While 123 million people were forcibly displaced in 2024—the highest number on record—global cooperation metrics held remarkably steady. This paradox lies at the heart of the World Economic Forum’s Global Cooperation Barometer 2026, a comprehensive analysis that challenges our assumptions about international collaboration in an age of rising tensions.

The third edition of this landmark report, developed in partnership with McKinsey & Company, reveals a nuanced truth: global cooperation isn’t collapsing—it’s transforming. Traditional multilateral frameworks may be straining under geopolitical pressures, but smaller, more agile coalitions are emerging to fill critical gaps in trade, technology transfer, climate action, and even security.

This evolution represents what UN Secretary-General António Guterres calls “hard-headed pragmatism”—the recognition that cooperation makes sense when it delivers tangible mutual benefits, even in a fragmented world.

What is the Global Cooperation Barometer 2026?

The Global Cooperation Barometer is an annual assessment by the World Economic Forum and McKinsey & Company that measures international collaboration across five key areas: trade and capital, innovation and technology, climate and natural capital, health and wellness, and peace and security. Using 41 metrics indexed to 2020, the 2026 edition finds overall cooperation held steady despite geopolitical tensions, but its composition shifted dramatically—from large multilateral frameworks toward smaller, flexible coalitions based on aligned interests and pragmatic problem-solving.

After analyzing 41 distinct metrics across five essential pillars—trade and capital, innovation and technology, climate and natural capital, health and wellness, and peace and security—the report’s central finding is clear: cooperation is adapting to new realities rather than disappearing entirely.

The Surprising Resilience of Global Cooperation

The 2026 Global Cooperation Barometer tracks international collaboration from 2012 through 2024, with all data indexed to 2020 as a baseline. This methodology, endorsed by OECD economists, allows researchers to isolate trends that emerged before the COVID-19 pandemic and those accelerated by it.

The topline finding? Overall cooperation levels in 2024 remained virtually unchanged from 2023, despite an environment characterized by:

• Escalating trade barriers and protectionist policies
• Multiple active military conflicts across three continents
• Heightened mistrust between major economic powers
• Record levels of forced displacement
• Increasing restrictions on technology transfers

According to Børge Brende, President and CEO of the World Economic Forum, “The paradox is that, at a time of such rapid change, developing new and innovative approaches to cooperation requires refocusing on some of the basics—notably, doubling down on dialogue.”

Understanding the Methodology

The barometer’s rigor lies in its comprehensive approach. Each of the five pillars comprises two indices:

1. Action Index: Measures concrete cooperative behaviors (trade flows, knowledge exchange, financial transfers)
2. Outcome Index: Tracks results of cooperation (life expectancy, emissions levels, conflict casualties)

Data is normalized to account for economic growth and population changes, ensuring that trendlines reflect genuine cooperation shifts rather than simple expansion. For example, trade metrics are measured as a percentage of global GDP, while migration data is normalized to global population levels.

This methodology, reviewed by International Monetary Fund economists, provides an apples-to-apples comparison across vastly different domains—from pharmaceutical R&D cooperation to peacekeeping deployments.

The Composition Shift That Matters

While aggregate cooperation held steady, the composition of that cooperation shifted dramatically. Metrics tied to global multilateral institutions—those large-scale frameworks involving most of the world’s nations—declined sharply:

• UN Security Council resolutions fell from 50 in 2023 to 46 in 2024
• Multilateral peacekeeping operations dropped by 11% year-over-year
• Official Development Assistance plummeted 10.8% in 2024
• International Health Regulations compliance weakened

Simultaneously, cooperation flourished in areas where flexible, interest-based partnerships could operate:

• Cross-border data flows surged, with international bandwidth now 4x larger than pre-pandemic levels
• Services trade continued its five-year growth trajectory
• Climate finance reached record levels, approaching $1 trillion annually
• Foreign direct investment in strategic sectors (semiconductors, data centers, EV batteries) accelerated

This divergence reveals a fundamental shift: from universal frameworks to tailored coalitions. As McKinsey’s research demonstrates, cooperation increasingly follows geopolitical alignment, with partners choosing collaborators based on shared interests and values rather than institutional membership alone.

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Trade and Capital: Reconfiguration Over Retreat

The trade and capital pillar reveals perhaps the most complex story in the entire report. On the surface, cooperation appears flat—neither advancing nor retreating significantly. But beneath this stability, tectonic plates are shifting.

The Great Trade Rearrangement

According to World Trade Organization data analyzed in the report, global goods trade grew slightly slower than overall GDP in 2024, leading to a marginal decline in trade intensity. More revealing than the volume, however, is the geographic redistribution underway.

McKinsey Global Institute research finds that the average “geopolitical distance” of global goods trade fell by approximately 7% between 2017 and 2024. Countries are trading more with geopolitically aligned partners and less with distant ones—particularly between the United States and China.

The numbers tell a stark story:

• US imports from China fell 20% in the first seven months of 2025 compared to the same period in 2024
• Developing countries’ share of manufacturing exports rose by 5 percentage points in 2024
• China represented over half of this growth, adding $276 billion in exports
• Trade concentration (measured by the Herfindahl-Hirschman Index) declined by about 1%, indicating slight diversification

“We’re witnessing not deglobalization but reglobalization,” explains Dr. Richard Baldwin, Professor of International Economics at the Graduate Institute Geneva. “Trade relationships are being rewired along lines of trust and strategic alignment.”

The Silent Surge in Services and Capital

While goods trade reconfigured, less visible but equally important flows accelerated. Services trade—encompassing IT services, professional services, travel, and digitally delivered offerings—continued climbing throughout 2024.

According to UNCTAD data, services trade growth was driven primarily by:

1. Digitally delivered services: IT consulting, cloud services, software development
2. Business services: R&D, engineering, professional services
3. Travel services: Rebounding from pandemic lows, though not yet at 2019 levels

Foreign direct investment told a similar story. While overall FDI flows remained complex (influenced by “phantom FDI” in tax havens), greenfield investment announcements—representing real productive capacity—surged in future-shaping industries.

FDI Markets data reveals a striking trend: newly announced greenfield projects concentrated heavily in:

• Semiconductors: $89 billion in announced projects globally
• Data centers and AI infrastructure: $370 billion (up from $190 billion in 2024)
• EV battery manufacturing: $67 billion
• Critical minerals processing: $34 billion

These investments flowed predominantly between geopolitically aligned partners. Advanced economies, particularly the United States, attracted the lion’s share, while China’s portion of announced FDI inflows dropped from 9% (2015-19 average) to just 3% (2022-25).

The Multilateral Casualty: Foreign Aid

The sharpest decline in the trade and capital pillar came in Official Development Assistance. According to OECD tracking, ODA fell 10.8% in 2024, with only four donor countries exceeding the UN target of 0.7% of gross national income.

The 2025 outlook appears even bleaker. The OECD projects an additional 9-17% decline in ODA, driven by:

• Reduced humanitarian aid budgets
• Decreased refugee spending in donor countries
• Lower aid to Ukraine as military assistance shifts
• Domestic political pressures in major donor nations

This trend has profound implications for low and middle-income countries that depend on international assistance for health systems, education, and infrastructure development.

New Coalition Models Emerge

Despite these challenges, innovative cooperation frameworks are sprouting. The Future of Investment and Trade (FIT) Partnership, launched in September 2025, brings together 14 economies—including Singapore, New Zealand, Switzerland, and the UAE—to pilot practical trade cooperation mechanisms.

According to Brookings Institution analysis, such “minilateral” arrangements offer several advantages over traditional multilateral treaties:

• Speed: Smaller groups reach consensus faster
• Flexibility: Tailored agreements address specific needs
• Resilience: Less vulnerable to any single member’s withdrawal
• Pragmatism: Focus on mutual gains rather than universal principles

Other examples include the EU-Mercosur trade agreement (after a decade of negotiations), the ASEAN Digital Economy Framework Agreement, and bilateral critical minerals deals between the US and allies like Australia and Canada.

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Innovation and Technology: The AI Race Drives Selective Cooperation

The innovation and technology pillar registered a 3% year-over-year increase—one of the strongest performances across all five domains. Yet this growth masks growing tensions over technology transfer, particularly in areas deemed strategically sensitive.

The Data Flow Explosion

International bandwidth capacity quadrupled between 2019 and 2024, according to International Telecommunication Union statistics. Cross-border data flows—measured as a percentage of total internet traffic—continued their upward trajectory, fueled by:

• Cloud computing adoption accelerating globally
• Remote work normalizing post-pandemic
• Streaming services expanding internationally
• AI model training requiring distributed datasets

Cisco’s annual internet report projects that global IP traffic will reach 4.8 zettabytes per year by 2027, with a growing share crossing international borders.

This digital connectivity enabled a corresponding rise in IT services trade. Software development, cloud services, and AI consultation increasingly operate as global markets, with talent and expertise flowing across borders despite physical restrictions.

The Strategic Technology Paradox

Even as general technology cooperation flourished, restrictions tightened on specific advanced technologies. The United States expanded export controls on:

• Advanced semiconductors and chipmaking equipment
• AI training systems above certain computational thresholds
• Quantum computing components
• Certain biotechnology applications

According to McKinsey research on export controls, these restrictions primarily target China but ripple across global supply chains, affecting companies and research institutions worldwide.

The paradox? Cooperation in cutting-edge technologies continues—but increasingly within aligned blocs. Examples include:

US-Aligned Technology Partnerships:

• US-India Initiative on Critical and Emerging Technology (iCET)
• US-EU Trade and Technology Council advancing AI safety standards
• US-Japan semiconductor research collaboration
• US-UAE framework on advanced technology cooperation

China-Led Technology Initiatives:

• 5G infrastructure partnerships across Southeast Asia and Africa
• AI research centers in Gulf states
• Data center investments in emerging markets
• Technology transfer agreements with Belt and Road countries

Foreign Affairs magazine describes this as “technological bifurcation”—not complete decoupling, but the emergence of parallel ecosystems with limited interconnection.

The Student Visa Squeeze

One concerning trend threatens long-term technology cooperation: declining international student mobility. After reaching record highs in 2024 (up 8% from 2023), international student flows appear to be contracting in 2025.

