COVID, Russia, Energy Crisis, inflation spike, interest rate rises, AI impact on society - how many more shocks can we expect? What next? Interview with Futurist Keynote Speaker and Trends Analyst - Patrick Dixon

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First question: You warned many times over the last few years of the risks of a new viral pandemic.  What do you think will happen next with COVID?

Yes.  In The Future of Almost Everything for example, my 17th book published in 2019, I again warned of viral pandemic threats.  

On page 19, I wrote a list of Wild Cards - top of which was ""Viral plaque - rapidly spreading, cases in every nation".  Another on the list was "Miscalculation by a powerful nation leading to sustained regional conflict" - but that's another story.

I have been tracking many new mutant viruses for over three decades now and on average we see one every year, often emerging in the Far East for reasons we don't fully understand.

When I was 30 years old, my work caring for those dying of cancer at home was suddenly overwhelmed by people dying from a new mutant virus that appeared from nowhere, having jumped from animals into humans.  It was spreading fast, created massive fear and panic, with no vaccine or cure, and that virus has since killed 35 million people.

Over 30 years later, despite vast research efforts we still have no vaccine nor a cure.  

That virus was HIV, causing AIDS.  

And through the Foundation ACET (AIDS Care Education and Training) that begin in our own home in 1987, my wife and I are still involved in global efforts to slow down spread of that particular virus, and to mitigate its impact on the poorest and most vulnerable communities in nations such as Uganda, Zimbabwe, Nigeria, DR Congo, Thailand and India.

So I have always worried that we would see more mutant viruses appear from nowhere and go global.

* "How AI Will Change Your Life - A Futurist's Guide to a Super-Smart World" - Patrick Dixon's latest book on AI is published in September 2024 by Profile Books.  It contains 38 chapters on the impact of AI across different industries, government and our wider world - including risks of new viral pandemics.

Can we learn any lessons from flu pandemics?

Yes - virus history is really important.

In 1918, a mutant version of flu spread globally, killing tens of millions.  It was called Spanish Flu - and in a world without air travel every nation was affected in only a few months.  But after two years it was gone, after mutating into a milder version.

So when COVID emerged, as a highly infectious agent similar to Spanish Flu, I assumed that the cycle of the pandemic would happen even faster, powered by global air travel, densely packed megacities and all the other features of Third Millennial life.

In 1918 there were only 2.3 billion people on the planet, yet 30 million died.

COVID spread slower than I expected, and the pandemic has lasted longer therefore, despite global vaccination campaigns.

And the virus is more unstable than we first hoped.  In July 2022 we detected COVID virus variants which are capable of infecting the same person several times a year.  So the virus is constantly adapting, learning how to defeat our immune systems.

There are around 8 billion people alive today.  And every person presents a new opportunity for nature to create a radical new version of COVID inside their own body.

But here's another important lesson - and we saw the same in the first year of the Russian invasion of Ukraine: all crises drive innovation.

During COVID we saw a massive increase in speed of innovation, using tools like AI / Artificial Intelligence to

- better track the pandemic - AI was faster and more accurate than human epidemiologists 

- predict impact of each new variant - AI was able to analyse all the data available at the speed of light

- treat patients more effectively - AI soon proved better than many intensive care physicians in patient management decisions

- identify new drugs against COVID more rapidly and accelerate clinical trials - AI was used to help screen vast numbers of existing drugs for potential impact

So when will the COVID threat be completely over?

Firstly:  COVID is not "over" and in will not be for many years.  Hospitals are likely to be treating people with COVID for decades to come.  It's very rare for us to be able to eradicated a virus globally - smallpox for example.  So COVID will stay with us.

Secondly:  COVID will become a part of life, as entire communities become "used" to being infected regularly, so death rates per thousand infections are likely to stay low.

Thirdly:  We have an ongoing risk that COVID may become more dangerous again, causing worse illness.  This could happen by recombination - when COVID and another virus are infecting the same person, it is easy for cells to get confused about what virus they are making, and a new hybrid can be created, combining lethal risks from another virus into a milder COVID.

