‘We're Moving To A Multipolar World, India Part Of Story': Geopolitical Analyst Jacob Shapiro

Brexit and Donald Trump’s tenure as the US president were epoch-making events that rewrote the global world dynamics as we knew it. It was soon followed by the Covid-19 pandemic that woke up to a world order where global supply chains had collapsed. As China got cordoned off from the rest of the world to help prevent the spread of the pandemic, newer hubs that could occupy the space vacated by China propped up. Self reliance became the policy need of the hour to survive through multiple lockdowns. All these together, changed the global power dynamics completely. 

There was increased talk over India taking up the gap created by lockdowns in China. Policymaking post pandemic became focussed on positioning India’s manufacturing sector as the favoured choice to diversify supply chains away from China. Production linked schemes were announced in as many as 13 manufacturing sectors like semiconductors and pharmaceuticals, among others, with the aim to bring global value chains into India. 

Agreeing that India could be one of the countries with potential to benefit from the changing global order, Jacob Shapiro, partner and director of Geopolitical Analysis at Cognitive Investments, pointed out that India has inherent strengths by the virtue of its skilled human capital, to be able to become a viable manufacturing alternative to China. “So even if you assume the worst possible government policy from India, I think that India has enough inherent strengths just by virtue of where it is, by the virtue of its human capital, how many people it has, how young they are, how ambitious and skilled and interested in the world they are. Just that billion plus Indian people coming online and wanting to be able to do all these things, that is going to move India in the right direction.” Shapiro said.

However, he does in no uncertain terms caution against the rising right-wing extremism that can undo the structural advantages in India’s favour. Shapiro said that the question that needs to be answered is whether the Indian government can do enough to protect Indian industry without turning India into an island that is not predictable or offers stability to companies. “…companies look at it and they say, oh, well, the potential is good, but the headaches are too much. There's too much red tape, and we'd have to pay this tax, and we'd have to do this thing. And honestly, just simpler to go into the interior of China or relocate closer to Mexico. So we pay a little bit more. At least we can sort of be more reliable. I think that's going to be the big challenge for India from an attracting investment point of view.”

For the weekend edition of The Core Report, financial journalist Govindraj Ethiraj spoke to Shapiro on not just about India, but how other Asian countries are now resisting US’ unilateral geo-political hegemony, and have in turn become less dependent on the US. 

Here are edited excerpts from the interview:

So let me start with that broad question first. We are in 2023. And as you look back and look maybe a little ahead, what's changed?

We could spend the entire conversation just on that one question. And for disclosure, I work directly with corporate clients who are making those direct investment decisions that you're talking about. So where do I relocate my factory from China? Or if I'm subject to these restrictions in country X, what is country Y? What is country Z? What is my advantage there? And before we hit the record button, (what) we were talking… (about was )that's completely different than portfolio considerations. And which countries can leverage their geopolitical strengths to do well relative to other countries? Which countries are fundamentally constrained from other countries? 

The way I think about geopolitics in general, maybe this is useful for your listeners, because I find that the word geopolitics gets thrown around a lot and people don't really use it intentionally. It's not just a synonym for international relations. It's a way of thinking about the world. And it's not that geopolitics is any more or less operative than it was before. It's just that during the ‘unipolar moment’ where the United States was the clear top political, economic, and military power in the world, geopolitics was boring. You only needed one insight, which was that the United States is the global hegemon. US markets are going to do well, and anybody tied to the US is probably going to do well. And by the way, globalisation is going to happen under the auspices of the hegemon. So expose yourself to globalisation and the companies that will use globalisation to do things well. And China is one of the big benefactors there. 

What has changed? And we could debate about when it started. We could debate that it started with Brexit, we could say that it was the Trump trade war against China, we could say it was Covid, we could say it was the Russia-Ukraine war. But what I think is indisputable now is that we're moving away from that unipolar world where there is one dominant power and we're going towards a multipolar world. And multipolar worlds are actually usually how history works. It's not normal to have one country that is more powerful than all the others. The only truly global empires we have in history, the British and the Americans, the Romans weren't really global. None of these old ancient empires that we talk about were really global. So that is sort of different in and of its own, right? But previous multipolar eras like this, where there's not one power or regions of powers that can dominate each other, there are actually times of incredible scientific innovation, of incredible disruption, that if you know what to look for, you can actually sort of get really good returns. Or if you pick the right countries, whether you're investing directly or in your portfolio, if you pick the right countries, you can have a lot of success. 

