Navigating geopolitics with Richard Haass

Richard Haass has devoted his career to studying geopolitical dynamics and advising leaders on managing them. For 20 years, he led the Council on Foreign Relations, stepping down recently to join an investment banking advisory firm. His United States diplomatic service includes acting as special assistant to President George H. W. Bush, counseling Secretary of State Colin Powell during talks in Afghanistan, and serving as the US envoy on peace negotiations in Northern Ireland. He has also authored or edited 17 books. In the most recent one, The Bill of Obligations: The Ten Habits of Good Citizens, he turns his attention to domestic issues, arguing that for American democracy to flourish, the idea of citizenship must be revised and expanded.

This episode of the Inside the Strategy Room podcast features a conversation between Haass and McKinsey senior partner Celia Huber at our recent strategy and leadership forum in New York. (The event took place before the outbreak of war between Israel and Hamas.) In it, he shares his perspective on how business leaders can navigate today’s complex geopolitical landscape while helping to reinforce democracy at home. This is an edited transcript of their conversation. For more discussions on the strategy issues that matter, follow the series on your preferred podcast platform.

Celia Huber: If you were a CEO today, what geopolitical issues would you be paying the most attention to?

Richard Haass: This is the most turbulent era that we have experienced for some time. Geopolitically, we see that turbulence in Europe, in the US–China relations, in North Korea, and Iran. The optimism that greeted the end of the Cold War has faded. We also have global issues such as climate change and, as we saw during the pandemic, there is a gap between global challenges and global responses. People use the phrase “international community.” The deep, dark secret is that there isn’t one. The gap between the demand for global cooperation and the supply of it is enormous on every issue.

We also have new technologies emerging, which bring both domestic and international challenges for managing their introduction and spread. Lastly, there are domestic concerns. For a long time, if you were a CEO, one thing you didn’t have to profoundly worry about was what was going on in this country. That luxury is gone. We have two big issues: the degree of political dysfunction in the United States and, more fundamentally, the operation of American democracy. One of our country’s great structural advantages has been the rule of law. I spent three years as the US envoy to Northern Ireland and I’ve seen what happens to societies when law and order can no longer be assumed: problems for people getting to work and how they behave at work, problems for consumers getting to stores, worries about kids going to school. Guess what? That, to some extent, is happening here. Consequently, the comparative advantage the United States has long had is much less pronounced.

For CEOs, both the external and internal contexts are now less benign, and the models they are comfortable with don’t easily account for those conditions. How do you do spreadsheets on the kind of challenges I just mentioned? How do you deal with probabilities? How do you deal with consequences?

Celia Huber: Given these complexities, how would you advise business leaders to factor those risks into their planning processes?

Richard Haass: When dealing with risk, first you have to identify it, then assess both its likelihood and its implications. Take the subject I’m most often asked about, which is China. You may be exposed to certain risks due to uncertainties about China’s economic and political trajectories. Numerous measures suggest that the Chinese economy has hit hard times. Whether you want to sell there or buy from there, you have to think about diversification in both directions. I don’t know any CEO who is not looking to reduce their dependence on China, which is difficult because in many cases, there aren’t perfect substitutes. Vietnam or India will not necessarily provide the same conditions, and you don’t want to give up access to the market. The question is how to position yourself so you can increase your resilience. That’s a good word to describe the CEO’s challenge in this era: how does one increase one’s resilience?

Celia Huber: What do you expect of the Chinese economy and what do you see as the biggest challenges?

Richard Haass: It’s clear that state-owned enterprises are not fading away; if anything, they’re getting more support under the current leadership. There is high youth unemployment but lower levels of economic growth, and the era of double-digit growth is unlikely to come back—it’s too mature of an economy for that. The long-term demographic issues are interesting. China now has 1.4 billion people, and its population is projected to shrink to 800 million by the end of this century, so productivity will be challenging. I think there will have to be slight economic loosening at some point, but I don’t anticipate it to be fundamental.

Celia Huber: What is your take on India’s economic trajectory?

Richard Haass: India’s economy is growing pretty strongly, but there are two Indias. You have Bangalore and other cities with a large middle class, but at least 800 million people are not part of that development and there is a lot of rural poverty. Much of India is being left behind. The country is getting more connectivity and better infrastructure, but there is a lot of hype about India, both economically and strategically. I think that India has economic promise, but it won’t be a substitute for China.

Celia Huber: Your new book is focused on US domestic issues. Why did you feel it was the right time to write it?

Richard Haass: It goes back to what I said at the beginning. For a long time, when we made our mental lists of issues we worried about, the domestic challenges were circumscribed. But I have become increasingly concerned about growing political dysfunction. We just hit $33 trillion in debt. Or take immigration: we have known the key elements needed for comprehensive immigration reform for decades, but we can’t move on it. Our politics are such that we can’t contend successfully with many issues. I see it in my city, in the crises New York faces around migration, crime, and public schooling. And the gap I mentioned between global challenges and global responses is also present domestically. That gap is large and getting larger.

I’m also concerned about democracy in this country. I can understand why our democracy is in some trouble. Imagine you’re under 40. During the two decades or so you have been politically conscious, there was 9/11, a couple of financial crises, the COVID-19 pandemic, and wars in Iraq and Afghanistan. You see the current political dysfunction and you say to yourself, “What’s so hot about democracy?” American support for democracy is falling off. Every democracy around the world is going through a degree of backsliding. The trend is toward illiberal democracy, wherein democracies become less classically liberal. We could see greater use of the organs of power to shape American politics, and pressures on judiciaries, civil servants, and journalists.

Celia Huber: In your book, you talk about ten habits of good citizens. Which ones do you consider to be the most important?

