What most of us want to know about geopolitical risk is simple: Is the world going to hell in a handbasket? The answer to that question is usually something like, “Not yet.” Whether that answer is satisfactory probably depends on whether one is an optimist or a pessimist.
To some degree, that’s how political risk research firm Eurasia Group introduces its list of the top 10 global risks for 2019. This year “could turn out to be the world falls apart,” but “for now” that outcome is unlikely.
Eurasia Group’s rather sanguine outlook seems almost to defy current headlines. The U.S. government shutdown was expected to be relatively brief when it began two weeks ago, but that outcome is not so clear now. Relations between the United States and China may be improving as a new round of trade talks begin, but then again, maybe the talks won’t work out. The proxy war between Iran and Saudi Arabia being waged in Yemen is a humanitarian disaster. And then there’s the most compelling story of all — climate change and the rapidly approaching point when it will become too late to stop or reverse it.
What are the specific risks and what are international political leaders doing about these and other issues with widespread impacts over the entire globe? The general answer to that question is “not much.” The primary reason for that failure, according to Eurasia Group, is that “[t]he world’s decision-makers are so consumed with addressing (or failing to address) the daily crises that arise from a world without leadership that they’re allowing a broad array of future risks to germinate ….”
Here, then, are the top 10 global risks that Eurasia Group identifies.
1. Bad Seeds
The firm identifies four areas where the seeds of future risks have been planted and may one day bear bad fruit. First on the list is the damage to the legitimacy of U.S. democratic institutions such as the FBI and the courts. Second is the fragmentation of Europe evidenced by Brexit. Third is the weakening of U.S. alliances resulting from the Trump administration’s focus on putting American interests above the common interests shared by nations with which the United States has long been allied. Fourth, the rise of nationalism and populism. None of these threats is “urgent,” but the sheer number of specific bad seeds is “far higher” than Eurasia Group has ever seen.
Calling this “the world’s most important bilateral relationship,” Eurasia Group is not confident that disagreements over trade and economic policy will be resolved soon.
3. Cyber Gloves Off
2019 is a turning point in the growing cyberwar involving state actors like Russia, North Korea and China. The United States is primed to be assertive in using its arsenal of cyber weapons in an effort to deter the use of cyber weapons against the country and its businesses. This more aggressive stance could backfire, however, because many of the bad actors are non-state actors and, even those, that are are unlikely to back down because of more assertive U.S. policy.
4. European Populism
The influence of euroskepticism will rise and “undermine Europe’s ability to function,” according to Eurasia Group. Four nations — Italy, Austria, Poland and Hungary — are leading the populist movement in the European Parliament, and while they may not have the majority, they will, for the first time, exercise real influence.
5. The United States at Home
This promises to be a chaotic year in domestic U.S. politics. A Democratic-controlled House poses Trump’s first real adversary with subpoena power. Eurasia Group notes that U.S. institutions are “too strong for the president to effectively muscle,” but that doesn’t mean that he won’t try.
6. Innovation Winter
Competition in the technology market became political in 2018, and 2019 is the year that this competition will extract payment from investors and markets. Calling it a “global innovation winter,” Eurasia group anticipates a politically driven reduction in both investment and human capital that would drive the next round of technological development.
7. A Coalition of the Unwilling
As a result of Trump’s “America First” message proclaiming that the United States would no longer play a leadership role in the global world order, an unlikely set of allies, all of them nationalists and therefore not allies in the traditional sense, has formed. Eurasia Group notes Brazil’s Jair Bolsonaro, Turkey’s Recep Erdogan, North Korea’s Kim Jong-un, Saudi Arabia’s Mohammed bin Salman, Israel’s Benjamin Netanyahu, Russia’s Vladimir Putin and Italy’s Matteo Salvini.
The newly elected government of Andres Manuel Lopez Obrador (AMLO) has big plans with not enough money to carry out all of them. Eurasia Group characterizes AMLO’s goal of making Mexico great again as taking it back to the 1960s and 1970s.
While Russian President Vladimir Putin may seem recently to have taken a more aggressive position toward Ukraine, Russia has long viewed Ukraine as a vital piece of Russia’s sphere of influence. Elections are scheduled for March and are likely to result in a pro-Western government that has only minimal popular support. 2019 promises to be an ugly year for Ukraine.
Africa’s most populous nation is headed for a presidential election in February between two old men, one of whom (the incumbent) is 77 years old and described as lacking the energy, creativity or political savvy to work at solving the country’s problems. His opponent, a 73-year old former vice-president, is alleged to have been part of a money laundering scheme that involved more than $40 million. The worst outcome, according to Eurasia Group, is a close election with no clear winner.
The full report from Eurasia Group is available at the firm’s website.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.