It's The "Most Volatile" Year For Political Risk Since World War II

"In 2017 we enter a period of geopolitical recession," warns Eurasia Group president Ian Bremmer, adding that international war or "the breakdown of major central government institutions" isn"t inevitable, though "such an outcome is now thinkable." In the company"s 19th annual outlook, Eurasia fears that U.S. unilateralism under Donald Trump, China’s growing assertiveness and a weakened German Chancellor Angela Merkel will make 2017 the "most volatile" year for political risk since World War II.

This is the most volatile year for political risk since World War II, @EurasiaGroup says https://t.co/7EfzqhH11p pic.twitter.com/E7XwVa5VkP

— Bloomberg (@business) January 3, 2017

As Bloomberg reports, the warning is a reminder of the range of threats to stability in 2017, from elections in Germany, France and the Netherlands and Britain’s planned exit from the European Union to setbacks in emerging nations such as Brazil and refugee crises.

With Trump’s ascent to the presidency on an America First platform, the global economy can’t count on the U.S. to provide “guardrails” anymore, according to Eurasia, which advises investors on political risk. Trump’s signals of a thaw with Russia, skepticism toward the North Atlantic Treaty Organization and his “alignment” with European anti-establishment parties such as France’s National Front could weaken the main postwar alliance protecting the global order, according to the report released Tuesday.

“You could see an environment that geopolitically is by far the worst that we’ve experienced in decades in 2017 and yet the investment into the U.S. markets and the strength of the American dollar is going to grow,” he said in a Bloomberg Television interview.

In China, a scheduled leadership transition makes it likely that President Xi Jinping will be “more likely than ever to respond forcefully to foreign policy challenges,” potentially leading to spikes in U.S.-China tensions, according to Eurasia. To maintain domestic stability, Xi might “overreact” to any sign of economic trouble, leading to a risk of new asset bubbles or capital controls, Eurasia said.

Merkel, who is seeking re-election in the fall, faces likely disputes over Brexit, Greece’s simmering debt crisis and an “increasingly authoritarian” Turkish President Recep Tayyip Erdogan, threatening a refugee accord between the EU and Turkey.

“Despite just how wrong the polls have been in recent major electoral contests across the developed world, Merkel will win a fourth consecutive term,” the report said. “But the need to appease domestic critics this year will leave her a diminished figure, impacting the quality of her leadership both at home and in the EU.”

Other risks cited by Eurasia include:

• Lack of economic reforms, with only China on a “positive trajectory” among 14 major nations and Italy, Russia, Saudi Arabia, South Africa, Turkey and the U.K. declining.

• Politicians blaming central banks, including the Federal Reserve, for economic woes. Such attacks mark “a risk to global markets in 2017 by threatening to upend central banks’ roles as technocratic institutions that provide financial and economic stability.”


• A “witch hunt” against parts of the opposition in Turkey, even tighter control over government and the media by Erdogan, and pressure on the Turkish central bank to keep rates low and rely increasingly on fiscal stimulus to offset slowing growth.


• North Korea’s nuclear program, which may yield some 20 nuclear weapons, combined with technological advances allowing strikes at the U.S. west coast in the future.


• National Front leader Marine Le Pen winning the French presidential election is the biggest political risk in Europe, where EU ties and the euro area are “in a process of gradual, slow-motion disintegration,” New York University economics professor Nouriel Roubini said on Bloomberg Television. “If Le Pen comes to power in France, if an anti-euro party comes to power in Italy, this could be the beginning of the end of Europe and the euro zone,” he said.

Eurasia concludes...

This year marks the most volatile political risk environment in the postwar period, at least as important to global markets as the economic recession of 2008. It needn’t develop into a geopolitical depression that triggers major interstate military conflict and/or the breakdown of major central government institutions. But such an outcome is now thinkable, a tail risk from the weakening of international security and economic architecture and deepening mistrust among the world’s most powerful governments.

Full Eurasia Group Report below...

