Great Dissolution – Navigating the Global Polycrisis of 2026

 Great Dissolution – Navigating the Global Polycrisis of 2026

Introduction

The year 2026 marks the arrival of "The Great Dissolution," a systematic fracturing of the global order. A dangerous polycrisis has emerged, driven by twenty-five distinct risks that threaten digital and environmental stability. At the heart of this volatility is a political revolution in the United States that is dismantling institutional guardrails. The world can no longer rely on U.S. treaty commitments, forcing allies to seek independent security arrangements.

Meanwhile, the "Donroe" Doctrine represents a shift toward aggressive U.S. primacy over the Western Hemisphere. Economic landscapes are further strained by "The Great Disillusionment" among youth facing automated job markets. AI displacement is rapidly removing entry-level roles, while water scarcity reaches critical levels in many regions. Businesses must now navigate a "regulatory minefield" of conflicting laws between the U.S., EU, and China.

Risks

U.S. Political Revolution

The United States is no longer viewed as a stable "anchor" of the global system but as its primary source of volatility. Following the return of Donald Trump to the presidency, 2026 is marked by a systematic dismantling of institutional guardrails.

• Weaponization of Government: The administration has moved beyond rhetoric, purging career civil servants and transforming the DOJ and FBI into instruments of political retribution.
• Domestic Chaos: As Democrats prepare for the 2026 midterms, the "Trump inner circle" has become increasingly risk-acceptant, launching investigations into donors and opposition platforms.
• Global Impact: This "Late Gorbachev Era" for America means that allies can no longer rely on U.S. treaty commitments, leading to a "hedging" strategy where even close partners like Japan and Germany are seeking independent security arrangements.

The "Donroe" Doctrine

A portmanteau of "Donald" and "Monroe," this doctrine represents a sharp pivot toward aggressive U.S. primacy in the Western Hemisphere.

• Venezuela as the Flashpoint: The U.S. recently executed a high-stakes military operation to oust Nicolás Maduro. While successful in removing him, the resulting power vacuum has triggered a messy "nation-building" crisis that the U.S. is ill-equipped to manage.
• Expansionist Claims: The doctrine includes a "Trump Corollary," asserting U.S. rights to intervene anywhere in the Americas to secure "key geographies." This includes renewed pressure on the Panama Canal, threats toward Cuba, and even high-friction rhetoric regarding the "acquisition" of Greenland from Denmark.
• Fractured Alliances: This unilateralism has caused an existential crisis for NATO, as European leaders realize the U.S. may prioritize hemispheric resources over European security.

Third Nuclear Era

The era of nuclear arms control has officially collapsed. The expiration of New START in February 2026 marks the first time in decades that the world's two largest nuclear powers (U.S. and Russia) are without a treaty limit.

• Proliferation Dominoes: Trump’s endorsement of South Korea’s pursuit of nuclear-powered submarines has triggered a "nuclear domino" effect in Asia. Japan and Iran are now at the threshold of becoming nuclear-armed states.
• Tri-Polar Competition: China is on a trajectory to match U.S./Russian ICBM counts by the end of the decade.
• The AI Factor: The integration of AI into nuclear command-and-control systems has shortened "decision-to-launch" windows, drastically increasing the risk of accidental escalation.

Russia’s Hybrid War

With its conventional military exhausted by the stagnation in Ukraine, Moscow has shifted its strategy to an affordable but lethal "Phase Zero" campaign against NATO.

• Gray-Zone Escalation: 2026 has seen a surge in "hybrid bombs"—clandestine sabotage of European energy grids, water systems, and rail lines.
• The "Second Front": The focus has shifted from the trenches of Donetsk to the heart of Europe. Intelligence agencies (MI6, BND) warn that Russia is testing NATO's Article 5 by conducting just enough damage to disrupt society without triggering a full-scale war.
• Risk of Miscalculation: With Poland threatening to shoot down Russian aircraft violating its airspace, the margin for error in the Baltics is at its narrowest since the Cold War.

Multipolar Fragmentation

The world is no longer unipolar or even clearly bipolar. It has fragmented into competing blocs with fundamentally different economic and digital foundations.

