Astana Club, one of the most esteemed geopolitical forums for Europe and Asia, announces the latest edition of the international rating "TOP-10 Risks for Eurasia in 2021".
The rating is developed by the Institute of World Economics and Politics (IWEP), comprising over 40 international experts and 1,200 professional respondents from 75 countries in Eurasia. The COVID-19 pandemic remains the key element to accelerate the risks in 2021 and affects recovery, social stability, digital and climate threats and the escalation of confrontations between key geopolitical players. We present the latest edition of Top 10 Risks for Eurasia. By outlining a number of urgent issues for the largest megaregion in the world in 2021, this edition contributes to increasing strategic awareness, and, therefore, readiness to face possible future problems.
THE PANDEMIC 2.0
Given the absence of effective international cooperation mechanisms to combat the infection and the constant mutation of the virus, the pandemic threatens to continue throughout 2021, possibly longer. COVID-19 has become the hardest challenge for humanity. The world was unprepared for the pandemic and many mistakes were made in dealing with the crisis. As noted by the WHO, at the beginning of 2021 the incidence of coronavirus again reached its peak. In parallel, more and more strains of the mutant virus have been discovered. They are more contagious and spread much faster. All this threatens to prolong the pandemic. Mass vaccination was supposed to be the way out. However, it is now clear that the coronavirus threat will not go away with the arrival of vaccines. There are difficulties with supplying vaccines in the right quantities. Developing countries in particular risk facing a shortage of vaccines. In addition, as the first results show, the actual effectiveness of vaccines may not be high in reality. The epidemic will also not be fully controlled due to the growing refusal of people to be vaccinated in a number of countries, both developed and developing. At the same time, it is possible that in 2021 new pathogens will come from the animal world. Many rodents, predators and birds have a large number of viruses that can leap to humans. Thus, one of the key global risks of 2021 remains an increase in the size of the pandemic, which could extend through 2021 and possibly beyond.
RECOVERY UNDER THREAT
The pandemic, collapse of economic activity, geopolitical and social instability and the debt crisis of emerging markets are key factors that threaten the shaky recovery of the world economy. According to estimates by the IMF, the global economy will be short $ 28 trillion over the next five years because of the coronavirus crisis. Many eyes are now focused on a speedy recovery of the world economy. However, slow recovery of global growth may be followed by a new recession. The main reason for this is the slow pace of vaccination. The failure of the vaccination campaign is now announced in the European Union. Vaccination has been very slow in the United States, despite the new administration's attempts to speed up the process.
Given this background, a rapid distribution of the vaccine cannot be expected in other, less developed countries, at least until mid-2021. Another point is related to the fact that the recovery of global growth will be far from uniform. Of particular note are developing countries, whose economies will remain extremely fragile. They risk a debt crisis in 2021. The recovery of economic activity in 2021 will also restrain the decline of investment activity in the world. UNCTAD predicts that investment will fall by more than 40% in 2021. This will actually be a throwback to the indicators of 15 years ago, when the global FDI market was equal to $ 1 trillion. As a result, the global economic picture will remain highly contradictory in 2021.
US-CHINA COLD WAR
The US and China have crossed practically all "red lines" during the pandemic; this confrontation will transform into full scale systemic conflict in 2021. In 2021, Eurasia will face a tougher geopolitical struggle between the US and China. The change of administration in Washington will not lead to an easing of the contradictions between the two powers, but, on the contrary, will give the struggle a systemic nature. Technology will become the field of fierce battle. In the struggle for leadership in the development of artificial intelligence, quantum computers and next-generation networks, Beijing and Washington will impose new restrictions against each other. The powers will try to force their allies to reject the competitor's software and technology. Critical risks will also arise in the military sphere. Territorial disputes in the South China Sea and the problem of Taiwan will push the parties to demonstrate force and increase their military presence in the APAC. Given this background, trade negotiations between the US and China will again become tough and uncompromising. As a consequence, the growing degree of tension between the two superpowers will hold the rest of the world hostage.
CRISIS AROUND IRAN
Growing tensions around Iran may trigger a large-scale military confrontation, thus dealing a crushing blow to the international energy market. At the beginning of 2020, Iran was already balancing on the brink of a direct armed conflict with the United States. Although the crisis has passed, the threat of war has not disappeared.
A change of administration in Washington would help stabilize US-Iranian relations. However, a full-fledged US return to the JCPOA and the lifting of anti-Iranian sanctions are unlikely. The source of new tensions could be Iran's complete withdrawal from the nuclear agreement. The beginning of 2021 has already been marked by Iran's announcement of a complete suspension of its commitments under the JCPOA. Tehran may view "nuclear blackmail" as an attempt to return to the negotiating table, but the Iranian establishment runs a great risk of finally losing support from Europe, which has sought to preserve the JCPOA. Iran's competitors Saudi Arabia and Israel, for whom Tehran's emergence as a powerful regional power is unacceptable, will also add fuel to the potential crisis. In this regard, Iran's neighbors in 2021 will strengthen the policy of tough containment of Tehran. Iran, in turn, will not let any diversion directed against itself go unpunished. A reciprocal exchange of hybrid strikes could well lead to an uncontrolled escalation of the confrontation.
