The 5 greatest risks for 2016

By J.F. Mezo

The 5 greatest risks for 2016 are global in every possible sense. They are not only distributed in different continents and regions of the world but their effects will be far reaching, impacting not only other countries and continents but also the global economy. Although said risks are diverse in nature, nationalism and the lack of international consensus will define the undertone of the upcoming year.

Photo by GotCredit: www.gotcredit.com

Political instability in Europe:

Since the financial crisis in 2008, Europe and especially the European Union have encountered difficulties not only of the financial but also of the political variety. Weak incumbents, competing interests, and the rise of nationalistic sentiments pushed the EU to the point where its structural weaknesses almost resulted in serious conflicts. The Greek crisis, the effects of Russian sanctions on certain EU members, and now the refugee crisis have all contributed to the growing internal tensions, and although in 2016 we can expect an improvement in the economic performance and investment climate of the region, the political dimension can make it difficult for businesses to operate within the EU.

What to be on the lookout for:

-       Weak popular support of the ruling party and its policies

-       Nationalistic policies, heightened sense of national identity

-       Conflicts of interest amongst EU members

The Refugee Crisis in Europe:

In 2015, Europe has seen a staggering number of refugees flowing into the continent, most of them coming from the war-torn regions of Africa and the Middle East. As the second half of 2015 clearly demonstrated, Europe was not and is still not ready to cope with the situation, and as long as a comprehensive framework is not negotiated, no meaningful progress can be expected. The refugee crisis can also become a risk to businesses operating in the region as it leads to internal political and social tensions, tensions between the locals and the immigrants, and interstate conflict (e.g. the Croatian-Hungarian hostility).

What to be on the lookout for:

-       Social and political unrest

-       Interstate tensions

-       Lack of cooperation

-       Terrorism?

ISIS:

Although the expansion of the Islamic State has slowed down considerably recently, ISIS has gained strong foothold in the Middle East. In spite of the joint efforts of local groups, European countries and the US, the rule of ISIS is far from over in the region. Also troubling is the fact that in order to prevent disillusioned followers from leaving the organization, ISIS is willing to adopt an increasingly hostile and aggressive ideology. As the rape of all non-Muslim women is now deemed legal and even encouraged by ISIS, female employees might be in increased danger in the Middle East. In 2016, the business world will need to monitor the situation closely and stand ready to withdraw from the region in order to protect their interests and employees.

What to be on the lookout for:

-       Violence and armed conflicts

-       Potential difficulties maintaining supply chains

-       Female employees in danger

Civil war in Syria:

The ongoing civil war in Syria will be amongst the top risks of 2016 as the disastrous political situation and the devastating armed clashes in the region will not only do further damage to the Syrian economy but will also set other, global risks into motion. One of them is the refugee crisis in Europe, as most of the refugees flowing into the continent have been arriving from Syria and its neighbouring territories. On the other hand, it can also deepen the Russia-West divide, as Russian arms export and military assistance to Syria have been amongst the most fiercely debated topics in the United Nations recently. The United States has been particularly unhappy with the Russian decision to intervene, and now that the Russian campaign in Syria started, we can expect a further cooling of US-Russian relations.

What to be on the lookout for:

-       Unfavourable business climate in Syria and between Russia and the West

-       Violence and armed clashes

-       Radical groups and ideas

South and East China Sea Armed Confrontation:

China’s increasingly aggressive policies have now pushed the Pacific region to the brink of a possibly multilateral conflict. In the South China Sea, China has warned other claimants that if they were to drill for oil in the disputed areas, they can expect Chinese retaliation. In the East China Sea, territorial debate over the Senkaku islands persists, as neither Japan, nor China is ready to compromise. The threat of escalation is present in both cases and it can lead to a disruption of trade and supply chains in the region in 2016.

What to be on the lookout for:

-       Escalation of interstate conflicts in the region

-       Possible US involvement through defence treaties (Japan, Manila)

-       Trade and supply chains disruptions

5 greatest risks to global stability looming ahead in 2016

By Anya Degtyarenko 

NEW YORK, Oct. 12 — With the end of the Cold War, the world entered the new era: multiple regional economic and political powers are about to reshape the world order. The startling trends had been much in evidence during 2015: complete breakdown in relations between the US and Russia with Putin’s aggressiveness; an escalating international crisis in the Middle East, a shattering economic and social state of the European Union, and the fearful economic effect of Chinese slowdown. While the world doesn’t seem close to “stable” today, the global stability implies the existing political status quo, allowing moderate and predictable international economic and social progress. Geopolitical factors that threaten the predictable order are, therefore, the risks causing global instability. Five of these top risks will be prominent in 2016. 

