- People are getting increasingly anxious
about the world that we live in:
I'm finding a lot of panic, people that are very online,
spending too much time on cable news and social media,
and maybe talking to their crazy uncle.
This is meant to be a counterbalance,
that you can keep the uncle
but you can also spend some time
thinking about deeper analytic trends
of what really is an issue
that's worth concerning yourself with,
how we might be able to respond to it,
and also all the things that, frankly,
don't merit the screaming headlines.
What we're talking about in the Top Risks Report
are those risks out there, globally,
that are going to have the most likely dramatic implications
in changing the way the world works
in ways that are unanticipated
by all of the major actors in that world:
the government actors, the business actors,
and the citizens.
And they're ranked in terms of impact,
imminence, and likelihood-
you put those three things together
and you get the top risks.
I'm Ian Bremmer, president of Eurasia Group,
and these are the top risks of 2023.
Number 10: Water stress.
Around the world, so many people think of water
as a sudden emergency
that needs a quick and immediate policy response.
Increasingly, this is an ongoing,
real-time issue for everyone.
Some people have too much water;
massive floods in California.
Some people have too little;
huge challenges with shipping in Europe.
Farmers having to consistently change the way they go
about their basic productivity on a season-to-season basis
because they do not have adequate resources
to be able to plant a normal season.
This is having the biggest impact on the Middle East
and sub-Saharan Africa, but it's a global issue.
There are global responses,
just like the COP summits on biodiversity
and on carbon emissions,
there's a COP summit on water,
but no one's ever heard of it
because it doesn't really do anything,
it hasn't become a priority,
therefore, it's not getting the resources,
and therefore it's getting worse every single year.
2023 is really the first year
that I think we can talk about global water
as being the kind of ongoing condition of stress
that we've already come to learn
about carbon, about biodiversity.
Number nine: TikTok boom.
It's not actually about TikTok,
it's about the generation that has grown up on TikTok.
It's the most diverse generation we've ever seen
in the West.
It's also, by far, the most activist.
At a young age, believing that they can do much more
by getting online and by demonstrating,
than they can by voting,
and that has much greater impact,
both in terms of driving agendas
that are very important to them, like on climate,
like on social equity-
also in terms of changing outcomes
for people in positions of power,
and here I'm thinking not just about political leaders
but also about industry leaders, CEOs, bankers,
and the like.
That is going to create big ripple waves
across the global economy
precisely because it's the most progressive generation,
and as a consequence, it will cause more volatility,
will lead to more political and economic change-
much of which will eventually be welcomed-
but the getting from here to there is, of course,
gonna be a challenge.
Number eight: Divided States of America.
Now, the fact that it's number eight, the United States,
and the U.S. is the most powerful country in the world,
kinda means it almost didn't make the list,
means that we are not panicking
about the future of the United States, but still,
divisions in the United States, politically,
are massive, they're much greater
than those of other advanced industrial economies
around the world,
that makes it a lot harder to functionally govern.
You saw this with 15 votes
to get Kevin McCarthy barely over the line
as Speaker of the House,
and he's gonna have an impossible time
actually holding that party together.
You also see this
with inability to even address fundamental issues
like improving education,
or dealing with immigration in the United States,
even though we all know what the basic answers are.
But the big positive in this risk is the fact
that all of the people that were running
for key positions of governor and Secretary of State
to oversee upcoming elections,
those that were claiming
that this election was gonna be stolen
and they had to stop the steal, they all lost.
So as we look forward to 2024,
the likelihood of a constitutional crisis
in the United States is virtually zero.
Number seven is arrested global development.
For 50 years, the world has seen
incredible human improvement in education,
in health and lifespan,
in economic growth across the world-
it wasn't just a tiny group of rich people
that were taking advantage, it was the emergence
of a global middle class.
We are now seeing that turn around:
we're seeing more people driven into poverty,
we're seeing more children leaving school, and particularly,
a burden on women being driven into sexual trafficking,
being driven into the informal economy,
not being able to experience the basic human rights
that they've worked so hard to achieve
over the last 50 years.
The United Nations estimates
that five years of human development on the planet
has been lost in the three years
since the pandemic has begun, and in 2023,
those losses will only accelerate.
There are lots of structural reasons for that,
some of it is, of course, the dangers of the pandemic,
some of it is the challenges that came
from the disruptions of the Russian invasion of Ukraine,
all the supply chain challenges,
and the inflation that came on the back of it,
some of it is climate change.
