NEW YORK, Jan. 4, 2021 /PRNewswire/ -- As we begin 2021,
the United States is the most
powerful, politically divided, and economically unequal of the
world's industrial democracies. China is America's strongest competitor, a
state capitalist, authoritarian, and techno-surveillance state that
is increasingly mistrusted by most G20 countries. Germany and Japan are much more stable, but the most
powerful leaders both nations have had in decades are out (former
Japanese Prime Minister Abe Shinzo)
or on their way out (German Chancellor Angela Merkel). Russia is in decline and blames the US and the
West for its woes.
Even as the world grapples with its worst crisis since World War
II, some risks are more potent, deadly, and likely to change the
course of world politics. These are Eurasia Group's Top Risks for
2021, the firm's annual prediction of the ten greatest threats to
the trajectories of nations, global politics, industries and
institutions. Unveiled each January, Top Risks helps investors,
companies and the public anticipate and respond to opportunities
wherever they invest or do business. The report is co-written by
Eurasia Group President Ian Bremmer
and Chairman Cliff Kupchan.
The #1 risk for 2021 is "46*"—the opening of an era in which the
occupant of the White House is viewed as illegitimate by roughly
half the country. Donald Trump's
refusal to accept the outcome of an election that he declares was
stolen is unique in American history, underscoring how divided
America has become—and will remain.
"A superpower torn down the middle cannot return to business as
usual," write Bremmer and Kupchan. "And when the world's most
powerful country is so divided, everybody has a problem. The
geopolitical recession—and our G-Zero world—will deepen as a
result."
Bremmer and Kupchan go on to argue that the strength of Trump's
base and political divisions in the US will force allies to
consider the possibility that any commitments made by the incoming
Biden administration could be overturned in four years with the
election of another "America First"
president.
Other Top Risks in the report include the ongoing impact of the
coronavirus pandemic, climate change, the US-China conflict, data
and cybersecurity, and distinct threats facing Turkey, the Middle
East, Europe, and
Latin America. The report also
includes several "red herrings"—issues that, despite media
attention, are unlikely to pose significant threats or drive
instability in the coming year.
Top Risks has an impressive track record for being both early
and accurate in its predictions. Eurasia Group's 2020 Top Risks
report, for example, correctly predicted a contested US election as
its #1 risk.
Bremmer and Kupchan will host an on-the-record press conference
call today, 4 January, at 10:30 a.m.
EST/15:30 GMT to discuss the
risks and take questions. To participate, please register
here
Below is a summary of all ten Top Risks for 2021. Please click
here for the full report.
Top Risks 2021
When the world's most powerful country is as divided as
the United States is now, the
G-Zero geopolitical recession is sure to deepen. The world needs
the leadership and cooperation that an engaged and well-functioning
superpower can help provide, because, just as the healthcare
response to the coronavirus pandemic defined 2020, the economic
response to its lasting damage will define 2021.
#1 – 46*
Following a 2016 Trump victory that many Democrats believe
Russia helped him win, Biden's
term opens the era of the asterisk presidency, a time when every
Oval Office occupant is seen as illegitimate by roughly half the
country—and the lawmakers that election skeptics send to Congress.
Most of the risk here is domestic, but the consequences of extreme
polarization for democratic legitimacy extend well beyond US
borders. Apart from a shared desire to contain China, Republicans and Democrats will disagree
sharply—with each other and among themselves—over the objectives of
US foreign policy. In addition, the size of Trump's base, and the
broadening of that base to include more minority voters, leaves
allies and potential partners wondering whether the next
"America First" president and
foreign policy are just four years away.
#2 – Long Covid
In 2021, the lingering symptoms of Covid-19 will threaten not
just lives but political stability and the global economy.
Countries around the world will struggle to meet ambitious
vaccination timelines, and the pandemic will leave a legacy of high
debt, displaced workers, and lost trust. The distribution of
vaccines will divide haves from have nots, both within and among
nations, stoking anti-incumbent anger and public unrest in many
countries. Some emerging markets will experience a debt crunch this
year. With inflation and borrowing costs rising, they'll have far
less room than the US and Europe
to cushion Covid's economic blow.
#3 – Climate: net zero meets G-Zero
Climate policy will move from playground of global cooperation
to arena of global competition. Across a range of clean
technologies, China's longstanding
industrial policy approach will now face a much more aggressive
climate push from Washington. Some
parts of the clean energy supply chain will face bifurcation
pressures like those seen in 5G. The push for net-zero emissions
targets will create enormous opportunities for private capital,
especially the growing pool of environmental, social, and
governance dollars and euros, but winners and losers will be
determined as often by political factors as by market
forces.