Putin Lays Down the Gauntlet to Obama Over Hacking Claims: ‘Show Proof or Shut Up’

Washington, D.C. – After the outlandish claims made by U.S. officials, that Russian President Vladimir Putin personally “hacked the US presidential election,” Putin has had enough of the relentless barrage of unproven allegations, and laid down the gauntlet to the U.S. President Obama.

“Either stop talking about it or finally provide some evidence. Otherwise, it looks indecent,” Kremlin spokesman Dmitry Peskov told reporters in Tokyo on Friday.

Blatantly operating as a propaganda outlet for U.S. intelligence/deep state interests, working in collusion with Democratic party elements, The Washington Post reported this week that anonymous sources claimed, “the CIA concluded in a secret assessment that Russia intervened in the 2016 election to help Donald Trump win the presidency, rather than just to undermine confidence in the U.S. electoral system.”

Then, Barack Obama, on Thursday, announced that the United States will “take action” at the “time and place of our choosing” in response to unverified CIA claims of hacking by the Russian government – an allegation which remains unproven and extremely suspect. He noted that a U.S. response “may be explicit and publicized,” and that “some of it may not be.”

The Russian government responded by warning that Obama’s threat to “retaliate” to the alleged cyber attack, without providing any evidence, would be a violation of “both American and international law.” Peskov hinted at of an open-ended escalation if Obama chooses to launch a cyberwar against Russia at today’s scheduled press conference.

Russia’s foreign minister, Sergei Lavrov, citing a report by NBC news that alleged U.S. officials believe with a “high level of confidence” Putin was personally involved in a secret campaign to sway the election in Trump’s favor, said he was “dumbstruck” by the allegations.

“I think this is just silly, and the futility of the attempt to convince somebody of this is absolutely obvious,” according to state television outlet Russia 24.

Of course, that is the game that is being played by the U.S. – lots of allegations with little to no disclosure of evidence to back the accusations. While the CIA, in an anonymous leak, attempted to conflate alleged Russian hacking with Trump’s election win, both the FBI, and the Office of the Director of National Intelligence (ODNI) have dismissed the CIA’s intelligence community’s assessment, for there being a complete lack of evidence of a specific intent.

Increasingly, it looks as if the entire “Russia did it” conflation is an attempt by deep state/military industrial complex interests to destroy any potential rapprochement between the U.S. and Russia once president-elect Trump takes office.

Additionally, according to an NBC report, the Eurasia Group, a team of political risk consultants, noted on Friday that they believe the Obama administration is likely to engage in actions which will likely create significant barriers for the Trump White House’s anticipated reconciliation with Russia.

“It is unlikely that U.S. intelligence reports will change Trump’s intention to initiate a rapprochement with Moscow, but the congressional response following its own investigations could obstruct the new administration’s effort,” Eurasia Group analysts reported.

On Thursday, Peskov told the AP that the allegations against Putin were ultimately “laughable nonsense,” while Russian foreign ministry spokesperson Maria Zakharova noted that “Western media” were acting as a “shill” and “mouthpiece of various power groups.”

Zakharova went on to state “it’s not the general public who’s being manipulated,” as “the general public nowadays can distinguish the truth. It’s the mass media that is manipulating themselves.”

In a humorous move, poking fun at the lack of credibility of the U.S. administration, and suspect nature of the “Russia did it” narrative being driven by western corporate media stooges, WikiLeaks posted on Twitter that “Obama should submit any Putin documents to WikiLeaks to be authenticated to our standards if he wants them to be seen as credible.”

Obama should submit any Putin documents to WikiLeaks to be authenticated to our standards if he wants them to be seen as credible.

— WikiLeaks (@wikileaks) December 16, 2016

The message to the U.S. administration is clear – Russia doesn’t believe you and neither do the American people. With strong accusations must come clear and concise evidence to match, and thus far none has been provided. Increasingly, it looks like military/intelligence interests are colluding to push their agenda in a covert attempt to preside over, and dictate policy to, the U.S. civilian government.