Why you should care
Because it’s good to be mentally prepared.
What ever happened to predictability? The world became a lot less predictable in 2016. Uncertainty is the name of the game, which means we have no idea how far the British pound will fall, nor can we guess the direction of the Donald’s foreign policy — just two examples of how making global forecasts is trickier than it’s been in the past.
Potential pitfalls for 2017 include some biggies — from nukes, terror and market uncertainty — to under-the-radar risks, which, by definition, have a nasty way of taking us by surprise. But with OZY’s Magic 8 Ball firmly in hand, we suggest you duck when it comes to the following …
The discontent continent. Thought populism died with Norbert Hoffer’s loss in Austria? Think again. Italians recently voted no to reforming parliament — yet another referendum — prompting Prime Minister Matteo Renzi’s resignation and giving rise to populist party sentiments. Meanwhile, everyone’s waiting to see whether the French left galvanizes behind rightist François Fillon to keep the far-right’s Marine Le Pen at bay in the presidential election this spring. And in March, the citizens of the Netherlands will head to the polls, where far-right populist Geert Wilders stands a good chance. Former CIA deputy director John McLaughlin is concerned by the apparent disenchantment with the EU in all three countries, in addition to Brexit and Hungary and Poland’s right-leaning surge. “If you had one of the really big countries back away from the EU, like Italy or France, it could be close to a death blow,” he warns.
Terror could rear its ugly head in Europe, given the number of ISIS-linked militants who’ve fled the Middle East for the continent. Could Vladimir Putin push his luck in a NATO country to see how far he can bend the alliance? “If Trump looks the other way on Ukraine, it could embolden Putin,” McLaughlin says. Klisman Murati, an international analyst with Global Risk Insights, disagrees. He doesn’t see Russia messing with the alliance unless there’s greater military buildup or NATO exercises in the Baltics. But if Moscow did make a move on a NATO country, it would be a “fundamental” challenge, McLaughlin warns. A more subtle Russian approach? Messing with European elections, the way they did here, he adds.
The scariest bit? Kim Jong-un. Before long, says McLaughlin, North Korea will have a nuke that “they can deliver on a long-range missile that probably can get to the continental United States.” It may not happen this year, but he believes Trump’s administration will face this as a reality within the first term.
There’s no telling how U.S.–Sino relations will shape up under the 45th U.S. president, given his fiery rhetoric, which leaves this relationship very much “up in the air,” says Murati. But one thing we do know is that both China and Japan are facing a mounting aging problem at home. In Japan, adult diapers are projected to outsell baby diapers within the next few years — an illustration, McLaughlin says, of the strain on societies where “young people are increasingly having to take care of parents and grandparents while employment pressures are rising.”
If Trump looks the other way on Ukraine, it could embolden Putin.
China will hold its party conference in September to review and set expected GDP increases. Murati reckons that Xi Jinping and his colleagues face daunting tasks in reforming the economy for an exploding middle class, which will grow further with the undoing of the one-child policy. Hong Kong, where voters will be forced to elect a Beijing-curated chief executive, also has a growing middle class that’s learning much more about the world … while Xi Jinping, Murati says, fights to keep the system going. So expect friction there.
Less obvious concerns? Aung San Suu Kyi’s credibility in Burma is being undermined internationally, says Jeremy Luedi, senior editor and analyst for Global Risk Insights. The Nobel Peace Prize winner’s failure to address the Rohingya crisis and potential genocide in Myanmar are to blame. He’s also concerned with how well the new Thai monarch will perform this year — King Maha Vajiralongkorn has a “somewhat checkered reputation” that could upset the balance of power between royals, the military and civilians. Also look out for a possible power rivalry between Uzbek President Shavkat Mirziyoyev and the late Islam Karimov’s powerful daughters.
The biggies? Iran and nukes. The controversial nuclear agreement “could fall apart or be challenged by the Trump administration,” says McLaughlin. Or “the Iranians could be caught cheating.” Either way would make waves, and few allies are likely to follow us back down the sanctions route if things fall apart.
Less obvious risks could exist in the monarchies that have managed a massive influx of refugees in recent years. The flip side of that is that a critical mass could be achieved in places like Jordan and Lebanon, McLaughlin says, pushing these societies to the brink. Saudi Arabia, despite efforts to wean themselves off oil, will be facing economic strains during their economic liberalization process. So far, McLaughlin notes, they seem to be dealing well, but there could be a fragility there we simply don’t see — “the way most people didn’t see the Arab Spring coming.” Most would say a revolution in Saudi Arabia is unlikely, he admits, but “if it were to happen, it would be a real upheaval” in the region.
Keep an eye on internal problems in Venezuela, says Luedi, who fears the country may see major anti-government actions and possibly even a leadership change, if President Maduro’s approval ratings fall further. And for all the African votes and the predicted status quo in places like Rwanda, Luedi warns that if Gambia’s Yahya Jammeh refuses to step down after losing — and initially conceding defeat — we could see greater civil unrest there.