Data from major destination countries shows:

• United States: F-1 and M-1 student visas down 11% in Q1 2025
• United Kingdom: Student visa grants fell 2% year-over-year
• Australia: International student approvals dropped 64% (driven by new policy restrictions)
• Canada: Study permits declined amid new caps on international students

According to the Institute of International Education, this reversal could have long-term consequences for innovation. Historically, international students have contributed disproportionately to research breakthroughs, entrepreneurship, and cross-border knowledge networks.

Dr. Mary Sue Coleman, President of the Association of American Universities, warns: “When we restrict the flow of talent, we don’t just hurt international students—we diminish our own innovative capacity.”

The Productivity Question

Despite increases in most innovation metrics, one crucial outcome measure remained stubbornly flat: total factor productivity growth. The Conference Board’s data shows global productivity growth has stagnated for over a decade, raising questions about whether current cooperation patterns effectively translate into tangible economic benefits.

However, McKinsey Global Institute research suggests this may change. Generative AI could increase global productivity growth by 0.1 to 0.6 percentage points annually through 2040, but only if cooperation enables:

• Cross-border data access for model training
• International talent mobility for AI development
• Shared safety standards and governance frameworks
• Collaborative research on frontier applications

The question isn’t whether technology cooperation will matter—it’s whether current cooperation patterns will be sufficient to realize these gains.

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Climate and Natural Capital: Deployment Rises, Outcomes Lag

The climate and natural capital pillar demonstrates both the promise and limitations of current cooperation patterns. Investment and deployment reached record levels, yet environmental outcomes continue deteriorating.

The Clean Energy Deployment Surge

Solar and wind capacity additions doubled between 2022 and 2024—from 300 to 600 gigawatts—according to the International Renewable Energy Agency. In the first half of 2025 alone, installations were 60% higher than the same period in 2024.

Remarkably, in the last 18 months, the world installed more solar capacity than in the previous three years combined.

International Energy Agency analysis attributes this acceleration to:

1. Dramatic cost reductions: Solar module prices fell 90% over the past decade
2. Global supply chains: Chinese manufacturing scale drove affordability
3. Policy alignment: Domestic energy security goals converged with climate objectives
4. Climate finance flows: Both public and private investment reached near $1 trillion annually

China accounted for two-thirds of solar, wind, and electric vehicle additions, but developing economies showed strong momentum. India became the world’s second-largest solar installer, while Brazil accelerated wind and solar deployment significantly.

The Natural Capital Challenge

While energy transition metrics improved, natural capital indicators stagnated or worsened:

• Marine protected areas: Growth stalled during 2023-24
• Terrestrial protected areas: Expansion slowed after steady progress
• Ocean Health Index: Continued gradual decline
• Biodiversity loss: Accelerated despite international commitments

The UN’s High Seas Treaty, reaching the required 60 ratifications in late 2025, offers hope. Entering force in January 2026, it creates the first legally binding framework for protecting two-thirds of the ocean beyond national jurisdiction.

Yet implementation remains uncertain, and the treaty faces the same multilateral pressures affecting other global agreements.

The Emissions Reality Check

Despite record clean energy deployment, global greenhouse gas emissions continued rising in 2024. Global Carbon Project data shows fossil fuel emissions reached approximately 37.8 billion tonnes of CO2 in 2024, up from 37.3 billion tonnes in 2023.

According to McKinsey Global Institute research, the energy transition is progressing at roughly half the speed needed to meet Paris Agreement goals of limiting warming to 1.5°C.

There is one encouraging trend: emissions intensity (emissions per unit of GDP) continues declining, demonstrating that economic growth can occur alongside emissions management—even if absolute reductions remain elusive.

Regional Climate Coalitions Take the Lead

As comprehensive global agreements prove challenging, regional cooperation is filling gaps:

European Union Initiatives:

• The Clean Industrial Deal (February 2025) aims to make decarbonization a competitive advantage
• The Net-Zero Industry Act accelerates manufacturing of clean technologies in Europe
• The Critical Raw Materials Act secures strategic inputs for the energy transition
• The EU-Central Asia Hydrogen Partnership (September 2025) creates new clean energy corridors

ASEAN Cooperation:

• The LTMS-PIP (Laos-Thailand-Malaysia-Singapore Power Integration Project) enables cross-border clean power trading
• Progress toward an integrated ASEAN Power Grid enhances energy security while enabling renewable deployment
• The ASEAN Community Vision 2025 and Master Plan on ASEAN Connectivity both reached target dates with mixed implementation

COP30 Outcomes: The UN climate conference in Brazil produced several commitments:

• Tripling of adaptation finance by 2035
• Launch of the Tropical Forests Forever Facility to boost investment in protected areas
• New mechanisms for loss and damage funding

Climate Policy Initiative analysis notes that while these commitments are significant, the critical challenge remains implementation—translating pledges into deployed capital and measurable emissions reductions.

The Just Energy Transition Shortfall

One area of cooperation that significantly underperformed expectations: the Just Energy Transition Partnerships (JETPs). These international financing mechanisms aim to assist emerging economies in transitioning to low-emission energy systems.

Despite commitments totaling $50 billion, only $7 billion had been delivered by June 2025—a 86% shortfall. According to World Resources Institute analysis, delays stemmed from:

• Bureaucratic complexity in mobilizing multilateral funds
• Competing domestic priorities among donor nations
• Difficulty coordinating between multiple financial institutions
• Recipients’ concerns about sovereignty and conditionality

This underperformance illustrates a broader challenge: while climate cooperation shows resilience in some areas (financing, trade, technology deployment), translating commitments into action remains difficult in the current geopolitical environment.

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Health and Wellness: Resilient Outcomes, Eroding Support

The health and wellness pillar presents perhaps the most deceptive picture in the entire barometer. Overall cooperation appears stable—but this masks a dangerous erosion of the foundational support systems that enable positive health outcomes.

The Outcome Resilience

All major health outcome metrics improved in 2024, according to the Institute for Health Metrics and Evaluation:

• Life expectancy continued its post-pandemic recovery
• Child mortality (under-five) declined further
• Maternal mortality decreased in most regions
• Disability-adjusted life years (DALYs) improved globally

These improvements reflect long-term developmental trends, post-pandemic normalization, and the cumulative effect of previous investments in global health systems.

However, health experts warn these improvements may prove temporary if current trends in health cooperation continue.

The Development Assistance Crisis

Development Assistance for Health fell 6% to $50 billion in 2024—continuing a three-year downward trend. IHME projections suggest an additional $11 billion decline in 2025, largely due to expected cuts from US funding agencies (approximately $9 billion).

Major donor reductions include:

• United States: PEPFAR (President’s Emergency Plan for AIDS Relief) facing budget pressures; USAID tightening cost-sharing requirements
• United Kingdom: Continued retrenchment in global health spending amid domestic fiscal pressures
• Germany: ODA cuts affecting health assistance

According to World Health Organization officials, this creates a dangerous dynamic: bilateral health assistance increasingly focuses on direct service delivery (medicines, diagnostics, frontline care) while reducing support for health system infrastructure, training, and governance.

Dr. Tedros Adhanom Ghebreyesus, WHO Director-General, describes this as “robbing Peter to pay Paul—we’re treating today’s patients while dismantling the systems needed to care for tomorrow’s.”

The Multilateral-Bilateral Shift

A significant trend emerged in 2024: funding through multilateral channels (WHO, Global Fund, multilateral development banks) fell by approximately 20%, while bilateral country-to-country funding declined only 3%.

This shift toward bilateral assistance has several implications:

Potential Benefits:

• More direct accountability between donor and recipient
• Faster deployment to specific needs
• Reduced bureaucratic overhead
• Clearer metrics for impact assessment

Significant Risks:

• System-level costs (training, governance, infrastructure) go unfunded
• Recipients face increased burden on domestic budgets
• Coordination between different bilateral programs weakens
• Political considerations may override health priorities
• Smaller countries with less strategic importance receive less support

Pandemic Preparedness in Limbo

The WHO Pandemic Agreement, adopted in May 2025 after three years of challenging negotiations, represents both an achievement and a disappointment in health cooperation.

On one hand, the agreement marks the first binding global framework for pandemic response, addressing lessons from COVID-19 around:

• Equitable access to vaccines and therapeutics
• Information sharing during outbreaks
• Research collaboration and pathogen surveillance
• Capacity building in low-resource settings

On the other hand, the United States—the world’s largest economy and historically the leading contributor to global health—did not participate in the agreement. This absence raises questions about the framework’s practical effectiveness.

Dr. Jennifer Nuzzo, Director of the Pandemic Center at Brown University School of Public Health, notes: “Treaties create obligations on paper, but pandemic preparedness requires sustained investment, trust, and coordination—all of which are in short supply in the current environment.”

Regional Health Cooperation Gains Ground

As global multilateral frameworks face pressure, regional cooperation showed promising developments:

Africa:

• The African Medicines Agency held its second session in Kigali (June 2025), advancing pharmaceutical regulatory harmonization
• The Accra Compact aligned African governments on health sovereignty priorities
• South Africa’s Aspen Pharmacare expanded COVID-19 vaccine manufacturing for the continent

Caribbean:

• The Organisation of Eastern Caribbean States scaled a model to reduce insulin prices region-wide
• Negotiations advanced on a Caribbean pharmaceutical procurement alliance

Latin America:

• Brazil’s Butantan Institute partnered with other regional manufacturers on vaccine development
• The Pan American Health Organization (PAHO) strengthened regional disease surveillance

The Lancet, in a November 2025 editorial, described these developments as “pragmatic regionalism”—a recognition that health security increasingly depends on strong regional capacity rather than solely on global institutions.

The Healthspan-Lifespan Gap

One troubling trend that demands attention: while life expectancy continues rising, “health-adjusted life expectancy” (years lived in good health) lags behind. According to research published in JAMA Network Open, this means people are living more years with illness and disability.

This “healthspan-lifespan gap” varies significantly by geography and socioeconomic status, but it’s widening in most regions—suggesting that current health cooperation patterns, while extending life, may be less effective at ensuring those additional years are healthy and productive.

