Four Political Risks to Watch

Around the world, the level of political risk remains dangerously high and this is having a measurable impact on international security and the global economy.  These political risks come in many forms.  The most obvious of these are the range of conflicts and uprisings that continue to destabilize a vast swathe of the globe stretching from West Africa to Central Asia and encompassing much of the Middle East.  Meanwhile, two revisionist emerging markets, China and Russia, are using the fact that the world’s leading power, the United States, is increasingly being distracted from global affairs, leading them to attempt to see how much they can improve their strategic positions in their near-abroad.  Finally, economic, social and demographic changes are leading to a major destabilization of the political systems of many of the world’s leading powers, and the consequences of these changes are yet to be fully understood.  Below are four current political risks that have the potential to cause major problems in the coming months.

Middle East Unrest Spreads: Currently, there are civil wars underway in four Middle Eastern countries (Iraq, Syria, Libya and Yemen), each of which shows no signs of being brought to an end in the near-future.  Moreover, each of these conflicts holds the potential to spill over into neighboring countries, potentially leading to new conflicts in countries such as Egypt, Tunisia, Algeria or Lebanon.  Meanwhile, the recent increase in political and economic tensions between two of the region’s leading powers, Saudi Arabia and Iran, shows now signs of abating and the potential for a direct or proxy conflict between these two countries is now very high.  Without a successful effort to improve ties between Saudi Arabia and Iran, the two sides will remain on opposite sides in wars and disputes in countries such as Syria, Iraq, Yemen and Bahrain.  Finally, the fact that oil prices have remained relatively low over the past two years means that many countries in the region have suffered severe economic losses and this too is adding to the level of political tension in the region.

Political Gridlock in Latin America: While the Middle East is beset by war and unrest, another emerging region, Latin America, is facing another sort of political threat, gridlock.  At the moment, Latin America is facing its biggest economic and political crisis in recent decades and this is threatening to roll back many of the political, social and economic gains that this region achieved in recent years.  Currently, the most significant political risks in the region are found in Brazil and Venezuela, with the president of the former currently facing an impeachment proceeding (amid a severe economic downturn) and the president of the latter likely to face being ousted from office as well (amid an economic collapse).  Meanwhile, the level of crime and corruption in Latin America remains much too high, as crime rates have soared in many areas of this region, while many countries are in the midst of massive corruption scandals.  With the near-term economic outlook for Latin America forecast to remain poor, the potential for much higher levels of political unrest in the region is significant. 

Terror in Europe: Over the past 16 months, Europe has been rocked by three major terrorist attacks, and a number of other planned attacks have been thwarted by the region’s security and intelligence forces.  Unfortunately, more such attacks in Europe are likely to occur in the coming months, as the region remains dangerously exposed to terror operations being planned in the Middle East and North Africa.  With failed states proliferating along Europe’s southern and southeastern periphery, and with thousands of people entering Europe each month from these regions, Europe is struggling to reduce the terror threat that it faces.  This rising threat of terrorism, coupled with Europe’s inconsistent handling of its ongoing migration crisis, has led to a major increase in support for far-right political movements across Europe, threatening both the region’s hard-fought integration and its political stability.  Moreover, while Europe remains the developed region most vulnerable to terrorism, other regions such as North America and East Asia also face an elevated risk of terrorism.

Democracy at Risk: Since the Second World War, democracy has been the political system that has allowed the countries that practice it to enjoy the highest standards of living and political security.  However, the political and economic changes of the past 15 years have led to changes that are now threatening the future of democracy in many areas of the world.  As labor markets change and political threats proliferate, so too do the political parties and movements that exist in the world’s democracies.  This has led to a fragmentation of these political parties and movements and it is this fragmentation that has emerged as the greatest threat to democracy.  In presidential systems (such as the United States or France), this fragmentation has allowed for politicians with more extreme right-wing or left-wing policies to move closer to power in recent years, and it is just a matter of time before an extremist candidate takes power in a major power with a presidential system.  In parliamentary systems, this fragmentation has led to political gridlock, with too many political parties now qualifying for representation in their country’s parliament, making it difficult to form coalition governments.  This has led to repeated elections, or, in other cases, weak coalition governments that rely on extreme-right or extreme-left parties to remain in power.  As both systems of government struggle under the weight of these changes, an increasing number of voters are losing faith in democracy, opening the door for non-democratic forms of government to gain favor.