12 January 2021

The Ten Leading Geopolitical Risks in 2021

It is little surprise that, following one of the most chaotic years in recent history, geopolitical risk levels entering the year 2021 are dangerously high. Even without the Covid-19 pandemic, geopolitical risk levels would likely be at uncomfortable levels due to the myriad of internal and external tensions and flashpoints that have proliferated around the globe in recent years. However, the pandemic has added another dimension to many of these flashpoints and has dramatically raised tensions in many parts of the world.

Now, the world faces not only threats to its stability from many of the geopolitical risks that existed before the world had ever heard of Covid-19, but also from threats that have emerged as a result of the economic, political and social changes that have come about due to the impact of the ongoing pandemic. As a result, geopolitical risk levels entering 2021 are as high as they have been since any time over the past ten to fifteen years, a less-than-welcome development for a world that is struggling to overcome the dislocations caused by the Covid-19 pandemic.

Before we look at the ten leading geopolitical risk levels for the coming year, it is interesting to look back at what we believed would be the ten biggest geopolitical risks of 2020. Of course, this list was compiled before we knew that the world would be confronted by its worst pandemic in a century, but as you can see, our forecasts for geopolitical risk in 2020 were nevertheless quite accurate:

The Leading Geopolitical Risks for 2020

  • The Distracting US Presidential Election: This year’s presidential election in the United States lived up to its expectations in terms of its impact on global stability.
  • Popular Unrest: The level of popular unrest entering 2020 was high and the pandemic resulted in an even higher level of unrest in many parts of the world.
  • China and Hong Kong: China’s crackdown on Hong Kong’s pro-democracy movement took place as expected and threatens Hong Kong’s future as an Asian economic hub.
  • A Gulf Conflict: The threat of a conflict in the Persian (Arabian) Gulf rose dramatically in early 2020 following the assassination of Qasem Soleimani.
  • Cyber Warfare: The massive cyber-attack on many government bodies in the United States and elsewhere in late 2020 highlighted the risk posed by cyber warfare.
  • India-Pakistan: Clashes between India and Pakistan were largely verbal in 2020, as India’s biggest threat last year came from neighboring China in the Himalayas.
  • More Difficulties for Western Democracy: In addition to the chaotic US election, Western democracy was shaken by Brexit and rising support for populist leaders.
  • The Technological Arms Race: The race for technological leadership between the US and China not only intensified, but threatened to leave other powers far behind.
  • Latin American Divisions: Latin America’s deep ideological divisions were overshadowed by the devastation wrought on that region by the Covid-19 pandemic.
  • Protectionism and Isolationism: The pandemic added to the downwards pressure on international trade and investment in 2020.

As we can see, many of our forecasts for the biggest geopolitical threats in 2020 came to fruition, even amid the disruptions caused over the course of the year by the impact of the pandemic. This indicates that not only is the level of geopolitical risk dangerously high, but that the pandemic is likely to have actually increased the threat posed by a number of these issues and flashpoints, while at the same time creating new threats to global stability and security.

As we prepare to enter a new year, and leave behind a year that most people would like to forget, it is clear that the elevated levels of geopolitical risk that we have been facing in recent years will remain in place for the foreseeable future. With economic and social tensions having soared as a result of the Covid-19 pandemic, the potential for conflict and unrest in many parts of the world has risen substantially, and any further dislocations that result from the pandemic will certainly add to these tensions in the months ahead.

As such, here are our predictions for the ten leading geopolitical risks facing the world in the year 2021:

  • The US-Chinese Cold War: Relations between the world’s two superpowers have fallen to their lowest level in decades. While there is an expectation that the incoming Biden Administration in Washington will attempt to alleviate tensions between the two giants, flashpoints such as Taiwan, Hong Kong and the South China Sea will threaten to lead to clashes between the two sides, while the two countries vie for global economic and technological leadership. Given the vast influence of both countries, any worsening in this relationship will have global repercussions. 
  • China and India: Last year’s clashes between the world’s two most-populous countries in the Himalayas were a reminder of the range of issues that divide the two countries. With both sides keen to portray themselves as leading powers in the 21st century, neither is likely to back down on their territorial claims along their shared border, raising the likelihood of more clashes in the coming year. This could harden both sides’ position on these issues and could push India into the arms of an emerging alliance in the Asia-Pacific region aimed at offsetting China’s rising power.
  • Vaccine Politics: As an increasing number of effective vaccines for Covid-19 are rolled out, the focus will shift from the development of such vaccines to their distribution, and here political tensions could arise. While countries such as the United States and the United Kingdom are likely to have most of their populations vaccinated by mid-2021, other countries, especially poorer ones, might have to wait until the following year to undergo mass vaccinations. This could further widen the North-South split and add to risk levels in countries where vaccinations are delayed.
  • Russian Over-Extension: In recent years, Russia has taken on a greater role in global affairs than at any time since the dissolution of the Soviet Union three decades ago. However, this expansion of Russian interests abroad has coincided with a prolonged economic slump at home, something that threatens to derail Russia’s geopolitical ambitions. With new leaders in Washington and Berlin in 2021, Russian ambitions in Europe and further abroad could meet more resistance in the coming year, while Russia’s capabilities will be limited by the weakness of its economy.
  • Cyber Terrorism: While the threat of cyber terrorism continued to grow over the past year, there are serious concerns that the world has only experienced a very small level of the true threat posed by potential cyberattacks. With both state and non-state actors becoming more adept at carrying out attacks in the cyber realm, the threat to global security and the economy will continue to grow. This raises the possibility of one of more debilitating cyberattacks in 2021, something that could trigger an actual conflict outside of the cyber sphere.
  • East Africa: The recent conflict in the northern Ethiopian state of Tigray has served as a reminder that most countries in East Africa suffer from high levels of internal ethnic and religious divisions that threaten to lead to conflict and unrest in each country in that region. With economic dislocations caused by the Covid-19 pandemic and massive locust swarms, tensions in this region have risen to even higher levels and the potential for conflict in places such as Ethiopia, Uganda and northern Mozambique is now dangerously high.
  • Iran’s Nuclear Program: A new administration in the United States has raised hopes that tensions surrounding Iran’s nuclear program and its ambitions in the Middle East can ease. However, Iran is facing a presidential election in 2021 and hardliners are determined to scupper any potential concessions to the United States over Iran’s nuclear program. At the same time, an alliance of Middle Eastern countries, including Israel and Saudi Arabia, has coalesced around the notion that Iran’s efforts to gain influence in the Middle East need to be countered.
  • The Volatile Eastern Mediterranean: The potential for a conflict in the eastern Mediterranean region will remain very high in 2021. On one hand, Turkey’s efforts to claim more of the waters (and their resources) in this region could put it into conflict with Greece (and some of its European allies). On the other, a host of countries are seeking to play a greater role in this region, including Russia and France. If the United States remains aloof from the troubles in this region, as it did in 2020, the potential for a conflict there will continue to rise.
  • Latin American Social Tensions: Prior to the Covid-19 pandemic, the level of social unrest across many parts of Latin America had risen dramatically, with massive street protests taken place in Chile, Brazil and other areas of that region. Now, following the massive human and economic cost paid by many Latin American countries during the pandemic, popular anger in the region is at an even higher level, threatening to usher in an even larger protests in 2021. If the recovery from the pandemic takes longer than expected, Latin America could explode.
  • European Leadership Vacuum: With German Chancellor Angela Merkel set to step down in 2021 after more than 15 years in power and with a largely faceless leadership at the helm of the European Union, Europe is facing the threat of a power vacuum that could jeopardize the region’s unity. French President Emmanuel Macron, as usual, is ready to take the helm, but France lacks Germany’s economic heft, and many EU member states are wary of French intentions. Meanwhile the post-Brexit United Kingdom will be increasingly focused on affairs outside of Europe.

As we prepare to say good-bye to one of the worst years, at least for much of the world, in recent history, it is important not to lose sight of the fact that geopolitical risk levels have continued to trend upwards over the past decade or more and are now at truly dangerous levels as we enter 2021. While countries such as the United States and Germany will have new leadership in 2021, most of the world’s other leading actors will continue to be led by the same people that have overseen this rise in geopolitical risk levels, boding ill for the prospects for a lessening of geopolitical tensions around the world. Add to this the fact that the Covid-19 pandemic will still be with us in 2021, and the fact that the economic fallout from the pandemic will continue to be felt in the coming year, and it is easy to see how this could be a year in which geopolitical risk levels rise even further. As such, it is clear that there will be much to watch in terms of geopolitical risk in 2021.