The 10 Biggest Risks The World Faces In 2015

GreeceREUTERS/Yannis BehrakisA pedestrian runs to avoid a fire caused by a petrol bomb thrown by protesters during a rally to mark the 2008 shooting of a student by police in Athens’ Syntagma (Constitution) square December 6, 2012.

Just two years ago Ian Bremmer, the head of Eurasia Group, stated that “political risk in the developed world is … overstated.”

Today, things are a bit different:

“Geopolitics is back,” write Ian Bremmer and Cliff Kupchan in Eurasia Group’s annual list of the top risks. “As 2015 begins, political conflict among the world’s great powers is in play more than at any time since the end of the Cold War.”

ISIS, Russia, China, and the emerging markets are major risks in the upcoming year, but the biggest one this year is actually Europe because of increased political instability, according to Bremmer and Cliff Kupchan.

We’ve put together Bremmer and Kupchan’s top 10 risks for 2015, along with key explanations and — bonus — a list of red herrings.

1. The politics of Europe.

'Anxiety is again on the rise over Europe's economics, but there is no sense of crisis to force political leaders to work together,' writes Bremmer.

Additionally, anti-EU political parties are becoming more and more popular, while some governments are increasingly growing to resent Germany's dominant influence.

And top of all that -- 'Russia and ISIS will add to Europe's security worries,' Bremmer writes.

Source: Eurasia Group

2. Russia

Although sanctions and lower oil prices have hurt Russia, ultimately they haven't pushed Putin to change up the course in Ukraine.

As Russia's economy continues to worsen, Putin's popularity will depend on his willingness to confront the West -- which makes Western companies and investors 'likely targets -- on the ground and in cyber-space,' writes Bremmer.

Source: Eurasia Group

3. The effects of China slowdown.

China's President Xi Jinping is shifting the country into a consumer-driven economy, which requires a shift toward lower levels of growth.

The continuing slowdown will 'likely have little impact inside the country,' writes Bremmer, but 'that's cold comfort for the expanding list of economics that depend on booming trade with a commodity-hungry China.'

Source: Eurasia Group

4. The weaponization of finance.

Washington is weaponizing finance -- everything from access to capital markets to sanctions -- in order to achieve foreign policy goals without the use of the military, writes Bremmer.

The downside here is that the US will damage its relations with allies (especially in Europe) and US companies will be caught in between Washington and sanctioned states.

Source: Eurasia Group

5. ISIS, beyond Iraq and Syria.

Although ISIS is facing military setbacks in Iraq and Syria, its ideological reach will spread throughout the Middle East and North Africa.

'It will grow organically by setting up new units in Yemen, Jordan, and Saudi Arabia,' writes Bremmer. 'The risk to neighbouring states will worsen.'

Source: Eurasia Group

6. Weak incumbents.

People are tired and fed up.

As a result, the presidents of Brazil, Colombia, South Africa, Nigeria, and Turkey are going to see 'determined opposition and formidable obstacles' while they're trying to push their respective political agendas, writes Bremmer.

Source: Eurasia Group

7. The rise of strategic sectors.

The success (or failure) of businesses in the new year will increasingly depend on governments that are focused on political stability. Companies that go along with the government will benefit, while those that don't will be punished, writes Bremmer.

'And we'll see it in the US, where national security priorities have expanded the military industrial complex to include technology, telecommunications, and financial companies,' writes Bremmer.

Source: Eurasia Group

8. Saudi Arabia versus Iran.

The Iran and Saudi Arabia rivalry will continue, but Washington (and others) will be reluctant to intervene.

'Mounting anxiety over the outcome of the Iran nuclear negotiations will ensure that these two countries use proxies to fuel trouble in more Middle Eastern countries than ever in 2015,' writes Bremmer.

Source: Eurasia Group

9. Taiwan and China.

'Domestic political turmoil in Taiwan will ensure that relations with the mainland will deteriorate sharply this year,' writes Bremmer.

'If Beijing determines that engagement with Taipei has failed to bring progress toward reunification, Beijing will probably back away from trade and investment deals.'

If the US gets involved, it could really hurt US-Chinese relations.

Source: Eurasia Group

10. Turkey

'President Erdogan will continue to attack political opponents and tighten his hold on power to try and remake Turkey's political system,' writes Bremmer. 'But he's unlikely to win the new powers he wants this year, forcing more political infighting, less policy coherence, and more political instability.'

Refugees from Syria and Iraq could add more radicalism into Turkey's politics, writes Bremmer.

Source: Eurasia Group

BONUS: The red herrings.

  1. The pre-occupation of political leaders with domestic reform will help China, Japan, and India avoid market-moving conflict in 2015.
  2. Although ISIS will continue to cause problems and attract new followers, the Islamic state it's aiming to create 'is highly unlikely to remain viable.'
  3. Risks of instability for oil-exporting states are overblown.
  4. Mexico's reform process should keep moving forward.

And now take a look at the...

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