World war has already begun, Ray Dalio believes. Where could a new conflict break out?

Most people are misguided about the war in Iran, focusing too much on short-term issues like the fate of the Strait of Hormuz or the cost of gasoline, Ray Dalio, founder of Bridgewater Associates, a major hedge fund, wrote in an April 7 blog post. He calls for a broader view - according to the investor's hypothesis, the world is already in the early stages of a world war that will not end anytime soon.

This may seem like an exaggeration, Dalio admits, but here are his arguments. First, the world is already engaged in several full-scale conflicts involving major nuclear powers at the same time. Plus, metaphorical "wars" have not disappeared: trade, economic, technological, wars for capital and geopolitical influence. All of this, according to Dalio, forms a "classic world war" - a global conflict made up of interrelated conflicts into which the world enters gradually, without a clear beginning or formal declaration of war.

For Dalio, historical analogies are a way of understanding where the world is at in the Big Cycle. This historical theory, long promoted by the investor, describes how world orders change - through recurring phases of debt crises, internal conflicts and external geopolitical confrontations. According to this theory, the world moves from prosperity to depression and war, and then to a new order.

Dalio writes that we are now in the ninth phase of the Great Cycle, when conflicts are taking place simultaneously in several theaters of war. In his view, the situation increasingly resembles the transition from the pre-war phase to open confrontation - as in 1913-1914 and 1938-1939.

One of the main signs of this phase, according to Dalio, is the overstretching of the leading power. This is how he suggests looking at the United States: the country maintains 750-800 military bases in 70-80 countries. Such a network gives influence but also creates vulnerabilities. History, Dalio writes, shows that powers that take on too much are worse at handling multiple conflicts at once. War with Iran is therefore important as a test of whether the U.S. can still fulfill its obligations to its allies.

According to Dalio's theory, after the ninth phase of the Great Cycle, the authorities begin to demand unconditional loyalty from the population, and dissent against war and state policy is increasingly suppressed. Then direct military confrontations between major powers begin. To finance the war, states raise taxes, increase debt issuance and money supply, impose currency controls, tighten financial restrictions, and, in extreme cases, even close markets. The cycle ends with one side winning and building a new world order by its own rules.

Dalio writes that in major wars the decisive factor is not so much a country's military strength as its ability to withstand hardship for the longest time. The U.S., Dalio argues, is not prepared for prolonged hardship.

Dalio cites internal stability - support ratings in democracies or the government's ability to maintain control in autocracies - as another important key to victory.

Dalio is convinced that the next five years will not be peaceful: with a probability of more than 50%, new wars will start or wars already underway will intensify. This is how he sees the potential conflict map:

1. War between Iran, the US and Israel

Dalio believes that the conflict continues to escalate, draining the resources of all sides. Among the key issues he cites are control over the Strait of Hormuz, Iran's nuclear program and missile arsenal, the willingness of the participants to suffer new losses in order to win, the stability of their alliances, and the risk of the conflict expanding if Iran's allies intervene directly or indirectly or if a new crisis erupts in Asia in parallel. A separate question, according to Dalio, is whether security in the Persian Gulf can be restored at all.

2. Russia's war against Ukraine

Dalio calls it an extremely dangerous conflict that already involves almost every major military power except China. The fighting has not escalated beyond Ukraine for three years, which, in his estimation, has so far kept the situation from escalating even further. At the same time, NATO is supplying Kiev with weapons and incurring high financial costs, while Europe is increasing military spending and preparing for a possible clash with Moscow. The main risks, according to Dalio, are a Russian strike on NATO territory, an attack on supply lines, direct alliance intervention in the war or an accidental clash between Russia and one of the bloc's countries. He estimates the probability of such a scenario in the next five years at 30-40%.

3. Taiwan: the risk of US war with China

Dalio writes that the United States and China are already in a state of ideological, technological, trade and geopolitical confrontation, although it has not yet come to a direct war. He calls Taiwan the main point of risk: for Beijing, it is an issue of sovereignty that is not negotiable. According to his assessment, both sides are openly preparing for a possible clash, increasing military expenditures and armaments, and the U.S. infrastructure in the First Island Chain (stretching from Japan through Taiwan to the northern Philippines and Borneo) is very vulnerable.

Among the possible signals of escalation, Dalio identifies a change in the U.S. position on Taiwan independence, a possible blockade by China, a direct clash between U.S. and Chinese forces, and an attempt by Beijing to increase control if it decides that the U.S. is now too weak to respond. He estimates the likelihood of a military conflict between the US and China over Taiwan in the next five years at 30-40%, and sees 2028 as the most dangerous period.

4. War involving North Korea

Dalio calls North Korea a provocative nuclear power that is ready to fight. In his assessment, Pyongyang has missiles capable of carrying nuclear warheads and reaching U.S. territory, and these capabilities could increase in the next five years. He also emphasizes North Korea's close ties with China and Russia and admits that the DPRK could act as a proxy player on their side. Dalio estimates the probability of a military conflict involving North Korea at 40-50%.

5. Clash in the South China Sea (Philippines - China - USA)

Dalio sees the South China Sea as another danger point. According to him, even a relatively small incident - a ship collision, an attack on a Philippine vessel, a blockade or a missile episode - would make it necessary for the U.S. to intervene because of its allied obligations to the Philippines. That said, he notes, the American electorate is unlikely to support such a decision. Dalio estimates the likelihood of such a conflict in the next five years at about 30%.

This article was AI-translated and verified by a human editor