• The BRICS+ Surge: By mid-2026, the BRICS+ share of global merchandise exports is projected to overtake that of the G7. The group is successfully piloting an "alternative to SWIFT" for trade, insulated from U.S. sanctions.
• The Electrostate vs. Petrostate: China has emerged as the world's first "Electrostate," controlling the "electric stack" (EVs, batteries, green energy). Meanwhile, the U.S. is doubling down on its status as a "Petrostate," creating a global rift in infrastructure development.

Resource Wars: The Electric Stack

Geopolitics in 2026 is driven by the scramble for the "building blocks" of the future.

• Critical Mineral Chokepoints: China currently refines 75% of the world’s cobalt and nearly 90% of its rare earth elements.
• The "Scramble for Africa" 2.0: The Democratic Republic of the Congo (DRC) and Indonesia have become the new "Middle East," as the U.S. and China compete for exclusive mining rights through debt-trap diplomacy and private military contractors.
• Supply Fragility: Any disruption in the supply of lithium or nickel now has the same global economic impact as an oil embargo did in the 1970s.

Terrorism Trajectory

Terrorism has evolved into a highly decentralized, digitally-driven threat focused on the Global South.

• The Sahel "Arc of Instability": Groups like Al-Qaeda in the Islamic Maghreb (AQIM) and ISIS affiliates have effectively turned parts of Mali, Niger, and Burkina Faso into "no-go zones," displacing millions.
• TTP in Pakistan: The Tehrik-e-Taliban Pakistan (TTP) has surpassed ISKP as the deadliest threat in the region, conducting attacks from bases in Afghanistan that threaten to pull the two countries into a full-scale border war.
• Digital Command Centres: Terror groups are now using "AI Digital Commands" to radicalize youth, with nearly 20% of global attacks in 2026 perpetrated by minors.

Technological & Digital Risks

AI as the "Great Disruptor"

In 2026, we have moved beyond chatbots to Agentic AI systems—autonomous entities capable of executing complex workflows, from financial trading to supply chain management.

• Regulatory Lag: Despite the "Global AI Safety Accord" of late 2025, national regulations are fragmented. Innovation is moving at "AI speed" while legislation moves at "bureaucratic speed," leading to a governance vacuum.
• Systemic Instability: The sheer volume of autonomous agents interacting in digital ecosystems has created "flash" events—unpredictable, cascading failures in digital markets or logistics that no human operator can intervene in quickly enough.

Deepfake-Enabled Social Engineering

The "Identity Crisis" of 2026 is driven by multimodal deepfakes that are now indistinguishable from reality in real-time.

• Corporate "Heist" Evolution: Following a massive $250 million deepfake fraud in early 2026 where an entire "virtual board meeting" was faked to authorize a transfer, trust in digital communication has collapsed.
• The Liar’s Dividend: Public trust is so eroded that genuine evidence of corruption is often dismissed as "AI-generated," a phenomenon known as the Liar's Dividend, which is destabilizing the 2026 U.S. midterm election cycle.

Sovereign AI Conflicts

AI has replaced oil as the primary metric of national power. Governments now view "Compute" and "Data" as sovereign territory.

• The Compute Cold War: The U.S. and China have entered a "Compute Lockout," where the export of sub-2nm chips is treated as an act of economic warfare.
• Nationalized Models: Countries like France and Saudi Arabia have launched "Sovereign LLMs" to ensure cultural and data independence, leading to a "Splinternet" of AI where models from different blocs refuse to interact or share data.

Cyberattacks on Physical Infrastructure

The vulnerability of the "Analog Foundation" has become the primary target for state-sponsored "Gray Zone" actors.

• Targeting the Grid: AI-powered malware is now capable of "learning" the unique configurations of aging electrical grids and water treatment plants in real-time to find zero-day vulnerabilities.
• Sanitation & Health: Small-scale, persistent attacks on municipal water systems in 2026 have led to "Sanitation Panics" in several European cities, forcing a costly and rapid "hard-wiring" of critical systems.

Digital Disruption of Labor

2026 is the year of the "White-Collar Tsunami." Unlike previous industrial revolutions, this one is hollowing out the middle class.