1. European Instability

European integrity and reputation of stability will continue to be challenged in 2016.  Eurozone economic weakness, coupled with the migration crisis and following political repercussions will be hitting European Union in its weak spots. The inflation rate has fallen again in 3rd quarter of 2015, to just 0.3 percent, and the unemployment rate is stuck at 11.5 percent — and prospects for 2016 might be worse. Economic weakness makes the EU reluctant to hurt Moscow; cutting it off from the global financial system would strike the EU too. Following the economic fragility, “Brexit”, the possibility of Britain quitting the EU, is the next risk sign of  European fragmenting. Economic stagnation and lack of political cooperation produced infirm responses to the Ukraine, Iraqi and Syrian crises. The bottom line of  the list is a migration crisis with no obvious solution. Migrant inflow from the African continent, dictated by demography and economic gaps, is going to increase and the EU must develop a common approach or risk further political and social challenges to its unity. 

2. China

While the world is focused on the situation in Middle East, ISIS and Putin, the problem with China will approach shortly. The growth targets for 2016 keep lowering, and it will affect China’s trade partners at first place. Commodities dependent countries booming on exports to China, like Japan, Brazil, Australia, Indonesia, Thailand, will continue to suffer, raising the risk of political unrest in the most unstable of them. GDP in the US and already the struggling and the Eurozone will decline. While the world is anticipating China’s economic slowdown, the Chinese Communist Party seeks to demonstrate its political and military power. It is building up its influence in the South Sea and closed the air space in Eastern China, which the US does not recognize. Its actions in Syria pose a major threat to the US-allies in the Middle East. Chinese hackers are believed to pose threat to the US cyber security. On top of the economic interdependence between the US and China, the political tension between powers will highly increase. 


3. The Middle East 

The expansion of the Islamic State, as well as Saudi Arabia and Iran, will continue to complicate the situation in the Middle East. ISIS ideology will continue to spread out, setting up new units and disrupting the status quo power of the Sunni countries like Saudi Arabia or the United Arab Emirates. Meanwhile, the conflict between Israel and the Palestinians is unresolved, Hamas in Gaza and Hezbollah in Lebanon will promote violent  clashes with Israel. With the US-Iran nuclear deal and impending lifting of sanctions, the struggle for dominance between Iran and Saudis will feed violent proxy wars in the region like those underway in Syria and Yemen. The threat of the Assad regime collapse and his successor will be on the agenda of 2016. With the US scheduled to withdraw from Afghanistan in 2016, there is a risk of the collapse of Afghanistan and possibly Pakistan into semi-failed states. Some of these conflicts may yield an actual oil supply disruption, as in 1973, 1979, and 1990, with the results reflected in risking prices. Weakened economies and civil wars in Lebanon, Jordan, Syria and Turkey, will turn millions of people into refugees and continue to destabilize Europe economically and socially. Furthermore, lasting hopelessness and growing unemployment will produce more anti-western jihadists among Arab Youth who will find their way to stage terrorist attacks in the US, Europe or Russia. 



4. Saudi Arabia

Saudi Arabia will contribute to global instability and already existing turmoil in the Middle East. Its importance as an oil exporting nation has made economic interdependence with the West inevitable, That, in turn, set up strong political and military relationships that at times have been a source of tension for both sides that will be tested in 2016. Saudi Arabia is facing multiple risks for its economy, succession and regional stability. With the trend favoring continued low oil prices, the Saudi budget deficit will increase, which was already $100 billion in 2015. This will produce risks for the Kingdom’s credit rating, capital outflows and negative responses on international markets. As the country will be close to running out of its financial and oil reserves, the region will be more destabilized. Besides this tight economic situation, the US-Iran nuclear deal shuttered the 70 year history of the American and Saudi relationships of the status quo powers. Russia’s dramatic intervention to the balance of power  in the Middle East will signal that the US is not responsible for defending its friends and allies anymore. With ongoing succession conspiracy inside the House of Saud, that  will leave the Saudis more vulnerable than ever, and cause more friction in the relations with Iran.  


5. Russia 

Russia is a tricky factor when calculating global destabilization factors in 2016. Against the backdrop of the weak Eurozone, the economic sanctions imposed after Crimea were not enough to mortally weaken Russia. Arguably, they made Putin even more aggressive and revisionist. As the Russian economy tumbles, Putin will increase its anti-Western economic policy, targeting the companies and investors inside of Russia. Its nuclear capability and intend on territorial and political expansion, especially in the region of the US-allies, continues to pose threat to the security of Western world and overall, global stability. With the Ukraine left in the “frozen conflict” state, Putin moved his attention to Syria. Putin’s intervention in Syria intends to insert Russia as a rival to the US-superpower role in the regional conflict. That clearly had implications for further extension beyond the region. Russia will continue its provocative behavior against NATO states (e.g. violating Turkey air space).  Further, China uniting with Russia against ISIS and US-backed allies will pose great risk of expelling NATO as a power organization and eventually shifting the US influence in the region. Failure to defend the NATO ally from Russia-China coalition will disrupt the whole balance of power and the attempt of the US to return to its primary power in the region will trigger the World War III. 