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Peace and Security: The Pillar Under Greatest Strain

No pillar declined as sharply as peace and security. Every single metric tracked in this domain fell below pre-pandemic levels, reflecting an intensification of conflict and a weakening of multilateral conflict resolution mechanisms.

The Conflict Surge

The number of active conflicts increased in 2024, according to Uppsala Conflict Data Program. Major conflicts include:

• The ongoing Russia-Ukraine war (continuing into its third year)
• Israel-Hamas conflict in Gaza (beginning October 2023)
• Israel-Hezbollah hostilities (escalating in 2024)
• Civil war in Sudan (displacing 11.5 million people)
• Civil war in Myanmar (intensifying since 2021 coup)
• Intensified fighting in eastern Democratic Republic of Congo

Battle-related deaths remained near 2023 levels, with the Russia-Ukraine conflict accounting for over 40% of total fatalities.

The Displacement Crisis

Forcibly displaced people reached a record 123 million globally by the end of 2024, according to UNHCR. This represents an increase from 117 million in 2023 and 108 million in 2022.

The Sudan conflict alone displaced approximately 11.5 million people—the largest single-year displacement since Syria’s civil war peaked in 2013-2015.

Refugee flows strained hosting countries, particularly:

• Turkey (hosting 3.6 million Syrian refugees plus new arrivals)
• Pakistan (hosting Afghan refugees amid economic crisis)
• Uganda (hosting over 1.5 million refugees from multiple neighboring conflicts)
• Poland and other Eastern European nations (supporting Ukrainian refugees)

According to Internal Displacement Monitoring Centre, the costs of supporting displaced populations fall disproportionately on middle-income countries neighboring conflict zones—countries that often lack the resources for adequate support.

Multilateral Mechanisms Under Pressure

The decline in multilateral peace and security cooperation manifested in several metrics:

UN Security Council:

• Resolutions decreased from 50 (2023) to 46 (2024)
• Vetoes by permanent members blocked action on several major conflicts
• The ratio of resolutions to active conflicts declined significantly
• Until November 2025, no new peacekeeping operation had been mandated since 2014

Peacekeeping Operations:

• The ratio of multilateral peacekeeping operations to conflicts fell by approximately 11% year-over-year
• Personnel deployed to multilateral peace operations declined by more than 40% between 2015 and 2024
• Budget constraints disrupted operations, with the approved UN peacekeeping budget falling from $9.7 billion (2014) to $4.7 billion (2025)

Stockholm International Peace Research Institute attributes these declines to:

• Geopolitical tensions among major powers limiting consensus
• Donor fatigue and budget pressures in contributing countries
• Questions about peacekeeping effectiveness in complex civil wars
• Host country sovereignty concerns limiting mandate flexibility

The Cyber and Grey-Zone Threat

Beyond traditional kinetic conflict, 2024 saw intensification of cyberattacks and “grey-zone” activities—actions that fall below the threshold of open warfare but still inflict significant damage.

Verizon’s 2025 Data Breach Investigations Report documents surging cyber incidents across Asia, the Middle East, and Europe. High-profile attacks in 2024-25 included:

• Tata Motors’ Jaguar Land Rover halted production due to cyberattack (September 2025)
• Marks & Spencer faced up to £300 million losses from cyber breach (May 2025)
• Multiple critical infrastructure attacks across Europe

Physical infrastructure also came under attack through grey-zone operations:

• Sabotage of gas pipelines in Europe
• Damage to undersea internet cables in the Red Sea and West Africa (three major multi-cable outages)
• GPS jamming affecting civilian aviation
• Disinformation campaigns targeting elections in multiple democracies

Center for Strategic and International Studies analysis suggests these grey-zone activities are becoming the preferred tool for state and non-state actors seeking to achieve strategic objectives while avoiding direct military confrontation.

The Defense Spending Response

Countries responded to deteriorating security with increased defense budgets:

NATO:

• All 32 member states met the 2% of GDP defense spending target in 2025 (compared to fewer than 20 in 2024)
• The alliance raised its spending target to 5% of GDP for 2035 at The Hague Summit (June 2025)

Asia-Pacific:

• China continued double-digit defense budget increases
• Japan increased defense spending significantly, moving toward the 2% NATO target
• India expanded military modernization programs
• Australia boosted defense spending in response to regional tensions

European Union:

• The European Defence Agency reported increased spending across member states
• New EU defense industrial strategy launched to build autonomous capabilities

According to International Institute for Strategic Studies, global military expenditure reached approximately $2.4 trillion in 2024, representing roughly 2.2% of global GDP—the highest level since the early post-Cold War period.

Regional Peacekeeping Fills the Gap

Despite the decline in UN-led multilateral operations, regional bodies stepped up:

African Union:

• Led security transition in Somalia (ATMIS – African Union Transition Mission in Somalia)
• Deployed forces to eastern Democratic Republic of Congo
• Supported peacekeeping efforts in South Sudan

ECOWAS (Economic Community of West African States):

• Maintained presence in several West African nations
• Coordinated responses to coups and instability in the Sahel

Arab League and GCC (Gulf Cooperation Council):

• Mediation efforts in Yemen
• Coordination on security challenges in the Red Sea corridor

United States Institute of Peace research suggests regional organizations often have advantages in peacekeeping:

• Better understanding of local contexts and dynamics
• Greater perceived legitimacy among parties to conflicts
• Ability to act when great power politics block global action
• More flexible mandates and lighter bureaucracy

However, these operations also face significant challenges, including limited resources, potential conflicts of interest among regional powers, and questions about impartiality.

Emerging Bright Spots in Conflict Resolution

Despite the overall decline, some successful examples of cooperation emerged in 2024-25:

Türkiye’s Mediation:

• The Ankara Declaration (February 2025) led to de-escalation of tensions between Ethiopia and Somalia
• Turkish diplomacy facilitated technical talks and confidence-building measures

Armenia-Azerbaijan Progress:

• The two nations agreed on the text of a peace treaty with EU and US facilitation
• Steps taken to keep third-country forces off borders reduced immediate escalation risks

Israel-Hamas Ceasefire:

• After 15 months of conflict, Qatar and Egypt mediated a ceasefire agreement in January 2025
• While fragile, the agreement created space for humanitarian access and reconstruction discussions

These examples underscore a theme throughout the barometer: while large-scale multilateral frameworks struggle, tailored diplomatic efforts by committed mediators can still yield results.

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The Rise of Minilateralism: From Global to Agile

The single most important trend across all five pillars is the shift from universal, rules-based multilateralism toward smaller, flexible, interest-based coalitions.

Defining the New Cooperation Landscape

Multilateralism traditionally involved:

• Near-universal membership (180+ countries)
• Comprehensive frameworks (covering many issues)
• Consensus-based decision-making
• Institutional permanence (UN, WTO, WHO, etc.)
• Rules-based order with dispute resolution mechanisms

Minilateralism (sometimes called “plurilateralism”) instead features:

• Small groups of like-minded countries (3-20 members)
• Focused agendas (addressing specific challenges)
• Streamlined decision-making (easier consensus)
• Purpose-built arrangements (dissolving when objectives met)
• Pragmatic cooperation based on mutual interests

According to Council on Foreign Relations analysis, minilateralism offers several advantages in the current environment:

1. Speed: Smaller groups negotiate and implement faster
2. Flexibility: Tailored solutions address specific needs without compromising for universal buy-in
3. Resilience: Less vulnerable to any single member’s withdrawal or obstruction
4. Effectiveness: Clear objectives and accountable membership improve outcomes
5. Complementarity: Can coexist with and supplement multilateral frameworks

Examples Across the Five Pillars

Trade and Capital:

• Future of Investment and Trade (FIT) Partnership (14 economies)
• EU-Mercosur trade agreement (after decade of negotiations)
• ASEAN Digital Economy Framework Agreement
• US-Australia-Japan-India Quad economic cooperation
• Bilateral critical minerals partnerships (US-Australia, US-Canada, US-Japan)

Innovation and Technology:

• US-India Initiative on Critical and Emerging Technology
• US-EU Trade and Technology Council
• US-Japan semiconductor research collaboration
• US-UAE advanced technology cooperation framework
• Various AI safety research partnerships

Climate and Natural Capital:

• EU Clean Industrial Deal and regional decarbonization efforts
• LTMS-PIP Southeast Asian power grid integration
• EU-Central Asia Hydrogen Partnership
• Just Energy Transition Partnerships (despite underperformance, represent minilateral model)

Health and Wellness:

• African Medicines Agency regional pharmaceutical cooperation
• OECS insulin procurement collaboration (Caribbean)
• Accra Compact on African health sovereignty
• Various regional vaccine manufacturing partnerships

Peace and Security:

• African Union-led peacekeeping missions
• ECOWAS regional security coordination
• Türkiye-mediated bilateral negotiations (Ethiopia-Somalia, others)
• Quad security dialogue (US-Japan-Australia-India)

The Geopolitical Clustering Dynamic

McKinsey Global Institute research identifies a clear pattern: cooperation increasingly occurs within geopolitical blocs defined by shared values, security concerns, and economic interests.

Three broad clusters are emerging:

Western-Aligned Bloc:

• North America, Europe, developed Asia-Pacific (Japan, South Korea, Australia)
• Characterized by: democratic governance, market economies, security alliances (NATO, bilateral treaties)
• Deepening integration in technology, defense, critical supply chains

China-Aligned Bloc:

• China, Russia, some Central Asian nations, selective African and Latin American partnerships
• Characterized by: state-directed economics,alternative governance models, Belt and Road participation
• Growing integration in infrastructure, commodities, some technologies

Non-Aligned/Swing States:

• India, Brazil, Indonesia, Turkey, Gulf states, much of Africa and Latin America
• Characterized by: strategic autonomy, economic pragmatism, multiple partnerships
• Maintain relationships across blocs, optimize for national interests

Critically, these clusters are not rigid or exclusive. Many countries maintain relationships across boundaries, and cooperation patterns vary by issue area. India, for example, partners with the US on technology and security (Quad) while maintaining trade relationships with Russia and China.

The Dialogue Imperative

For this new cooperation landscape to function effectively, dialogue becomes more—not less—important.

