Felix Zulauf: The Unipolar World Is Over

Ed D'Agostino
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December 8, 2023
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Geopolitical tensions are running at multidecade highs. We all know about Israel v. Hamas and Russia v. Ukraine. But what about Guyana?

Outside of my friend René Aninao at CORBU Research, today’s guest on Global Macro Update, Felix Zulauf, is one of the few geopolitical experts talking about it.

Zulauf was a global strategist for UBS Bank and the head of its institutional portfolio management group. He went on to found Zulauf Asset Management. Today, he runs Zulauf Consulting, where he advises some of the largest and most influential institutional investors.

The highest tier of financial professionals continually seeks out Zulauf’s guidance—something I hear time and again when he joins us at the Strategic Investment Conference. Zulauf only makes media appearances once a year, so we are fortunate to welcome him back to Global Macro Update. My last interview with Zulauf remains one of our most-watched ever.

Today, Zulauf and I touch on Guyana because the conflict speaks to a bigger issue for investors: the end of the unipolar world.

Guyana, to refresh all our memories, is a tiny country with fewer than a million people on the northeast coast of South America. It shares a border with Venezuela. For over a century Venezuela has maintained that Guyana’s Esequibo region belongs to Venezuela.

At this point, though, the conflict is about oil and gas. In 2015, ExxonMobil made a major oil discovery off Guyana’s coast. Together with Hess and China's CNOOC, it’s been producing oil in Guyana since 2019. (The Esquibo region currently produces around 400,000 bpd, and that figure could top 1 million bpd by 2027.)

This has transformed Guyana into the fastest growing economy in the world. Last year, real GDP shot up 62.4%. It’s no wonder Venezuela wants to grab a slice.

On Sunday, Venezuelans voted to claim Guyana’s Esequibo region for itself. The vote wasn’t binding in any way. It was designed to give a translucent veneer of legitimacy to Venezuelan President Nicolás Maduro’s next steps.

Here’s Maduro holding up his new map of Venezuela on Tuesday, with what he’s calling Venezuela’s “new state.”

Source: The Guardian

The Guyana Defense Force is “on high alert.” But it doesn’t have much weight to throw around. So of course, it’s turned to the US for help.

US Secretary of State Antony Blinken has reaffirmed US support of Guyana’s sovereignty. And the US military planned to conduct flights alongside the Guyana Defense Force yesterday.

The US has good reason to protect the interests of US oil companies like ExxonMobil (and its investors). It doesn’t want Venezuela’s state oil company taking the 11 million barrels of recoverable oil and gas sitting off Guyana’s coast.

But how many skirmishes can we manage?

As Felix Zulauf mentions in our interview today:

The world has to find the new order, which will likely be a multipolar order. And if we cannot achieve that through diplomacy, we have to go through wars. And when the top dog is weakened or considered to be weakened, you have all sorts of conflicts popping up…

Even the US military has its limits. As do US purse strings. That is part of the reason Republicans are currently blocking a $110 billion bill that includes more aid for Israel, Ukraine, and Taiwan.

In today’s interview, you’ll hear why Zulauf and I agree that the era of the unipolar world is over, along with what this means for the global economy and the markets.

You will also hear: