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Business News/ News / World war chances at 50% as Israel-Hamas conflict may spark more battles, says Ray Dalio
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World war chances at 50% as Israel-Hamas conflict may spark more battles, says Ray Dalio

The primary risk of a full-blown world war emanates from the possibility of the United States and China getting involved in a direct confrontation, the hedge fund wizard said.

Ray Dalio, Bridgewater's Co-Chairman and Co-Chief Investment Officer (REUTERS)Premium
Ray Dalio, Bridgewater's Co-Chairman and Co-Chief Investment Officer (REUTERS)

The raging conflict between Israel and Palestinian militant group Hamas has increased the chances of a full-blown world war to 50 percent, from 35 percent two years ago, as per the assessment of American billionaire and hedge fund wizard Ray Dalio.

This war has a high risk of leading to several other conflicts of different types in “a number of places", and it is likely to have “harmful effects that will extend beyond those in Israel and Gaza", he stated in a LinkedIn post.

“It appears to me that the odds of transitioning from the contained conflicts to a more uncontained hot world war that includes the major powers have risen from about 35 percent to about 50 percent over the last two years," added Dalio, the founder of world's largest hedge fund Bridgewater Associates.

The primary risk of a full-blown world war emanates from the possibility of the United States and China getting involved in a direct confrontation, he warned.

Currently, however, the US-China tensions have "not yet crossed" the irreversible line from being containable to becoming a brutal war between the biggest powers and their allies, Dalio said.

“We should recognize that these two hot wars (the Israel-Hamas war and the Russia-Ukraine war) are not just between the parties directly involved in them—these wars are part of the bigger great power conflicts to shape the new world order—and they will have big effects on the countries who are allies and enemies of the four sides in these two seemingly irreconcilable wars. These two wars will cost the allies of these countries a lot," he explained.

Track the latest updates of Israel-Hamas war

While Israel has received the backing of the US, Canada and most of the West, those standing in solidarity with Palestine includes Iran, and its Axis of Resistance – Syria, Yemen and Lebanon. A number of Arab countries, considered close to Washington, are feeling pressure from the local populace who have rallied in support of Palestinians.

Notably, China and Russia – the two ideological rivals of the US – have underlined the need to resolve the seven decades old dispute and “establish an independent State of Palestine".

Dalio believes that if the “major powers" – a reference to the US and its allies on one hand and China and its close partners on the other end – “do have a direct fighting with each other, in which one side kills a significant number of people on the other side, (then) we will see the transition from contained pre-hot-war conflicts to a brutal World War III."

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The comments come in the backdrop of Saudi Arabia – considered as the de-facto leader of the Muslim world – formally halting the normalisation talks with Israel and condemning the bombardment in the besieged Gaza Strip that has so far led to the death of over 2,300 persons, with most of them considered to be non-combatant civilians.

Need to broker peace in Ukraine

According to Dalio, there is a need to broker peace in Ukraine in order to contain the conflict from spreading over to the point where it could end up involving direct confrontation between the US and China. He said his “dream" is to see Washington and Beijing jointly broker peace between Russia and Ukraine, which could swiftly de-escalate the global tensions.

“Imagine if the two leading and opposing world powers that are currently lining the sides up for a hot war join forces to deliver peace."

"That would be shockingly terrific because besides delivering peace, it would reduce the risks of the Russia-Ukraine war leading to worse wars and would also show that they could work together for peace," he added.

Dalio added that he also has another “pipe dream" which he believes is unattainable. The dream is that world leaders recognise that having hot wars is the “worst possible thing to happen" and that working together on creating a path and processes for minimising the chances of a hot war developing “is the best thing they can do".

Notably, the Russia-Ukraine war erupted in February 2022, and both sides have not hinted at starting negotiations over the past 20 months. An estimated 500,000 Ukrainians have been killed since the start of war, whereas, around 300,000 Russians have lost their lives, US officials said in August.

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Updated: 15 Oct 2023, 07:31 PM IST
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