So I think there's a tendency when looking at the news to sort of get in your foxhole and say: Oh, my God, everything is terrible, the world is terrible. That's human nature. Fifty years ago, they were saying it was terrible. I'm sure 100 years ago they were saying it was terrible and they were looking back to the past. I actually think these are the good times. I'm a little bit scared about what the world looks like for my children, if we continue down this multipolar geopolitical competition path for the next two to three decades. But here, right now, it's good. We're talking about disruption, we're talking about a move away from globalisation towards reshoring and nearshoring and all the investment that's going to mean in different countries besides China. We're talking about incredible advancements with the energy transition, with biotechnology. If you know where to look, there's actually a lot of positive stories coming out of the disruption here. 

So that's the one key takeaway I would have for folks that are listening. When you think about geopolitics right now, it's a methodology and a tool to understand the world. And the world is going multipolar. It's not going to be dominated by the US, it's not going to be a US-China Cold War, it's going to be rising and falling powers all around the world and those that make the best policy decisions and that have the inherent strengths are going to do best.

I'm keen to know why you chose or why you feel it could have either been Brexit or let's say the election of Trump as president in 2016 and then his subsequent policies, which were, let's say, anti-China, increasing tariffs and so on. So what is it that could have triggered the shift to the multipolar world?

This is actually a difficult question to answer, because I think a lot of Americans would tell you, Oh, it's because the United States is in decline. I don't think the United States is in decline at all. The United States is still the most powerful country in the world. It's just its power and its economic influence relative to other powers has diminished. And so it's a story primarily about China and China's economic rise, and it's now becoming a stronger military force as well. But it's also a story about the rise of Brazil. Brazil is a country that has been punching below its weight for literally over a century. And in the last 15-20 years, you've seen real changes in Brazil. You've seen more mature monetary policy. You've seen more stable politics. 

India is part of the story as well. India has the profile that China did 30 years ago. So if you're thinking about that next stage of globalisation and because we're nearshoring and all these other things, it doesn't mean there isn't globalisation to happen here. But the rise of India and India becoming a more important force in its own right–that's part of the story too. As we look around the world, countries like Turkey, countries like Indonesia, all of these countries are advancing economically. And it's not unreasonable for them to say: Ok, we got this far with globalisation, but the rules were never tilted in our favour. The rules were made by the global hegemon so that the global hegemon could have cheap iPhones and look at TikTok videos all day on their iPhones at home. We would like the rules to be tilted in our favour. And now we have enough economic heft and enough leverage that we can start to remake those rules or we can insist on: Hey, these rules need to be different if you want to invest in our country. Like, say, Indonesia is doing right now, where you can't just have our nickel, you have to build the battery factories here too. So that, I think, is the dynamic. 

That's the positive part of it. There are also declining powers. Russia's invasion of Ukraine and the way that we're watching the Russian Federation sort of slowly descend into history, that's a declining power. And sometimes declining powers are the ones that are most desperate and that push back against the global order right now. So it's not all rising powers. We also have the decline of Russia, demographic decline in Europe, and Europe having to account for its squabbles in the European Union. You put all those things together, it's just a much more dynamic, much more volatile world. 

That's why I say the history books need to say, well, beginning with Brexit or beginning with this, it was the beginning of a trend. Not really. Politics is always dynamic, so these things are always changing. And at a certain point, there was a tipping point where these other countries woke up and realised: Hey, we don't like the order that it is right now, and we don't have to just say, yes. We can push back because we have more leverage. 

In a multipolar world where there's more nearshoring happening, the cost economics, as things stand, is also shifting because people were producing in China as it was cheaper there. But in this new world, and if you were to look at this as an investor now, how does this landscape look like where costs are rising, tariffs are rising, and therefore it's not the cheapest iPhone anymore?

Well, it depends who is benefiting. So, yes, factory workers who moved to cities inside of China and got better paying jobs, from that point of view, they did very well. There are hundreds of millions of Chinese living in the interior of the country who haven't enjoyed any of that success, who would say, well, actually, it might have been better if we protected our local industry rather than just becoming a factory for the world. And also keep in mind that it's really not just a China story. Let's just talk about cobalt, which is basically in every single battery that's out there, whether it's in an EV or things like that. Roughly 70% of the world's cobalt is being mined in the Democratic Republic of Congo, some of it by child slave labour. Child slave labour is pretty cheap. So if you actually want to sustainably, go get the cobalt or you want secure supply chains that are not dependent on these things, well, you're going to have to pay a lot more for goods. It's one of the reasons, and one of the things that I think has been lost in the global focus on inflation. And remember, inflation just means higher prices. 