As UN Secretary-General António Guterres emphasized in his September 2025 address to the General Assembly: “Taking steps forward to address global priorities can only happen if parties first talk with one another to find commonality.”

Yet dialogue quality has deteriorated. Too often, international engagements feature:

• Positioning statements rather than genuine exchange
• One-way communication designed to hold ground rather than find common ground
• Performative diplomacy focused on domestic audiences
• Tactical maneuvering instead of problem-solving

Effective dialogue in the minilateral era requires:

1. Confidential channels: Away from public pressure and domestic political constraints
2. Specific agendas: Focused on concrete problems with potential solutions
3. Good-faith participation: Genuine willingness to find mutually beneficial outcomes
4. Technical expertise: Subject matter experts alongside diplomats
5. Follow-through mechanisms: Implementation plans with clear accountability

Harvard Negotiation Project research emphasizes that successful minilateral cooperation depends on participants separating people from problems, focusing on interests rather than positions, and generating options for mutual gain before deciding on specific approaches.

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What the Shifting Cooperation Landscape Means for Global Business

The transformation in global cooperation patterns has profound implications for multinational corporations, investors, and business leaders navigating an increasingly complex environment.

The Corporate Sentiment Split

The Global Cooperation Barometer survey of approximately 800 executives across 81 economies revealed a striking divergence in perceptions:

• 40% reported that growing barriers in trade, talent, and capital flows hampered their ability to do business
• 60% said the effects were neutral or not substantially negative

This split suggests that business impacts depend heavily on:

• Industry: Technology and pharmaceuticals face more restrictions than services
• Geography: Companies operating between aligned partners less affected than those spanning geopolitical divides
• Business model: Digital platforms more adaptable than asset-heavy manufacturers
• Strategic positioning: Proactive adaptation mitigates negative effects

According to Harvard Business Review analysis, companies successfully navigating this environment share several characteristics:

1. Geopolitical intelligence capabilities: Dedicated teams tracking regulatory changes, alliance shifts, and emerging restrictions
2. Flexible supply chains: Multiple sourcing options and rapid reconfiguration ability
3. Regional strategies: Tailored approaches for different geopolitical clusters
4. Government relations excellence: Deep understanding of policy priorities and effective engagement
5. Scenario planning: Regular war-gaming of geopolitical shocks and strategic responses

The Opportunity in Reconfiguration

While some business leaders focus on cooperation’s decline, others see opportunity in its transformation. McKinsey research identifies several emerging opportunities:

New Trade Corridors:

• Intra-ASEAN trade growing rapidly as regional integration deepens
• Africa-India trade expanding as both seek diversification
• Middle East-Europe connections strengthening (renewable energy, logistics)
• Latin American regional trade agreements creating larger effective markets

Strategic Industry Positioning:

• Semiconductor manufacturing expanding beyond East Asia (US, Europe, India investments)
• EV battery supply chains developing regional hubs (Europe, North America, Southeast Asia)
• Critical minerals processing diversifying away from China dominance
• Pharmaceutical manufacturing regionalizing for supply security

Services and Digital Growth:

• IT services demand surging as businesses digitize and adopt AI
• Professional services expanding as companies navigate complex regulatory environments
• Digital platforms less constrained by physical trade barriers
• Knowledge-intensive services benefiting from continued (if selective) talent mobility

Climate Transition Opportunities:

• $1 trillion+ annual climate finance creating massive market
• Clean technology manufacturing and deployment accelerating globally
• Energy transition requiring infrastructure investment across developing economies
• Carbon markets and climate services expanding

Building a Geopolitical Nerve Center

McKinsey research on geopolitical risk management recommends companies establish a dedicated “geopolitical nerve center”—a cross-functional team responsible for:

Monitoring and Intelligence:

• Track regulatory changes across jurisdictions
• Monitor geopolitical developments affecting operations
• Assess competitor positioning and strategic moves
• Maintain relationships with policy experts and government officials

Scenario Planning and War-Gaming:

• Develop detailed scenarios for potential geopolitical shocks (new sanctions, conflict escalation, alliance shifts)
• War-game company responses with senior leadership quarterly
• Identify trigger points for pre-authorized decisions
• Maintain updated playbooks for rapid response

Strategic Coordination:

• Align business unit strategies with geopolitical realities
• Coordinate government relations across regions
• Manage trade-offs between efficiency and resilience
• Balance short-term costs of adaptation with long-term risk reduction

Capability Building:

• Develop internal expertise on key geographies and issues
• Build relationships with external experts and advisors
• Train leadership on geopolitical risk assessment
• Foster cultural awareness and sensitivity

Companies that invested in these capabilities earlier are now outperforming. According to Boston Consulting Group analysis, firms in the top quartile of geopolitical preparedness showed 3-5 percentage points higher return on invested capital during 2022-24 compared to bottom-quartile peers.

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Three Strategies for Navigating the New Cooperation Paradigm

As global cooperation evolves, leaders in both public and private sectors must adapt their approaches. Three strategies emerge from the barometer’s findings:

1. Match Cooperation Format to Specific Issues

Not all challenges require universal, multilateral solutions. Leaders should strategically choose cooperation formats based on:

Issue Characteristics:

• Technical problems with clear solutions: Small expert groups (e.g., technology standards)
• Economic opportunities with aligned incentives: Bilateral or regional trade agreements
• Security challenges with geographic concentration: Regional organizations
• Global challenges requiring universal participation: Reformed multilateral institutions (climate, pandemics)

Partner Alignment:

• High alignment: Deep integration possible (single markets, currency unions, defense alliances)
• Moderate alignment: Issue-specific cooperation (trade agreements, technology partnerships)
• Low alignment: Transactional engagement (commodity trade, specific projects)

Time Sensitivity:

• Immediate crises: Ad hoc coalitions of capable and willing actors
• Medium-term challenges: Purpose-built minilateral partnerships
• Long-term systemic issues: Institutional frameworks with staying power

The key is strategic flexibility—maintaining participation in multiple cooperation formats simultaneously, activating different partnerships for different challenges.

2. Strengthen Resilience Through New Organizational Capabilities

Both governments and businesses must build capabilities to thrive in a more fragmented cooperation landscape:

For Governments:

Intelligence and Foresight:

• Establish forward-looking analytical units tracking cooperation trends
• Maintain comprehensive mapping of existing partnerships and potential new ones
• Develop scenario planning for different cooperation futures

Diplomatic Agility:

• Train diplomats in minilateral negotiation techniques
• Empower smaller negotiating teams with flexible mandates
• Build rapid response capacity for emerging cooperation opportunities

Policy Coordination:

• Break down silos between trade, security, climate, and health policy
• Recognize interconnections across cooperation domains
• Develop whole-of-government strategies for key relationships

For Businesses:

Geopolitical Intelligence:

• Build dedicated teams monitoring regulatory and political developments
• Develop early warning systems for cooperation disruptions
• Maintain networks of advisors across key geographies

Operational Flexibility:

• Design supply chains with multiple sourcing options
• Maintain manufacturing and service delivery capacity in multiple regions
• Develop rapid reconfiguration capabilities

Strategic Relationships:

• Cultivate relationships with policymakers in key markets
• Participate actively in industry associations and multi-stakeholder forums
• Build trust through consistent engagement, not just during crises

According to McKinsey & Company research, companies that systematically built these capabilities showed higher revenue growth (2-4 percentage points annually) and lower volatility (15-25% lower earnings variance) compared to peers during 2020-24.

3. Pursue Public-Private and Private-Private Coalitions

Cooperation need not flow only through governmental channels. Innovative partnership models can accelerate progress:

Public-Private Coalitions:

These partnerships leverage complementary strengths:

• Government: Convening power, regulatory authority, patient capital, long-term perspective
• Business: Technical expertise, operational efficiency, innovation capacity, private capital

Successful examples include:

Minerals Security Partnership:

• Governments and leading mining/manufacturing companies
• Objective: Accelerate critical mineral projects
• Approach: Coordinated investment and market-making
• Result: Pipeline of projects moving toward financial close

Coalition for Epidemic Preparedness Innovations (CEPI):

• Governments, foundations, pharmaceutical companies
• Objective: Accelerate vaccine development for emerging threats
• Approach: Coordinated R&D funding and manufacturing capacity
• Result: Rapid COVID-19 vaccine development and future preparedness

Private-Private Coalitions:

When public policy moves slowly, businesses can self-organize:

The Resilience Consortium (World Economic Forum/McKinsey):

• Brings together businesses’ agility, MDBs’ capital mobilization capacity
• Focus on building resilience in critical supply chains
• Enables rapid coordination without waiting for government action

Industry-Specific Standards Bodies:

• Technology companies collaborating on AI safety standards
• Pharmaceutical companies coordinating on pandemic preparedness
• Logistics companies optimizing supply chain resilience

According to World Economic Forum research, effective public-private partnerships share common characteristics:

1. Clear governance: Defined roles, decision-making processes, accountability
2. Aligned incentives: Structure ensuring all parties benefit from success
3. Measurable objectives: Concrete targets and transparent progress tracking
4. Risk sharing: Appropriate distribution of risks and rewards
5. Long-term commitment: Patience through inevitable implementation challenges

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Looking Ahead: Cooperation’s Future in 2026 and Beyond

As we move deeper into 2026, several trends deserve close attention:

Pressure Points to Watch

US Policy Direction:

• Tariff policies and their implementation affecting global trade flows
• Foreign aid levels impacting health and development cooperation
• Technology export controls shaping innovation ecosystems
• Immigration policies affecting talent mobility

China’s Strategic Choices:

• Economic opening or further self-reliance emphasis
• Technology cooperation with developing economies
• Belt and Road Initiative evolution
• Role in multilateral institutions

European Union Cohesion:

• Internal political dynamics affecting unity
• Defense spending and security cooperation expansion
• Industrial policy and subsidy competition
• Enlargement and neighborhood relations

Emerging Economy Agency:

• India’s positioning between major powers
• Gulf states’ technology and economic partnerships
• African regional integration progress
• Latin American trade and political alignments

Multilateral Institution Reform:

• UN Security Council reform discussions
• WTO dispute resolution restoration
• World Bank/IMF governance changes
• WHO funding and authority

Reasons for Measured Optimism

Despite significant challenges, several factors suggest cooperation’s resilience:

Economic Incentives Remain Strong:

• Global supply chains still deliver efficiency gains
• Cross-border investment creates wealth
• International students and workers enhance innovation
• Trade benefits consumers through lower prices and greater choice

Technology Enables New Forms:

• Digital platforms reduce coordination costs
• Data flows enable distributed collaboration
• Remote communication makes distance less relevant
• AI could enhance translation and cross-cultural understanding

Shared Challenges Demand Collective Action:

• Climate change affects all countries
• Pandemics ignore borders
• Cybersecurity threats require coordination
• Economic instability ripples globally

Pragmatic Leaders Understand Value:

• Surveys show majority recognize cooperation benefits
• Business leaders adapt strategies rather than retreat
• Diplomats seek creative solutions within constraints
• Civil society maintains cross-border networks

The Adaptation Imperative

The central message of the Global Cooperation Barometer 2026 is neither pessimistic nor naively optimistic. Instead, it offers a realistic assessment: cooperation is under pressure but adapting.