Did Everything Just Get Worse?

By Adrienn Keszei

I was fourteen years old, sitting in the tv room of our high school dorm in Hungary, watching a television show with my roommates, when someone rushed into the room and changed the channel to see the news. Her sister, she said with trepidation, lived in New York and worked in the financial district. None of what she was saying made any sense—until we saw what was on the screen.

Exactly fourteen years after the attacks of September 11, 2001,  I found myself in Manhattan looking at the Tribute of Light from Brooklyn Bridge Park, and contemplating what – if anything - we have achieved in almost one and a half decade. How much closer did we get to a world where such things simply could not happen? Unfortunately, not much at all.

Washington - Pentagon Memorial 

(Source: http://www.navy.mil/view_image.asp?id=203186 )

9/11 was an extraordinary catalyst that started the long War on Terror. A lot has happened since 2001. The U.S. waged war on Islamist terrorist organizations and regimes supporting them, launched a war on Iraq based on erroneous intelligence, then the suffered international embarrassment when the inhumane treatment of detainees was unveiled and Saddam Hussein turned out to have no weapons of mass destruction after all. Of course, Osama bin Laden was killed, and in the midst of all this, following a US withdrawal from Iraq, the Islamic State (also known as ISIS) was “born’ into the political vacuum—a new enemy gaining more territory, power and followers every day. In many ways, the situation got worse than it was before, with the U.S. having to deal with a more dangerous and much more brutal organization than al-Qaeda ever was, while the government cannot seem to figure out an effective strategy to eliminate this new enemy. Furthermore, as a result of the war in Syria, which has been indirectly enabled by the U.S. intervention in Iraq, tens of thousands of people are migrating to Europe from the Middle East, seeking a better future. Among them, hidden safely in all the chaos, could be people sent by ISIS or other terrorist organizations, posing as migrants. Threats and security risks were ignored once before and with devastating consequences. Now, weary as the American public may be of the topic, the U.S. government must find a way to eliminate threats in the Middle East and minimize the risk of terrorist activity in Europe.

Many abroad now think that waging an extremely aggressive war on the countries associated with terrorist organizations was a mistake. They also believe that the U.S. overemphasized 9/11 while civil wars, famine, or constantly deteriorating hygiene and health conditions across the globe are contributing to much larger death tolls every day. Others argue that the leadership’s hostility toward all of Islam contributed to the ever-growing popularity of new jihadist groups. These are strong opinions, which seem quite insensitive at first, but a more detached perspective might just be what America needs in order to find a better strategy to eliminate the source instead of fighting a futile war against people on the ground.

It is hard to understand how the US government, with all the resources at its command, cannot figure out a better strategy to stop Islamist militant groups. After 9/11, most of the attention was focused on al-Qaeda, and as much as people wished for retribution, weakening al-Qaeda and killing bin Laden did not make the world much safer, nor did it heal the wounds caused by 9/11. Soon after al-Qaeda was weak enough to consider it less of a threat, a rival Islamist group appeared, known as the Islamic State. Their growing power and brutality forced thousands of people to leave their home countries.

These people are seeking a safe, better future—and it is the responsibility of the destination countries to assist them in any way possible to realize this wish. But migrants are arriving in large numbers, which means it will be difficult to effectively integrate them into society for a while as they will probably create their own isolated societies. This environment is unfortunately perfect for recruiting people to follow jihadist groups. Granted, the absolute majority of migrants are innocent people who deserve a better life. Nevertheless, it would be awfully naive to think that terrorist groups—that have been systematically recruiting people from all over the world for years now—would not take advantage of the chaos and the huge, uncontrolled mass migration. Some suspicious individuals have already been identified in several European countries, but chances are that due to the overwhelming crowds of migrants and refugees, most threats will remain undetected.

New York - U.S. Coast Guards Maritime Safety and Security Teams 

(Source: http://www.navy.mil/view_image.asp?id=2714)

To prevent such an outcome, the U.S. should offer help to Europe to ensure that migrants are registered legally and effectively; not only to ensure global security, but also to create a safer future for America. The Bush administration ignored several clear warnings before 9/11. Who is to say that the present administration will not make a mistake again, ignoring the minor threats in Europe, which may only become greater in time. So, as I was sitting on a bench, looking at the blue lights relentlessly pointing towards the sky, I was contemplating the past fourteen years, and realized that we must very quickly learn how to prevent threats in time; otherwise, we will find ourselves fighting futile wars for decades, only creating more enemies and more tragedies in the process.