2017's Top Five Global Political Risks

As has been the case in recent years, global political risk levels remain too high for comfort and continue to pose a serious threat to international security as well as the economies of many of the world’s leading countries.  Worse, political risk levels failed to fall in 2016 and, in some cases, continued to worsen.  Heading into 2017, there does not appear to be a strong likelihood that political risk levels will decline.  In fact, there is a strong chance that overall political risk levels will rise in the coming year, in some cases to very dangerous levels.  This is due to a variety of factors, including the ongoing wars and unrest in countries stretching from West Africa to Central Asia, the isolationist trend in the United States and the rise of nationalism and populism in many areas of the world.  Here, we will look at five key political risks facing the world as it prepares to head into 2017.

US Isolationism: Inevitably, when the world’s leading power (and the state the guarantees the balance of power in many areas of the world) withdraws to some degree from the world stage, political risk levels are going to rise significantly.  Of course, much remains to be seen with regards to how the incoming Trump Administration will manage US foreign policy, but this uncertainty is already contributing to a rise in political risk levels around the world.  For example, there are major concerns in East Asia and Europe over the new administration’s commitment to the US’ military and security alliances in those regions and its willingness to prevent China and Russia from becoming more aggressive in asserting their territorial claims in those regions.  Furthermore, many of the US’ key allies in Asia (such as Japan) or Europe (much of the European Union) are declining powers in need of US reinforcement to provide stability and security, so a reduction in US support could accelerate their relative declines.  Overall, a more isolationist US is likely to lead to more unrest, both in these economically-vital regions, as well as in more unstable regions around the world.

The Balance of Power in Asia: One area of the world that is heavily exposed to a potential move towards isolationism by the United States is Asia, where the balance of power continues to shift in China’s favor.  In recent years, China has grown more assertive with regards to its territorial and maritime claims in the region, while the vast scale of its economy is increasingly resulting in other countries in the region becoming more and more dependent upon trade and investment ties with China.  Now, with a potential US retrenchment, China will undoubtedly see an opportunity to further reinforce its claim to primacy in Asia and this could spark a conflict in the region.  For example, China may move to expand its military presence in the South China Sea, or may test Taiwan’s pro-independence government.  Elsewhere, the risk levels on the Korean Peninsula would have remained high regardless of the outcome of the US presidential election, but it remains to be seen how a new government in Washington will react to future provocations by North Korea.  Finally, the are concerns in New Delhi that the recent strengthening of ties between the US and India could be rolled back, leaving India increasingly isolated in Asia.

Russian Revanchism: For the first time since the Cold War, the dominant foreign policy issue in a presidential election in the United States was the threat posed to the US by an increasingly aggressive Russia.  There is little doubt that Russia remains a power in decline, particularly in terms of demographic and economic power.  However, Moscow views a potential reduction in the presence of the United States in Europe, as well as the weakness and disunity of the European Union, as a unique opportunity to restore Russian domination over its near-abroad, potentially its last such opportunity.  As such, there is a strong possibility that Russia will move to bring countries such as Belarus, Moldova and Kazakhstan into a closer orbit around Moscow in 2017, while seeking to expand its presence in Ukraine while weakening an unfriendly government in Kiev.  Furthermore, Russian President Vladimir Putin may attempt to test the new US government’s commitment to NATO, particularly in Central Europe and the Baltic states.

EU Divisions: While Russia may view the increasing disunity within the European Union as an opportunity to enhance Russia’s position in Europe, many European leaders are terrified that the divisions within Europe that increased in 2016 could continue to widen in 2017.  Most notably, the impending withdrawal of the United Kingdom from the European Union is a massive blow to the EU, as the UK was a leading economic, military and cultural power within the EU.  In 2017, much of the EU’s focus will be on the so-called Brexit, as it remains uncertain as to what sort of ties the UK will retain with the EU after it begins the procedure to leave the EU in early 2018.  Meanwhile, the spectre of nationalism and populism will loom large over the EU in 2017 as national elections will take place in Germany, France and the Netherlands next year, and populist parties and leaders on both the right and the left are likely to play a key role in each of these elections.  Add to this mix the potential for a resurgence of Europe’s migration crisis and the threat of another economic downtown, and it is clear that political risk levels in Europe are likely to rise significantly in 2017.

Syria and Iraq: Finally, a key political risk that has been in place for a number of years and will remain a leading threat to global security in 2017 are the intertwined conflicts in Syria and Iraq that have already claimed hundreds of thousands of lives and have destabilized an entire region.  In both cases, outside powers (Russia, Iran and Hezbollah in Syria, the US and Iran in Iraq) have successfully propped up fragile governments, enabling them to stave off near defeats in both conflicts, but in the process, prolonging the suffering and misery in each country.  This has led to soaring casualties, as no side in these conflicts is able to gain a decisive edge, particularly in Syria.  In the meantime, the Islamic State is likely to be driven from its remaining strongholds in Mosul and Raqqa in the near-future, but the threat from this militant group will remain in place as it goes to ground in Syria and Iraq and as many of its foreign fighters return to their home countries in order to carry out attacks there.  As such, these conflicts will remain the most immediate security risks facing the world, but as we have seen, there are many more out there that could dramatically raise political risk levels in 2017.