2 January 2015

Top Five Political Risks for 2015

Prior to 2014, many experts claimed that political risk had fallen to more manageable levels in most areas of the world and that political risk would pose little threat to the tentative global economic recovery that is underway.  However, events in 2014 proved that political risk levels have, in fact, risen in recent years, culminating in a number of significant threats to global security.  As we prepare for 2015, it is clear that, not only have most of 2014’s threats to security remained unresolved, but that other threats are looming that could lead to even higher levels of political risk in the coming year.  As such, here are the five political risks that will pose the greatest threat to global security and economic growth in 2015.

 

War in Eastern Ukraine

For many, 2014’s most shocking event was the war in eastern Ukraine that resulted in Russia annexing Crimea and sending troops and weapons in large numbers to eastern Ukraine to back pro-Russian militants in their insurgency there.  As 2015 approaches, a very fragile ceasefire remains in place along the front lines in eastern Ukraine, with clashes flaring on a regular basis along some sectors of the front line.  Meanwhile, Russia has been increasing its shipment of troops and weaponry into eastern Ukraine, pointing to the likelihood of a new offensive there in the near future.  Moreover, it is clear that Russia would like to expand its territorial control in southern Ukraine in order to dominate the northern Black Sea and to connect Crimea with Russia.  With Russia’s geopolitical goals in Ukraine not yet realized, 2015 could prove to be the year that decides to future of Ukraine.

 

Islamic State-Inspired Terrorism

The threat of larger-scale terrorist attacks by members of the Islamic State (IS) militant group, or by individuals inspired by the IS and al-Qaeda, has risen sharply over the past year and will continue to do so in 2015.  There are already thousands of Europeans and other foreigners fighting alongside the IS in Syria and Iraq and many of these militants are likely to attempt to return to their home countries in the coming year.  Furthermore, as the Islamic State comes under increasing military pressure from the United States-led coalition fighting against the IS in Iraq and Syria, it is likely to use terrorist attacks as a means for striking back at its enemies.  As such, the likelihood of larger-scale and higher-profile terrorist attacks will rise to dangerous levels in the coming year.

 

A Distracted United States

The dominant military and political power of the United States in recent decades has allowed for the global economy to undergo a massive trade and investment boom, backed by the US’ dominance of the world’s key shipping routes and its protection of the world’s leading economic and energy-producing regions.  However, as 2015 approaches, it is clear that the US is finding itself in a position were it cannot manage all of the crises underway around the world.  Moreover, US President Barack Obama is a lame-duck president facing a hostile Congress and this could further weaken the US’ ability to project power internationally next year.  So far, the rise in political unrest has avoided most of the world’s economic and energy-producing regions, but should this unrest spread to such regions in 2015, confidence in the US’ ability to react to such a crisis will have waned.

 

East Asian Maritime Clashes

Tensions over disputed maritime borders in the East and South China Seas have led to a tense standoff between many of East Asia’s leading powers.  At the center of these disputes is China, as it is challenging Japan’s control of disputed islands in the East China Sea and as it is claiming nearly the entire South China Sea as its waters, angering a host of Southeast Asian countries.  In 2015, these tensions are likely to rise, as China grows more assertive in both bodies of water.  These flashpoints could ignite over the issue of oil and gas reserves believed to be found in these disputed waters, which is leading to all sides increasing their naval presence in both seas.  Should a clash erupt between different naval forces, the potential for a larger conflict in this region will rise accordingly.

 

The Collapse of Venezuela

As Venezuela’s economy continues to approach a total collapse driven by hyperinflation and worsening product shortages, the potential for that country to descend into a full-blown civil war will rise.  Moreover, the recent sharp decline in oil prices has added to the downward pressure on the Venezuelan economy.  With President Nicolas Maduro proving incapable of dealing with the worsening economy, he may resort to a much larger crackdown on the political opposition in Venezuela than the one seen in early 2014.  This time, his support will certainly have fallen as the economy descends into a depression and this may lead to an all-out war between Venezuela’s political left and right.