One of the reasons I think inflation has been stickier than people expected is because we're not just talking about the demand side. That's what the central banks focus on. We're also talking about the supply side. And if companies and companies are doing this, are rebuilding factories and rebuilding supply chains and training entire new workforces in new countries, that means you're going to pay more for the iPhone. That means you're going to pay more for goods. If you also have decided that, we want secure access to cleaner energy or secure access to food that is grown without pesticides or that is grown in sort of greener ways that is more friendly to the environment: Okay, you can do that, your food is going to cost more. There's a reason that food prices are up 10%,15% over the last two years if you look at it. Higher in some of the different groups. So globalisation (is) eventually free trade. If theory is correct, a rising tide will lift all boats and eventually everybody will specialise in one thing and the benefits will redound to everyone. But before you get there, you get these huge discrepancies within economies themselves and huge wealth inequality, which is a story in China, in the United States, in India. All these countries are dealing with wealth inequality because it's one of the byproducts of globalisation.

If you're looking for who's going to do well, I think it's the people who control access to the resources that are still critical. It's the countries that have access to cheap and secure energy going forward, or countries that have a labour force that is still young, that is still growing, and that can compete relative to other labour forces out there. And then it's always if you have the commanding heights of the next generation technology, those are all ways that countries might be able to push forward here. But I would caution just thinking that globalisation, it didn't just mean cheaper iPhones. It meant certain segments of economies did well, and it meant certain other segments didn't do well. And some of the political backlash against globalisation is those parts that didn't do well, they're the ones that are rising up and electing populist leaders and saying: Well, this wasn't so good for us. Can we please get a little bit of help.

Let me get some thoughts from you on China. I was talking to Louis Vincent Gave a few weeks ago, and he said why he felt that you should not believe the western media when it comes to China, and that people are giving up on China too soon in the context of a power in the globalised world. And you too talked about the Huawei example, a company that was given up on and has bounced back.

Yeah, Louis is always optimistic on China, and I've joined Louis at times in being optimistic about China. I used to work with a geopolitical analyst. His name is Phillip Orchard. But I'm going to steal his point here shamelessly. He always said that the next China might be China, because, as I said, you know, the wealthy coastal regions of China have done very well, but there's still hundreds of millions of people in the interior that did not do well. And brave factories are actually moving into the interior now. You have Chinese political risk and great game geopolitical risk between the United States and China and all those other things, but there's lots of opportunity. 

The other point that you said that Louis made about not trusting the Western media? Yeah, don't trust the western media and don't trust the eastern media and don't trust the Chinese National Bureau of Statistics. Really don't trust anything. If you haven't seen it on the ground, you probably don't know anything, which is one of the reasons I like working directly with companies. It really allows me to keep my finger on the pulse, because whether it's companies or farmers or people who are actually pulling coal and oil out of the ground—those are the people who actually see things on a day to day basis. So I try to talk to those types of people and understand what's really going on and put it together in context with what's going on in the media. 

But the media is all we really have, and Huawei is a really good example. Now, the media was actually correct about Huawei. Trump's trade war against China, Huawei really bore the brunt of it. And it begins around 2017-2018, and it really kneecaps Huawei. I mean, Huawei had more in common with a company like Microsoft than it did with the Chinese Communist Party in 2017-2018. But by completely decimating Huawei's ability to do business with those very tough semiconductor restrictions, it basically made Huawei much more dependent on the Chinese market and on the support of the Chinese state. 

Now, it took Huawei what, six, seven years to reappear with a phone that was indigenously made, apparently some chips from South Korea as well, and now they're there. So the United States used its tech leverage and it was able to knock down Huawei for a period of years and maybe give it enough time to go ahead in the 5G race. Because remember, the reason that Huawei was such a fixation for the United States was because it was the best 5G telecoms kit gear company that was out there. You had Ericsson and Nokia, but Huawei was better than them and it was cheaper than them. And that's why everybody wanted their things. And I think there's a lesson in this, maybe for India as well, and certainly for decision makers and policymakers around the world. Tech leverage like the United States has over China, it's most effective when it's used as leverage. Once you pull the leverage, once you say: Okay, we're denying you this thing that we have. The other country is going to move heaven and earth to try and make sure that they're self-sufficient. So that's what Huawei and China did. They said: OK, you showed us that you have this power over us. We're going to make sure you don't have this power over us anymore. 

