There's a rising angst in foreign policy circles over the status of democracy around the world.
In an era of "big personalities" — or what many academics and historians prefer to call strongmen — Council on Foreign Relations President Richard Haass believes this trend poses a direct risk to investors and proponents of civil liberties alike.
"This is an authoritarian era, all things being equal. Democracy is in something of a recession," Haass told CNBC's Hadley Gamble in Paris on Friday. The veteran U.S. diplomat outlined why he was concerned about the direction of many governments today, and what it could portend for those engaged in the markets.
"I don't see the people in place who are aware potentially of the consequences of what they're doing," he said, referring to leaders like Russian President Vladimir Putin and Saudi Arabia's crown prince, Mohammed bin Salman, as "strongmen." And this, he warned, could be irreversibly destabilizing to the global order that's been established since the end of the Second World War.
"For 70, 75 years, we've had this rules-based international system, no great power wars, muted rivalries … and now when I look at the world and the people running the world, it gives me pause. I'm worried that when historians look back on this moment, they're going to see this is the beginning of the unraveling."
And investors should be worried, Haass warned — particularly if they are thinking of long-term investments.
"I think they have to assume that they can't assume things are going to be good, that all things being equal, going forward is going be less stable than going backwards."
Haass, a highly awarded diplomat who served as director of policy planning for the U.S. State Department, U.S. coordinator for the future of Afghanistan, and U.S. special envoy for Northern Ireland, has spent decades witnessing and analyzing international political and economic trends. His assessment matches that of many other experts in his field.
According to the Economist Intelligence Unit's Democracy Index report, out of the 167 countries ranked in 2018, 89 received lower scores than the previous year. The index ranks countries on a scale in the categories of electoral process and pluralism, civil liberties, government functionality, political participation, and political culture, with each category comprised of a range of concrete indicators.
In 2017, the research group demoted the U.S. from a full democracy to a "flawed democracy," citing dwindling trust in government, elected representatives and political parties. It also noted that this decline was well underway before the election of President Donald Trump.