• Massive Displacement: Junior to mid-level roles in law, accounting, and coding are being automated by Agentic AI at a rate 4x faster than reskilling programs can accommodate.
• The Reskilling Gap: While 60% of the workforce requires urgent upskilling, corporate training budgets have largely shifted toward AI infrastructure, leaving a "Lost Generation" of digital workers.

Unregulated Shadow Tech

The rise of "Shadow Tech"—decentralized, non-bank financial systems—is undermining central bank authority.

• Dark DeFi: Unregulated Decentralized Finance (DeFi) protocols have grown into a $5 trillion "Shadow Economy" that facilitates untraceable global capital flight.
• The Crypto Pivot: As traditional currencies face inflation, "Stablecoin Sovereignty" has emerged, where private digital assets are used as primary currency in fractured regions, bypassing national sanctions and tax systems.

Economic & Financial Risks

The Economic "Morass"

Economists have labelled 2026 as the year of the "Sticky Morass"—a period where the old tools of monetary policy seem broken.

• Structural Inflation: Transitioning to green energy and re-shoring supply chains has baked in a "base-level" inflation of 3.5–4% that interest rate hikes have failed to quell.
• Productivity Paradox: Despite massive AI investment, aggregate productivity gains are "bottlenecked" by aging physical infrastructure and a lack of skilled human-AI "co-pilots."

Asset Bubbles: The $35 Trillion Risk

The "AI Gold Rush" has created a valuation bubble that dwarfs the 1990s Dot-com era.

• Hyperscaler Overhang: Markets are currently priced on the assumption that AI will add 7% to global GDP by 2027. If the "Earnings Proof" (actual ROI from AI software) fails to materialize by the Q3 2026 reporting season, analysts predict a systemic correction.
• Concentration Risk: With the "Magnificent Seven" now representing nearly 35% of the S&P 500's total value, a single AI-related earnings miss could trigger a global liquidity crisis.

Trade Protectionism: The Era of "Mano Dura"

We have entered a period of "Economic Iron Fists" (Mano Dura). Trade is no longer a tool for prosperity but a weapon of statecraft.

• Tariff Turbulence: Global trade growth is projected to collapse to just 0.6% in 2026 as effective U.S. import tariffs climb toward 14%. This has forced a fundamental reorganization of the "production footprint," with 40% of trade departments now reporting directly to CEOs to manage daily volatility.
• The Absorption Squeeze: In a desperate bid to keep market share, 77% of exporters are now absorbing tariff costs themselves rather than passing them to consumers, leading to a massive spike in corporate insolvencies (projected to rise 5% globally this year).
• Export Controls: "National Security" is now the universal justification for banning the export of everything from advanced legacy chips to processed lithium, creating a "walled garden" global economy.

Global Debt Fragility

The "Debt Stabilized" narrative of 2025 has evaporated. Total global debt now exceeds 235% of world GDP ($251 trillion).

• The Refinancing Wall: Developing nations face a "Triple Threat" in 2026: they must refinance $60 billion in external debt at interest rates three times higher than developed nations.
• Public-Private Crowding: As governments borrow to fund AI infrastructure and climate defence, "crowding out" has become a reality. Private sectors in Brazil and India are seeing credit dry up as sovereign bonds soak up all available liquidity.
• Sovereign Defaults: We are seeing a record high in sovereign debt defaults among highly indebted poor countries (HIPC), now totalling over $127 billion.

Supply Chain Shock 2.0: The Reshoring Tax

The "Just-in-Time" model has been replaced by "Just-in-Case," but the cost of this transition is staggering.

• The 12% GDP Penalty: OECD models suggest aggressive reshoring and geopolitical fragmentation could lead to a 12% loss in global GDP by 2030. In 2026, the "Transition Tax" is hitting hard as factories move from low-cost hubs to high-cost "friendly" nations.
• Agentic Supply Chains: To manage this complexity, 80% of manufacturers are pivoting to "Agentic AI" to autonomously rebalance networks when a chokepoint (like the Suez Canal or South China Sea) is threatened.
• Cyber-Physical Friction: Over 10% of global cyber threats now target supply chains directly, using malware to "freeze" logistics at the port level to extract geopolitical concessions.