Ironically, you know, in Huawei's six or seven years out in the wilderness, maybe the United States just planted the seeds for a major semiconductor renaissance in China itself. Because China just decided we need semiconductors and it doesn't matter what the profit margins are, and it doesn't matter whether it's cost effective. The Chinese government will be there to support Chinese semiconductor companies because that's the only way we can survive in this world. So if you use leverage that way against another country, the backlash will be that that country will probably figure out a way to be self-sufficient in that thing, if it's capable of it. And that's exactly what we've seen with China. And that's exactly what I think you will see play out as countries use these kinds of tech leverage or trade protections against each other in general. 

Always beware of the backlash of what's going to happen even if you are able to set a company back from a geopolitical or national security perspective for a couple of years.

As you look at now and ahead, Jacob, what's standing out to you either as countries or sectors within them or even stocks that you might be tracking or are in a position to share with us? 

I won't give you any individual names, but I'll give you three sectors that we are really interested in, where we think a lot of that tech disruption is happening. If you rewind 10-15 years ago, where would you want to be? You'd want to be in cloud computing. You'd want to be the Microsofts and the Googles and things like that. So what is cloud computing of the next 10 to 15 years? 

I think the energy space is ripe for this. I think in some ways the energy situation today where we have the move towards renewables, but it's not clear which technology is going to rise and do the best. For all we know, some scientists at MIT could figure out nuclear fusion tomorrow, and it's a completely different conversation you and I would be having. I mean, you really have to track this stuff in real time, and I think there's going to be opportunities. The metaphor I use is, imagine you could go back in time and buy standard oil in the United States before people figured out that oil was going to take over the global economy. We have those sorts of opportunities in energy. Whether it's hydrogen or nuclear fusion or fission, wind, solar, geothermal, or something that hasn't even been invented yet that gets invented in the next year, that's one area to really be focusing on and to really keep on top of technological developments. 

In a similar vein, I think the biotech sector is also incredibly interesting. And that was for me, the lesson of the Covid-19 pandemic. Moderna and Pfizer, they could have produced that vaccine within weeks. They had it designed within weeks. It's just that US Regulatory systems and global regulatory health systems were not able to approve it in time because we didn't know that we could create things that quickly. There's a whole bunch of fascinating biotechnology coming down the pipeline, and there's going to be more diseases with climate change and all these other things. I think that's going to be a really interesting sector to watch. 

And then I think we're also just at the very, very beginning stages of a second space race. And India's here, too, with that lunar lander that you guys had while the Russians had theirs blow up in their face. Or I think it was the Russians. But in general, in a unipolar world where everybody was friends and we all wanted to join the WTO space, was seen as a neutral space, if you'll forgive the pun. The United States and Russia worked together in space for a long time, servicing the international space station. It was the one sort of sector of the world where everybody came together, and that's not true anymore. So now you have all of these countries trying to figure out, okay, well, how do I protect my satellites? How do I put up satellites, so I can have communications. How do I protect them from attack and things like that. So I think anything related to space is also interesting. 

And then at a country level, I would tell you that the countries that I think are the geopolitical pivots of the next five to ten years, and they may do well, they may do badly, but I think that they have the potential to do really well. It's Brazil, India, Turkey, Indonesia, Mexico. 

I honestly don't even pay attention to most American newspapers anymore. When I wake up in the morning, I try to read the main newspapers from those five countries because that's going to tell me a lot more about what's going on in emerging markets and in the world than, you know, listening to what the latest thing was that Donald trump tweeted or said at some ridiculous campaign rally in the United States. So those for me are the five most interesting countries. They all have tremendous challenges. I can make the bear case for any of them, but they also all have tremendous potential. And if they can get policy and potential to line up in the same direction, I think those are countries that are really going to lead the way forward. So I don't know if all of them are going to do well. It could be (that) none of (them) do well. I don't think that's the most likely scenario. But those are the five places where I spend my time looking the most closely right now from an emerging market perspective. 

