Will relations between countries and regional blocs become more or less challenging in the years after the COVID-19 pandemic? If nations become more inward facing, can businesses fill the void of multilateral coordination, and shape global responses to shared challenges? What might the impact of growing international friction be for firms with global footprints and markets?

Sir Jeremy opened the discussion saying that the identity-driven polarization of geopolitics is a trend that has been accentuated by the pandemic. “It turned up some weaknesses in the global structure and the global architecture of what we’re doing, where unfortunately there’s been no great renewal of collaboration and cooperation among countries.” He asked the panelists what this means for the energy industry, and how we are all going to adapt to the new geopolitical environment as we take our companies forward.

Ambassador Burns said that, from an American perspective, he believes President Biden is enacting major change, essentially reengaging on global issues more consistently and professionally, rejoining the Paris Agreement and the World Health Organization, and other important international alliances. Based on the depth of experience in the president’s cabinet, and on some early actions (canceling the Keystone pipeline, and tightening drilling restrictions on federal lands), Ambassador Burns was struck by how serious the US now appears to be about climate. “And I do think it’s a sincere commitment that they’re making, and it’s going to underline their energy policy for the next four years.”

Dr. Tocci started by highlighting how much the last year has clarified some questions about the direction of the international system. She said we now know that what’s developing between the US and China is not simply a set of different sectoral disputes on trade, digital, and security—but rather a broader political and ideological polarization, and other power centers will inevitably be pulled magnetically towards one side or the other. “So we’re essentially moving towards an international system in which confrontation is going to be a defining feature.” Given the context of the WTO and WHO, if left unchecked, she said it will weaken multilateralism.

She described four major defining challenges of our age: digital, energy and climate, demography including migration, and global health. “All of these challenges are exquisitely transnational in nature, which essentially means that international cooperation and multilateralism is a must.” For these issues, she said, even where countries don’t share underlying norms and values, it’s more important to cast the net as wide as possible to improve the quality and speed of solutions. At the same time, she said, there are other issues like human rights, democracy, migration governance, economic recovery, and security where a wider net might not be possible or desirable. Wrapping up, Dr. Tocci said “we’re really going to be navigating a world in which there is going to be as much confrontation as a need for cooperation.”

Dr. Mitrova agreed that we are currently in a very contradictory time. While we all need cooperation, she unfortunately expects conflicts and confrontations to continue. She said barriers, trade wars, and sanctions are being presented to countries that are not able to move in exactly the same direction or at the same pace.

She said the energy transition in Europe is quite different from India, Russia, and Malaysia for example, that all countries have very different starting positions and prices to pay for going net zero. Resource-rich countries like Russia and many in the Middle East and North Africa are so reliant on hydrocarbon export revenues that jumping to the future overnight, changing their whole economic structure, is extremely difficult and painful. “Therefore, I think it’s not surprising that they are frustrated.” She believes this can be overcome, but that it requires a much more inclusive way of thinking about energy.

Sir Jeremy asked if the pandemic has increased the role of the central state to the disadvantage of the individual, and if recovery will put the corporate/private sector at a disadvantage.

Ambassador Burns said that President Trump’s federal government was not strong enough. “So here in the United States at least, I think you can make a case that our federal government needs to be stronger and more capable. The private sector, of course, can be helpful. We’ve seen the brilliance of our pharmaceutical companies in this warp speed project to produce Pfizer, Moderna, AstraZeneca, these vaccines. And yet government is critical in the distribution of the vaccines in order and, of course, in continued testing.”

He believes the pandemic has exposed the extraordinary income inequality in the United States, and a similar situation on the international front with wealthy countries, in effect, hoarding vaccines because of their relationship with the companies that make them. “And so, I think this question of international equity has to be answered as well.”

Sir Jeremy passed along a question from a viewer, asking if the relationship between Russia and Saudi Arabia, which seemed to be transactional, is perhaps deepening now?

Dr. Mitrova said the cooperation began as a solution to declining oil prices back in 2016, but its complexity has essentially locked both countries in. “There is no way out from this deal to put it clearly. And therefore, despite some geopolitical disagreements, despite obvious competition on the energy markets, I think there will be nevertheless ongoing cooperation between Russia and Saudi Arabia simply because we do not have any choice.”

With COP 26 coming up in November, Sir Jeremy posed the final question, asking Dr. Tocci if the atmosphere in international interaction at the moment is going to be ripe for a real advance on the Paris Agreement.

Dr. Tocci said that, with 2020 essentially being a lost year for real climate progress, there’s now a general sense that there needs to be greater cooperation and greater ambition on climate action. “So, to me, COP 26 will only be a success to the extent to which it does really trigger concrete action.”