Top Risks 2019

US-China relations are hitting the skids. The future of the Middle East is doubly uncertain now that US President Donald Trump wants to pull American troops out of Syria. Meanwhile, politics in Washington, DC are about to become a bitter smackdown.


And don't forget about the possibility of a no-holds barred cyber conflict.

But are any of these things the most important risks to watch in 2019?

Every January our parent firm, Eurasia Group, publishes a Top Risks report, which identifies the major political and geopolitical risks to watch in the year ahead. The full report is online (see it here), but here's a one sentence version of each risk to pique your interest (and your pulse.)

Let us know your thoughts

10. Nigeria's presidential election, which pits the ailing President Muhammadu Buhari against business tycoon Atiku Abubakar, could return an inconclusive result that leads to post-election upheaval in Africa's largest economy.

9. Ukraine: A little tension between Moscow and Kiev helps the presidents of both countries at home, but as Russia seeks to influence Ukraine's presidential and parliamentary elections this year, the armed standoff between the countries could get hot again, fast.

8. Mexico's popular and powerful new president, Andres Manuel Lopez Obrador, brings to office a centralized style and spendthrift plans to tackle inequality and security that could rattle Latin America's second largest economy.

7. Coalition of the Unwilling: Trump may be unpopular at home and among the globalist elite, but a growing group of populist, nationalist, and authoritarian leaders around the globe will all bolster Trump's revisionist impulses on the world stage.

6. Innovation Winter: The global environment for technological innovation will feel a chill this year as governmental and popular backlashes over security and privacy lead to tighter restrictions on investment and data use across major economies.

5. US domestic politics is going to get supremely ugly as Democrats assume the House and a combative President Trump responds to a slew of investigations in ways that could lead to a constitutional crisis.

4. European populists will gain firmer footing within EU institutions in elections slated for May, giving them an opportunity to reshape the EU's policies on immigration, trade, and democratic norms.

3. The cybergloves will come off this year as the US goes on the offensive with its powerful cyberweapons as a show of force, and blowback from non-state actors as well as nation state rivals like Russia, China, and Iran could open a Pandora's box in cyberspace.

2. US-China relations will get worse as the world's two largest economies diverge on a whole lot more than just trade – technology, industrial policy and potentially even the South China Sea will emerge as bitter points of contention this year.

1. Bad seeds: The fraying of US alliances, erosion of the European Union, and deepening discord between the world's major economies are all "bad seeds" – none will lead to a catastrophe this year, but left untended they will put down deeper roots that erode global stability and leave the world vulnerable to fresh economic or security crises.

Don't want to read? Check out our Top Risks 2019 video, directed/scored by yours truly.

Facebook unveiled plans for a new cryptocurrency and payment system on Tuesday. It's called the Libra, and it's not-so-modest goal is to "reinvent money," and "transform the global economy" so that "people everywhere can live better lives." Ambitious much, Zuck?

This is a huge political gamble, but the rewards could be enormous. Here's a quick look at the tradeoffs:

The risks: Facebook is asking its 2.5 billion users — and government regulators — to entrust it with something that's vitally important to people everywhere and a power that governments jealously protect: access to money. And it's doing so at a time when trust in Facebook and other big Silicon Valley companies is at a low ebb.

Whether it's a concern that Big Tech has become too powerful or that it's not doing enough to protect privacy or put a stop to fake news, it's a heck of a time to launch a new techno-utopian project that could give Silicon Valley much more power — including the ability to track not just what people say they like but how they spend their money.

Mark Zuckerberg understands this — the Facebook founder is setting up Libra as a Swiss-based non-profit that will be governed by an "association" of 28 tech and financial companies and non-profits of which Facebook is just one member. He's also promising that Facebook will not mix personal data with payment information, and to cooperate with regulators.

But this will always be Zuckerberg's baby, and by launching Libra, he's painting a big new political bullseye on his own back.

