Annus Conflictus

Describing 2024 as the year of massive and widespread conflict might be apt. Some fundamental factors underpinned this sombre development.

First, global military expenditure soared. The top ten countries on this metric are listed below:

United States: $811.6 billion

China: $298 billion

India: $81 billion

Saudi Arabia: $73 billion

Russia: $72 billion

United Kingdom: $70 billion

Germany: $57.8 billion

France: $57 billion

Japan: $53.9 billion

South Korea: $49.6 billion

Global defence spending thus grew by 9% to reach a record USD2.4 trillion, driven, in part by NATO member states boosting budgets in response to Russia’s invasion of Ukraine. Non-US NATO members now spend 32% more on defence since Russia’s 2014 invasion of Crimea. The International Institute for Strategic Studies’ flagship report Military Balance 2024, shows the deteriorating security environment which is exemplified by a mounting number of conflicts, such as the Hamas–Israel war, Russia’s continued aggression against Ukraine, Azerbaijan’s takeover of the Nagorno-Karabakh region, coups in Niger and Gabon, as well as China’s more assertive manoeuvres around Taiwan, in the South China Sea and elsewhere. The year 2024 confirmed a troubling trend: an increasing reliance on war to address the challenges of a world in flux, seeking to adapt to a new global order. From the Middle East to Ukraine, Sudan, and the Sahel, at least 59 conflicts persist worldwide.

Second and as a corollary, revenues from sales of arms and military services by the 100 largest companies in the industry reached $632 billion in 2023, a real-terms increase of 4.2 per cent compared with 2022, according to data released by the Stockholm International Peace Research Institute (SIPRI), available at www.sipri.org. It proves the old adage, war is good business!

Third, conflict-affected areas across the world have grown 65% since 2021 to encompass 4.6% of the entire global landmass, up from 2.8% three years ago. That is equivalent to 6.15 million km2, nearly double the size of India, that is now afflicted by fighting between or within states, according to the Conflict Intensity Index (CII) issued by The Heidelberg Institute for International Conflict Research.

Fourth, from the widespread human cost and increased migration to the widening of geopolitical fault lines, the damaging economic impacts and threats to international trade and supply chains, the consequences of the upsurge in conflict are globally significant. The spread of violence is mirrored by rising casualty rates, with conflict deaths on course to breach 200,000 by the end of 2024, up 29% on 2021. The UN has also estimated that the number of people displaced by conflict, violence or persecution exceeded over 120 million by the end of April 2024.

Fifth, the Middle East and Ukraine remain the most intense theatres of war, and both have the capacity to escalate. The spread of conflict in these geographies is well documented, in part because of their geopolitical significance. However, the Conflict Intensity Index, which measures the severity of armed conflict at subnational levels across 198 countries, also provides valuable insights into countries and regions that are less well reported on. In total, 27 countries, including the emerging markets of Ecuador, Colombia, Indonesia and Thailand, have experienced a significant increase in risk since 2021.

Sixth, in terms of areas affected by conflict, sub-Saharan Africa has seen a greater expansion than any other region. Africa’s ‘conflict corridor,’ which now spans 4,000 miles from Mali in the west to Somalia in the east, has doubled in size since 2021. As a result, areas affected by conflict in 14
countries across the Sahel and East Africa now equate to around 10% of sub-Saharan Africa’s overall land mass or 2.5 million km2 , more than 10 times the size of the UK.

Seventh, beyond Africa, several other lesser-known conflicts are also contributing to this upswing. The civil war in Myanmar, which has been raging since the 2021 coup d’état, has seen the South-East Asian state fall from the 19th to the 2nd worst performing country. Haiti and Ecuador have similarly chalked up statistically ‘exceptional’ deteriorations on the Conflict Intensity Index amid surging gang violence, which has escalated from criminality to the declaration of internal conflicts.

Finally, from an economic perspective, the cost of conflict can also be devastating. The latest UN estimate is that the war in Ukraine has caused USD152 billion in direct damage and the cost of reconstruction and recovery will reach nearly USD500 billion. The cost of rebuilding Gaza is estimated at over USD80 billion. In addition, the direct and indirect threats to businesses need to be closely monitored. Data from Asset Risk Exposure Analytics (AREA) – which measures the exposure of over 4 million assets of publicly listed companies to political, human rights, climate and environmental risks – shows that corporate exposure to conflict is currently limited. Only 3.68% of the assets of the highest risk sector, oil & gas, are exposed to conflict, but this could change rapidly if conflict in the Middle East escalates. Global supply chains, on the other hand, are more exposed to war-related impacts. Most notably, the disruption to Red Sea maritime trade caused by the Iranian-backed Houthi rebels in Yemen attacking Western shipping shows no sign of ending and has led to increased shipping and insurance costs. The fallout from Russia’s invasion of Ukraine likewise roiled global supply chains, from energy to fertiliser through to agri-commodities.

There is little sign that the recent upsurge in armed conflict – and all the tragedy and challenges that go with it – will dissipate in 2025. Indeed, the situation may get worse before it gets better. Against this backdrop, it is impossible to avoid the deduction that international diplomacy is failing the world. A melancholic 2025 thus awaits us all.