States today, and two analogous alliances from the past. One comprised the Axis powers—Germany, Italy, and Japan―in 1937−1941; the other, the Soviet Union and China in 1948−1962. In the second case, a world war was averted. In the first, a world war broke out.

In all three cases, the anti-American “partners believe that the United States is the leader or anchor of a domineering imperial or neo-imperial system. They believe this hegemonic system strains in every way to block or strangle their nation’s aspirations. They rally others to their cause, to the resistance, others who also feel oppressed.”

China, the author notes, is already preparing for war. Furthermore, its manufacturing capacity “now exceeds that of Europe and the United States combined.”

Zelikow concludes that the odds of a third world war breaking out in the next two to three years are a whopping 20−30%.

Four Lessons Learned

Zelikow lays out a couple scenarios in which a world war could break out, and we’ll summarize them in a moment. But first we share the four lessons on assessing geopolitical risk we took away:

1. 1. Humility is in order. What’s to come is unknowable; the clues are inscrutable; the goings on behind the scenes invisible. Anti-American partners will act seemingly erratically, following “a twisted path”. Along it, they’ll be motivated by “opportunism, constant strategic calculation and recalculation, divided counsels, and the potential for quick, dramatic changes”.
      For us asset managers seeking to assess risk, these facts render interpreting the news flow close to impossible. Did the anti-American partners have a falling out? Do not conclude that risks are shrinking, lest tomorrow you wake up to find them having kissed and made up.
      Are a leader’s advisors or spy agency reported to oppose a belligerent option? Take no comfort. They’re not in charge, the leader is. Leaders disregard their advisors’ advice every day.
      It would be irrational for a leader to choose such and such an option? Do not rule it out.[2] Historians looking back often fail to decipher what motivated a past leader to act in a certain way. Irrationality is human.
   2. Non-historians like us must double our humility. When Joe Biden and Xi Jinping met in San Francisco in 2023 and Xi offered Biden “peaceful coexistence”, our reaction was to take comfort. Author (and historian) Zelikow’s reaction? Alarm. Our first thought was, “That sounds like de-escalation.” His? “That sounds like Krushchev in September 1959. He used that exact phrase: ‘peaceful coexistence’. It proved to be a prelude to the most dangerous phase of the Berlin crisis.”
   3. When leaders see war as inevitable, they may see it to their advantage to act preemptively. Today, Western Europe and Japan are re-arming. The United States is organizing “its global coalition to impose containment and strategic decoupling through technology and trade controls” and “trying much harder to ramp up its defense-industrial base.” But investments of these sorts will take years to bear fruit. So Russia or China could decide to start a war now to avoid future deterrence.
   4. Belligerents can “start” wars without firing the first bullet, compelling the United States to fire it. The author calls this approach “Indirect Control”. China has a long history of it. In the Korean War, China never officially declared war. The soldiers it sent it called “volunteers”. In Vietnam, its involvement was covert, as is Iran’s in the Middle East today. And in the South China Sea, “the Chinese conquest did not meet military opposition. The occupation was conducted first as a civilian assertion of territorial rights. China strenuously denied any plans to militarize its outposts” there, but then “proceeded to full militarization.”

The Scenarios

Finally, Zelikow’s scenarios.

The first he calls Pearl Harbor. In it, “China combines an invasion of Taiwan with an attack on U.S. installations, at least in Guam, and possibly on Japanese territory as well. The United States, and possibly Japan, are immediately at war with China,” with rapid escalation to a world war looking likely.

The second, Korea 1950. China attacks Taiwan alone, seemingly to prepare for invasion. The United States and Japan and perhaps others prepare for escalation to a general war.

Third and, in the author’s mind, easiest and most likely, Indirect Control. This scenario has variants.

In one variant, China establishes customs and immigration controls on Taiwan and “violently retaliate against any Taiwanese air or sea units” that don’t bow to them. Taiwan ostensibly continues self-governance, and China steers “Taiwan’s semiconductor trade and access to its supply chains without touching the fabrication centers themselves.”

Zelikow notes that “China is already rehearsing this option on a limited scale in controlling the water around Taiwan’s offshore island of Kinmen”.

Notice how, in this scenario, the “burden of military escalation to preserve access [to Taiwanese semi-conductors] could fall on the United States.” Thus the name, Indirect Control.

In a second variant, Russia’s 2024 push in Ukraine draws the United States into direct conflict. Again, here, the United States fires the first shot.

In a third, Iran provokes the United States to move first. It does so by inviting an Israeli attack, either by provoking Israel through its proxies or by stepping up its nuclear program. Saudi Arabia and United Arab Emirates prove to be no help, as they’ve achieved a détente with Iran and an “understanding with China, Russia, and India that further guarantees their security.” Given the backdrop of the Gaza war, which is in fact an Iranian―Israeli war, domestic politics in Iraq and Turkey in this scenario constrain the U.S. use of their bases in those countries. And Europe’s dependence on gas and oil from the Middle East, North Africa, and the east Mediterranean weakens its resolve to support the United States.

Our Conclusion

We can’t help but notice that none of these scenarios precludes any of the others, hence cannot rule out a world war.

[1] We learned of this piece from Noah Smith, who cited it when interviewed on 31 May 2024 by Andrew Sullivan on Sullivan’s podcast, The Weekly Dish.

[2]We violated this rule in Regional War in the Middle East is Still a Tail Risk when we wrote, “We see no possible benefit to either Israel or the United States to engage directly with Iran and vice versa.” As noted, we’re learning.

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