With the election of Donald Trump, the G-zero world is now fully upon us.
The triumph of an “America first” foreign policy marks a fundamental break with decades of U.S. exceptionalism and a consensus view in Washington that U.S. international leadership, however flawed and uneven, is indispensable for international stability.
That in turn is set to bring to an end the 70-year era of Pax Americana, a period in which U.S. hegemony in security, trade, and the promotion of values provided baseline predictability for the global economy. In 2017, we enter a period of deep geopolitical recession.
With these ideas as backdrop, here are the top 10 political risks for the coming year, according to the Eurasia Group — the political risk consultancy I founded and oversee. There are also a few “red herrings,” stories where we see less risk than meets the eye:
1. Unpredictable America
The world’s sole superpower was once the international trump card, imposing order to force compromise and head off conflict. Now it’s a wildcard, because instead of creating policies designed to bolster global stability, President Trump will use U.S. power overwhelmingly to advance U.S. interests, with little concern for the broader impact. Trump is no isolationist. He’s a unilateralist. Expect a more hawkish–and a much less predictable–U.S. foreign policy. Allies, especially in Europe and Asia, will hedge. Rivals like China and even Russia will test. U.S.-led institutions will lose more of their international clout.
2. China Overreacting
China’s leadership transition will create risks that matter far beyond that country’s borders. The need to maintain control of the transition ahead of the Party Congress in the fall will increase the risk of economic policy mistakes that rattle foreign investors and international markets. In addition, President Xi Jinping knows this is a dangerous time to look weak and irresolute. Provocations from Trump, and the sheer number of places where U.S.-China tensions might play out — North Korea, Taiwan, Hong Kong, the East and South China Seas — make 2017 a dangerous year for China, and all who depend on it for growth and stability. Read more