5 Conflict Hotspots in 2024

Here are five conflict hotspots which could potentially undermine the global economy and put international trade routes at risk in 2024.

Military conflict and business development generally do not go together, despite what you may have heard about wars and military production leading to economic booms.

Military conflict wreaks havoc by interrupting supply chains and causing supply shortages which lead to price surges, which in turn trigger inflation.

And once the Pandora’s Box of inflation has been opened—as we remember from the recent inflationary period of 2021-2022—everyone will be worse off.

The Russian invasion of Ukraine in early 2022, for instance, came with disastrous consequences for grain and natural gas supply chains.

A century and half earlier, the American Civil War (1861-1865) disrupted the supply of cotton, thus affecting Europe’s booming textile industry, which was one of the main pillars of industrial revolution at the time.

And going even further back, it is sometimes suggested that ongoing military conflicts on the outskirts of the Roman Empire in the 5th century cut off the trade routes of wine, spices, and precious metals, undermining the ancient Roman economy, which ultimately led to the fall of the Roman Empire.

Now, as we are preparing to begin the year 2024, once again the world is witnessing several ongoing military conflicts—from Eastern Europe to the Middle East—as well as a number of latent tensions poised on the brink of escalation.

What all of these conflict hotspots have in common is that they have the potential to hurt the global economy and businesses across the world.

Bab Al-Mandab Strait (Yemen)
Image credit: Shutterstock / Below the Sky

In the wake of the ongoing military engagement of Israel in the Gaza Strip, Houthi rebels in control of parts of Yemen have threatened maritime traffic passing through the Bab Al-Mandab Strait at the bottom of the Suez Canal.

As roughly 30% of global maritime container transportation passes through this trade route, an all-out war between the West and the Houthi rebels of Yemen could seriously affect the global economy.

New assaults by Yemeni forces in December 2023 on several merchant ships marks the beginning of a period of uncertainty in international trade through the Red Sea and the Suez Canal.

The US, in response, “wants to form the ‘broadest possible’ maritime coalition to protect ships in the Red Sea and send an ‘important signal’ to Yemen’s Houthis that further attacks will not be tolerated,” according to Reuters, citing the US envoy to Yemen.

South China Sea (China, Malaysia, the Philippines, and Vietnam)
Image credit: Shutterstock / Marisa Estivill

There are several unresolved territorial claims in the South China Sea region among China, Malaysia, the Philippines, and Vietnam over islands and territorial waters, with China being the most powerful actor which could potentially start a war.

“Tensions are flaring once more in the South China Sea,” reported CNN in September 2023, following China’s ongoing attempts to wrest control of “a number of obscure reefs and atolls far from its shoreline across the South China Sea, [by] building up military installations, including runways and ports.”

The geopolitical importance of the South China Sea as a crossroad for maritime trade is impossible to exaggerate; over 50% of Japan’s and China’s manufacturing output is shipped to the world through this crossroad.

However, The Statesman assesses that “China is aware that if it launches operations and fails to achieve its objectives, it could impact its global standing.”

There are no signs that China is seeking an imminent military confrontation in the region for the time being.

The Strait of Taiwan (China and Taiwan)
Image credit: Shutterstock / Lin kent

We also have the unclear political status of Taiwan, which is a threat to the global economy in the context of  trade routes passing through the Strait of Taiwan.

Beijing has for decades refused to formally recognize Taiwan as a sovereign state, considering it as an indispensable part of the People’s Republic of China (PRC), based on its “One China” policy.

Although the West supports Taiwan, no major power—including the US—has so far established formal diplomatic ties with Taiwan.

From time to time, however, indications of proximity between the US and Taiwan have earned enraged reactions from Being.

In August 2023, and following a visit by the Taiwanese Vice President, William Lai, to the US, “China launched widely expected drills near Taiwan in an angry response to his brief visits to the United States,” according to Reuters.

Most observers agree that, unlike Russia, China is too integrated into the global economy to risk the crumbling of its already shaky domestic economy with a war over Taiwan—at least in the near future.

Horn of Africa (Ethiopia, Somalia, Eritrea, and Djibouti)
Image credit: Shutterstock / Venera Salman

The region including Ethiopia, Somalia, Eritrea, and Djibouti, which is often referred to as the Horn of Africa, has witnessed several concurrent security issues over the last couple of years.

Most prominently, the civil war in Sudan has been going on between rival factions since April 2023.

While South Sudan and Somalia are struggling with—almost total—lack of the rule of law and political stability, the presence of dangerous groups such as Al-Shabab and Somali pirate gangs has been on the rise.

To make matters worse, historical border disputes between Eritrea and Ethiopia are resurfacing again, while the situation is worsened by the long-standing ethnic tensions in both Ethiopia and Eritrea.

All this is happening in a region which has suffered years of drought and famine, leading to multiple humanitarian crises. The whole region, which is home to nearly 150 million people is, in short, a keg of gunpowder ready to explode.

Although the Horn of Africa may not be wholly integrated in the global economy, its deterioration could create a whole host of challenges for the wider world, from piracy in the Gulf of Aden to the necessity of providing humanitarian relief to affected populations.

Jammu and Kashmir (India and Pakistan)
Image credit: Shutterstock / Tawseef Nazir

As one of the sources of skirmishes between India and Pakistan, the unresolved issue of Jammu and Kashmir can potentially lead to undesirable consequences in the Indian subcontinent.

“For the last seven decades, Kashmir has been the epicenter of a bitter dispute between India and Pakistan in which the people in Jammu are an integral party,” noted a 2023 opinion column published by the UN-focused nonprofit media, PassBlue, which added that India has thus far deployed over 900,000 troops in the region—a sign that is difficult to interpret optimistically.

This is all the more alarming when considering the fact that the two South Asian nuclear powers have a combined population of over 1.6 billion.

Any military confrontation between the two nations will come with catastrophic consequences for the world economy, especially as India is increasingly part of the supply chain of various industries from software and IT to pharmaceuticals.

But while observing that these South Asian rivals’ already-complicated relationship is “now at rock bottom,” Al Jazeera also noted in 2023 that not all hope is lost.

Pakistan’s foreign minister, Bilawal Bhutto Zardari paid a two-day visit to the Indian city of Goa in 2023, marking the first arrival of a major Pakistani diplomat in India in well over a decade.

It is hoped that India and Pakistan will continue to use dialogue and diplomatic measures in 2024, sparing the world from yet another military confrontation.