Fourthly:  My original warning remains.  Every year we can continue to expect new mutant viruses emerge somewhere in the world.  Most of these infections disappear rapidly, usually because the virus is so lethal that most people infected are dead in a short time so there is little opportunity for spread.  So mutant viruses will continue to be a significant threat to humankind.

The truth is that the larger our population, the denser our cities, the better our transport systems, the greater the risks.

We were very fortunate with COVID - so far at least - in that young people, children, babies were relatively immune with very few deaths.  That's not what happened with Spanish Flu.  Most of those who have died from COVID have been elderly of people with other significant medical conditions.  Take the UK for example:  by July 2022 we had seen 200,000 deaths - almost all of adults.  But imagine if we had also seen 200,000 deaths of babies, toddlers and school children.  The trouble is that we may not be so fortunate next time.

What steps will governments and researchers take to make our future safer?

Expect massive investment over the next two decades in effective antiviral medication.  When COVID hit us the pharma options were almost zero.

The truth is that in 2022 we still don't have a single antiviral medication for any type of viral infection that is as effective as penicillin was when first discovered in the 1940s.

This single shocking fact is the result of 60 years of complacency, and is a massive gap in medical treatments.

Yes we have therapies for viruses such as HIV but in that example, people have to take their medication every day for the whole of the rest of their lives - it is a suppressant, not a cure, and the medicines are expensive as well as having significant side effects.

You also warned of risks of sustained regional conflict - what are your thoughts about the Russian invasion of Ukraine?

Once again, as I said, I warned that this kind of thing was a real possibility.  I think my surprise is that it was a further seizure of Ukraine territory.  I was more expecting action against a nation like Estonia, Latvia, Lithuania - tiny nations that could be over-run in a heart-beat.  But President Putin would have forced a formal response by NATO.

Winston Churchill once said that if you want to understand the future, study history, and that is absolutely correct regarding Russia.

We need to understand the wider history, and fears fuelled by invasion of Russia by German in the Second World War leading to no less than 20 million Russian deaths.  That single event has defined Russian views on national security in a way that is hard perhaps for many in the West to fully grasp.

We also need to understand patterns of more recent events.  Where Russia has interfered with nations on its borders over the last 20-25 years. And that would of course include countries like Georgia and Ukraine with invasion of Crimea and conflicts in Eastern Ukraine.

As I have written elsewhere on this site, war itself has changed dramatically from outright military action to hybrid conflicts involving everything from cyberattacks to economic sabotage, kidnappings and intimidation of foreign governments, interference with elections, supporting unnofficial and deniable militia forces and so on.  Russia has had a very sophisticated foreign policy, a strategic pattern involving all of these things in different places, to achieve its own national security interests.

How might the situation in Ukraine be resolved?

Expect Russian strategy to be very long term, relying on time, patience and inertia to achieve objectives.

Russia is not a large nation from the economic point of view - it was the size of Spain before the conflict.  So Russia is very limited in what it can sustain in intense, short or medium term expenditure on military adventures.

Russia's intention has been very clear for a long time now, which is by any means necessary to ensure a "buffer zone" around it's borders, which it controls, and to discourage extension of NATO or any other military alliances that might be used against them. 

And if you look at the pattern, an objective has been to create so-called "frozen conflicts" where a chunk of a neighbouring nation is occupied by forces loyal to Russia or under Russia's direct command, without having the cost and risk of taking over the other nation entirely.

That was the strategy for Eastern Ukraine.  But that conflict did not "freeze" with significant battles continuing week by week over many years, and now more land being taken to extend that area.

So that approach creates major risks for nations further North - the Baltic States and also for Finland.  Particularly since Estonia, Latvia and Lithuania are under the umbrella of formal NATO protection, while Finland is now in process of joining, which is a very negative outcome for Russia of their further attacks on Ukraine.

If Russia remains true to its longer term strategy, then it will seek to establish a new and stronger "border" within Ukraine.

To divide Eastern Ukraine from Western Ukraine along a clear line such as a large river, and to then absorb Eastern Ukraine into Russia, maybe with some kind of demilitarised zone between.

