The greatest risks to the world in 2021

2021 begins in the middle of the greatest crisis of our lives. The healthcare response to the pandemic will define 2020. The economic response to its permanent damage will define 2021.

A world in crisis will miss the leadership and collaboration of a dedicated and well-functioning superpower. With the world’s most powerful country as divided as the United States is now, G-Zero’s geopolitical recession is sure to deepen. So we start this year’s report with the problem of political legitimacy in America. These are the top 10 risks for the Eurasia Group for 2021.

1 – 46 *

Following a 2016 Trump victory that many Democrats believe Russia helped him win, Joe Biden’s tenure opens the era of the Starlet Presidency, which will see the Oval Office resident of about a third of the country – and some lawmakers – These election skeptics are considered illegitimate to send to Congress. The greatest risk here is domestically. President-elect Biden is the weakest executive since Jimmy Carter in 1976. However, the consequences of extreme polarization for democratic legitimacy extend far beyond the borders of the United States. Aside from a shared desire to contain China, Republicans and Democrats will disagree among themselves and among themselves on the goals of US foreign policy. Furthermore, given the size of Trump’s base and the expansion of that base to include more minority voters, allies and potential partners are wondering whether America First’s next president and foreign policy are only four years away.

2 – Long Covid

In 2021, the persistent symptoms of COVID-19 will threaten not only life but also political stability and the global economy. Countries around the world will struggle to meet ambitious vaccination deadlines, and the pandemic will leave a legacy of high debt, displaced people, growing inequality, and lost trust. The bumpy adoption of vaccines and the economic scar tissue of the pandemic will fuel outbursts and public unrest in many countries. In some emerging markets, liquidity conditions will tighten this year. With the cost of inflation and credit rising, they have much less room than the U.S. and Europe to cushion the economic blow from COVID.

3 – Climate: Net zero meets G zero

Climate policy is becoming a higher national priority … and an arena of global competition. In a number of clean technologies, China’s longstanding industrial policy approach will face an aggressive counter-offensive from Washington. Bifurcation pressures occur in some parts of the clean energy supply chain, as occurs with 5G. The demand for net zero emissions targets will create enormous opportunities for private capital, especially for the growing US dollar and euro pool in environmental, social and governance (ESG) areas. However, winners and losers are as often determined by political factors as they are by market forces.

4 – The competition between the US and China is expanding

A shared desire in Washington and Beijing for stability in US-China relations will ease headline tensions, but US coordination of Chinese competition with allies, as well as vaccination diplomacy / nationalism and climate technology strategy dueling, will come off long-running Frictions in other areas further intensify their rivalry. Disagreements on trade, Hong Kong. Taiwan and the South China Sea will carry over by 2021. Taken together, these issues will increase the risk of miscalculation and escalation towards a crisis.

5 – Global data billing

A slowdown in the free flow of cross-border free data increases costs for businesses and disrupts popular apps and internet business models. This risk starts with the US and China, but doesn’t end there. Even as the data-driven 5G and AI revolutions gain momentum, other governments worried about who is accessing their citizens’ data and how will undermine the very foundation of the open global internet. Business models for innovative technology sectors will suffer. App bans and other issues will hinder global collaboration on public health and climate challenges.

6 – Cyber ‚Äč‚Äčturning point

There is not a single factor that increases the risk of a major disaster in cyberspace in 2021. The digital realm, in which any computer or smartphone can become an entry point for hackers and where nation states and criminals act relatively with impunity, is too unpredictable for that. Instead, a combination of low likelihood but high impact risks and an enlarged threat surface as digitization accelerates will make 2021 the year when cyber conflicts create an unprecedented technological and geopolitical risk in cyberspace.

7 – (out in) cold Turkey

The economic setbacks of 2021 and Turkey’s poor COVID-19 response will cause President Erdogan to struggle to win back voters disaffected by his two-decade rule. This dynamic will fuel social tensions, spark crackdown on the opposition, and encourage Erdogan to embark on more foreign policy adventures in order to fuel nationalism and distract his supporters. And this year the Turkish president will have no international friends to protect him from the consequences.

8 – Middle East – Low oil costs a toll

The Middle East is the biggest regional loser from the coronavirus. Energy-producing countries in the Middle East and North Africa faced a collapse in global energy demand in 2020, which resulted in the governments of Algeria pouring less money into their coffers in Iran – even as the pandemic sickened citizens and weakened economies. 2021 will get worse, energy prices will remain low. Many of these governments will cut spending, harm the vulnerable private sector and boost unemployment. Reforms will slow down and protests will increase.

9 – Europe after Merkel

Angela Merkel’s departure later this year after 15 years as Chancellor will determine the continent’s greatest risk. Europe is facing an economic hangover due to tightened lockdown restrictions in several countries, and Merkel will not be there to encourage flexibility in the multilateral response. Any economic setback could thus endanger Europe’s fragile recovery and create the conditions for European populism to awaken from its hibernation. Without Merkel as a strong negotiator, diplomatic efforts to resolve energy and territorial disputes in the eastern Mediterranean will also have problems. The EU’s position is becoming more hawkish as France urges more member states to be tough on Turkey, creating tension.

10 – Latin America disappointed

After the Middle East, Latin America is the region of the world hardest hit by the coronavirus. Governments in Latin America are facing aggravated versions of the vast political, social and economic problems they faced prior to the pandemic. Large-scale vaccinations will not be available in most regions by the end of the year and countries are poorly positioned to deal with another wave of COVID by then. Political and economic pressures will mount when Argentina and Mexico hold parliamentary elections in 2021 and voters in Chile, Ecuador and Peru vote for president.

red herrings

President Joe Biden will pragmatically include Trump-friendly leaders like Brazil’s Bolsonaro, Turkish Erdogan, Britain’s Boris Johnson and Israeli Netanyahu, albeit unevenly.

U.S. lawmakers will not declare war on tech companies that are helping restore post-pandemic growth because they cannot agree on their grievances and regulatory approach.

US-Iran relations will not be as productive or destructive as many fear (and no, President Trump will not wage war on Iran before leaving office).

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