The question isn’t whether countries and organizations will cooperate—they will, because they must. The question is whether they’ll adapt quickly and effectively enough to address urgent challenges while managing tensions.

As Børge Brende of the World Economic Forum notes: “Cooperative approaches are vital for advancing corporate, national and global interests. The barometer finds that, in the face of strong headwinds, cooperation is still taking place, albeit in different forms than in the past.”

The path forward requires:

• Dialogue: Open, constructive engagement to identify common interests
• Flexibility: Willingness to try new cooperation formats and partnerships
• Pragmatism: Focus on tangible outcomes rather than ideological purity
• Patience: Recognition that building trust and achieving results takes time
• Innovation: Creative approaches to long-standing challenges

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Conclusion: Cooperation Evolving, Not Collapsing

The 2026 Global Cooperation Barometer paints a nuanced picture of international collaboration in an era of geopolitical fragmentation. While traditional multilateral frameworks face unprecedented strain, cooperation persists and evolves through smaller, more flexible coalitions.

Across trade, technology, climate, health, and security—the five pillars of global cooperation—we see common patterns:

• Multilateral mechanisms declining but not disappearing entirely
• Regional and minilateral partnerships filling gaps with agile, interest-based cooperation
• Economic incentives continuing to drive collaboration where mutual benefits are clear
• Outcomes holding steady or improving in some areas, deteriorating in others
• Adaptability emerging as the key to navigating uncertainty

For business leaders, this environment demands new capabilities: geopolitical intelligence, supply chain flexibility, strategic relationship management, and scenario planning. Companies that proactively adapt can find opportunity in reconfiguration rather than merely managing decline.

For government officials and diplomats, success requires matching cooperation formats to specific challenges, building diverse partnership portfolios, and maintaining dialogue even—especially—with those with whom disagreement runs deep.

For all stakeholders, the fundamental truth remains: many of today’s most pressing challenges cannot be solved by any country or organization alone. Climate change, pandemic preparedness, economic prosperity, technological innovation, and peace all require cooperative effort.

The shape of that cooperation may look different from the post-World War II multilateral order. It may be more fragmented, more pragmatic, more selective about participants and more focused on concrete outcomes. But cooperation itself—the human capacity to work together toward shared goals—endures.

As we navigate 2026 and beyond, the barometer’s message is clear: cooperation isn’t dying. It’s evolving. And our collective ability to adapt will determine whether that evolution leads to a more resilient, prosperous, and peaceful world—or to continued fragmentation and missed opportunities.

The choice isn’t between cooperation and isolation. It’s between rigid adherence to fading frameworks and creative adaptation to new realities. The data suggests pragmatic optimism: cooperation is down but not out, strained but not shattered, adapting even as it’s tested.

In this era of transformation, the question each leader must answer is not “should we cooperate?” but “how shall we cooperate most effectively?” The Global Cooperation Barometer 2026 provides essential data for answering that question wisely.

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Methodology Note: This article draws primarily from the World Economic Forum’s Global Cooperation Barometer 2026 Third Edition, produced in partnership with McKinsey & Company. All statistics are sourced from the report’s 41 tracked metrics unless otherwise noted. Additional reporting includes interviews with policy experts, analysis of supplementary data sources, and review of academic literature on international cooperation.

Behind closed doors this week, America’s most powerful oil executives delivered an uncomfortable message to President Donald Trump’s administration: Venezuela’s vast oil reserves—the world’s largest at 303 billion barrels—remain off-limits without unprecedented investment protections.

As Trump seeks to reshape global energy markets following the dramatic U.S. military operation that captured Venezuelan President Nicolás Maduro, industry leaders from ExxonMobil, Chevron, and ConocoPhillips are demanding written guarantees against nationalization, sanctions reversals, and political interference before committing capital to a country that expropriated more than $30 billion in foreign assets just over a decade ago.

The stakes extend far beyond Venezuela’s borders. Trump’s ability to broker a deal could define his administration’s energy dominance strategy and test whether economic incentives can stabilize a failed petrostate 1,200 miles from Florida’s coast. Yet three days after Maduro’s capture, oil companies remain deeply skeptical—and the numbers explain why.

The Reluctant Billionaires: Why Big Oil Is Saying “Not So Fast”

Despite Trump’s public optimism that U.S. oil companies are “ready and willing” to invest, industry sources paint a starkly different picture. Energy Secretary Chris Wright met with oil executives Wednesday at the Goldman Sachs Energy Conference in Miami, followed by a White House meeting Friday with CEOs from ExxonMobil, Chevron, and ConocoPhillips—but no companies have committed to new investments.

“The appetite for jumping into Venezuela right now is pretty low,” a senior energy executive familiar with discussions told CNN, speaking on condition of anonymity. The executive cited three insurmountable obstacles: collapsing oil prices, Venezuela’s nightmarish track record, and complete uncertainty about who actually controls the country.

The Price Problem Nobody’s Talking About

Global oil markets are drowning in oversupply. Brent crude tumbled 20% in 2025, closing the year near $60 per barrel—its worst annual performance since the pandemic. The U.S. Energy Information Administration projects Brent will average just $55 per barrel through 2026, with some analysts warning prices could dip below $50.

These depressed prices fundamentally undermine the investment case for Venezuela. Consulting firm Rystad Energy estimates that maintaining Venezuela’s current production of roughly 1 million barrels per day would require $53 billion through 2040. Returning the country to its 1990s peak of 3.5 million barrels daily demands a staggering $183 billion—nearly impossible to justify when oil hovers around $60.

“Just because there are oil reserves—even the largest in the world—doesn’t mean you’re necessarily going to produce there,” another industry source told CNN. “This isn’t like standing up a food truck operation.”

Francisco Monaldi, director of the Latin America Energy Program at Rice University’s Baker Institute, reinforced this reality: rebuilding Venezuela’s infrastructure to reach 4 million barrels per day would require more than $100 billion and take at least a decade.

What Companies Are Demanding: The Non-Negotiable Investment Protections

Behind the scenes, oil executives have outlined specific conditions they’ll need before risking capital in Venezuela. These demands reflect hard-won lessons from 2007, when President Hugo Chávez nationalized the oil sector and forced foreign companies to accept minority stakes or exit entirely.

Legal Shields Against Nationalization

At the top of every company’s list: ironclad protections against expropriation. When Chávez seized control in 2007, ExxonMobil and ConocoPhillips refused the new terms and walked away from billions in assets. International arbitration courts later ruled in their favor—ConocoPhillips won an $8.7 billion award in 2019, while ExxonMobil secured $1.6 billion—but Venezuela has paid only a fraction of these judgments.

According to CNBC’s reporting, Venezuela currently owes ConocoPhillips approximately $10 billion and ExxonMobil around $2 billion when interest is included. These unpaid debts cast a long shadow over any new investment discussions.

Industry experts say companies now want bilateral investment treaties with teeth—agreements that allow immediate recourse to international arbitration and specify compensation at full market value, not the artificially low “book value” Venezuela offered in 2007.

Sanctions Certainty and Congressional Buy-In

Oil companies fear the “sanctions whiplash” that could occur if a future administration reverses Trump’s policies. Current U.S. sanctions, expanded under both Trump and Biden, have essentially embargoed Venezuelan oil exports. Any Trump-era deal based solely on executive authority could evaporate when he leaves office.

“No one’s going to start investing on the ground in a place where there’s no legal contract and viable permission to operate or if there’s concerns about political stability and violence,” Ryan Kepes, an energy analyst, told NPR.

Companies want legislative backing—either new laws or amendments to existing sanctions frameworks—that would survive beyond Trump’s presidency. Without congressional approval, any investment represents a billion-dollar bet on political continuity that few executives are willing to make.

Operational Autonomy and Profit Repatriation

Venezuela’s state oil company, PDVSA, is effectively bankrupt. The entity that once generated 95% of Venezuela’s export earnings now struggles to maintain basic operations. Yet under current Venezuelan law, PDVSA must hold majority stakes in all oil projects.

Oil executives are demanding unprecedented operational control—the ability to hire international staff, import equipment without bureaucratic delays, and most critically, repatriate profits without Venezuela’s crushing currency controls. The country’s black market exchange rate differs so dramatically from official rates that companies fear losing billions to government-mandated conversions.

Venezuela’s Collapsing Infrastructure: A $100 Billion Problem

The physical reality on the ground makes investment even more daunting. Venezuela’s oil infrastructure has deteriorated dramatically over two decades of underinvestment, mismanagement, and sanctions.

Current production stands at approximately 950,000 barrels per day—down from 3.5 million barrels daily in the late 1990s and a peak of 3.7 million in 1970. PDVSA itself acknowledged that its pipelines haven’t been updated in 50 years, according to CNN reporting.

The technical challenges are immense. Venezuela produces predominantly “extra-heavy” crude from the Orinoco Belt—oil so dense it barely flows and requires specialized processing. This crude contains high sulfur content, making it more expensive to refine and less attractive in an era when many refiners have invested in lighter, sweeter crude infrastructure.

A World Bank analysis published late last year noted that even optimistic scenarios—assuming immediate sanctions relief and political stability—would require 18-24 months before any new production comes online. More realistic projections stretch to 3-5 years for meaningful output increases.

