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Hold us accountable: Our biggest calls for 2023
Every year, Eurasia Group releases its Top 10 geopolitical risks for the year ahead. You’ll see the 2024 edition next Monday. But an honest analyst looks back at past forecasts to see (and acknowledge) what he got right and wrong, and I’m going to do that here and now.
Here’s the 2023 full report. To remind you, our Top 10 risks for 2023 were:
- Rogue Russia
- Maximum Xi
- Weapons of Mass Disruption
- Inflation shockwaves
- Iran in a corner
- Energy crunch
- Arrested global development
- Divided States of America
- TikTok boom
- Water stress
Let’s take these one at a time …
1. Rogue Russia
Our top risk last year was that the war between Russia and Ukraine would be no closer to resolution and that Russia would be on track to become the world’s most dangerous rogue state.
Check and check.
Another year of brutal fighting brought hundreds of thousands of casualties – and barely budged the war’s frontlines. Russia, still led by a president considered a war criminal in the West, now faces even more sanctions, and it has therefore drawn closer to Iran and North Korea to procure much-needed military supplies from both.
Russia has also picked up the pace of cyberattacks on Ukrainian targets and continues to target cities across the country with airstrikes. Putin has kept Russia’s asymmetrical attacks incremental to avoid escalation and exacerbating divisions in the West, but Russian disinformation attacks are picking up in support of Kremlin-friendly politicians and political parties inside NATO countries.
For 2024, Putin will have new options. More on that next week.
2. Maximum Xi
This call fared well too. We expected Xi Jinping’s consolidation of political power to create big economic and policy challenges through increasingly arbitrary and capricious central decision-making. We saw that most dramatically early in 2023 when a sudden U-turn from the world’s tightest zero-COVID policies produced a bad hangover for the Chinese economy.
Making matters worse, the expected economic bounce-back hasn’t materialized, and the unpredictability of government decision-making led to growing capital flight and a sharp turnaround in foreign direct investment, weakening the economy further.
In fairness, Xi Jinping responded to the economic weakness later in the year with a friendlier and more open foreign policy than we feared. Relations with the United States and Europe have been far better managed in recent months.
Do we expect that trend to last in 2024? We’ll tell you much more about that next week too.
3. Weapons of Mass Disruption
Here’s where I think we were furthest ahead of the curve. A year ago, very, very few political leaders were actively thinking about the disruptive power of artificial intelligence. Now, the hopes and fears are front and center in every region of the world – but especially for decision-makers in America, China, and Europe. The UN is on the case now too.
We learned this year that new AI tools represent a unique technological breakthrough with implications for every sector of the economy. They’re already driving a new phase of globalization. But they’re also creating serious risks because AI will enable disinformation on a massive scale, fuel public mistrust in governing institutions, and empower demagogues and autocrats in both politics and the private sector. More on that next week too.
4. Inflation shockwaves
Here our forecast mainly missed the mark. We expected that inflation at levels not seen in generations would lead to a restrictive policy stance by major central banks, reducing global demand and causing financial stress and social and political instability. We were thinking mainly of countries already under pressure, but we considered the United States vulnerable too.
The US did experience a banking crisis of confidence following the collapse of Silicon Valley Bank and First Republic in 2023, but stronger-than-expected growth and continued low unemployment helped contain the fallout.
The global impact was less than we expected. Yes, China underperformed, but Europe absorbed the shocks created by the transition away from imports of Russian energy, and overall US performance stuck close to the “Goldilocks” scenario of slow economic cooling while avoiding recession. The risk of a major financial crisis was avoided.
With hindsight, inflation deserved to be on the list, but not at #4.
5. Iran in a corner
This one cut both ways in 2023. On the one hand, as we expected, there was no breakthrough with the Biden administration to restore the Iran nuclear deal, and that led Tehran to step up uranium enrichment and stockpiling. It also upped its military cooperation with the Kremlin, particularly with drone transfers that boosted Russia on the battlefield in Ukraine.
We also finished the year with serious concerns about an expansion of the regional war between Israel and Hamas, a conflict in which Iran would be a key player. Their various proxies in the region were already stepping up attacks on Israel and US forces in the region as 2023 came to an end.
But the positive surprise was a breakthrough we didn’t foresee — brokered by China — between Iran and Saudi Arabia. That diplomatic opening has facilitated better economic relations, and following the outbreak of war, leaders of the two countries have been in regular communication, helping to stabilize the region for now.
6. Energy crunch
This was the biggest miss in our 2023 top risks report. We forecast that supply-limiting geopolitical challenges coupled with higher global energy demand would push oil prices beyond $100 a barrel by the end of the year. But there was no energy crunch in 2023 because the wars and the best efforts of OPEC+ to bolster prices couldn’t outweigh reduced demand from sluggish economic growth in China or a dramatic expansion of US oil production despite its commitment to a faster and more expansive energy transition. Oil topped out just under $95 and quickly backed down. Despite the entirely unexpected risks in the Middle East, the price has lately bounced between $75-$80 per barrel.
7. Arrested global development
Though the pandemic is over, human development indicators overall continue to suffer, thanks to the Russia-Ukraine war, global inflation, climate change, the Israel-Hamas war, and a number of other military coups and conflicts in places like Haiti, Sudan, Ethiopia, and Armenia-Azerbaijan that receive very little attention from Western media.
The result is lower levels of economic and political security for most of the world’s population. This should have come higher on our list.