And can I ask you to maybe dwell a little on Brazil and Indonesia? Brazil, because it was part of the BRIC, along with India and Indonesia, because it's usually been compared with India as a fast growing economy. 

For Brazil, it really doesn't have much to do with BRICS. For Brazil, first of all, they have Argentina as their biggest competitor, and Argentina is a literal dumpster fire. I think that's the technical term at this point for what's happening in Argentina. So they have no competitor, they're not on the Eurasian landmass, so they're not connected to all the geopolitical craziness that's happening over there. They have become an agricultural superpower. So this was the first year, 2023, where they supplanted the United States as the biggest corn exporter in the world. They are food secure, they are energy secure. That's a really good place to start from to begin with. 

The problem with Brazil is that the society has always been inherently conservative. This is not a perfect metaphor, but if the United States had not had a civil war and had remained a class-based agrarian society with small numbers of families owning large shares of land and things like that, that's sort of what Brazil is today. It never really had that conflict that said:  Okay, we're going to industrialise, we're going to encourage entrepreneurship. It's more been about, no, we're going to preserve the gains of a conservative wealthy class. And that's beginning to change.  While everybody's focusing on Lula and Bolsonaro and all the crazy things happening at the top level of Brazilian politics, you know what Lula's been doing underneath the surface? Passing tax reform, which if you looked at polls before the elections, was the number one thing Brazilians wanted. The tax code was incredibly inefficient, incredibly challenging for entrepreneurs to deal with. And they're trying to change that. That's a good sign. 

Another good sign. The Brazilian Central Bank was way ahead of just about every other country in the world for anticipating inflation. They called it right at every single moment. This is the central bank that oversaw hyperinflation even 30 years ago, roughly. So you combine that good policy and thinking pragmatically about things, and then you combine those geopolitical resources and the lack of competitors. That's why I'm optimistic about Brazil. 

Indonesia is more of a wild card here, and even five years ago, I was less optimistic about Indonesia. The thing is that all the things that has made Indonesia a laggard relative to say other countries in the region like Malaysia and which made it really a redheaded stepchild for the World Bank which never tired of talking about how Indonesia was inefficient and was never going to achieve its potential was because Indonesia has been protecting its most important industries since before everybody realised it was a multipolar world. It's almost like they were preparing for this in the early 2010s, early 2015s and now the policies that led to lower growth rates, maybe in early 2010, 2015s and 2016s–those are now the policies that everybody's emulating. And Malaysia, which literally built an economy on, we're going to be this transit hub for all these different things. And it's globalisation. And our trade is some ridiculous percentage of our GDP, like 130, I think, or something like that. Whereas Indonesia is like, no, we're banning the export of all commodities until we're self-sufficient. Hey, China, you want to invest here and have access to our young and growing labour force? Great. Build your factories here. And until then, take a hike. We don't really want to talk about it. And they were the first movers there. So you combine that really young population, they're ahead of the game on protectionist policies. They're far enough away from the South China Sea that if you want to hedge–China-Taiwan tensions and things like that, they just have a lot of things going for them. 

The flip side with Indonesia is it doesn't really make sense as a nation state. It's so many different languages and ethnicities and islands, literally, even geographically, it's not that coherent. And not to mention how climate change… like Indonesia is literally on the front line of climate change. I mean, Jakarta probably won't be there in 30 years if they don't shore it up and that's why they're trying to move their capital. So I don't want to underestimate the challenges that they're facing. But that's the bullish picture there when thinking about Indonesia. 

And you talked about geothermal. A few days ago a company listed and did pretty well in the markets, a geothermal company in Indonesia. And of course, I think Jakarta saw its first bullet train that also started off just last week or the week before that. So things are happening

We don't have bullet trains here in the United States. I always joke on my own podcast. I'll say it here too. If the Chinese Communist Party is listening, please come to the port of New Orleans where I live. Feel free to build some high speed rail and a new port infrastructure here. We'd be happy to default on the debt at a later date. But jokes aside, yes, like Indonesia is building infrastructure that not even the United States has. That tells you where growth and where progress is happening. 

And I'm going to come to the Middle East in a bit. But now let me ask you about India in the context of all that you've told me, what are you looking at? And I know that you do look at India quite closely. So what are you looking at that interests you and that you're looking out for?