“Venezuela’s oil infrastructure has also been heavily degraded by decades of underinvestment and much of Venezuela’s oil is extremely heavy, making it relatively costly to extract and process,” Neal Shearing, group chief economist at Capital Economics, explained in a report.

The Geopolitical Chess Match: Why Trump Needs This Deal

For the Trump administration, success in Venezuela represents a geopolitical trifecta: undercutting Russian and Chinese influence, providing heavy crude to U.S. Gulf Coast refiners, and demonstrating American power projection in the Western Hemisphere.

The Russia-China Factor

For years, Venezuela has relied on economic lifelines from Moscow and Beijing. Russia’s state oil company Rosneft provided billions in prepayment deals, while China extended over $60 billion in loans-for-oil arrangements. Yet neither country invested the massive capital needed to reverse production declines—they simply extracted value from existing, deteriorating assets.

Trump’s intervention disrupts this model. Energy Secretary Wright emphasized at the Goldman Sachs conference that the administration will control Venezuelan oil sales “indefinitely,” redirecting barrels that previously flowed to China toward U.S. markets instead.

Marco Rubio, Trump’s Secretary of State, has been even more explicit about geopolitical objectives. The administration is pressing Venezuela’s interim government to expel all Chinese, Russian, Cuban, and Iranian intelligence operatives—a demand that reveals how deeply national security concerns drive the oil agenda.

The Refinery Economics Nobody Discusses

There’s a hidden economic logic behind Trump’s Venezuela push that rarely makes headlines: U.S. Gulf Coast refineries desperately need heavy crude.

These refineries—concentrated in Texas and Louisiana—invested billions in complex processing units specifically designed to handle heavy, high-sulfur crude. When Venezuelan supplies disappeared, they turned to Canadian oil sands and occasional Mexican imports. But Venezuela’s Orinoco crude remains uniquely suited to their equipment.

S&P Global Commodity Insights data shows that heavy crude typically trades at a $10-15 discount to lighter grades—a margin that makes these refineries highly profitable when they can source steady supplies. Restoring Venezuelan flows could lower gasoline and diesel prices along the Gulf Coast while boosting refinery margins.

Skip York, a fellow at Rice University’s Center for Energy Studies, noted that if Venezuela achieves political and economic stability, investors could expect returns of 15-20%—competitive with other global opportunities. But that’s a massive “if.”

The Historical Scar Tissue: Why 2007 Still Matters

The shadow of Hugo Chávez’s 2007 nationalization hangs over every conversation about Venezuela today. Understanding what happened then is essential to grasping why companies remain so hesitant now.

The Forced Renegotiation

In early 2007, Chávez ordered all foreign oil companies operating in the strategic Orinoco Belt to convert their projects into joint ventures with PDVSA holding at least 60% control. Companies had a stark choice: accept minority status under worse terms or exit entirely.

Chevron accepted and stayed. ExxonMobil and ConocoPhillips refused and were effectively expelled. CBC News reporting describes this as “the biggest seizure of private property in the country since Chavez took power.”

The Arbitration Marathon

What followed was a decade-long legal battle that still hasn’t concluded. ExxonMobil filed claims under bilateral investment treaties, initially seeking $16.6 billion. In 2014, an ICSID tribunal awarded $1.6 billion—far less than sought but still unpaid. The company continues pursuing additional claims.

ConocoPhillips initially won $2 billion in 2018, but a fuller ICSID decision in 2019 increased the award to $8.7 billion plus interest. Venezuela appealed unsuccessfully, with an annulment committee upholding the entire award in January 2025. Yet ConocoPhillips has collected virtually nothing.

These unpaid judgments create a unique leverage point. Trump has hinted that settling these debts might be prerequisite to new investment, telling reporters the oil companies will “take back the oil that, frankly, we should have taken back a long time ago.”

However, Energy Secretary Wright suggested old debts aren’t an immediate priority. “The huge debts that are owed Conoco and Exxon, those are very real and need to be recompensed in the future,” Wright told CNBC. “But that’s a longer-term issue. That’s not a short-term issue.”

Chevron’s Unique Position: The Only Player on the Ground

While ExxonMobil and ConocoPhillips nurse old wounds, Chevron stands alone as the only U.S. major with current Venezuelan operations—making it the most important company in any restoration scenario.

Chevron accepted Chávez’s 2007 terms and maintained a presence through two decades of sanctions, economic collapse, and political upheaval. The Biden administration granted a limited license in 2022 allowing Chevron’s PDVSA joint venture to export oil, which Trump’s administration later modified.

Kpler data shows Chevron exported approximately 140,000 barrels per day from Venezuela in Q4 2025—modest volumes but critically important for maintaining relationships and operational knowledge.

“Chevron is the best positioned among US oil companies—by far,” Francisco Monaldi, the Rice University energy expert, told CNN. The company has 3,000 employees in Venezuela, existing infrastructure, and relationships with PDVSA that could enable rapid production increases if conditions improve.

Yet even Chevron has been circumspect. In a carefully worded statement, the company said it “remains focused on the safety and well-being of our employees, as well as the integrity of our assets,” while declining to comment on expansion plans. Translation: we’re watching and waiting.

The Market Reality Check: Oversupply Kills Investment Appetite

Perhaps the most fundamental obstacle to Trump’s Venezuela vision is one he cannot control: the global oil glut.

International Energy Agency data shows the oil market has been in surplus since early 2025, with production outpacing consumption by approximately 2.5 million barrels per day in the second half of the year. The IEA projects this oversupply will reach 3.8 million barrels daily in 2026.

OPEC+ production increases, booming U.S. shale output, and rising volumes from Brazil, Guyana, and Canada have flooded markets while demand growth stalls. Chinese economic weakness and accelerating electric vehicle adoption have dampened consumption just as supply surges.

For oil companies, this creates a brutal calculation. At $60 per barrel, many U.S. shale producers remain profitable—barely. But investing tens of billions in a risky foreign venture with a 5-10 year payback period makes no economic sense when prices are falling and domestic opportunities exist.

“The bottom line is that adding Venezuelan oil makes the oversupply worse,” said Bob McNally, president of Washington-based consulting firm Rapidan Energy Group. “Companies are cutting back on drilling in the Permian Basin because of oversupply. Why would they rush to Venezuela?”

Bloomberg analysis noted that ExxonMobil, Chevron, and ConocoPhillips are collectively laying off about 14,000 employees as profits decline. These are not companies eager to embark on massive new capital projects in unstable jurisdictions.

What Happens Next: Three Scenarios for Venezuela’s Oil Future

Industry analysts and policy experts are mapping out possible paths forward, each with dramatically different implications.

Best Case: Phased Sanctions Relief With Investment Guarantees

In this scenario, the Trump administration negotiates a comprehensive framework that includes:

• Legislative sanctions modifications providing long-term certainty
• Bilateral investment treaties with international arbitration rights
• Gradual production targets tied to democratic reforms
• Settlement mechanisms for old expropriation claims
• PDVSA restructuring to allow operational autonomy

Timeline: 18-24 months to first new production; 5-7 years to reach 2 million barrels per day.

Francisco Monaldi suggests even a “trustworthy government” could boost production to 1.5-2 million barrels daily within two years by enabling existing operators like Chevron, Eni, and Repsol to increase spending within current licenses.

Most Likely: Limited Waivers With Slow Capital Deployment

This middle scenario reflects current reality: the administration grants specific licenses to particular companies under strict conditions, but comprehensive protections remain elusive.

Chevron expands modestly, perhaps doubling current output to 300,000 barrels daily over 3-4 years. ConocoPhillips and ExxonMobil secure debt settlements before committing new capital. Independent U.S. producers enter small projects in less complex areas.

Timeline: Gradual increases reaching 1.3-1.5 million barrels daily by 2030; still well below historical peaks.

The Council on Foreign Relations notes this scenario most closely matches how investments typically unfold in post-conflict petrostates—incremental, cautious, and constantly reassessed against political developments.

Worst Case: Talks Collapse, Status Quo Continues

If the Trump administration cannot provide adequate guarantees, or if Venezuela’s political situation deteriorates further, oil companies simply walk away.

Chinese and Russian state entities might deepen partnerships, but without the capital or technology to meaningfully boost production. Venezuela remains trapped producing 800,000-1 million barrels daily, with aging infrastructure continuing to decay.

Timeline: Indefinite stagnation; possible production declines to 500,000-700,000 barrels daily by 2030.

This scenario would represent a complete failure of Trump’s energy diplomacy but seems increasingly plausible given industry skepticism and adverse market conditions.

The Congressional Obstacle Course

Even if Trump convinces companies to invest, he faces a significant political problem: Congress.

Democrats immediately criticized the Venezuela operation as potentially illegal, questioning the military authority to capture a foreign head of state. Progressive members like Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders condemned what they called “imperialism” and expressed concerns about repeating Iraq War mistakes.

But Trump’s challenges extend beyond predictable Democratic opposition. Several Republican senators, particularly those from oil-producing states, have raised questions about sanctions policy and whether Venezuela investments might undermine U.S. energy producers.

Secretary of State Marco Rubio faced skeptical lawmakers during classified briefings this week. One senator, speaking anonymously, told CNN: “There are more questions than answers, and I’m not convinced this administration has thought through the second- and third-order effects.”

The Center for Strategic and International Studies, a Washington think tank, published analysis suggesting any lasting Venezuela framework would require bipartisan legislative backing—an increasingly rare commodity in today’s polarized environment.

What Investment Guarantees Actually Mean in Practice

For readers unfamiliar with international oil contracts, understanding what companies are demanding requires explaining some technical structures.

Bilateral Investment Treaties (BITs): These government-to-government agreements establish protections for investors, including the right to international arbitration if a host country violates commitments. The U.S. has BITs with numerous countries, but Venezuela withdrew from many after Chávez’s nationalization.

Production Sharing Agreements (PSAs): Unlike traditional concessions where companies own the oil, PSAs allow governments to retain ownership while contractors receive a share of production as compensation. Iraq, Kurdistan, and other challenging markets use PSAs to attract investment while maintaining resource sovereignty.

