While the immediate risk posed by the crisis in Gaza to international financial markets is the risk of Iran’s involvement and the resulting hike in oil prices that could devastate the world economy, billionaire Ray Dalio has an even more long-term concern.
Dalio – in a recent LinkedIn post titled “Another Step Toward International War” – the escalating geopolitical conflicts involving Israel and Hamas, as well as Russia and Ukraine, provided some troubling insights.
Dalio made it clear that these disputes aren’t separate but rather a part of the ever-growing power conflicts that have been talked about. Most worryingly, he wrote: it appears to me that the odds of transitioning from the contained conflicts to a more uncontained hot world war that includes the major powers have risen from about 35 percent to about 50 percent over the last two years.
“In my opinion, this war has a high risk of leading to several other conflicts of different types in a number of places, and it is likely to have harmful effects that will extend beyond those in Israel and Gaza,” he says.
“Primarily for those reasons, it appears to me that the odds of transitioning from the contained conflicts to a more uncontained hot world war that includes the major powers have risen from 35 percent to about 50 percent over the last two years.”
Ray Dalio makes a comparison between the current political landscape and the pre-World War eras of the 20th century in his thesis. He makes a point of noting that the Israel-Hamas and Russia-Ukraine disputes have progressed to a stage of open conflict, which is likely to be fierce and drawn out until a clear victor emerges. Additionally, Dalio cautions that these standoffs could escalate further, involving additional countries and even escalating to a global war if major nations such as the United States and China become embroiled in direct fighting.
He believes that, much like before the last two world wars, the disputes between Israel, Hamas, Ukraine, and Russia indicate larger battles between great powers that’ll have significant repercussions for those allied with these countries. He suggests that the US is already indirectly involved in these struggles, conducting proxy wars in Europe and the Middle East while also preparing for the probability of fighting in East Asia. Not only will these wars be expensive, but they also risk dragging nations not directly involved in the conflict, thus enlarging the size and scope of the battles.
How far are we from an apparent international geopolitical conflict escalating into World War III?
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