You put all of those things together
and global development is changing trajectory.
Number six: Energy crunch.
The Russian invasion of Ukraine means
that the Europeans are no longer getting their gas
and much of their oil from Russia,
one of the largest energy producers in the world.
But the Europeans need their energy,
what are they doing?
They're spending as much as humanly possible
to get the energy from anywhere else they can,
that drives prices up,
but it also means that developing countries
that don't have access to the same deep pockets
that the Europeans do are really taking it in the teeth.
So over the course of the year,
the Europeans are going to experience
another challenging winter,
in many ways more challenging in 2023 than in 2022,
because they don't have the benefits
of all of that Russian energy that was coming in
at the beginning of the year like they did last year,
but also it means that the knock-on challenges
for the poorer countries that are not commodity producers
around the world, gonna feel very great stress this year.
Number five: Iran in a corner.
Demonstrations across Iran erupted months ago
with the killing of Mahsa Amini, a young woman
who was not correctly wearing her head scarf,
killed by the "morality police," so-called, in Iran,
and it touched off the greatest demonstrations
they've had on the ground since the 1979 revolution-
and the Iranian government is only repressing in response,
there's no willingness to have a dialogue or compromise.
No, in fact, we see, increasingly,
the Iranian government is willing to execute their citizens
with no reason.
At the same time as that's going on,
the JCPOA, the Iranian Nuclear Deal
the Americans stepped away from unilaterally,
well, the Iranians are stepping away from it too,
and they've now achieved 'nuclear breakout,'
their willingness to engage
in nuclear development enrichment that would allow them
to build nuclear weapons when the inspectors aren't there.
And finally, the Iranians are Russia's best friend
on the global stage.
Chinese aren't providing them
with military support to invade Ukraine, but Iran is,
that's angering the Americans, angering the Europeans.
The likelihood we see regime change in Iran
is relatively low, and even if it were to occur,
it would probably be towards a military dictatorship,
not to a democracy;
it's not gonna help in resolving any of these issues.
But the likelihood that we see military confrontation
between Iran and a new Netanyahu-led right-wing coalition
in Israel,
Saudi Arabia, and even the United States,
that's higher than at any point
since the Iranian Nuclear Deal was signed.
Number four: Inflation shockwaves.
Should surprise no one that,
after a staggering contraction of the global economy
that came with COVID,
the global economy basically shut down,
and an enormous fiscal outlay
from every major economy in the world to ensure
that all the people that were suffering,
had their businesses closed,
and lost their jobs, would still be able to get through
while the economy contracted,
and then the economies open up, but not at the same time,
and the shipments and ships, they're not in the right place.
So what happens is a consequence of all of that:
While people are ready to spend money,
supply chains are massively disrupted,
costs go way up, and costs go way up around the world,
doesn't matter if you were Biden,
or you were the Europeans,
or you were the Chinese, the Brits, the Japanese,
everyone experiencing generational levels of inflation.
Overall, global growth from 6% in 2021 to 3% in 2022,
expecting less than 2% in 2023- that's a global recession.
The implications of that around the world
will be very serious,
especially given levels of present inflation.
The wealthy countries have the money
to be able to continue to ensure that their working classes,
their middle classes, are taken care of,
but the real issue is for developing countries
who don't have the fiscal space
to be able to make these payments
to the rest of populations;
they'll put policies in place
that will only make
the much-more indebted dollar-denominated debt,
in many cases, with higher interest rates
that they will not be able to service, leading to collapse.
The social instability, the political instability
that comes from these economic challenges
on much of the developing world, is at higher levels in 2023
than we have seen in decades.
Number three: Weapons of Mass Disruption.
The United States, back in 1989 when the wall came down,
was the leading exporter of democracy around the world,
not always with successful outcomes,
frequently hypocritically, but nonetheless,
that's how the wall came down,
that's how the Soviet Union was defeated.
In 2023, only 30 years later,
the United States has become the principle exporter of tools
that destroy democracy.
That's not the intention of the U.S. government,
it's not even the intention of the technology companies
that have these algorithms,
it is an unintended consequence of the business model
and the AI capabilities.
But we are seeing the exploitation of these tools
by bad actors.
