The 10 biggest risks the world faces in 2018

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“Let’s be honest: 2018 doesn’t feel good,” Eurasia Group’s president, Ian Bremmer, and chairman, Cliff Kupchan, wrote in their annual “Top Risks” report.

“Yes, markets are soaring, and the economy isn’t bad, but citizens are divided,” Bremmer and Kupchan said. “Governments aren’t doing much governing. And the global order is unravelling.”

Their assessment of the biggest risks the world faces in 2018 spans the planet, from individual countries to global trends. Something big could happen, they say, to shake the world unlike anything in a decade.

“If we had to pick one year for a big unexpected crisis – the geopolitical equivalent of the 2008 financial meltdown – it feels like 2018,” Bremmer and Kupchan said. “Sorry.”

Here’s what Eurasia Group sees as the risks for 2018.

1. China filling a global leadership vacuum

Top of the list is the risk of a powerful and modern China filling in a void left by the United States in for the position of global leader.

Chinese President Xi Jinping is ” the strongest Chinese president since Mao Zedong,” Bremmer and Kupchan write. More countries are beginning to turn to China because of its “noninterference in the political and economic lives of other countries.”

As Eurasia Group puts it – “At a moment of policy incoherence and dysfunction in Washington, China’s government has redefined the country’s external environment, set new rules within it, and developed the world’s most effective global trade and investment strategy.”

2. Accidents

The analysts of the Eurasia Group are worried about an accident that could spark a larger conflict.

“There’s been no major geopolitical crisis since 9/11, and none created by governments since the Cuban missile crisis,”Bremmer and Kupchan write. “But there are now many places where a misstep or misjudgment could provoke serious international conflict.”

The biggest risk areas are the Korean Peninsula, Syria, Eastern Europe, and Iraq, they note. The Eurasia Group report also points out that “competition and conflict in cyberspace,” as well as “dispersal of Islamic State fighters,” pose significant risks.

3. Global tech cold war

Eurasia Group’s report notes that “the world’s biggest fight over economic power centres on the development of new information technologies,” like artificial intelligence and supercomputing.

Bremmer and Kupchan write that the US and China will vie for dominance in this regard, and will try to dominate the markets, specifically in Africa, India, Brazil, and Europe.

Whichever country comes out on top will likely set the standards for the future, potentially with weaponised AI.

4. Mexico

2018 will be a defining year for Mexico, a country plagued by corruption, violence in its struggle against gangs and drug cartels, and slow economic growth.

Chief among the concerns for Mexico, and the one with the most potential repercussions according to Eurasia Group, is the potential for the collapse of the North American Free Trade Agreement (NAFTA).

“A collapse of NAFTA talks would not kill the deal, but uncertainty over its future would disproportionately harm the Mexican economy given the country’s deep reliance on US trade,” Bremmer and Kupchan write.

5. US-Iran relations

It looks like Trump “has it in for Iran,” according to Eurasia Group’s analysis, and the US president could danger fragile diplomatic gains made in the past – specifically the nuclear deal.

“The nuclear deal will probably survive 2018, but there’s a substantial chance that it won’t,” Bremmer and Kupchan write.

Trump will likely continue to push back against Iranian influence, particularly in Syria, Iraq, Lebanon, and Yemen. There will also be deeper coordination with Saudi Arabia.

Iran, in turn, will push back and ramp up its nuclear program if the deal falls through, which in turn increases the possibility of an American or Israeli strike in Iran – causing oil prices to rise.

6. The erosion of institutions

Eurasia Group believes that with Trump’s election and the UK’s vote for Brexit, there is a concrete threat against institutions.

“Institutions that support and sustain peaceful and prosperous societies – governments, political parties, courts, the media, and financial institutions – continue to lose the public credibility on which their legitimacy depends,” Bremmer and Kupchan write.

This will “create a toxic, antiestablishment populism in developing countries,” the report warns, which “will make economic and security policy less predictable.”

7. Protectionism 2.0

Going along with anti-establishment and populist sentiments, Eurasia Group fears that politicians will be forced by voters “to shift toward a more zero-sum approach to global economic competition and to look as if they’re doing something about lost jobs.”

Bremmer and Kupchan call it “Protectionism 2.0” and write that it will be different from its predecessor in that “instead of import tariffs and quotas, today’s tools of choice include ‘behind-the-border’ measures such as bailouts, subsidies, and ‘buy local’ requirements.”

8. The United Kingdom

“2017 may not have been fun for the UK,” Bremmer and Kupchan write. “2018 will be worse.”

Much of what puts the UK on the list is related to Brexit – specifically the negotiations of the country’s exit from the European Union.

The UK’s negotiating principle that “nothing is agreed until everything is agreed,” will “encourage endless fights over details between and within the two sides,” according to the Eurasia Group report.

To add to the uncertainty, Prime Minister Theresa May’s handling of the negotiations could cost her her job – potentially being replaced by a more “hardline” Tory leader, or Labour Party leader Jeremy Corbyn.

9. Identity politics in southern Asia

As Bremmer and Kupchan write, “Identity politics in southern Asia comes in several forms: Islamism, anti-Chinese and anti-other minority sentiment, and an intensifying nationalism in India.”

The report points to a rising sentiment of Islamism in Indonesia and Malaysia, resentment of wealthy ethnic Chinese citizens in Indonesia, and the persecution of Myanmar’s minority Muslim Rohingya people.

In India, Bremmer and Kupchan worry that Prime Minister Narendra Modi’s Hindu nationalist rhetoric before elections “could give cover to radicalized elements of society that want to target Muslims and lower-caste Hindus.”

10. Africa’s security

The Eurasia Group report worries that 2018 will see a spillover of violence from Africa’s “unstable periphery” (Mali, South Sudan, and Somalia), into the core countries of Africa – Cote d’Ivoire, Nigeria, Kenya, and Ethiopia.

Militancy and terrorism are the principle threats – specifically Al Shabaab, Al Qaeda, and other jihadist and islamist groups like ISIS and Boko Haram.

“The dangers posed by Al Shabaab in East Africa and Al Qaeda in West Africa are not new, but they’re set to intensify,” Bremmer and Kupchan write.

Red herrings

Bremmer and Kupchan also identify three global red herrings that may look bad on the surface but are likely to be relatively stable:

Trump White House: “For 2018, he can at most follow through on a limited number of ongoing legislative priorities and some executive orders. If there’s a major crisis (please see risk #2: Accidents), we’re all in trouble.”

Eurozone: “A close look at the trajectories of individual countries in the eurozone suggests the region looks set for another relatively constructive year after surprising observers to the upside in 2017.”

Venezuela: “President Nicolas Maduro heads into 2018 in a relatively comfortable position. He has consolidated control of the country’s institutions, enjoys military support, and has effectively divided and demoralized the opposition, leaving it with no capacity to force regime change.”

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