(Some of) your 2022 Top Risks questions, answered

(Some of) your 2022 Top Risks questions, answered

This week, our parent company Eurasia Group published its annual list of top geopolitical risks for 2022, which we hosted a livestream conversation about on Monday. During the program we received many great questions from our viewers, but couldn’t answer them all in the time allotted, so we thought we’d have some Eurasia Group experts tackle them here.


What are Jair Bolsonaro’s chances in Brazil’s upcoming presidential election?

He has a chance, but they aren’t good. Bolsonaro has the support of close to 30 percent of Brazil’s electorate, with his anti-establishment message still resonating amongst his core base of support. But he has paid a high price for mismanaging the pandemic, and with inflation squeezing the disposable income of poor families, economic discontent has also risen. With most economists forecasting close to zero growth in 2022, odds are he won’t recover. His best shot remains one of reaching a run-off against former president Lula da Silva, and exploring the latter’s vulnerabilities over the massive corruption scandal that rocked the Worker Party’s two previous administrations. Possible, but unlikely to succeed.

Chris Garman. Managing Director, Americas

In Turkey, what share of the country’s youth backs the leadership?

The ruling Justice and Development Party gets more votes from the older age groups. It’s the same for the AKP’s parliamentary ally, the Nationalist Movement Party. The AKP receives only 17 percent of its support from those aged 18 to 34, whereas its average support is close to 24 percent. Young Turks are also the most dissatisfied with the state of the economy, with around 85 percent of those aged between 18 and 34 evaluating the economy as very bad or bad.

What is the probability of war between the US and China in the next 15 years?

Very low, but likely to grow over time.

If there is a war anytime soon, it is more likely to be the result of an accidental conflict resulting from miscommunication than one resulting from miscalculation. The US and China have the most robust trading relationship in world history. Unless there is a fundamental rebalancing of that economic relationship over the next 15 years — which is possible given ongoing decoupling in the tech and capital flows — the two countries are unlikely to escalate any conflict to disrupt that. Furthermore, the cyber capabilities and economic are so interlinked that any actual conflict is more likely to be limited to economic disruption, and not turn into a hot war.

The top flashpoint remains Taiwan, and China is years away from having the military capability and economic dominance to invade without major risks for economic and political stability. Even if the Chinese were to act fast enough to surprise and overwhelm Taiwan’s defenses, the US is likely to respond with sanctions and trade embargoes that would severely impact the Chinese economy, and significantly raise the costs of invading.

Fifteen years is a long time, of course. The conditions for war would include one and probably more than one of the following: accelerated decoupling in trade of physical goods between the US and China, a significantly more advanced Chinese military, an internally weak US president unable to rally Americans to defend Taiwan, more dependence of regional Chinese trade partners (India, Japan, and Australia), and a rebalancing of economic power in those countries away from the US towards China.

Jon Lieber. US managing director

How big of an economic and security threat are high energy prices?

High energy prices have become a significant drag on global economic growth. In China, Japan, South Korea, and many European countries — all of which are highly dependent on fossil fuel imports of natural gas and thermal coal — prices have skyrocketed since late 2020. Europe has the additional complication of security of supply due to escalating tensions with its biggest gas supplier, Russia. Major emerging economies like India and Indonesia are also affected by surging import costs and supply disruptions due to COVID.

In the best case, rising industrial and household energy bills weigh on economic growth prospects. In the worst case, there are supply shortages that lead to industrial closures or even localized blackouts.

Government reactions show the severity of the problem. European governments have implemented measures to secure affordable household energy during this winter, including by windfall taxes on the energy industry. China has repeatedly interfered in energy markets by capping prices, and shut down some energy-intensive industries. Indonesia, the world’s biggest exporter of thermal coal, suspended exports amid tight domestic supply. Even in the US, which is rich in domestic oil and gas reserves, the Biden administration in late 2021 interfered in markets by releasing part of the Strategic Petroleum Reserve in order to cool retail gas prices.

The global energy crunch has led to emotional and polarized debates about its cause. This will hamper climate action efforts, as governments juggle the long-term need to reduce greenhouse gas emissions with the immediate priority of ensuring affordable and reliable energy for everyone.

Henning Gloystein. Director for Energy, Climate & Resources

Should we expect more government regulation of crypto this year?

Following the massive inflow of capital into the crypto sector and increased industry lobbying in 2021, friendly lawmakers in the US Congress plan to introduce soon a sweeping piece of legislation to fully integrate digital assets into the financial system. The growing pro-digital asset group of representatives and senators want to provide clearer guidance for digital assets and will seek to normalize their use with rules for stablecoins, consumer protection provisions, and updated taxation guidance. While likely to spur debate across industry and regulators, the bill’s passage will probably be delayed by more pressing administration priorities and a lack of policymaker understanding of crypto issues.

New action by the Securities and Exchange Commission is likely before any new legislation is enacted. SEC Chairman Gary Gensler gave a series of speeches in late 2021 on the need for more regulation of the crypto sector, and the SEC appears nearly ready to launch a major regulatory probe of global centralized cryptocurrency exchange leader Binance and its CEO, likely on charges including money laundering. Jurisdictions in Asia and Europe already moved last year to rein in Binance operations. Nevertheless, major digital asset players have deep pockets and will certainly launch legal challenges to any SEC moves. The outcome of the current SEC lawsuit against Ripple — for which expert witness testimony was largely completed in December — will be closely watched for indications about where US courts stand on issues related to the definition of cryptocurrencies as securities.

