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COLUMN-2014's top 10 political risks

Source: Reuters - Tue, 7 Jan 2014 22:18 GMT
Author: Reuters
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(The opinions expressed here are those of the author, a columnist for Reuters.)

By Ian Bremmer

Jan 7 (Reuters) - Since the 2008 financial crisis, the world's biggest risks have been economic. From a euro zone meltdown, to a Chinese hard landing, to the U.S. debt crisis, analysts have spent the past five years worrying about how to stave off financial implosion.

That's over. In 2014, big-picture economics are relatively more stable. But geopolitics are very much in play. The impact of the G-Zero world - one that increasingly lacks global leadership and coordination - is on display.

So what are this year's top 10 political risks?

10.) Turkey

Among emerging markets, Turkey is particularly vulnerable in 2014. The country faces spillover effects from Syria's civil war, a re-emergence of the Kurdish insurgency, and heightened political uncertainty in the wake of public outcry against Prime Minister Erdogan. Erdogan is lashing out against the opposition, both inside and outside his party - and elections loom. 9.) The capricious Kremlin

President Putin remains the single most powerful individual in the world, with a commanding hold on power in one of the world's most important countries. But his popularity has waned significantly, and after a decade of rising expectations, Russia's economy is stagnating (and too oil-dependent: see risk #5). This makes Russia under Putin far less predictable - at home and abroad - but Putin is no less willing or able to implement his preferred policies. Expect the unexpected from Putin in 2014. 8.) The Middle East's expanding unrest

After three years of turmoil, the Middle East is set to spiral even further. This year, expect violence in Iraq to skyrocket, as Iranian influence grows in Baghdad (much to Saudi Arabia's dismay). With questions surrounding the United States' role in the region (see risk #1), Iran's nuclear program, and al Qaeda (#7), as well as ongoing transitions in Egypt and Tunisia, the region could become even more unhinged. 7.) al Qaeda 2.0

Turmoil in the Arab world has invited a resurgence of Sunni extremism and the al Qaeda brand; the Syrian conflict has become a powerful magnet for jihadists. The U.S. homeland remains safer than in the aftermath of 9/11, but local governments and western interests across the Middle East and North Africa are now the lower-hanging fruit - and thus at greater risk. 6.) Strategic data

The Internet and its governance are shifting from a bottom-up open source sector to a top-down strategic sector as the state plays a growing role. Expect this trend to accelerate in 2014, and accordingly, that costs of doing business will increase, particularly as cybersecurity becomes even more vulnerable. 5.) Petrostates

The unconventional energy revolution has had important geopolitical implications, but disruptive events have offset much of the effect of volume growth, limiting the impact on producers in recent years. In 2014, this trend will change, with an acceleration of spare capacity growth, bearish price pressures, and increased competition among producers more generally. Petrostates like Russia, Nigeria, Venezuela and Saudi Arabia could get squeezed. 4.) Iran

The continued progress of Iran's nuclear program, the crippling effect of sanctions on Iran's economy, and the dramatic electoral victory of Hassan Rouhani in last June's presidential election have vastly improved the chances for a comprehensive negotiated settlement between Iran and the West. We set the odds at better than even, but there will be risks along the way, and if the deal falls apart, the risk of military action will rise. One way or the other, it is shaping up to be the make-or-break year for Iranian nuclear negotiations. 3.) The new China

President Xi Jinping and China's key leaders have embraced far-reaching reform to a greater degree than we've seen in two decades. But the party will face formidable political tests, and missteps could undermine reform and the leadership itself. Too much reform too quickly could lead to dissent from within the party as stakeholders with vested interests lose out and lash out; too little could provide oxygen to popular dissent and protests. 2.) Diverging markets

In Brazil, Colombia, India, Indonesia, South Africa and Turkey - six of the largest emerging markets where elections matter (China doesn't have them and Russia's don't really count) - voters will go to the polls this year facing new political challenges. Slowing growth and rising demands from newly enfranchised middle classes create heightened uncertainty, and as recent protests in Brazil, Turkey, Colombia, Russia and Ukraine have shown, a frustrated public can quickly take to the streets. 1.) America's troubled alliances

In the wake of perceived American foreign policy missteps in the Middle East, the Snowden scandal, and dysfunction at home that leaves allies guessing abroad, the United States' foreign policy has become increasingly hard for the global community to interpret and predict. For security partnerships, America's closest allies - Israel, Britain, Japan and others - have few options. That's not the case for Washington's second-tier allies, countries like Germany, France, Turkey, Saudi Arabia, and Brazil. To avoid too close an alignment with the United States and hedge against these developments, these governments will begin to shift their international orientation - with implications for companies and investors doing business within their borders. (Ian Bremmer)

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