Environmental & Resource Risks

Climate Decline: The "New Normal"

In 2026, the term "extreme weather" has been retired by many insurers. We have entered the era of the Permanent Extreme.

• Attribution Science: 2026 marks the first year where climate change—not El Niño—is officially cited as the primary driver for 70% of hydrological disasters.
• Economic Toll: Since 1995, storms and floods have caused over $4.5 trillion in damage. In 2026 alone, the "Climate Risk Index" shows that recurring events are hollowing out the GDP of the Global South, with India and the Philippines facing annual losses of 3-5% of their total wealth.

Grid Instability: The AI Power Hunger

The collision between the 1970s power grid and 2026 AI demand has reached a breaking point.

• The 75 GW Milestone: U.S. data centre demand alone is projected to reach 75.8 GW this year. 70% of the U.S. grid is approaching the end of its life cycle, leading to "brownout rotations" in tech hubs like Northern Virginia and Dublin.
• The Clean Energy Stress Test: AI is now the "stress test" for the energy transition. If data centres cannot find enough clean power, they are forcing fossil-fuel plants to stay online longer, effectively derailing 2030 "Net Zero" targets.

Water Scarcity: The "Blue" Constraint

Water has surpassed carbon as the most critical geopolitical constraint.

• The Chips-Water Paradox: High-end semiconductor fabrication and AI cooling are incredibly water-intensive. In 2026, we are seeing the first "Blue Protests"—local communities blocking data centre construction to protect residential water tables.
• Weaponized Rivers: Following the 2025 India-Pakistan standoff, the suspension of the Indus Waters Treaty has set a precedent for water being used as a primary instrument of war.

Planetary Boundary Breaches

As of late 2025/early 2026, seven of the nine planetary boundaries have been breached.

• Ocean Acidification: This is the latest boundary to "go red." The ocean's pH has dropped 30-40% since the industrial era, threatening the foundation of the marine food chain and global fisheries.
• Agriculture Under Siege: With land system change and biosphere integrity compromised, the "predictable season" for farming has vanished. 2026 food prices are being driven by "biosphere shocks" rather than just transport costs.

Social & Governance Risks

Gen Z Rebellion: The "Kicked Ladder"

Discontent among the youth (born 1997–2012) has moved from social media to systemic political disruption.

• The Inequality Gap: The top 0.001% of the world now owns three times more wealth than the bottom 50% combined. Gen Z, facing 22% unemployment in regions like Morocco and Serbia, views the "ladders of success" (home ownership, stable jobs) as having been intentionally kicked away by elites.
• AI Displacement: Entry-level roles—the traditional gateway for graduates—are being automated by AI at a record pace, leading to "The Great Disillusionment."

Regulatory Fragmentation: The "Patchwork" Maze

Operating a global business in 2026 requires navigating a "regulatory minefield" where laws in the U.S., EU, and China are often mutually exclusive.

• Compliance Overload: Companies now face a "Patchwork of Priorities"—from the EU’s strict AI Act to the U.S.’s national security-focused executive orders.
• The Cost of Disagreement: Compliance costs have risen by 30% year-over-year as firms are forced to build "localized" digital versions of their products to satisfy conflicting data sovereignty and AI governance laws. As we move through 2026, the question is no longer when the world will return to "normal," but whether we can build a new order before the old one completely dissolves. The risks are clear; the solutions will require a level of global cooperation that, for now, remains as scarce as the water in our reservoirs.

Conclusion

As we navigate 2026, it is clear that the traditional global order is dissolving into a patchwork of priorities. The rising cost of regulatory compliance highlights the deep friction between competing international governance laws. Localized digital versions of products are becoming a necessity to satisfy conflicting data sovereignty requirements. Socially, the intentional "kicking away of the ladder" by elites has fuelled widespread disillusionment in many nations.

Technological automation through AI continues to displace workers, further destabilizing the global workforce. The recurring theme of 2026 is that a return to the previous "normal" is no longer a viable possibility. The critical question remaining is whether a new stable order can be built before the old one fully collapses. Global cooperation is more necessary than ever, yet it remains as scarce as the world's dwindling water reservoirs. Ultimately, the risks of 2026 demand a level of collective action that the world has yet to fully achieve.