Political Risk Insurance: Private insurers and multilateral agencies like MIGA (World Bank) offer coverage against expropriation, currency inconvertibility, and political violence. However, premiums for Venezuela would be extraordinarily high given its track record.

Sovereign Guarantee Agreements: The government issues binding commitments to compensate investors under specific conditions. These guarantees become enforceable debts if triggered—though collecting remains challenging, as ExxonMobil and ConocoPhillips can attest.

Companies want a combination of all four mechanisms, creating multiple layers of protection. Yet even this multilayered approach cannot eliminate political risk entirely, which explains the persistent hesitation.

The Bottom Line: Trump’s Energy Gambit Faces Long Odds

Six days after U.S. forces captured Nicolás Maduro, Donald Trump’s vision of American oil companies rapidly revitalizing Venezuela’s energy sector appears increasingly disconnected from commercial reality.

Oil executives want guarantees the administration cannot easily provide. Market conditions undermine investment economics. Congressional support remains uncertain. Venezuela’s physical infrastructure requires generational investment. And historical experience suggests promises made in crisis can evaporate when political winds shift.

Energy Secretary Wright has been more candid than Trump about these challenges. “We’re not going to be twisting or convincing anyone’s arms,” Wright told reporters. “We need to have that leverage and that control of those oil sales to drive the changes that simply must happen in Venezuela.”

Yet leverage alone won’t convince companies to risk billions. They need legal certainty, operational autonomy, market conditions that justify massive capital deployment, and confidence that any framework will outlast Trump’s presidency.

As of now, none of those conditions exist.

The industry’s message to Trump remains consistent: show us the guarantees, show us the profits, show us the stability—then we’ll talk about billions in investments. Until then, Venezuela’s 303 billion barrels might as well be on Mars.

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Key Takeaways

For Investors: Venezuelan oil stocks and related companies will remain speculative until concrete investment frameworks emerge. Chevron has the clearest exposure, but near-term production increases appear limited.

For Energy Markets: Don’t expect Venezuelan supply to materially impact global oil balances before 2027-2028 at earliest. The current oversupply will persist regardless of Venezuela developments.

For Policy Watchers: Trump’s Venezuela strategy represents his administration’s most ambitious test of economic statecraft. Success or failure will influence how allies and adversaries view American power projection.

For Companies: The Friday White House meeting will be telling. If executives emerge with specific commitments, markets will react. More likely, they’ll offer cautious support while awaiting concrete protections.

The world’s largest proven oil reserves remain tantalizingly out of reach—not for lack of geological potential, but because history, economics, and politics create barriers that presidential bravado alone cannot overcome.

When Kelvin Chiang presented his team’s agentic AI models to Singapore’s Monetary Authority, he knew he was demonstrating something unprecedented. What used to consume an entire workday for a private banker—compiling wealth reports, validating sources of funds, drafting compliance documents—now takes just 10 minutes. But before Bank of Singapore could deploy these tools across its wealth management division, Chiang’s data scientists had to walk regulators through every safeguard, every failsafe, and every human oversight mechanism designed to prevent the system from “hallucinating” false information.

The regulators didn’t push back. They embraced it.

That collaborative spirit between government and industry defines Singapore’s radically different approach to the AI transformation sweeping global banking. While financial institutions in the United States and Europe announce mass layoffs—Goldman Sachs warning of more job cuts as AI takes hold—Singapore is executing the world’s most ambitious banking workforce retraining program. DBS Bank, OCBC, and United Overseas Bank are retraining all 35,000 of their domestic employees over the next two years, a government-backed initiative that represents not just a skills upgrade, but a fundamental reimagining of what it means to work in financial services.

The Revolutionary Scale of Singapore’s AI Training Initiative

The numbers tell only part of the story. Singapore’s three banking giants are investing hundreds of millions in a training infrastructure that reaches from entry-level tellers to senior executives. But unlike generic technology upskilling programs that plague many organizations, this bootcamp targets specific, measurable competencies needed to work alongside autonomous AI systems.

Violet Chung, a senior partner at McKinsey & Company, identifies what makes this initiative unique: “The government is doing something about it because they realize that this capability and this change is actually infusing potentially a lot of fear.” That acknowledgment of worker anxiety—combined with proactive solutions rather than platitudes—sets Singapore apart from Western approaches that often prioritize shareholder returns over workforce stability.

The Monetary Authority of Singapore (MAS) isn’t just cheerleading from the sidelines. Deputy Chairman Chee Hong Tat, who also serves as Minister for National Development, has made workforce resilience a regulatory expectation. The message to banks is clear: deploy AI aggressively, but ensure your people evolve with the technology. Singapore’s National Jobs Council, working through the Institute of Banking and Finance, offers banks up to 90% salary support for mid-career staff reskilling—an unprecedented level of public investment in private sector workforce development.

Understanding Agentic AI: The Technology Driving the Transformation

To grasp why 35,000 bankers need retraining, you must first understand what agentic AI does differently than the chatbots and recommendation engines that preceded it.

Traditional AI systems respond to prompts. Ask a question, get an answer. Agentic AI, by contrast, pursues goals autonomously. According to research from Deloitte, these systems can plan multi-step workflows, coordinate actions across platforms, and adapt their strategies in real-time based on changing circumstances—all without constant human intervention.

Consider OCBC’s implementation. Kenneth Zhu, the 36-year-old executive director of data science and AI, oversees a lab where 400 AI models make six million decisions every single day. These aren’t simple calculations. The models flag suspicious transactions, score credit risk, filter false positives in anti-money laundering systems, and even draft preliminary reports that once consumed hours of compliance officers’ time.

At DBS Bank, an internal AI assistant now handles more than one million prompts monthly. The bank has deployed role-specific tools that reduce call handling time by up to 20%—not by replacing customer service staff, but by handling the tedious documentation and data retrieval that used to interrupt human conversations. Customer service officers now spend their time actually serving customers, while AI manages the administrative burden.

The source of wealth verification process at Bank of Singapore exemplifies agentic AI’s potential. Relationship managers previously spent up to 10 days manually reviewing hundreds of pages of client documents—financial statements, tax notices, property valuations, corporate filings—to write compliance reports. The new SOWA (Source of Wealth Assistant) system completes this same analysis in one hour, cross-referencing Bank of Singapore’s extensive database and OCBC’s parent company records to validate information plausibility.

Bloomberg Intelligence forecasts that DBS will generate up to S$1.6 billion ($1.2 billion) in additional pretax profit through AI-derived cost savings—roughly a 17% boost. These aren’t theoretical projections. DBS CEO Tan Su Shan reports the bank already achieved S$750 million in AI-driven economic value in 2024, with expectations exceeding S$1 billion in 2026.

Inside the Bootcamp: How 35,000 Bankers Are Actually Learning AI

The phrase “AI bootcamp” might conjure images of programmers teaching SQL queries. Singapore’s program looks nothing like that.

The curriculum divides into three tiers, each calibrated to job function and AI exposure level:

Tier 1: AI Literacy for Everyone (All 35,000 employees)

• Understanding what AI can and cannot do
• Recognizing AI-generated content and potential hallucinations
• Data privacy and security in AI contexts
• Ethical considerations when deploying automated decision-making
• Prompt engineering basics for interacting with AI assistants

Tier 2: AI Collaboration Skills (Frontline and Middle Management)

• Working with AI co-pilots for customer service
• Interpreting AI-generated insights and recommendations
• Overriding AI decisions when human judgment is required
• Monitoring AI system performance and reporting anomalies
• Translating customer needs into AI-friendly inputs

Tier 3: AI Development and Governance (Technical Teams and Senior Leaders)

• Model risk management frameworks
• Building and validating AI use cases
• Implementing responsible AI principles (fairness, explainability, accountability)
• Regulatory compliance for AI systems
• Strategic AI investment and ROI measurement

The Institute of Banking and Finance Singapore doesn’t just offer online modules. Through its Technology in Finance Immersion Programme, the organization partners with banks to create hands-on learning experiences. Participants work on actual banking challenges, developing practical skills rather than theoretical knowledge.

Dr. Jochen Wirtz, vice-dean of MBA programs at National University of Singapore, emphasizes the urgency: “Banks would be completely stupid now to load up on employees who they will then have to let go again in three or four years. You’re much better off freezing now, trying to retrain whatever you can.”

That philosophy explains why DBS has frozen hiring for AI-vulnerable positions while simultaneously training 13,000 existing employees—more than 10,000 of whom have already completed initial certification. Rather than the classic “hire-and-fire” cycle that characterizes American banking, Singapore pursues “freeze-and-train.”

The Human Reality: Fear, Adaptation, and Unexpected Opportunities

Not everyone welcomes their AI co-worker with open arms.

Bank tellers watching their branch traffic decline, back-office analysts seeing AI handle tasks they spent years mastering, relationship managers uncertain how to add value when machines draft perfect emails—the anxiety is real and justified. Singapore’s approach acknowledges these concerns rather than dismissing them.

Walter Theseira, associate professor of economics at Singapore University of Social Sciences, notes that banks are managing workforce transitions through “natural attrition rather than forced redundancies.” When employees retire, change roles internally, or move to other companies, banks increasingly choose not to backfill those positions. This gradual adjustment—combined with the creation of new AI-adjacent roles—softens the disruption.

The emerging job categories reveal how AI transforms rather than eliminates work:

• AI Quality Assurance Specialists: Testing AI outputs for accuracy, bias, and regulatory compliance
• Digital Relationship Managers: Handling complex wealth management with AI-generated insights
• Automation Process Designers: Identifying workflows suitable for AI augmentation
• Model Risk Officers: Ensuring AI systems operate within approved parameters
• Customer Experience Strategists: Designing human-AI interaction patterns

UOB has given all employees access to Microsoft Copilot while deploying more than 300 AI-powered tools across operations. OCBC reports that AI-assisted processes have freed up capacity equivalent to hiring 1,000 additional staff—capacity redirected toward higher-value customer interactions and strategic initiatives rather than eliminated.

One success story circulating in Singapore’s banking community involves a former transaction processor who completed the AI training program and now leads a team designing automated fraud detection workflows. Her deep understanding of payment patterns—knowledge that seemed obsolete when AI took over transaction processing—became invaluable when combined with technical AI literacy. She didn’t lose her job to automation; she gained leverage over it.

