Although invasion is “highly unlikely”, a naval blockade in the Taiwan Strait increasingly probable, warns Dragonfly

Next year will be defined by a ‘global unravelling’, according to the ninth annual Strategic Outlook from leading security intelligence experts Dragonfly, with a likely security crisis over Taiwan, escalating tensions between China and the US, and a prolonged conflict in Ukraine.

Together they paint a picture of an increasingly volatile world that is seeing the erosion of its existing systems of global cooperation and governance.

Some of the other key trends and forecasts that Dragonfly project and assess for 2023 include:

  • US-China relations are likely to deteriorate even further, with it being likely that US authorities introduce further barriers to high-tech firms doing business in China to try and delay Chinese self-sufficiency
  • Vladimir Putin’s unpopular mobilisation is likely to fail to reverse Russia’s fortunes in the Ukraine conflict, and why the likely consequence is to prolong the conflict indefinitely, while simultaneously escalating the diplomatic and economic pressure on Europe and Ukraine
  • It’s likely that there will be a further deterioration in relations on the Korean peninsula in 2023, and why this is more likely than not to result in Pyongyang restarting its testing of nuclear weapons, prompting live-fire exercise by South Korea and the US
  • US Federal Reserve hikes are a key risk driver in Latin America, with any default on loan repayments to the US probably being a precursor to serious economic crises in the region

Henry Wilkinson, chief intelligence officer at Dragonfly, explained: “The systems, institutions, and orders that have underpinned relative global stability and security for decades are unravelling and taking new forms. Strategic Outlook 2023 provides our latest assessment of persistent volatility as the world rapidly adapts to changes and challenges shaped by war, great power competition, and economic turmoil.”

Taiwan security crisis increasingly probable

Dragonfly’s specialists assess that the geopolitical risk of greatest consequence to the global order in 2023 is the prospect of a security crisis in the Taiwan Strait.

Although an invasion is highly unlikely, a security crisis such as a naval blockade is increasingly probable. This would cause numerous supply chain and inflationary pressures that would further the global unravelling, and potentially turn it into a near virtual collapse of the global order.