2020 will prove to be a tipping point moment in international politics. In recent decades, globalization has created opportunities, reduced poverty, and supported peace for billions of people. But with China and the US decoupling on technology, the 21st century economy is now breaking in two. Developed world countries have become toxically polarized. Climate change matters as never before. Taken together, these trend lines are likely to produce a global crisis. Governments and the private sector will respond, but the scale of the challenges is greater than in the past, and tribalism within national politics undermines global cooperation. These are Eurasia Group's
Top 10 risks for 2020.
1. Rigged!: Who governs the US?
In 2020, US political institutions will be tested as never before, and the November election will produce a result many see as illegitimate. If Trump wins amid credible charges of irregularities, the result will be contested. If he loses, particularly if the vote is close, same. Either scenario would create months of lawsuits and a political vacuum, but unlike the contested Bush-Gore 2000 election, the loser is unlikely to accept a court-decided outcome as legitimate. It's a US Brexit, where the issue isn't the outcome but political uncertainty about what the people voted for.
2. The Great Decoupling
The decoupling of the US-Chinese tech sector is already disrupting bilateral flows of technology, talent, and investment. In 2020, it will move beyond strategic tech sectors like semiconductors, cloud computing, and 5G into broader economic activity. This trend will affect not just the $5 trillion global tech sector, but other industries and institutions, as well. This will create a deepening business, economic, and cultural divide that will risk becoming permanent, casting a deep geopolitical chill over global business. The big question: Where will the Virtual Berlin Wall stand?
3. US/China
As this decoupling occurs, US-China tensions will provoke a more explicit clash over national security, influence, and values. The two sides will continue to use economic tools in this struggle—sanctions, export controls, and boycotts—with shorter fuses and goals that are more explicitly political.
4. MNCs not to the rescue
Far from filling the gaps on critical issues like climate change, poverty reduction, and trade liberalization created by underperforming national governments, multinational corporations (MNCs) will face new pressures from political officials, both elected and unelected. Politicians working to manage slowing global growth, widening inequality, populist rivals, and security challenges created by new technologies will assert themselves at the expense of MNCs.
5. India gets Modi-fied
In 2019, Prime Minister Modi and his government revoked the special status for Jammu and Kashmir, piloted a plan that stripped 1.9 million people of their citizenship, and passed an immigration law that considers religious affiliation. Protests of various kinds have expanded across India, but Modi will not back down, and a harsh government response in 2020 will provoke more demonstrations. Emboldened state-level opposition leaders will directly challenge the central government, leaving Modi with less room for maneuver on economic reform at a time of slowing growth.
6. Geopolitical Europe
European officials now believe the EU should defend itself more aggressively against competing economic and political models. On regulation, antitrust officials will continue to battle North American tech giants. On trade, the EU will become more assertive on rules enforcement and retaliatory tariffs. On security, officials will try to use the world's largest market to break down cross-border barriers to military trade and tech development. This more independent Europe will generate friction with both the US and China.
7. Politics vs. economics of climate change
Climate change will put governments, investors, and society at large on a collision course with corporate decision-makers, who must choose between ambitious commitments to reduce their emissions and their bottom lines. Civil society will be unforgiving of investors and companies they believe are moving too slowly. Oil and gas firms, airlines, car makers, and meat producers will feel the heat. Disruption to supply chains is a meaningful risk. Investors will reduce exposures to carbon intensive industries, sending asset price lower. All this as warming makes natural disasters more likely, more frequent, and more severe.
8. Shia crescendo
The failure of US policy toward Iran, Iraq, and Syria—the major Shia-led nations in the Middle East—creates significant risks for regional stability. These include a lethal conflict with Iran; upward pressure on oil prices; an Iraq caught between Iran's orbit and state failure, and a rogue Syria fused to Russia and Iran. Neither Donald Trump nor Iran's leaders want all-out war, but deadly skirmishes inside Iraq between US and Iranian troops are likely. Iran will disrupt more tanker traffic in the Persian Gulf and hit the US in cyberspace. It may also use its proxies in other Middle East countries to target US citizens and allies. The chance is rising that the Iraqi government will expel US troops this year, and popular resistance from some Iraqis against Iran's influence there will strain the Iraqi state—OPEC's second-largest oil producer. Feckless US policy in Syria will also drive regional risk in 2020.
9. Discontent in Latin America
Latin American societies have become increasingly polarized in recent years. In 2020, public anger over sluggish growth, corruption, and low-quality public services will keep the risk of political instability high. This comes at a time when vulnerable middle classes expect more state spending on social services, reducing the ability of government to undertake austerity measures expected by foreign investors and the IMF. We'll see more protests, fiscal balances will deteriorate, anti-establishment politicians will grow stronger, and election outcomes will be less predictable.
10. Turkey
President Erdogan—who has a long history of provocative behavior in response to threats, sparking confrontation with both foreign and domestic critics—has entered a period of steep political decline. He's suffering defections from the ruling Justice and Development Party as popular former allies establish new parties. His ruling coalition is shaky. Relations with the US will hit new lows as likely US sanctions take effect in the first half of this year, undermining the country's reputation and investment climate and putting further pressure on the lira. Erdogan's responses to these various pressures will further damage Turkey's ailing economy.
Red herrings
The new “Axis of Evil”—Iran, North Korea, Venezuela, and Syria—are unlikely to blow up, despite the headlines. Iran is the biggest challenge, but neither Trump nor Tehran wants all-out war.
The world's advanced industrial democracies—the US, Europe, and Japan—remain well-positioned to withstand the populist storm in 2020.
A big win for Boris Johnson and his Conservative Party—and an historic-sale loss for Jeremy Corbyn's Labour Party—gives Britain a much-needed break from Brexit madness in 2020.
Read the full Top Risks for 2020 report.
This originally appeared on Time.com.
