The biggest threat to the world this year is neither a potential Middle East war nor is it Vladimir Putin's new hypersonic weapons he claims makes Russia the world's premier military power. It's U.S. politics.
Surprisingly, American politics is the biggest threat facing the world in 2020, according to separate analyses by two strategic and political risk consultancy firms. The analyses by Eurasia Group based in New York and Control Risks headquartered in London also said the upcoming U.S. presidential election on November 3 will roil America's institutions and exert a significant influence on economic and foreign policy. The election will further divide the already highly partisan American electorate. Its result will have massive consequences for world politics, business and even climate change.
Eurasia Group is a political risk consultancy, regarded by some as the world's largest political-risk consultancy. On the other hand, Control Risks is a global risk and strategic consulting firm specializing in political, security and integrity risk.
Both consultancy firms will present their formal assessments at the 2020 World Economic Forum (WEF) Annual Meeting from Jan. 21 to 24 in Davos, Switzerland. WEF is also warning of more dislocations this year from trade conflicts and political polarization that make it tougher to gain the upper hand against looming global challenges.
Eurasia Group this year designated U.S. politics as the top risk for the first time in its annual assessment of the state of the world. It warned the U.S. presidential election will be the most divisive in over a century. It believes the election's outcome will likely to be viewed as illegitimate by roughly half the U.S. population. Eurasia Group expects the election result to be contested, no matter which candidate wins.
"The 2020 election is an American Brexit -- a maximally polarized vote where the risk is less the outcome than the political uncertainty of what the people voted for," wrote Eurasia Group in its report. "It's uncharted political territory, and this time in a country where uncertainty creates shock waves abroad."
Control Risks says president Donald Trump's re-election campaign will drive decision-making in U.S. foreign policy. His unpredictability increases the chance investors will be caught off guard by his protectionist and mercantilist policies distancing the U.S. from the rest of the world.
"The campaign will focus foreign policy on managing crises, distracting U.S. attention from non-urgent issues and geographies," wrote Control Risks in a recent report. "Trump's thirst for deliverable 'wins' before the election, meanwhile, will amplify foreign leverage in trade and security relations."
