Individual autocrats in Russia and China as well as at a number of top global technology firms pose a severe risk to geopolitical and economic stability in our world this year, the Eurasia Group says in its report on top risks for 2023. This global context will lead to volatility in emerging markets this year.
At the presentation of the risk report, Ian Bremmer, founder and president of the New York-based advisory firm, said that a small group of individuals has now “amassed an extraordinary amount of power, making decisions of profound geopolitical consequence with limited information in opaque environments.”
“It’s ageing autocrats and tech pro’s. It’s a small number of people in very different environments, who have the willingness and capacity to disrupt the global environment in ways that we are not predicting and in ways that we are not ready for,” said Bremmer, referring specifically to Russian president Vladimir Putin and China’s president Xi Jinping.
Expertise not getting through
“They have very little constraints, no checks and balances on their power internally in their environments and their systems and their institutions. And they also don’t have a lot of expertise that is getting through to them,” said Bremmer.
The biggest global threat in 2023 is Russia. Eurasia Group believes that “a humiliated Russia will turn from global player into the world’s most dangerous rogue state, posing a serious security threat to Europe, the United States, and beyond.”
‘Hot war’
“We’re not in a cold war with Russia… we’re in a hot war with Russia,” said Bremmer. “There is no way that Putin can withdraw and give up like Khrushchev did in 1962, and still keep his job and if not his life. That’s ultimately what makes it really, really scary,”
With Xi Jinping, risks boil down to “maximum impunity and maximum potential mistakes”, the report said. When the 20th Party Congress was held last October, what became clear was that Xi has now succeeded in consolidating power like no one else in recent Chinese history,
“The big risk is that he’s also less fettered and his ability to make miscalculations and mistakes. We already see that playing out with a sudden end of zero Covid,” said Anna Ashton, director of China Corporate Affairs at the firm. “Now he’s operating with fewer constraints than ever, without checks and balances in place, without an opposition faction to contend with, and surrounded by political allies who are likely to be yes men. So his recognition and mistakes and his steps to course correct may also be delayed.”
In terms of technology, 2023 “will be a tipping point for disruptive technology’s role in society,” the group said, referring specifically to increasingly sophisticated Artificial Intelligence such as ChatGPT, GPT-4 and Stable Diffusion.
Weaponising AI
“These advances represent a step-change in AI’s potential to manipulate people and sow political chaos,” it said. “Demagogues and populists will weaponise AI for narrow political gain at the expense of democracy and civil society.”
The current global context makes it more likely that global development will be arrested, with the gap between rich and poor countries widening further.
“The divide between rich and poor economies is just going to keep growing,” said Eurasia’s chairman Cliff Kupchan. “For instance, the whole fund that they created last year on the climate side for emerging markets, people are going to ask where’s the money and the money is going to be nowhere to be found. So there’s that trust level between rich and poor countries is going to just be lower and lower.”
Top Risks for 2023, as per Eurasia Group:
- Rogue Russia
- Maximum Xi
- Weapons of Mass Disruption
- Inflation Shockwaves
- Iran in a corner
- Energy crunch
- Arrested global development
- Divided States of American
- Tik Tok Boom
- Water Stress
Eurasia’s risk perspective closely matches the risks that several financial firms have outlined. Charles Schwab last month cited China’s reopening, overtightening by central banks and a broadening Ukraine war among the biggest risks, along with a possible mortgage shock and an energy crisis in Europe.
A recent UK survey conducted by Forbes among CEOs showed that they are most concerned about the effects of rising interest rates, the magnitude of the coming recession, labour shortages and rapidly changing market trends. Chief executives also worry about global supply chain problems as well as cybersecurity risks.