Eurasia Group | Eurasia Group updates Top Risks for 2020: Coronavirus Edition

Eurasia Group updates Top Risks for 2020: Coronavirus Edition

19 March 2020

Unprecedented update examines COVID-19 impacts on geopolitical risks identified in January

NEW YORK, 19 March – Eurasia Group President Ian Bremmer and Chairman Cliff Kupchan announce the first-ever update to the firm's annual Top Risks report, which identifies the most important geopolitical trends and stress points for global investors and market participants in 2020. The updated report addresses how coronavirus has accelerated the most troubling global developments in the year ahead.

“Over the coming weeks the world will get a much better handle on the epidemiology of the coronavirus pandemic,” write Bremmer and Kupchan, “but the fractiousness and weakness of the geopolitical order reflect a radically different backdrop for a global crisis than any we've experienced in recent decades.”
Below is a summary of all ten Top Risks for 2020 and how they are impacted by the coronavirus outbreak. Please click here for the updated report.

1- Rigged!: Who Governs the US? (increased risk due to coronavirus)

We anticipated that in 2020, US institutions would be tested as never before, and the November election would produce a result many see as illegitimate. If President Donald Trump wins amid credible charges of irregularities, the result will be contested. If he loses, particularly if the vote is close, same. Either scenario would create months of lawsuits and a political vacuum, but unlike the contested Bush-Gore 2000 election, the loser is unlikely to accept a court-decided outcome as legitimate. As an extremely politicized crisis of grave scale, and by complicating the physical act of voting, the coronavirus intensifies fears and doubts about the presidential election's legitimacy.

2- The Great Decoupling (significantly increased risk due to coronavirus)

The decoupling of the US and Chinese tech sectors is already disrupting bilateral flows of technology, talent, and investment. In 2020, this decoupling will move beyond strategic tech sectors like semiconductors, cloud computing, and 5G into broader economic activity. Coronavirus adds to pressure on supply chains, accelerating the trend toward decoupling.

3- US/China (significantly increased risk due to coronavirus)

As this decoupling occurs, US-China tensions will provoke a more explicit clash over national security, influence, and values. The two sides will continue to use economic tools in this struggle—sanctions, export controls, and boycotts—with shorter fuses and goals that are more explicitly political. Attempts by Washington and Beijing to explain coronavirus and its containment to their respective domestic audiences will intensify recriminations between the two governments.

4- MNCs not to the rescue (similar level of risk under coronavirus)

Far from filling the gaps on critical issues like climate change, poverty reduction, and trade liberalization left by underperforming national governments, multinational corporations (MNCs) will face new pressures from political officials, both elected and unelected. In this more difficult global environment, corporate leaders will be more focused on their bottom lines, not less. Coronavirus will hit MNCs from multiple directions, but distracted and overwhelmed governments will create opportunities for them, as well.

5- India gets Modi-fied (increased risk due to coronavirus)

Prime Minister Narendra Modi has spent much of his second term promoting controversial social policies at the expense of an economic agenda. Protests of various kinds have expanded across India, but Modi will not back down, and a harsh government response in 2020 will provoke more demonstrations. India has managed the coronavirus relatively effectively to this point, but the continuing vulnerabilities posed by its weak healthcare system will exacerbate tensions among angry citizens already on edge.

6- Geopolitical Europe (similar level of risk under coronavirus)

European officials now believe the EU should defend itself more aggressively against competing economic and political models, including on regulation, trade, and security. Coronavirus exacerbates transatlantic tensions, but it will also fully occupy European leaders at a time when they would like to become much more assertive toward both the US and China in many areas.

7- Politics vs. economics of climate change (significantly decreased risk due to coronavirus)

Climate change will put governments, investors, and society at large on a collision course with corporate decision-makers, who must choose between ambitious commitments to reduce their emissions and their bottom lines. Coronavirus will shift global attention and resources away from addressing climate change, putting the issue on the backburner.

8- Shia crescendo (similar level of risk under coronavirus)

Risk around Iran has dropped since we wrote, as neither Washington nor Tehran will risk military conflict given the need to fight the coronavirus. But the Iraqi state is still sputtering; a severe virus outbreak could be the last straw. The US never had a Syria policy, Russia and Iran took charge; now stability could dip again if the virus hits Syria hard. Coronavirus eases the risks of failed US policy in Iran, but amplifies them in Iraq and Syria.

9- Discontent in Latin America (significantly increased risk due to coronavirus)

Latin American societies have become increasingly polarized in recent years. In 2020, public anger over sluggish growth, corruption, and low-quality public services will keep the risk of political instability high. Latin America's lack of preparedness for the coronavirus will add to the many existing causes of public discontent.

10- Turkey (increased risk due to coronavirus)

President Recep Tayyip Erdogan has entered a period of steep political decline and his responses to the challenges facing him will further damage Turkey's ailing economy. Coronavirus in and around Turkey will weaken both Erdogan and his foreign rivals.


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