Eurasia Group’s Top Risks for 2018

Eurasia Group’s Top Risks for 2018

Welcome everyone. It’s great to be with you on this tour of the world’s top risks for 2018. I’m Ian Bremmer. And I’m Cliff Kupchan. And together we’re going to be
taking you around the world. Our biggest concerns, the things that keep us up in the
night. Ranked from ten to one. Please do set your headphones – channel 2 for English, channel 1 for Chinese. Let’s get started. 2018 is by far the most dangerous geopolitical risk environment that we have experienced since we started the company some 20 years ago. The markets don’t recognize it. They’re hitting records on a regular
basis. The global economy feels pretty good, but geopolitically we are in the midst of a deep recession. And unlike the last economic recession – the worst since the Great Depression, this time around geopolitically countries don’t feel like they need to hurry to a fix. Certainly the United States the one country in the world that could
be making a difference to pull us out of geopolitical
recession doesn’t feel like it’s their
problem. The Chinese are responding but they’re creating an alternative
model to the extent they can at least
economically. The Europeans are nowhere to be
seen. The Russians are only causing
problems and rogue states and actors all see
this as an opportunity – some space for them to operate. That’s a dangerous 2018 it’s one you’re going to particularly see
when we get to risk number one. But first let’s start counting down from risk ten. The tenth risk is Africa’s Security. Large countries in Africa have recently shown quite robust
investment climates and been relatively immune to the instability that surrounds
them. That could well change this year. You see that with terrorism – al Shabaab and ISIS only growing across sub-Saharan Africa. You see it with greater refugee flows that are
going to be picking up over the course of
2018. And you see it with greater concerns downside for these economies. This is not the African dream that consulting firms have
been talking about for over a decade now. It’s actually much more dangerous
environment. Risk number nine is identity
politics in Southern Asia. You know Southern Asia is a fantastic story economically – we’ve seen that in India and we’ve seen across Southeast Asia
one of the best in the world. But there is an underside to it. You see greater Islamic populism on the part of governments as well
as Islamic terror particularly in Malaysia and Indonesia. We see greater anti-China sentiment playing out in nationalism across this region from populations that are doing particularly well – Chinese expats but aren’t as appreciated by local governments and local populations politically. And then of course we also see Hindu
nationalism and Indian nationalism coming from Narendra Modi in India. Risk number 8 is the United Kingdom. Part of it of course is Brexit – by
far the most challenging international
negotiation being underway anywhere in the world and neither the United Kingdom or the Europeans are really in line in terms of what they want. That’s only going to cause market
uncertainty all year long. The biggest issue is Northern Ireland. The UK is going to leave the EU. So there’s got to be a border
somewhere – north south or east west. Any special deal on that border is going to set a precedent that
Scotland and even the city of London is going
to want to follow. It doesn’t work. Moreover Theresa May may not finish her term. The most benign scenario is that
another Tory takes over but that would upset
Article 50. The least benign scenario is that there’s a new election and Jeremy
Corbyn wins. I’ve got to tell you if Corbyn
actually becomes prime minister that’s probably worse for
the United Kingdom than the Brexit negotiations. Risk number seven: Protectionism
2.0. Protectionism is taking on an entirely new form. It’s not just about tariffs. It’s about protecting IP and associated technologies. The key to the future. Moreover, protectionism 2.0 is politicized – where the money comes from
matters. People don’t really want Chinese, Russian investment. They’re going to be careful. If it’s economic issues that are driving the United States and China farther apart. Some of that will be tariffs but most of it will be non-tariff
measures between the world’s two largest
economies. Protectionism 2.0 is going to come
against the backdrop where the United States is not
leading the rules of the road in the global economy. Nobody else is either. Risk number six is erosion of
institutions. People don’t trust bureaucratic, technocratic governments. In the United States, legitimacy of
the media is significantly down. Nobody knows who’s telling the
truth. Fake News. Elections – legitimacy down. Europe and the United States –
turnout down in both These institutions are becoming less
legitimate. The societies are becoming more
polarized. And in 2018 we’re going to see that
process pick up steam. It’s going to make a difference in
the ability of the United States Pax Americana to lead by example for the rest of the world. Risk number five is U.S.-Iran relations I think it’s safe to say that
neither the Americans nor the Iranians are happy with each other at this point, despite this nuclear deal. President Trump to start with is going to do everything