Paul Triolo. Practice head, Geotech

What major shifts should we watch for in (sub-Saharan) Africa this year?

Upcoming elections around the continent will be a major watchpoint. Kenya goes to the polls in August to select President Uhuru Kenyatta’s successor in a race that is poised to be close, while Joao Lourenço is likely to win a second term as Angolan president in the same month despite an anticipated stronger showing by the opposition. Meanwhile, Nigeria’s two main parties will hold primaries to select their presidential candidates ahead of pivotal elections in 2023, while South African President Cyril Ramaphosa is favored to win another term as head of the African National Congress despite growing factionalism within the party. Finally, the African Continental Free Trade Area is likely to launch this year once technical negotiations are completed, creating the world’s largest trade community by area. Yet the economic benefits of the agreement will take years to materialize given the persistence of non-tariff barriers to trade.

Tochi Eni-Kalu. Analyst and Practice Manager, Africa

People working at computers in a room labeled Malware Lab

Microsoft observed destructive malware in systems belonging to several Ukrainian government agencies and organizations that work closely with the Ukrainian government. The Microsoft Threat Intelligence Center (MSTIC) published a technical blog post detailing Microsoft’s ongoing investigation and how the security community can detect and defend against this malware. Microsoft shared this information over the weekend to help others in the cybersecurity community look out for and defend against these attacks. To read more visit Microsoft On the Issues.

President Vladimir Putin

No one knows whether Russian President Vladimir Putin plans on invading Ukraine. But the president of the United States sure seems to think this is a real possibility, saying Wednesday that Putin will likely "move in" in the near term. Biden, prone to political gaffes, was then forced to awkwardly walk back comments that Russia would face milder consequences from the West in the event of a "minor incursion."

The timing of this blunder is... not great. It comes just as US Secretary of State Antony Blinken prepares to meet his Russian counterpart on Friday in hopes of lowering the temperature after recent diplomatic efforts in Geneva were deemed a failure by Moscow.

Indeed, with the Kremlin having amassed at least 100,000 troops surrounding Ukraine on three sides, the growing threat is impossible to ignore. So what would a Russian military offensive into Ukraine actually look like, and how might the West respond?

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Omicron has arrived. It's more contagious, but less severe. Some parts of the world are even looking forward to the pandemic becoming endemic.

Not China. Xi Jinping's zero-COVID strategy has worked wonders until now, but it's unlikely to survive omicron, explains Ian Bremmer on GZERO World.

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Chilling at the beach, retired German Chancellor Angela Merkel is so over politics. Or is she?

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Ian Bremmer's Quick Take: Hi everybody. Happy Tuesday after the long weekend for those of us that had a long weekend. I thought I would kick us off with the first major foreign policy crisis of the Biden administration. And that is of course, Russia-Ukraine. Afghanistan, of course, was a debacle, but not exactly a global crisis. This of course has the potential to really change the way we think about European security and about US relations with the other major nuclear power in the world. So, I would say that the level of concern is even higher and there are a lot of things we can say.
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What We’re Watching: Xinjiang at the Beijing Olympics, Boris in deep(er) trouble, Indonesia’s new capital

Selling Xinjiang. Xi Jinping — a man well known for both his grand vision of China’s future, and for his willingness to get large numbers of people to do things they might not otherwise do — said in 2018 that he wanted 300 million Chinese people to participate in winter sports. The Chinese government announced this week that this goal has been met in honor of the Beijing Winter Olympic Games, which open in China’s capital on February 4. Multinational companies are consistently impressed by the commercial opportunities created when 300 million people decide to try new things. But it’s an inconvenient truth that most of China’s most abundant snow and best ski slopes are found in the northwestern region of Xinjiang, a place where Western governments and human rights organizations have accused Beijing of imprisoning more than one million minority Uyghurs in re-education camps. In these prisons, critics say inmates have experienced “torture, and inhumane and degrading treatment.” As China’s government opens new profit opportunities in Xinjiang, multinational corporations will face pressure from multiple directions not to invest there.

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Hard Numbers: Tongan emergency fundraising, EU docks Poland pay, new Colombian presidential hopeful, Turkey gets UAE lifeline

345,000: As of Wednesday afternoon ET, Tonga's Olympic flag-bearer has raised more than $345,000 online to help the victims of Saturday's volcanic eruption and tsunami. Pita Taufatofua, a taekwondo fighter and cross-country skier, has not yet heard from his father, governor of the main Tongan island of Haapai.

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Ian Bremmer shares his insights on global politics this week, discussing Boris Johnson's tenuous status as UK PM, US Secretary of State Blinken's visit to Ukraine, and the volcano eruption in Tonga:

Will Boris Johnson resign?

It certainly looks that way. He's hanging on by his fingernails. He's losing members of Parliament. He's giving shambolic media interviews. In fact, I think the only people that don't want him to resign at this point is the Labour Party leadership, because they think the longer he holds on, the better it is for the UK opposition. But no, he certainly looks like he's going. The only question is how quickly. Is it within a matter of weeks or is it after local elections in May? But feel pretty confident that the days of Boris Johnson are numbered.

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