Russia would really struggle, even if tempted to do so, to conquer the whole of Ukraine.  For several reasons.

It is not difficult for a nation with huge artillery forces to pound a neighbouring nation to rubble, one hundred metres forward at a time, given enough time.  But what you win is then almost worthless from the economic point of view.

The challenge is what you do with what you occupy.  

But let's return to all those buildings. Do you rebuild all you have just destroyed?

If so, that would mean a cost to the Russian economy of up to a trillion dollars for Ukraine as a whole.  Maybe more.  

Power stations, water supplies, railways, bridges, roads, schools, hospitals, shopping centres, homes, theatres, public buildings, city streets and so on.

There is a related and massive problem for Russia. What happens to 40 million Ukrainians?  What would be the cost of imposing rule on a very reluctant population - even if to the East there is much more cultural affinity with Russia.  It could mean a Russian-paid and loyal force of hundreds of thousands of secret police and other security personnel.

If an invading nation reduces another nation to rubble, the greatest challenge afterwards is to convert hatred to affection, to overcome hostility, fear and anger.  That means investment, repair, recovery - to demonstrate that life under a new regime is not so bad.

But Russia does not have the financial power to do that, without neglecting its own citizens back home.

Another reason that Russia would really struggle to take the whole of Ukraine is lack of commitment to the cause by 18-30 year olds in cities like Moscow, who are highly Westernised in lifestyle, aspirations, connectivity, travels, connections with family and friends in Western nations, and least enthusiastic about military imperialism compared to those for example in rural areas over the age of 65.

That is why despite major losses, from February to July 2022 the Russian army had still not conscripted the youth of Moscow into the army, but was drawing on men in remote rural areas, enticed by money.

And then there is the issue of sanctions which will have a greater impact on the Russian economy as months go by.

So it is not hard to imagine that Russia might seek some kind of settlement with Ukraine and the wider international community, to withdraw to a defined line, retaining some Ukrainian land including Crimea, and to cease hostilities, in exchange for Ukraine doing the same and the international community lifting all sanctions.

But if such an offer is refused as it may on the basis that Russia might restart military action again at any time, then the war could continue for many years.

What have we learned about the future of warfare from the conflict?

The main lesson is that traditional methods of blowing things up with artillery are still a powerful way to impose power.

Armies can invest in incredibly expensive smart weapons - and they have their place - but sustained volume of explosive power, and frequency of firing are really important.

That's because if buildings or woods or other sheltered areas are left intact, then an invading army including tanks can be destroyed easily with mobile missiles which are fired from behind cover.

As I have written elsewhere on this website and in The Future of Almost Everything, the problem is that in all war game scenarios mapped out by Western military over the years, Russia always ends by gaining territory, that is unless Russia is convinced that if it does not withdraw, tactical nuclear weapons will be used. But that is a very, very high risk gamble.

The reason is simple maths.  

However ancient some of Russia's military equipment might be, they have a vast amount of it, which can be rapidly moved to a bordering nation.  

In comparison, the lead nation in NATO, the US, has a tiny military presence in Europe, and EU nations have very small and independent armies. The largest EU economy, Germany, has also been extremely reluctant to spend significant money again on defence because of what happened in the Second World War.  

The UK army recently calculated that at Russian rates of artillery fire, the UK would run out of shells in just 8 days.

What will be the impact on patterns of military spending?

We should expect the following:

-  Boom-time for smart shoulder launched missiles of all types.

-  Same for swarms of smart drones, especially ones able to deliver missiles or drop bombs.

-  Next-generation GPS jammers and control signal blockers and other defences against drones / targeted munitions

-  Highly mobile rapid-fire artillery / mortars / missile launchers etc

-  Long range small-sized smart missiles

-  Funding defence companies to hold larger stocks of vital parts eg chips to enable rapid scaling up of production in times of conflict

-  Investment in systems co-ordination / integration / training to make NATO / EU forces more effective as one fighting force

What about the longer term, wider impact on trade with Russia?

It will take at least 20 years for Russia to rebuild trust with the leaders of multinational business.