possible to pick on Iran on the non-nuclear side That means in terms of support for anti US and anti U.S. ally proxies across the region, support for terrorism as well as picking up economic sanctions, diplomatic efforts, and military efforts by the United
States to check Iranian geopolitical power. It’s been on the rise across the region. Trump also – and it’s very important to
understand – he can get up in the morning and he can just end the deal any
day. If this deal goes down sanctions will get slapped back on and the Iranian nuclear program
could very well start back up again. This time next year we could well be talking about the Israeli strikes
on Iranian nuclear facilities. That’s a bad movie and we’ve all seen it. Our fourth risk is Mexico NAFTA – The negotiation could fall
apart, might not work. Trump could initiate withdrawal and that would stop negotiations at least temporarily creating tremendous uncertainty over billions of dollars of trade and especially hurting the Mexican
economy which is very dependent on its trade with the United States. And you don’t want all of that
happening in an election year that’s going to politicize and create a great sense of
anti-Americanism and the person who’s most likely to
play it well that’s Lopez Obrador in charge of his Morena party. He and what will certainly be a much more anti U.S. Cabinet will create massive uncertainty for the economic environment of America’s southern
neighbor. Risk number three is the Global Tech
Cold War. What we have is the most important global sector being an object of great contention between the world’s two most
important economies – U.S. and China. It’s a fight over big data. It’s a fight over information. And it’s a fight increasingly over
the attempt to dominate Artificial
Intelligence. In China it’s the government pouring cash in with companies aligned and patriotic. In the case of the United States more advanced but also much less aligned and these companies are not patriotic they are increasingly
fighting against each other and they’re certainly not
playing nice with Washington. Our number two risk is accidents. There’s no global policeman. And the wood is dry in a lot of
arenas around the world. Take cyber. Lots of state and non-state actors
have tremendous cyber capability. We could be facing a year where
there’s a cyber takedown of a large part of a major economy. Second – Syria. It is a country
where countries that don’t like each other have a lot of hardware in close proximity. The United States, and Russia. The United States and Iran. Something could well good wrong. North Korea. Not that we’re expecting a war but it’s certainly more likely than
it has been. The idea that the Americans are
telling the North Koreans “fire and fury” “you guys can’t develop an ICBM” and they’re saying “oh yeah? Watch us.” Certainly greater danger around that. Terrorism hitting Americans outside the United States or even back at home. The overreaction from the Trump
administration would be extravagant. We haven’t had a major geopolitical accident since the Cuban missile crisis decades ago. 2018 feels like a time when our luck may be running out. And our number one risk for 2018 is China Loves a Vacuum. For decades now it’s the Americans
that have told other countries in the
world how to reform – the Russians after the Soviet collapse, the East Europeans, emerging markets, yes even the Chinese. But today in 2018 you could argue that the American political system is in greater need of structural reform than that of Xi Jinping’s China. Xi is the strongest leader that
China has had since Mao Zedong. He has consolidated power domestically and he’s prepared to play an increasingly global leadership role at a time when the Americans will not and cannot lead by example. The geopolitical vacuum doesn’t get
filled but it becomes much more
antagonistic and confrontational because of the rise of China. Especially in U.S.-China. China is not going to play on North
Korea. Trade tensions are going to break
out. So the U.S.-China relationship is going to be very tricky. There is really for the very first
time an alternative to the Western model of liberal democracy. It’s Xi Jinping. It’s China. And that’s our top risk of 2018.

14 thoughts on “Eurasia Group’s Top Risks for 2018

  1. I wonder: did they pay everbody on that coach, they forgot to blur the people faces, or they brought the whole company on the coach 🙂
    Anyways, I appreciated the content and the video footage. Great job!

  2. The video is so blatantly pro US, that makes one wonder are you being sponsored by the US agencies for making this propaganda piece?  You literally blame China for proposing and defending an alternative social and political configuration!  Please also notice that you don't even speak of the risk of the US dollar or the cost of servicing of the US national debt.

  3. I wonder why every years, geopolitical condition always came to reccession. But u have some good points regarding to indentity politics especially in Indonesia wherein religion often being used as one of political instrument for gaining majority of vote from local communities. It make feels like going back to dark ages.

  4. so China becoming more authoritarian (more unified power under 1 man) and they don't require "fixing" but the US does? Ian your bias is showing.

  5. Well Corbyn resembles more a Bernie Sanders presidency and less the likes of Trump faux populism/nationalism.

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