The payoff: If Libra can survive the inevitable political and regulatory storm (and convince its billions of users that they can trust the underlying technology and financial stability of the new cryptocurrency) the upside could be enormous.

How enormous? The Libra website claims that more than 30 percent of the world's population — about 1.7 billion people — currently lack access to traditional bank accounts. Many more pay steep fees to transfer money using traditional payment services. Libra, by contrast, promises access to anyone in the world with a simple smartphone — and to make payments as inexpensive as sending a text message.

Plug those capabilities into a social network whose user base is roughly double the population of the biggest country in the world, and the results could be revolutionary — not just for billions of people who would gain new access to financial resources, but for Facebook's business model, and for central banks and governments that have traditionally sought to control the flow of money through their economies.

That would be a techno-utopian dream come true, but it's a power that governments won't willingly surrender.

Does the leader of Hong Kong appear weaker withdrawing the extradition bill?

Well as we'd say in Australia, "Is the Pope a Catholic?" Of course. This means that Carrie Lam's authority within the Hong Kong SAR is reduced and her standing in Beijing is reduced as well. But I think the bottom line is that China will resist any efforts to remove her from office, despite local pressure.

Is the US – China trade war coming to an end anytime soon?

Depends Dr. Bremmer on what your definition of "any time soon" happens to be. My prediction is simply this: once they get to the G20 meeting in Osaka Xi Jinping and President Trump will agree to reboot the negotiations process but then it's a question of the substance of the deal. My prediction is A) there will be a deal sometime between now and the end of the year. And secondly, the nature of the deal will be America yielding on the questions of tariffs to the Chinese and China yielding to the Americans on the amount that President Trump expects in the purchasing order of future American goods by the Chinese. That's my bottom line. Both countries need the economic outcome. Both countries therefore have a deep interest in securing a deal. Doesn't mean the end of the economic war however, technology reigns supreme.

If Willis's story on Tuesday about Argentina being plunged into darkness after a nationwide power failure didn't get you packing a flashlight and checking that your car has a full tank of gas, this one should. Over the weekend, the New York Times said anonymous US officials had revealed a US campaign to plant "potentially crippling malware" inside Russia's power grid "at a depth and with an aggressiveness that had never been tried before."

Quick thoughts:

This is a big provocation. It's the cyber equivalent of mining a harbor — an aggressive move that falls short of actual conflict but sends an unmistakable message: mess with us, and we'll mess you up.

The leak was probably intentional. The campaign fits with the new US strategy, launched under the Trump administration, of trying to deter cyber adversaries like Russia, China, and Iran from hacking its critical infrastructure. By disclosing the US campaign, US officials are effectively telling Russia (and by extension China and Iran), that they've got a loaded gun cocked and pointed at their economies.

That's dangerous. People — and governments — may not always behave rationally when a gun is pointed at their heads. Russia might be even more inclined to lash out. And unlike more conventional forms of conflict, cyber isn't a domain where the US can be sure it has an overwhelming advantage if push comes to shove.

It gets worse. The Times said US cyber officials described a "broad hesitation" to go into details of cyber operations against Russia with President Donald Trump because they feared he might cancel it or tell other governments about it. Among other things that are disturbing about this story, a lack of communication between the President and US cyber warriors could send mixed signals that further embolden US adversaries.

It's no secret that cyberattacks are becoming more commonplace. But where do most of them originate and what countries do they target most? The graphic above shows the most significant offenders and victims since 2006. Hackers in China, Russia, Iran, and North Korea account for three-quarters of all major attacks. Nearly a fifth of attacks, meanwhile, have targeted institutions or companies in the United States.

(At least that we know of: this chart highlights known attacks on government agencies, tech companies, and other operations that caused more than $1 million in economic damage. But many cyberattacks are never disclosed, and some countries are more transparent than others, so consider this a cross-section of a much bigger — and more disturbing — picture.)