Richard Haass: The most basic is to be informed. This is the prerequisite for everything else. That means both the availability of information and free press, and citizens’ interest in availing themselves of those sources. The second habit I would highlight is being involved. Democracy is not a spectator sport. The fact that in the most recent mid-term elections more than half the eligible voters didn’t vote is a problem. Roughly half the states in the country now have automatic voter registration, so when you apply for a driver’s license or similar documents, you are automatically registered to vote. You want to make it easy.

If I were to focus on one thing, it would be civics. We must do a better job of teaching our story in our schools. Americans are not born understanding why democracy is valuable and what democracy expects of its citizens. You can graduate from high school or college never having read the Constitution or The Federalist Papers and not understanding the operations of government or the relationship between citizens and the government. I am on something of a personal crusade to make civics a central part of the curriculum in middle schools, high schools, colleges, and universities. Stanford University, for the first time this year, requires all its freshmen to take a civics course. When a prestigious school like Stanford does that, I hope others will follow. We wouldn’t think of having somebody graduate if they couldn’t read, write, do math, or get online. Why is preparation to be a citizen any less significant?

I’m also a big believer in public service. I don’t think it can be mandated because Americans don’t like mandates, but you can incentivize it. Just as some employers preferentially hire veterans, they could hire people who have performed public service. If we implemented widespread gap-year programs to do public service, employers, colleges, or graduate schools could give those individuals a leg up. I want people to get used to the idea of doing things for the country. We want the best and the brightest to go into public service. I also want people from rural Arkansas to meet people from Brooklyn. I worry that we are increasingly separated in this country, and public service can be a way to break down some of those barriers.

We can introduce programs to promote civics and public service. The other habits I write about—being civil, being open to compromise, putting country before party—require individual initiative, but we can encourage certain behaviors, politically and corporately. For example, CEOs can make it easy for employees to vote by giving them time off. Every university I know allows professors to take a one- or two-year leave to work at a public institution. Why can’t more businesses encourage people to work for the city, the state, or the federal government and have a job for them when they return? My guess is they will be better when they come back.

Business leaders also need to remember that they depend upon the rule of law. It’s like oxygen: we don’t notice it, but we all rely on it. We don’t want to wake up in a world where the IRS or the Justice Department is weaponized against us and there is violence in the streets. CEOs ought to do more to ensure that oxygen is adequate.

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Celia Huber: What do you think is the best way to ensure citizens are informed?

Richard Haass: We all talk about cyber hygiene. Likewise, we need to think about information hygiene. I would make it part of a civics curriculum. You shouldn’t single-source information, for example. If you had a medical issue, you would probably get a second opinion. Why don’t we get second opinions on information? Secondly, remember that the first word in “social media” is social. It’s great for social stuff but these microcommunities are often self-selected and have certain biases, so don’t go there for information.

New Jersey has introduced a requirement for its public schools to teach information literacy. We should teach young people multiple sourcing, which sources have fact checkers and editors, the differences between fact and opinion or prediction or recommendation. It’s the contradiction of the times: we’re swimming in information but we’re swimming in misinformation, too.

Celia Huber: If you had a magic wand and could fix one problem, global or domestic, what would it be?

Richard Haass: Domestically, it’s easy to identify but not to fix: public education. The one requirement for every American is not that they vote or do public service but that they go to school through the age of 16. That is essential, whether for teaching citizenship or basic life skills. It’s the ladder of American society. The only way to make equal opportunity a reality rather than a slogan is through public education, and right now, it is, with few exceptions, a failure. One of my best friends used to be New York’s commissioner of schools. He knew I was promoting civic education and he told me, “You should focus on colleges. It’s really hard to change public schools.” That made me sad, because so much flows from public schools.

As for global issues, I have a long list. An area for some potential optimism, which may surprise you, is climate change, which could be the defining challenge of the century. Geopolitics will always be with us, but we got through COVID, the great global crisis of recent years. How did we get through it? Two technologies: mRNA vaccines and Zoom. Videoconferencing allowed us to continue our lives, studying and working without putting our health at risk. And thanks to the vaccine, the crisis lasted eight months rather than eight years. Which leads me to climate change. I’m excited by technology’s potential. We see it with renewables, carbon capture, batteries. I’m excited about the potential of business, perhaps with a degree of government support, to accelerate the emergence of solutions, because I don’t think diplomacy or politics will be the answer.

If I had a magic wand, I would accelerate the emergence of those technologies. Then we will have to think about how to scale production and availability. Over the next 30 years, Africa will see a massive population increase, so once these technologies are introduced, we must make them affordable. That is as much a political challenge.

Celia Huber: What path do you see for Western Europe, which is dealing with low economic growth and an energy crisis?

Richard Haass: Along with the slower economic growth and rate of innovation there, I worry about growing populism. It’s no different than in the US. I think there will be governance challenges. Will Europe play a larger defense or strategic role? It has stepped up to help Ukraine but imagine—and it’s not inconceivable—that the United States wavers on Ukraine. Would Europe fill the gap? The good news about Europe is that it’s enormous in terms of population and economy, and the rule of law is pretty strong.

Celia Huber: What are your views on Latin America?

Richard Haass: If you had asked that question 20 or 30 years ago, Latin America would have won the award for the world’s most-improved region. Now, not so much. Latin America is going through a much more populist era, and these dynamics go in cycles. Democratic institutions, even in Chile or Colombia, are being challenged. We see it in Argentina; we saw it in Brazil. I don’t expect that pattern to change. We will see what happens in Mexico after the upcoming election, but I’m not worried about geopolitics in Latin America. I’m not worried that Brazil will invade Argentina. Latin America is, for the most part, geopolitics-free—almost like parts of Europe. What it’s not free of are internal issues. The unevenness of governmental capabilities there is the real challenge.

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