War, infrastructure and world order | thearticle

This Russian invasion of Ukraine has been both a shock and shocking in equal measure. It has also been a wake-up call for many and has led to biggest change in German foreign and defence

policy since the Berlin Wall was torn down in 1989, marking the beginning of the end of the Cold War. The neoliberal world order to which it gave way, and which was already creaking in the

face of growing populist pressure and rising inequality, has now been rocked to its core. The guiding mantra of “_Wandel durch Handel_”, that relations with formerly hostile states could be

changed through trade, which formed the bedrock German policy over three decades has been abandoned. The invasion of Ukraine is, as Olaf Scholz the German Chancellor has soberly concluded,

_eine Zeitenwende: _an epoch changing event. It was another Vladimir, Lenin, who observed that “there are decades where nothing happens; and there are weeks where decades happen”. He was

right. A new world order will surely emerge from the ashes and the rubble and infrastructure will be central to it in three areas: security, prosperity and longevity. First, energy security

is on the agenda in a manner unseen since the oil price shocks of the early 1970s with Brent crude having reached almost $130 per barrel in recent weeks. This is painful against a backdrop

of energy costs that were already punitive, rising inflation and increasing interest rates. The Achilles’ heel of Europe’s over-dependence on Russian energy, which accounts for 40% of gas

imports and 27% of oil, has been exposed. Frans Timmermans, Vice-President of the European Commission, has announced that the EU will work “bloody hard” to reduce its Russian gas imports by

two thirds by the end of the year. The German government has announced the cancellation of Nord Stream II, the building of two new LNG ports and that the closure of remaining nuclear

facilities will be slowed down while renewable capacity is ramped up. The UK will end Russian oil imports by end of 2022 and Boris Johnson is scrambling to convince Middle Eastern OPEC

states to increase production. The longer-term solution lies in the diversification of energy supply and a move away from interdependence towards greater self-sufficiency, if we are to avoid

a Hobbesian anarchical society riven by nation state competition, where life really is “solitary, poor, nasty, brutish and short”. Those that frame the new geopolitical reality as a

competition between security through the extended use of fossil fuels on the one hand, and decarbonisation towards the achievement of the net zero 2050 agenda on the other, miss the point.

Renewable power generation and the means to store the energy it produces, are a catalyst of long-term security of supply. Second, infrastructure has a key role in acting as an enabler in

rebuilding prosperity across the globe in the post-pandemic era. The $1.2 trillion Bipartisan Infrastructure Framework which was passed by the US Congress last November is the largest

investment in US infrastructure since Dwight D. Eisenhower’s Interstate Highway system in the 1950s. Last December, the European Commission announces plans to spend €300 billion on

infrastructure in developing countries, as an alternative to China’s Belt and Road Initiative. The UK government, whose mandate and raison d’être is now levelling up to spur wealth creation

across the country, has itself committed to spend £640 billion on new projects before 2025. The infrastructure renaissance is being matched in the private sector with a record $136 billion

raised by investment funds last year with investors particularly attracted to renewables and digital infrastructure. Third, the vast sums of capital to be deployed provide a huge opportunity

to contribute to the longevity of the planet, through investments in hydrogen, batteries and carbon capture and storage. This recognises that environmental pressures, which in turn will

drive competition for scarce resources, will create further geopolitical tensions. In addition, the move towards social infrastructure reflects the demographic challenges posed by ageing

populations in many advanced economies and the concomitant requirements for increased healthcare provision, which offer huge investment opportunities including hospitals and care homes. We

are living through a pivotal period that will shape history that is yet to be written. It is infrastructure that will provide the foundation for the new world order that will emerge. A

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