In conversation with Moonfare, General David Petraeus, the former Director of the CIA and decorated US Army leader (Ret.), spoke about current geopolitical frictions, economic uncertainty, the implications of artificial intelligence and more.

Now serving as a Partner at KKR and Chairman of the KKR Global Institute, General Petraeus recently joined us for a macro-themed episode of our Deal Talk series, hosted by Steffen Pauls, the Founder and co-CEO of Moonfare.

The pair discussed current geopolitical developments, their broader context and the impact these have on economic stability and private markets. The main highlights of this fascinating conversation include:

The success of Europe in easing economic woes. “In the case of war in Ukraine, there were worries of significant [economic] ramifications — in Germany, in particular, given its dependence on natural gas pipelines from Russia. The country had to go through a considerable effort to reduce this dependency. And has done that very impressively, cushioning the blow of higher costs of electricity for citizens and sought to do the same for major manufacturers. (...) By and large, Europe has done quite an impressive job responding to the sudden change to Russian energy exports.”

Making NATO great again. “Truth is that Putin set out to make Russia great again. But he made NATO great again by pushing historically neutral countries into seeking NATO membership, one already in Finland, the other one [Sweden] on the threshold of that membership.”

On the US relationship with China. “We continue to compete where we have to and strive to deter. Deterrence is the function of two elements — the potential adversary’s assessment of your capabilities on the one hand, and your willingness to employ them on the other. We have to ensure there is no question of that in the minds of decision-makers in Beijing. Not that we’re looking for a fight, we want to avoid a fight or conflict.”

The transformative nature of AI. “By and large, artificial intelligence (AI) will be transformative. We’ve gone through various exercises at KKR where we looked at every sector in which we invest. [...] AI will have transformative effects in many of these. It will dramatically improve productivity and efficiency and literally how we do everything, not just in our work but also in our daily lives. But it's going to take time, it will be uneven and it’s not always as predictable as one might think.”

The importance of information for investors. “We’re in an era that can be described as renewed great power rivalries. Barriers are going back up. There are great economic concerns and geopolitical risks. Globalisation has become “slowbalisation” and regionalisation. In this world, you have to have a very informed view of different trends and how they affect investment opportunities.”

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Monday Morning Podcast 5-3-21