Singapore’s Regulatory Philosophy: Partnership Over Policing

What separates Singapore’s approach from virtually every other financial center is how its regulator, the Monetary Authority of Singapore, engages with AI deployment.

In November 2025, MAS released its consultation paper on Guidelines for AI Risk Management—a document that reflects months of collaboration with banks rather than top-down dictates imposed on them. The guidelines focus on proportionate, risk-based oversight rather than prescriptive rules that could stifle innovation.

MAS Deputy Managing Director Ho Hern Shin explained the philosophy: “The proposed Guidelines on AI Risk Management provide financial institutions with clear supervisory expectations to support them in leveraging AI in their operations. These proportionate, risk-based guidelines enable responsible innovation.”

The guidelines address five critical areas:

1. Governance and Oversight: Board and senior management responsibilities for AI risk culture
2. AI Risk Management Systems: Clear identification processes and accurate AI inventories
3. Risk Materiality Assessments: Evaluating AI impact based on complexity and reliance
4. Life Cycle Controls: Managing AI from development through deployment and monitoring
5. Capabilities and Capacity: Building organizational competency to work with AI safely

Rather than banning certain AI applications, MAS encourages banks to experiment while maintaining rigorous documentation of safeguards. When Kelvin Chiang presented his agentic AI tools, regulators wanted to understand the thinking process, the oversight mechanisms, and the escalation protocols—not to obstruct deployment, but to ensure responsible implementation.

This collaborative regulatory stance extends to funding. Through the IBF’s programs, Singapore effectively subsidizes workforce transformation, recognizing that individual banks cannot bear the full cost of societal-scale reskilling. PwC research shows organizations offering AI training report 42% higher employee engagement and 38% lower attrition in technical roles—benefits that justify public investment.

MAS Chairman Gan Kim Yong, who also serves as Deputy Prime Minister, framed the imperative at Singapore FinTech Festival: “It is important for us to understand that the job will change and it’s very hard to keep the same job relevant for a long period of time. As jobs evolve, we have to keep the people relevant.”

The ROI Case: Why Massive AI Investment Makes Business Sense

Singapore’s banks aren’t retraining 35,000 workers out of altruism. The business case for AI transformation is overwhelming—provided the workforce can leverage it.

DBS CEO Tan Su Shan described AI adoption as generating a “snowballing effect” of benefits. The bank’s 370 AI use cases, powered by more than 1,500 models, contributed S$750 million in economic value in 2024. She projects this will exceed S$1 billion in 2026, representing a measurable return on years of investment in both technology and people.

The efficiency gains manifest across every banking function:

Customer Service: AI handles routine inquiries, reducing average response time while allowing human agents to focus on complex problems requiring empathy and judgment. DBS’s upgraded Joy chatbot managed 120,000 unique conversations, cutting wait times and boosting satisfaction scores by 23%.

Risk Management: OCBC’s 400 AI models process six million daily decisions related to fraud detection, credit scoring, and compliance monitoring—work that would require thousands of additional staff and still produce inferior results due to human attention limitations.

Wealth Management: AI-powered portfolio analysis and market insights allow relationship managers at private banks to serve more clients at higher quality. What once required a team of analysts now happens in real-time, personalized to each client’s specific situation.

Operations: Back-office processing that once consumed entire departments now runs largely automated, with humans focused on exception handling and quality assurance rather than manual data entry.

According to KPMG research, organizations achieve an average 2.3x return on agentic AI investments within 13 months. Frontier firms leading AI adoption report returns of 2.84x, while laggards struggle at 0.84x—a performance gap that could determine competitive survival.

The transformation isn’t limited to cost savings. DBS now delivers 30 million hyper-personalized insights monthly to 3.5 million customers in Singapore alone, using AI to analyze transaction patterns, life events, and financial behaviors. These “nudges”—reminding customers of favorable exchange rates, suggesting timely financial products, flagging unusual spending—drive engagement and revenue while genuinely helping customers make better decisions.

Global Context: How Singapore’s Model Differs from Western Approaches

The contrast with American and European banking couldn’t be starker.

JPMorgan Chase CEO Jamie Dimon speaks enthusiastically about AI’s opportunities while the bank deploys hundreds of use cases. Yet JPMorgan analysts project global banks could eliminate up to 200,000 jobs within three to five years as AI scales. Goldman Sachs continues warning employees to expect cuts. The narrative centers on efficiency gains and shareholder value, with workforce impact treated as an unfortunate but necessary consequence.

European banks face different pressures. Strict labor protections make large-scale layoffs difficult, but they also complicate rapid workforce transformation. Banks attempt gradual transitions through attrition, but without Singapore’s comprehensive retraining infrastructure, displaced workers often struggle to find equivalent roles.

Singapore’s model succeeds through three unique factors:

1. Government-Industry Alignment The close relationship between MAS, the National Jobs Council, and major banks enables coordinated action impossible in more fragmented markets. When Singapore decides workforce resilience matters, resources flow accordingly.

2. Social Contract Expectations Singapore’s three major banks operate with implicit understanding that their banking licenses come with social responsibilities. Massive layoffs would trigger regulatory and reputational consequences, creating strong incentives for workforce investment.

3. Manageable Scale With 35,000 domestic banking employees across three major institutions, Singapore can execute comprehensive training that would be logistically impossible for American banks with hundreds of thousands of global staff.

Harvard Business Review analysis suggests Singapore’s approach, while difficult to replicate exactly, offers lessons for other nations: establish clear regulatory expectations around workforce transition, provide financial support for retraining, create industry-specific training partnerships, and measure success not just by AI deployment speed but by workforce adaptation rates.

The 2026-2028 Horizon: What Comes Next

As Singapore approaches the halfway point of its two-year retraining initiative, early results suggest the model works—but also highlight emerging challenges.

DBS has already reduced approximately 4,000 temporary and contract positions over three years, while UOB and OCBC report no AI-related layoffs of permanent staff. The banking sector is discovering that AI changes job composition more than job quantity, at least in the medium term.

The next wave of transformation will test whether current training adequately prepares employees. Gartner forecasts that by 2028, agentic AI will enable 15% of daily work decisions to be made autonomously—up from essentially zero in 2024. As AI agents gain more autonomy, the human role shifts from executor to orchestrator, requiring even higher-order skills.

MAS is already considering how to hold senior executives personally accountable for AI risk management, recognizing that autonomous systems create novel governance challenges. The proposed framework would mirror the Monetary Authority’s approach to conduct risk, where individuals bear clear responsibility for failures.

Singapore is also grappling with an unexpected challenge: Singlish, the local English creole, creates complications for AI natural language processing. Models trained on standard English struggle with Singapore’s unique linguistic patterns, requiring localized AI development—which in turn demands more sophisticated training for local AI specialists.

The broader implications extend beyond banking. If Singapore succeeds in demonstrating that massive AI deployment can coexist with workforce stability through strategic retraining, it provides a template for other industries and nations facing similar disruptions.

McKinsey estimates that AI could put $170 billion in global banking profits at risk for institutions that fail to adapt, while pioneers could gain a 4% advantage in return on tangible equity—a massive performance gap. Singapore’s banks, with their AI-literate workforce, position themselves firmly in the pioneer category.

Lessons for the Global Banking Industry

Singapore’s AI bootcamp experiment offers actionable insights for financial institutions worldwide:

Start with Culture, Not Technology: The most sophisticated AI fails if employees resist or misuse it. Comprehensive training that addresses fears and demonstrates value creates buy-in impossible to achieve through top-down mandates.

Partner with Government: Workforce transformation at this scale exceeds individual firms’ capacity. Public-private partnerships can distribute costs while ensuring industry-wide capability building.

Measure What Matters: Singapore tracks not just AI deployment metrics but workforce adaptation rates, employee satisfaction with AI tools, and the emergence of new hybrid roles. These human-centric measures predict long-term success better than pure technology KPIs.

Reimagine Rather Than Replace: The most successful AI implementations augment human capabilities rather than substituting for them. Relationship managers with AI insights outperform both pure humans and pure machines.

Invest in Adjacent Capabilities: AI literacy alone isn’t enough. Workers need complementary skills—critical thinking, emotional intelligence, creative problem-solving—that AI cannot replicate but can amplify.

Create New Career Paths: As traditional roles evolve, new opportunities in AI quality assurance, model risk management, and human-AI experience design create advancement paths for ambitious employees.

Accept Gradual Transition: Singapore’s two-year timeline, with flexibility for individual banks to move faster or slower based on their readiness, acknowledges that workforce transformation cannot be rushed without creating unnecessary disruption.

The Verdict: A Model Worth Watching

As the financial world watches Singapore’s unprecedented experiment, the stakes extend far beyond one nation’s banking sector. The question isn’t whether AI will transform banking—that transformation is already underway. The question is whether that transformation must inevitably create massive worker displacement, or whether strategic intervention can enable human adaptation at the pace of technological change.

Singapore bets on the latter possibility. By retraining all 35,000 domestic banking employees, by creating robust public-private partnerships, by developing comprehensive curricula that address both technical skills and existential anxieties, the city-state attempts to prove that the future of work doesn’t have to be a zero-sum battle between humans and machines.

Early returns suggest the model works. Banks report measurable productivity gains without mass layoffs. Employees initially resistant to AI training increasingly embrace it as they discover enhanced rather than diminished job prospects. Regulators fine-tune an approach that enables innovation while maintaining safety.

Yet challenges remain. Can retraining keep pace with accelerating AI capabilities? Will the job categories being created prove as numerous and lucrative as those being transformed? What happens to workers who cannot or will not adapt, despite comprehensive support?

These questions lack definitive answers. What Singapore demonstrates beyond doubt is that workforce transformation of this magnitude is possible—that major financial institutions can deploy cutting-edge AI aggressively while simultaneously investing in their people’s futures.

When historians eventually assess the AI revolution’s impact on work, Singapore’s banking sector bootcamp may be remembered as either a successful proof of concept that other nations and industries replicated, or as an admirable but ultimately isolated experiment that proved impossible to scale beyond a small, tightly integrated economy.

The next two years will tell us which.