The world stands at a crossroads. And US President Donald Trump has put us there.
“Everyone is watching,” declares Ray Dalio, billionaire investor and founder of one of the world’s largest hedge funds.
He’s worried about Iran. And China. And President Trump.
“Will the United States win or lose?” he asks.
“Will it leave or take away the control of the Strait of Hormuz from Iran?
“Will it leave or take away the nuclear material from Iran?
“Will it leave or take away the deadly missiles and drones from Iran?”
Dalio, 76, is one of an increasing number of global analysts convinced the future is in the balance.
“If the United States leaves without taking these away, it will create one path for the US and the world, and if they are taken away, it will create a very different path …
“We are about to find out which path we are on.”
Standing quietly beside Iran is China.
It also has an outsized say on future directions.
“When US President Donald Trump and Chinese leader Xi Jinping meet in Beijing this week, it will be a modern standoff with the unmistakeable overtones of single combat,” observes Asia Group chairman and former National Security Council adviser Kurt Campbell.
It’s a very different dynamic from when the two “Great Navigators” of global affairs last met.
Washington’s alliances are in tatters. Its enormous military strength is drained by the unresolved assault on Iran.
Beijing’s star, however, is soaring. It is wielding its economic dominance as a diplomatic weapon. And Chairman Xi’s purges have firmly ensconced him on Beijing’s imperial throne.
“Now that the United States is riven by internal politics, alienating allies, and once again consumed by a war in the Persian Gulf, this seems like an opportune moment for China to wrest the mantle of global leadership,” Campbell observes.
‘We’re gonna win so much, you may even get tired of winning’
Dalio wants to know where to place his billion-dollar bets.
Will the US secure the world? Or China?
That, he believes, depends on Iran.
“[It] seems obvious to me that there will either be
“a) a US win over Iran, which will require taking control over the Strait of Hormuz and assuring that Iran’s nuclear program is dead – i.e., defanging Iran, or
“b) a US loss, which is the result if these things don’t happen.”
Where exactly the Trump Administration stands on this scale is uncertain. Its messaging is mixed as it struggles to balance domestic costs against political gain.
“It needs to be made clear soon because continuing on the current path or being more forceful will cause sharp increases in oil and gasoline prices and great difficulties during the high travel season – bad political consequences for President Trump,” Dalio assesses, along with “difficulties in his upcoming meeting with President Xi in China”.
“So, we should have that verdict soon.”
Dalio anticipates a US loss.
“The perception that the b) path is most likely is already leading to a view that the United States will not be a reliable protector against possible opponents like Russia in Europe and/or China in Asia”.
Dalio describes himself as “a global macro investor for over 50 years who has needed to study all things that affected markets over the last 500 years to know how to deal with what’s coming”.
He believes the individual crises flaring across the world are distractions.
Instead, it’s all part of what he calls a “Big Cycle” that nations seem to follow inevitably.
“At this stage of the Big Cycle, just before major wars, circumstances like the inability to resolve irreconcilable disputes with compromises typically drive one stage in the cycle unavoidably to the next until there is a violent resolution,” he asserts.
Dalio is ticking off the steps.
We’re at stage nine of 13. Global war is stage 11.
“The world order has changed from a multilateral rules-based world order led by the dominant US power and its allies … to a might-is-right world order with no single dominant power enforcing order, which means that we can expect more fighting,” Dalio states.
“Virtually nobody is talking about the fact that we are in the early stages of a world war that isn’t going to end anytime soon.”
Brawn, or brains?
Beijing has been remarkably silent over the wars in which its Axis of Authoritarian allies are engaged.
President Vladimir Putin bungled his invasion of Ukraine. But China continues to quietly supply crucial component parts to restock Russia’s shattered military in exchange for oil and technology.
The theocratic Iranian Islamic Republic is an odd match for a professedly Communist China. But the ambitions of the ayatollahs have made it an enemy of China’s enemies, and therefore a friend.
But Beijing, while happy to heckle from the sidelines, hasn’t stood up for a central role.
Meanwhile, President Trump has taken a wrecking ball to his nation’s long-established alliances in Europe. He’s expressed disinterest in Asia. And the rich kingdoms of the Middle East have captured his fascination.
“China’s restraint should not be seen as a sign of weakness,” argues Brookings Institution think-tank China Centre director Ryan Hass.
“Instead, the country is biding its time, positioning itself as the ready choice to fill a leadership vacuum when the United States flames out.”
Put simply, Beijing believes Washington is doing a good enough job on itself.
It just needs to sit back. And wait.
“Why should Beijing risk entering a hot war or challenging American leadership in the Middle East or elsewhere when the United States is plainly wearing itself down, militarily, fiscally, and politically?” Hass asks.
“China’s mission, then, is not to seize the moment but to lay the groundwork for its preferred future.”
Dalio agrees.
The odds are stacked against the US, he concludes.
“As history has shown, the most reliable indicator of which country is likely to win is not which is most powerful; it is which can endure the most pain the longest.
“While the United States appears to be the most powerful country in the world, it is also the most overextended major power and the weakest at withstanding pain over a long period of time.”
Clash of Titans
“Summits are often less historically significant than advertised, but this one has the feel of a geopolitical heavyweight matchup,” Campbell observes.
“With the broader relationship at a crossroads, each man comes to the table with remarkably few institutional constraints, substantial personal latitude, and manifest ambition to shape the next phase of the US-Chinese relationship.”
It’s economy versus economy.
Military versus military.
Ideology versus ideology.
Strongman versus strongman.
“When US President Donald Trump and Chinese leader Xi Jinping meet in Beijing this week, it will be a modern standoff with the unmistakeable overtones of single combat,” Campbell believes.
The contest boils down to just these two men.
It’s a clash of Homeric proportions.
“The meeting between Trump and Xi represents far more than a routine diplomatic engagement,” Campbell writes.
“It is the highest-stakes encounter yet between two leaders whose personal styles, political imperatives, and global ambitions have already reshaped international relations.”
Nothing less than the global reputations of Beijing and Washington are at stake.
Can they be trusted? Do they have a spine? Will they sell out their allies for their own gain?
Campbell says we’ll get a sense of who “wins” from the “balance between informality and rigidity” in their public appearances.
Mr Trump’s style is one of chaotic improvisation, confrontation and impolitic bluntness.
Xi’s style is one of discipline, steadiness, commitment – and resolute positioning.
“Whether the meeting appears relaxed and improvisational or tightly scripted will offer clues about which side has the upper hand,” Campbell assesses.
To the victor go the spoils.
“When Achilles dragged Hector’s body behind his chariot, Troy’s fate was sealed,” Campbell observes of the Iliad tale of the Trojan War.
“As Trump ventures into the arena in Beijing, the world will be watching and eager to see whether the two leaders emerge driving together in the chariot, or with one dragging the other behind.”
Jamie Seidel is a freelance writer