And it will be difficult for this to happen while President Putin is in power.

I often say that trust in a brand can take a generation to build up but can be lost in hours or days.

It's the same for nations.  Just a few years ago, Russia was seen as an exciting destination for CEOs seeking new deals.

More recently, some companies had been reducing investment or pulling out altogether, citing challenges such as corruption but also unease after seizure of Crimea and a gradual increase in autocratic government.

Within 48 hours of the invasion of Ukraine by Russia in February 2022, hundreds of CEOs were taking decisions to cancel orders, dismantle operations in Russia, recall senior teams and so on,

This instant response was not caused by government action back home, but was an instinctive rush by boards and CEOS, fearing massive reputational damage as well as disruptions.

What do you think will be longer term impact on energy markets of recent events?

In The Future of Almost Everything I predicted that we would see chaos in energy markets for all kinds of reasons with prices as high as $145 at times over the next 30 years, and indeed prices reached close to that in the Summer of 2022.

We will see an even greater rush to develop green energy in many EU nations as a direct result of Russian actions to shut off gas supplies in response to sanctions.

And the US will continue to increase production of oil and gas, a process that has been massively accelerated by widespread used of fracking.  Indeed fracking technology in America in just 6 years increased the world's proven gas reserves from 80 to 200 years.

At the same time, as a matter of national security, expect some nations to tear up previous commitments towards a Carbon Zero world, and to reactivate very inefficient coal power stations in a desperate bid to prevent national power cuts.  

Germany will also be forced to reverse (partially) its decision to rapidly phase out nuclear power - a decision made after the nuclear accident in Japan some years earlier.

Of course, Russia will find other markets for oil and gas as EU demand dries up, and the EU will never again in its history allow itself to be so dependent on Russia for such a fundamental need. But in the short term, Russia has limited means to dispose of unused gas, with limited routes to China or by sea.

The spare Russian oil and gas will be snapped by emerging nations where 85% of humanity actually lives, and where economic growth will continue to drive consumption of fossil fuels for the next 25-30 years.

So to some extent, EU and US sanctions against Russian oil and gas will only have limited impact.

What will happen to inflation and interest rates?

In The Future of Almost Everything, I predicted that Central Banks would tend to encourage inflation rather than risk deflation (whatever they say publicly).  

And that has turned out to be correct.  

So governments pumped trillions of dollars into the global economy during COVID, were slow to withdraw the stimulus, and slow to increase interest rates from near zero.

What has followed inevitably is increasing inflation before the economic disruption related to Russia's invasion of Ukraine.

Inflation happens when everyone is spending and there is not enough product or services to meet demand.

And that is what has happened during COVID.

The first inflationary shortage was locked up people diverting leisure and travel spending into buying things for their homes, or improving their homes.

That meant a lack of goods just as China and other manufacturing nations were hit by COVID-related factory disruption.  Not helped by similar COVID disruptions in loading and unloading container ships.

The second inflationary shortage was unlocked up people using spare cash saved up during COVID to have lots of holidays, meals out and other leisure experiences - as well as continuing to improve their homes. Hence chaos in airports across Europe which were unable to scale up staffing levels again in time.

But these are of course short term adjustments to COVID.

And the jump in energy prices is also one off event. Energy prices will not leap by the same amount more for a second year. - whatever happens in Ukraine.

Production and demand will return into better balance, problems in supply chains will resolve and so on.

So expect inflation to fall I many nations as we head into 2023-2024, unless inflation in 2022-2023 triggers wage-price spirals.

Therefore Central Banks will be in a great dilemma.  If they raise interest rates anywhere near inflation rates, they will kill their national economies.  But if they fail to act enough, inflation in their nations could rise even higher.

Expect Central Banks to increase rates far less than inflation in 2022-2023, for all the reasons above.

Especially given all the other economic risks - COVID, supply chain disruptions and so on.

So long as governments can continue to borrow for less than the actual rate of inflation, an interesting thing will happen: national debt will be reduced in real terms.  

That's why Central Banks and governments often have a hidden benefit from (slightly) higher inflation.

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