With deepfakes in video,
and other tools that are used
both politically and economically
to achieve changes in your behavior,
both in the marketplace and in politics,
will pose great dangers to representative democracy,
as well as the proper functioning of the free market.
That's why Brazil had their January 8th events
that looked an awful lot
like those in the United States in January 6th:
without Instagram, without Facebook,
without all of these algorithms
driving all these conspiracy theories,
you don't get tens of thousands of Brazilians
that believe that their election was stolen,
and are prepared to throw away their futures
in order to occupy these buildings.
We're gonna see a lot more of this,
Brazil's not about to fall apart,
just as the United States was not, but around the world
democracies are becoming more vulnerable
because these tools are being exported,
and no one is able to stop them.
Number Two: Maximum Xi.
Xi Jinping is now the undisputed leader of China,
he has rid himself of term limits,
he can be president for life.
He has also surrounded himself, in the Communist Party,
the entire hierarchy, with only loyalists.
That don’t have checks and balances,
and as a consequence he can make mistakes. Those mistakes can be big,
they can have major implications for how the world actually works.
This is not the way China was run 10 years ago,
there was a lot of differentiation
between hardliners, on the military,
and people that wanted more pragmatic economic outcomes-
technocrats, the Shanghai Clan, Beijing, you name it-
but today you are with Xi or you are out.
We saw that with the treatment
of the former president, Hu Jintao, forced removal
in front of the entire communist party leadership
was an extraordinary display of the unique power
that Xi Jinping was prepared to exercise,
and every person in that room understood
that there but for the grace of God,
or Xi, go there.
We saw that with the sudden turn from zero COVID
to maximum COVID, made by a snap decision
of the Chinese president at the end of the year.
That level of uncertainty
does not just involve changing the path on COVID,
it also involves treatment of technology companies,
engagement in the global economy,
even issues of fundamental national security.
Now, the good news is that the United States and China
are not in a cold war, they don't want a cold war.
Indeed, after the G20 in Bali,
Xi Jinping and President Biden put a floor
underneath the relationship to ensure
that it couldn't continue to deteriorate
in ways that would be damaging to both countries,
but many companies around the world see Maximum Xi
and are discomforted by it.
As a consequence,
they are themselves taking decisions
to start to decouple further from the Chinese economy,
unwinding globalization,
decreasing global market efficiency,
and creating challenges for the global economy.
And number one: Rogue Russia.
Over the course of one year,
Russia has gone from a global power,
standing as the most important friend,
without global limits, with China's Xi Jinping,
to becoming a rogue state,
isolated from the entire group
of advanced industrial economies,
cut off economically from Europe,
their most important trading partners,
and facing staggering losses on the battlefield in Ukraine.
There is no way for Putin to turn this around
under any circumstances,
he cannot achieve the status quo ante
of February 23rd,
before he decided to invade the independent Ukraine.
Rather, NATO is enlarging,
with thousands of troops forward deployed,
Ukraine has become one of the most powerful military states
in the continent of Europe.
The Europeans have moved away
from their energy supply from Russia,
and they'll never return to it,
and from a political perspective,
the Russians have become seen as war criminals
by the United States
and all of its critical allies around the world.
Russia is not going anywhere:
Putin is not going to be forced out of office
in the foreseeable future, and as a consequence,
the question is what is he going to do?
Because the reason Putin's losing
is because he's fighting not just Ukraine, but NATO.
This is essentially a proxy war
where the Americans and all of their allies
are doing everything they can to provide the training,
the intelligence, and the military support
to ensure that Ukraine can defend itself,
retake its territory,
and bloody the Russians after their illegal invasion.
The Russians have taken this war thus far to Ukraine,
but it's hard to imagine that it'll stop there.
Remember, Russia has 6,000 nuclear weapons,
more than anybody else in the world,
and so they feel that they have the ultimate deterrent
to stop a third World War,
which means that asymmetric attacks like cyber,
like fiber, like proxy strikes, like pipeline attacks,
like terrorism, into NATO states,
much like what the Iranians have done in the Middle East
over the past years,
does lead to a consolidation of the allies:
We saw the Abraham Accords
between Israel and the Gulf states,
you're seeing NATO becoming much stronger,
but it also means much more danger
for these countries going forward as well.
The potential for mutually-assured destruction
because of accidents and miscalculations
in and around the battlefield will be higher in 2023
as a consequence of this war,
than at any point since the Cuban Missile Crisis in 1962.