#4 – US-China tensions broaden
A shared desire in Washington
and Beijing for stability in
US-China relations will briefly
ease headline tensions, but intensifying vaccine diplomacy and
climate and tech competition
will combine with longstanding frictions in other areas to further
complicate their rivalry. Disagreements over trade, Hong Kong, Taiwan, and the South China Sea will carry
over into 2021. Collectively, these points of dispute will boost
the risk of miscalculation and escalation toward crisis.
#5 – Global data reckoning
A slowdown or halt to the free flow of sensitive data across
borders will raise costs for companies and disrupt popular apps and
internet business models. This risk begins with the US and
China, but it doesn't end there.
Even as the data-driven 5G and AI revolutions gain steam, other
governments concerned about who is accessing their citizens'
data—and how—will erode the foundation of the open global internet.
Business models for AI and other innovative tech sectors will
suffer. App bans and other issues will hamper global cooperation on
public health and climate
challenges.
#6 – Cyber tipping point
There is no single factor that raises the risk of a major
disaster in cyberspace in 2021. The digital realm, where any
computer or smartphone can become an entry point for hackers and
nation states, and criminals act with relative impunity, is too
unpredictable for that. Instead, a combination of low-probability
but high-impact risks and inexorable technology trends will make
2021 the year that cyber conflict creates unprecedented
technological and geopolitical risk in cyberspace.
#7 – (Out in the) cold Turkey
Economic setbacks in 2021 and Turkey's poor Covid response will leave
President Recep Tayyip Erdogan struggling to win back voters
disillusioned with his two-decade rule. These dynamics will stoke
social tensions, prompt a crackdown against the opposition, and
encourage Erdogan to launch more foreign policy adventures to fuel
nationalism and distract his supporters. But this year,
Turkey's president won't have
international friends to shield him from the
consequences.
#8 – Middle East – low oil
takes a toll
Energy-producing countries in the Middle East and North Africa faced a collapse in global energy
demand in 2020 that left governments from Algeria to Iran with less cash flowing into their
coffers—even as the pandemic sickened citizens and weakened
economies. 2021 will be worse, because energy prices will remain
low. Many of these governments will cut spending, damaging
vulnerable private sectors and fueling unemployment. Reforms will
slow, and protests will grow.
#9 – Europe after
Merkel
Angela Merkel's departure later
this year after 15 years as chancellor will drive the continent's
top risk in 2021. Europe faces an
economic hangover from intensified lockdown restrictions in several
countries, and Merkel won't be there to encourage flexibility in
the multilateral response. Without the German leader to serve as a
strong and neutral negotiator, diplomatic efforts to resolve energy
and territorial disputes in the Eastern Mediterranean will
struggle, as will the UN process to address Cyprus issues. The EU position will become
more hawkish as France pushes more
member states to get tough with Turkey, raising the odds of diplomatic
rupture.
#10 – Latin America disappoints
Governments in Latin America
face intensified versions of the formidable political, social, and
economic problems they were confronting before the pandemic. There
will be no large-scale vaccinations until late in the year, and
countries are poorly positioned to deal with another Covid wave
before then. Political and economic pressures will intensify as
Argentina and Mexico hold legislative elections in 2021, and
voters in Chile, Ecuador, and Peru vote for president.
Red herrings
Trump's friends in trouble – Trump-friendly leaders such
as Erdogan, Brazil's Jair
Bolsonaro, the UK's Boris Johnson,
and Israel's Binyamin Netanyahu
will engage with the new US president where they
can.
Techlash in US – US lawmakers won't declare war on
the tech companies helping to restore post-pandemic
growth.
Iran-US confrontation – Ties between the US and
Iran will be neither as productive
nor destructive as many fear.
About Eurasia Group:
Eurasia Group is the world's
leading global political risk research and consulting firm. By
providing information and insight on how political developments
move markets, we help clients anticipate and respond to instability
and opportunities everywhere they invest or do business. Our
expertise includes developed and developing countries in every
region of the world, specific economic sectors, and the business
and investment playing fields of the future. With our best-in-class
advisory and consulting offerings and GZERO Media, the Eurasia
Group umbrella provides the marketplace with a complete political
risk solution. Headquartered in New
York, we have offices in Washington, London, San
Francisco, Brasilia,
Sao Paulo, Singapore, and Tokyo, as well as on-the-ground experts and
resources in more than a hundred countries. "Politics first"
grounds our work: Politics is the lens through which we view the
world, and we are committed to analysis that is free of political
bias and the influence of private interests.
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SOURCE Eurasia Group.