Competition for sea, space and soil will exacerbate future geopolitical risk: Marsh

Rising competition for supremacy over soil, sea and space will fuel future global geopolitical tensions as nations seek to stake their claims on sea-based borders, previously untapped mineral resources and the all-but-unregulated cosmos, according to a new report from Marsh. The broker’s Political Risk Report 2022, published by Marsh Specialty, says that land borders between countries remain key delineators of political risk, as shown by Russia’s invasion of Ukraine. But competition for ocean territory, minerals and space will increasingly influence interstate relations. “The conflict between Russia and Ukraine is a stark reminder of how quickly geopolitical risks can escalate and have a terrible local humanitarian impact, as well as affect businesses and investors around the world,” states Nick Robson, head of credit specialties, Marsh Specialty. “The appalling consequences of this conflict on the Ukrainian people will remain at the centre of our thoughts for the foreseeable future. However, this is also a moment for businesses and investors to consider how developments in the environments of sea, space and soil could influence future geopolitical tensions between countries and regions,” he adds. Marsh points out that with more than 80% of the sea depths unexplored, there remains immense potential for exploration and investment to meet the growing demand for food and raw materials. The ‘blue exploration’ will, however, raise the risk of heightened geopolitical tension. This is because the broader challenge of climate-related risk is “significantly dependent” upon our care of the oceans. Moreover, most potential resources are located in exclusive economic zones, which cover territorial rights offshore that may be contested, especially where they overlap, says Marsh. The report also says that demand and competition for strategic minerals such as cobalt, copper, lithium, manganese, thorium, titanium, uranium and vanadium, which are crucial to the energy transition, will also shape future geopolitical risk. “With just a small number of countries, often with autocratic systems of government, producing these minerals, alternatives such as mining the seabed are increasingly being investigated. However, this exploration could cause irreversible damage to underwater ecosystems and further disrupt already fragile global food and supply chains,” concludes the report. Marsh also says the growth in the “space economy”, when combined with the increased militarisation of space, could also risk an escalation of geopolitical tensions. This could be further exacerbated if there is a failure to collaborate on a robust governance framework as more countries turn to space for intelligence gathering, navigation and military communications, the report says. It is thought that within the next decade, the low-Earth orbit could host 100,000 satellites, leading to an increase in orbital debris. The impact of even a small piece of space junk could seriously damage orbiting equipment and risk triggering conflict, the report suggests.

Competition for sea, space and soil will exacerbate future geopolitical risk: Marsh

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