Political Risk Outlook 2020 – Executive summary

If the early 2000s were marked by the global war on terror, the 2010s by post-crisis economic recovery and the rise of populism, the 2020s appear set to become the decade of rage, unrest and shifting geopolitical sands.

In this year’s Political Risk Outlook, we kick off by taking a forensic look at the upsurge in civil unrest. Using our risk indices and predictive data, we unpack where the risk is increasing, the driving forces behind the protests and the trends we see for 2020, including understanding where protestors are at highest risk of abuses committed by security forces and the impacts on business.

Ultimately, with 47 countries seeing a significant rise in risk, 2019 was a nadir for stability in a host of countries. But with 75 jurisdictions forecast to see an uptick in protests, the next two years could be just as turbulent.

Senior analysts from our Country Risk Insight team then explore some of the primary geopolitical issues affecting the key regions and players around the world by dissecting the new and evolving power dynamics shaping security and trade.

Nowhere is this more prominent than in the Persian Gulf, which has seen the start of the new decade marked by the assassination of Iran’s talismanic General Soleimani in a US drone strike. Our MENA analysts put this in context by examining America’s changing priorities in the region. These are being shaped by its emerging energy independence and a growing unwillingness to underwrite security for oil production and shipping that is of most benefit to its biggest geostrategic rival, China.

Outside of the Gulf, we see this rivalry increasingly moving into new battlegrounds. We explore how corporates are now becoming a new front line in the strategic competition between the world’s two largest economies. This is borne out by the elevated levels of geopolitical risk that American firms operating in China, and Chinese firms operating in the US, have had to contend with amid the trade war. We believe navigating this evolving landscape is only going to get harder, and it is companies that face the risk of becoming collateral damage.

China is also taking the trade war into the United States’ backyard by placing an increasing focus on Latin America. As the US seeks to pressure China through trade tariffs, and Beijing looks to secure crucial resources for its companies and population, we will see Latin American countries such as Brazil and Argentina increasingly caught up in the crossfire as they balance competing interests to limit probable economic losses. The commodities to watch are steel, aluminium and soya, but a Chinese bailout for Argentine debt could see the country’s giant Vaca Muerta shale play become a geopolitical trojan horse.

Finally, we examine Russia’s recent power projection in Africa. While Moscow is keen to build the impression that its global influence is on the rise, we argue that its growing presence is confined to countries characterised by weak governance and corruption, and is fuelled more by commercial interests than any long-term strategy. The reliance on mercenaries and ‘political technologists’ to burnish Russia’s credentials as a global power is cause for concern though. Payments for their services often materialise in the form of mineral concessions, but what happens to these claims when the leadership of these countries change could have implications for mineral supply chains.