I honestly struggle with India. I can't figure out if India is about to take over the world or if it's about to collapse in on itself. And depending on the day of the week, I could make the argument both ways. So let me just be transparent about my ambivalence.

Like, you might see me in an interview in a week from now saying something completely different. It's not that I'm crazy or that I've lost my mind. It's just that India is a billion plus people. It is so dynamic, and it's even hard to speak about India as a single country within itself, because in some parts of India, things are going great, and then in some parts things aren't going great. And it's hard to sort of put it together at a holistic level. 

My business partner at Cognitive Investments, Rob, he always jokes that quantity has a quality all of its own. So even if you assume the worst possible government policy from India, I think that India has enough inherent strengths just by virtue of where it is, by the virtue of its human capital, how many people it has, how young they are, how ambitious and skilled and interested in the world they are. Just that billion plus Indian people coming online and wanting to be able to do all these things, that is going to move India in the right direction. 

For me, the question is whether the Indian government can do enough to protect Indian industry without completely making India, you know, sort of this island that is not predictable or that companies look at it and they say: Oh, well, the potential is good, but the headaches are too much. There's too much red tape, and we'd have to pay this tax, and we'd have to do this thing. And honestly, just simpler to go into the interior of China or relocate closer to Mexico. So we pay a little bit more. At least we can sort of be more reliable. I think that's going to be the big challenge for India from an attracting investment point of view. 

The other thing here, and I'd honestly be curious on your take, I mean, it seems to me that the Modi government hasn't been able to push a lot of the reforms that it wanted to. Some it was able to do well. The agricultural reforms, an example of things that didn't go well. But in general, it seems to me that India is changing into a more Hindu nationalist state. Whereas before, India loved its diversity, and I think India still loves its diversity, but very clearly to me, shifting towards the… ,No, No, it's a Hindu majority state. 

It's going to be Hindu majority interests that are going to govern here. And that's well and good. Most nation states are the majority ethnicity who the nation state is supposed to serve in that regard. But you also have hundreds of millions of Muslims and other minorities within the country that generally, when you move in that direction, things are not so good for. And that's a very combustible mix. And I don't think it's going to be particularly easy for India to work through that transition to, okay, more Hindu nationalism. But then what are we going to do about the fact that we're also one of the largest Muslim populations in the world, if not the largest, even if they're not the majority? So that's one thing that gives me some pause. But those are the things that I think about when I'm tackling India from an investment (perspective). 

Let me come to the Middle East. We've had an unfortunate sequence of events, beginning with Hamas attacking Israel. There's a lot of history to all of this. But clearly the temperature levels in the Middle East because of this war have gone up considerably. How are you seeing this? Is this like a black swan event or is it something that you could still absorb in your overall calculations of where things are in the geopolitical and economic context? 

Look, I don't think we can ignore the history of it. And this is not just Israel- Palestine. Look at Azerbaijan taking back Nagorno-Karabakh. Look at Russia's invasion of Ukraine. The India-Canada diplomatic spat is about the status of Sikhs and whether they want independence or not and things like that hearkening back to the 1850s and the beginning of the British Empire in India. So history is all around us right now. And I think one of the symptoms of that multipolar world that I talked about is when there isn't one global hegemon or when there isn't one global ideology or not everybody's pushing in the same direction, countries start doing things out of fear or whatever they think their interests is, and I think you're seeing that in lots of parts of the world, and just in this past weekend, we're seeing it in Israel and Palestine.

I think one of the reasons that we're seeing it so intensely is because so much of this was caught on video. If your listeners have not seen some of the videos, I wouldn't recommend watching them. They're absolutely gut wrenching. I've been doing this career for almost two decades now, and I've never really seen videos that terrible. And I expect that we're going to see a lot worse as the Israeli war machine mobilises and goes back for vengeance against Hamas and probably to reoccupy the Gaza Strip.

I don't see that the chance of a regional conflagration is very large. I don't really understand Hamas's intentions here, and I think in some ways they've made a critical mistake because it doesn't seem to me that Hezbollah is going to open up a second front. They certainly haven't yet. Iran has made a lot of noise, but it doesn't really make sense for Iran to attack Israel right now either, because then you'd get the United States in and is that really in their interests… Turkey, you know, again press statements. But are they actually doing anything? No. 

