Geopolitical Flux and the Fragmented Global Economy

At the 2025 S2G Summit, Dr. Parag Khanna spoke with Sanjeev Krishnan about geopolitical tensions, international alignment, and the impact on the global economy. Below are the key highlights from their conversation. 

Iran-Israel Conflict Escalation and Global Implications

In a conversation at our S2G Summit that took place in May 2025, prior to Israel’s attack on Iranian nuclear and military targets on June 13, 2025, Sanjeev Krishnan asked geopolitical strategist Dr. Parag Khanna to weigh in on the escalating tensions between Israel and Iran and the potential for a broader regional conflict, particularly given the backdrop of renewed U.S. – Iran nuclear negotiations and shifting power dynamics in the Middle East. At the time of this filming, Parag noted that Israel continued to make independent military calculations, sometimes irrespective of ongoing diplomatic talks, and explained that Israel feels emboldened by its successful defense systems and increasingly views itself as having the upper hand in managing direct threats.

Given the U.S. attack on Iranian nuclear sites on June 22, 2025, and subsequent ceasefire on June 24, this conversation underscored the fragility of the geopolitical status quo in the Middle East and the deep interconnection between diplomacy, defense posturing, and energy and technology infrastructure investments. It served as a reminder of how regional flashpoints can have global consequences, especially in a world already stressed by asymmetrical risks and shifting alliances.

China-Taiwan Conflict May Be Less Likely Than Feared Thanks to Semiconductor Globalization

While Taiwan has long been seen as a geopolitical flashpoint, Khanna argued that the likelihood of war is decreasing as Taiwan’s critical chip manufacturing becomes globally distributed. With facilities now expanding in the U.S., Europe, India, and Japan, Taiwan is becoming less of a single point of failure in the semiconductor supply chain. In Khanna’s view, this diffusion reduces the strategic incentive for China to invade and also lessens the U.S.’s rationale for direct military involvement, underscoring the strategic value of supply chain diversification as a stabilizing force.

The World Is Moving from Unipolar Power to ​“Multi-Alignment”

Dr. Parag Khanna emphasized that the global order is no longer dominated by rigid alliances (e.g., U.S.-led blocs) but is increasingly shaped by a strategy of multi-alignment. Key nations — especially in the Middle East and Asia — are pragmatically engaging with all major powers (U.S., China, India, EU) to maximize national interests. This includes embracing both Western investment and strategic partnerships with China (e.g., hosting data centers, trading oil in yuan, or stockpiling gold to back digital currencies). The implication is that businesses and investors must adapt to a multipolar world where loyalty is fluid and influence is more transactional than ideological.

Demographics, Climate, and Migration Are Creating a Global Labor Realignment

Khanna forecasted that climate volatility, declining birth rates, and labor shortages, especially in developed nations, will spark a global shift toward targeted labor migration. As countries struggle with aging populations and shrinking workforces, he says that they will be forced to adopt bilateral ​“skills transfer agreements” to attract essential workers in sectors like agriculture, healthcare, construction, and technology. Despite political backlash against immigration, he predicts a rise in managed migration as a structural necessity and a key lever for long-term economic resilience and adaptation.