Decoupling of the West and China will not only continue under the new US administration but will gain a dangerous new dynamic in 2021. In 2021, Eurasia will face the risk of further misalignment of the strategic development courses of the US and China in the geo-economic and technological spheres. An overnight severance of US-Chinese economic ties seems unlikely, as it will be difficult for Washington to replace China with other suppliers in the foreseeable future. At the same time, Washington will continue systemic steps to "disconnect" China from the benefits it derives from trade, investment and technology partnerships with the West and, above all, with the United States. US authorities will go on to further reduce investment related to innovative developments in the Chinese market. Proponents of a "divorce from China" in the US will also increase pressure on US companies to curtail strategic production in the PRC. Decoupling would not only reduce international trade, it would also break many of the production and technology chains that have already weakened during the pandemic. It is clear that China, too, will not sit idly by, but on the contrary, will go on the offensive in the face of its successes against the pandemic. Already now we can observe a sharp intensification of Chinese foreign policy on a global scale and a hardening of the tone of Chinese diplomacy. Thus, the rivalry between the West and China will increasingly acquire a bloc character, which risks dividing the world into two opposing poles led by the United States and China.
DISSOLUTION OF THE NUCLEAR NON-PROLIFERATION REGIME
The erosion of key nuclear treaties and institutions along with outstripping developments in military technologies threaten to initiate a new nuclear arms race. Thirty years after the end of the Cold War, the world stands on the threshold of a new unlimited nuclear arms race. With increasing conflict in international relations, the erosion of key international treaties, an increase in the number of nuclear players, and a series of unresolved crises (Iran, the DPRK, etc.), the new nuclear race threatens to become much more dangerous and unpredictable than in the previous Cold War era. The main sources of instability in 2021 will be the contradictions between the two largest nuclear powers, the United States and Russia, China's growing nuclear ambitions, and the rapid development of new military technologies.
EXPLODING SOCIAL PROTESTS
Political systems in many countries will come under unprecedented pressure as the economic and social impact of COVID-19 mounts. The coronavirus pandemic has exacerbated protest sentiments in societies around the world. Protest potential, which had been building up since the 2008-09 global financial crisis, peaked as a result of quarantine and the imposition of severe restrictions. At the same time, the coronavirus crisis exposed many socio-economic problems, sharpening the relationship between citizens and governments to the limit. Among the most acute of these are falling living standards and rising unemployment, especially among young people. An additional trigger could be the problem of unequal access to vaccine, which would not allow the relaxation of quarantine measures. Given the uncertain prospects for stabilizing the epidemiological situation and restoring the global economy, many states in Eurasia risk facing an unprecedented wave of social protest.
GLOBAL CYBER CRISIS
The absence of uniform rules in the digital domain opens the road to massive cyber-attacks, which may become the catalyst for a global-level crisis. Forced social isolation during the pandemic forced the digitalization of the global economy. Governments, businesses and the entire international community were forced to work remotely. The increased strain on digital infrastructure has not only exposed the problem of unpreparedness, but has also shown the scale of the threats concentrated in cyberspace. Not only business, but also more sensitive sectors such as industrial and military facilities and critical infrastructure are under attack. A key risk factor is that to this day there are no generally accepted rules of the game in the digital sphere. In general, international regulation has failed to catch up with the rapid pace of development of digital technologies. Thus, the next global crisis may come from cyberspace.
Total digitalization, accelerated by the pandemic, offers unprecedented opportunities to control personal data and political censure, creating the risk of a new type of totalitarianism. During the pandemic, digital technology became one of the key factors in curbing the spread of the coronavirus. This was particularly evident in East Asian countries, where the state was able to establish tight control over the movement of citizens thanks to technologies such as facial recognition or the introduction of QR codes. But there was a downside to this process: digital control threatened the freedom and privacy of citizens. Total online "socialization" and the growing share of digital services and attempts at digital voting are creating unprecedented opportunities for tracking personal data and managing public opinion. In turn, governments are concerned that vast amounts of data about citizens are controlled by a limited number of corporations that already influence domestic political processes in many countries. Thus, the establishment of digital totalitarianism has become a real threat that Eurasian countries may face in the near future.
FAILURE OF DECARBONISATION
In 2021, the world will be concerned with recovering economic growth, meaning plans to decarbonize and reduce CO2 emissions will be pushed to one side, especially in developing countries. The historic decline in pollutant and greenhouse gas emissions during the pandemic was only the imputed "calm before the storm."
The gradual recovery of international business activity will make a build-up of CO2 emissions almost inevitable. For many countries, restoring economic growth, on which citizens' well-being directly depends, will be a higher priority. We can expect not only a reduction in funding for climate initiatives, but also a significant slowdown in the share of traditional fuels in the global energy balance. As a result, the "green agenda" risks being relegated to the background in 2021, and international cooperation will be partially frozen for an indefinite period.
The year 2020 will go down in human history as the beginning of radical transformations. Before our eyes, a new global reality was being formed, which brought into life many elements of uncertainty, both new challenges and still undiscovered opportunities. At the same time, the pandemic has accelerated the existing trends in the world system more than introduced a fundamentally new content. Nevertheless, it is already clear that the consequences of the current coronavirus crisis will be fundamental.
Astana Club sees its mission in creating an atmosphere of open dialogue regarding the future of Greater Eurasia. www.astanaclub.kz