So I think that this is going to be an incredibly violent chapter in the Israeli Palestinian conflict. I've been calling this the First Israeli-Palestinian War because until now we had skirmishes and military operations and counter-insurgency. I mean, this is going to be a war, and I think it's not going to be pretty. But to your point, it's a conflict that goes back over a hundred years. We can thank the British Empire in parts for it, for mismanaging things in the Middle East so poorly that we get to this point now. And it's just going to be another really dark chapter in that complex history. I don't expect it to be that kind of regional war that people are worried about now. That said, I would still put the odds at some kind of regional war that draws in Iran and Turkey and Saudi Arabia. I mean, I put the odds between 2-5%, and that is not a very even though that sounds like a very low probability for an event that would have such massive ramifications, that's way too high a figure. Even 2% to 5% is way too high of a figure. And there is still so much we don't know about. 

Was Iran involved in this? Was Iran the one pushing Hamas to do this? Are they going to open up another front, whether it's their proxies in Syria attacking Israel from the north or something else? I mean, there's a lot yet and a lot of uncertainty yet to come here. But right now, here today, as we're talking, it's not a story about a regional war or a huge spike in oil prices. It's not a 1973 type scenario. For example, when a war there shot up oil prices. It's just a particularly dark and depressing chapter in the Israeli-Palestinian conflict. And I'm afraid there's more to come. 

You mentioned that history is playing a role in some of these encounters, including the India-Khalistan factor. Khalistan is an abstract concept today for people, even in Punjab, in India, but it's somehow kept alive somewhere else. But it's history. But is it going to rear its head up and influence the direction of geopolitics and therefore investments in going back to where we started? 

Yes, and I think it's rearing its head all over the place. And I agree with you. Khalistan is a fairly minor thing, and some people are keeping the idea of it alive. Kashmir (is) a much more operative one that is much more present and much more important and right between India and Pakistan as well. And the ghost of history is alive and well there too. But it's not just there.

I mean, think about China's relationship with Hong Kong and Taiwan. That goes back to the fall of the Qing (Ch’ing) Dynasty and the Chinese Civil War and the context of China and World War II and things like that. Even if you're in Eastern Europe, as we think about Russia and Ukraine fighting before the Russia-Ukraine war, you had Poland and Hungary and Romania all saying, well, parts of Ukraine actually speak our language and we want to settle our own scores. Or think back to Scottish Independence and whether that's going to happen because of Brexit or Catalonia versus Spain. Think about the fact that we've already had one Ethiopian Civil War in the last five years, and it looks an awful lot like there's going to be a second one between the Amharas and between the Ethiopian Federal government and that all goes back to the Organization of Ethiopia into a federal state where there are a lot of different ethnicities and a lot of different groups that speak different languages under one banner. 

So I think everywhere you look around the world, none of these conflicts ever went away. But when you had globalisation and when you had this sort of one narrative and idea that it was all about economic prosperity and enrichment, you can put all those things underneath the table. You put them underneath the table and it's okay, we're going to trade, and we're going to do everything else. And that's the past. And I think what the Middle East taught us this past week, what Russia taught us when it invaded Ukraine, it taught us that the past is not the past. The past is right here with us. And any progress that we think that we've made in the last hundred years or so since the horrors of World Wars–I and II, maybe that progress hasn't been made so much anyway. 

And like I said, I'm fairly optimistic about the next five to ten years, because I don't see that any of these larger powers that we're talking about think that they can remake the world in their own image. I would include China in that. The United States is still the most powerful country in the world, and no great power is going to go after the United States in the next five to ten years. Right now, it's all of these smaller conflicts. It's on the periphery, it's the South Caucasus, it's the Middle East, it's places that most people haven't even heard of. But let's fast forward ten years down the road. Let's say China continues to militarise at the pace that it is. Let's say India continues to militarise at the pace that it is. Let's say that Turkey continues to militarise at the pace that it is. Suddenly, that's a very, very different world, and maybe we do get that great power competition in general. So in some ways, my investment thesis is these are the good times. 

If you're waiting for the good times, like you're in them right now. Now's the time where there's enough disruption and enough interesting things happening to put capital to work. Because if we get to that scenario where it's not Israel, Palestine and Khalistan and these minor things on the margins, but it's China and the United States over Taiwan, or it's Turkey and Iran over Kurdish regions of the Middle East… like, that's a much different world. And that's a world where it's going to be hard to do much investing of any kind, because that kind of global war, there are opportunities at the end. There are opportunities before there's just war in between.