'Pre-hot-war to brutal World War III': Ray Dalio explains how Israel-Hamas, Russia-Ukraine conflicts can spiral out of control

By Anwesha Madhukalya from Business Today 

Israel-Hamas war: Ray Dalio said that it is unlikely that the Israel-Hamas war will be limited to Israel and Gaza Strip only. This war along with the Russia-Ukraine war will have “big effects on the ongoing great power conflicts”.

Ray Dalio, billionaire investor and founder of investment management company Bridgewater Associates, said that the Israel-Hamas and Russia-Ukraine wars should “raise revulsion and fear in everyone”. He said that these ‘hot wars' will cost the allies of these countries a lot and has the potential to spiral out of control to become an international war.  (His full missive is found at LinkedIn here.)

These wars reveal the “unimaginably terrible and revolting ways” people can treat other people, he said. No one anywhere can be sure that they won’t find themselves in the middle of a war, he stated in a blog titled ‘Another Step Toward International War’, where he also cites his book ‘Principles for Dealing with the Changing World Order’. 

Although Israel, Ukraine, Russia and Hamas are involved in hot wars, “thankfully the major powers” China and the US are not but they might be at the brink of one, he said. Dalio added that it remains to be seen how far the war spreads and how the great powers will react. Dalio said that he hopes the horrific and tragic images will “encourage restraint”. 

Assessing how things have played out in the past, Dalio said that it seems clear that the warring sides have crossed the lines from “contained pre-hot-war conflicts to uncontained hot wars” that are expected to remain brutal till the end. Wars like these are more likely to spread than subside, he said, adding that they have the potential to be a “much more horrific hot world war”.

The world is changing in ways that haven't happened in our lifetimes but many times in history, he said. He listed “five big forces” that always interact to drive the confluence of all major changes in the world – debt, money or economic force, political conflicts due to irreconcilable wealth and value gaps, geopolitical conflicts, forces of nature like droughts, floods and pandemics, and human inventiveness or new technologies. 

“Based on the perspective I have gained from studying history and from my over 50 years of experiences betting on what’s likely to happen, it seems to me that the Israel-Hamas war is another classic, unfortunate step toward a more violent and encompassing international war. In other words, it’s part of a larger war dynamic,” he said, adding how these wars can end up involving more countries. 

The billionaire investor said that it is unlikely that the Israel-Hamas war will be limited to Israel and Gaza Strip only. This war along with the Russia-Ukraine war will have “big effects on the ongoing great power conflicts”. 

Also read: War in Middle East escalates as Israel strikes Syria's main airports in Aleppo, Damascus

“These two wars will cost the allies of these countries a lot. For example, the US is now fighting proxy wars in Europe and the Middle East while preparing for war in East Asia. As these wars spread, they will cost more. Fortunately, the progression toward a world war between the biggest powers (the US and China) has not yet crossed the irreversible line from being containable (which it is now) to becoming a brutal war between the biggest powers and their allies. If these major powers do have direct fighting with each other, in which one side kills a significant number of people on the other side, we will see the transition from contained pre-hot-war conflicts to a brutal World War III,” he said. 

Wars don’t go as expected and are more brutal than anticipated, he said, adding that the ones in favour of war also end up regretting having them. “I hope that the leaders of the great powers will wisely step back from the brink, even while they must prepare to be strong enough to successfully fight and win a hot war,” he said, adding that the might of non-fighting parties will also be tested. 

“That is because being allied and helpful to the allied countries in these brutal wars is always very costly and raises the risks of being drawn fully into the war. That’s how local wars spread into world wars,” said Ray Dalio. 

The billionaire investor said that it is his pipe dream to have “world leaders recognize that having hot wars is the worst possible thing to happen”. He added that his “more attainable stretch goal” is for the US and China to jointly broker peace in Ukraine. 

“Imagine how great an alliance in pursuit of world peace between the two greatest opposing countries would be,” he added.