8. Divided States of America
Given the structural political dysfunction (ask former House Speaker Kevin McCarthy and the parade of his hapless would-be replacements) and the continued erosion of public confidence in US political institutions, this deserved to be on the list. Given the trajectory, we should have had it a little higher.
The 2024 election season is now in full swing, and in many ways, it is more problematic than in 2020. The international impact has so far been limited, and other governments are only just starting to grapple with the post-November uncertainties in US policymaking. More on that next week.
9. TikTok boom
Gen Z certainly became a bigger player in 2023, and not just on climate or issues of equality and identity politics. The Israel-Hamas war has created early challenges for the Biden reelection campaign, with both support for Palestinians and anger at the Israeli government becoming more intense as 2024 begins.
10. Water Stress
Water stress became more of an issue in 2023. Record rains made a big positive difference in the United States, facilitating a political deal for water-sharing in western US states and giving farmers a medium-term lease on life.
But other water-stressed parts of the world have experienced more pain. Northern Mexico remains in serious trouble. Agriculture and overall fiscal strain across Europe will require new political thinking. Sub-Saharan Africa now faces more starvation, especially in the Sahel and the Horn of Africa, adding to forced migration trends. Too many governments are focused only on crises, leaving longer-term plans for new institutions capable of marshaling long-term resources on the drawing board.
So, that’s my look back at 2023. Beginning next Monday, you’ll be reading much more about our expectations for a historically turbulent 2024.
Global Stage: Global issues at the intersection of technology, politics, and society
GZERO Media and Microsoft have joined forces to launch Global Stage, a partnership to present conversations about critical global issues at the intersection of technology, politics, and society.
On location from prestigious events including Davos, Munich, the UN General Assembly, COP, and more, Global Stage takes you to the frontlines of monumental global gatherings, where pivotal dialogues unravel at the crossroads of technology, politics, and society. Watch our live discussions tackling the world's most urgent challenges, featuring respected leaders and experts from both the public and private sectors who illuminate topics from cybersecurity, AI, and climate change to the ongoing conflict in Ukraine. Stay engaged throughout the year with thought-provoking livestreams, in-depth interviews, compelling podcasts, and more. Welcome to the Global Stage.
Iraq 20 Years Later
On the 20th anniversary of the US-led invasion of Iraq, US Senator Tammy Duckworth and NBC's Chief Foreign Correspondent Richard Engel sit down with Ian Bremmer on GZERO World to reflect on the legacy of a war that reshaped the Middle East and continues to reverberate around the world.
Senator Duckworth, a former helicopter pilot who lost both her legs in the Iraq War and now sits on the Senate Armed Services Committee. She emphasizes the importance of honoring the promises made to veterans and the impact it has military readiness. "The cost of going to war isn't just the tanks, the guns, the helicopters, and the ammunition during the period of actual conflict," Duckworth says, "The cost of war goes on for many decades."
Engel shares his experience as a journalist in Iraq during the 2003 invasion, including the initial reception from the Iraqi people and the increasing hostility as the war dragged on. He notes that while the people are now “freer,” the country is not yet "fully functioning" or "embraced by the larger Middle East."
Today, as the war in Ukraine drags into its second year, both Duckworth and Engel share their perspectives on what lessons we can learn from Iraq and its aftermath to avoid repeating the mistakes of the past.
Watch the upcoming episode of GZERO World with Ian Bremmer, featuring Senator Duckworth as well as NBC News Chief Foreign Correspondent Richard Engel, on US public television. Check local listings
War in Ukraine heading to "violent" new phase, warns NATO's Mircea Geoană
Ukraine's military has lasted far longer than anyone expected when the war in Ukraine began one year ago. Much of that success comes down to Ukraine's ability to mobilize the energy of the nation, as well as material support from NATO and its allies. On the one-year anniversary of Russia's invasion, GZERO World traveled to the Munich Security Conference and spoke with NATO Deputy Secretary General, Mircea Geoană, for his candid assessment of the state of the war.
Geoană sees a "very significant and violent" new phase in the offensive and, despite public unity, acknowledges there are internal divisions within NATO about how best to engage and support Ukraine. Plus, there's still an open question about Ukraine's path toward NATO membership, and whether joining the alliance is in Kyiv's best interest. Ian Bremmer asks Geoană about Ukraine joining NATO, the lessons the alliance has taken away from Russia's fighting capacity, and what that means moving forward as the war enters its second year.
Catch Bremmer's full interview with Geoană in this week's episode of "GZERO World with Ian Bremmer," airing on public television stations in the US. Check local listings.
A police officer blocks the street after an explosion on busy pedestrian Istiklal street in Istanbul, Turkey.
Hard Numbers: Istanbul’s explosion, FTX’s downfall, Ukraine’s win in Kherson, Terminal 2F’s farewell
6: At least 6 people were killed and dozens were wounded on Sunday when an explosion rocked a busy district in central Istanbul, Turkey. The cause remains unknown, but the same location was the target of a 2016 suicide attack carried out by an Islamic State affiliate.
900 million: FTX, the major crypto exchange that filed for bankruptcy and is being investigated for potential financial crimes, held just $900 million in saleable assets against a whopping $9 billion of liabilities. Headed by crypto megastar Sam Bankman-Fried, FTX has been accused of unethical business practices. Meanwhile, its downfall has sent crypto and stock markets into a tailspin.
8: For eight months, residents of Kherson – the only provincial capital held by the Russians – were living under the Kremlin’s control, but the province is now firmly in Ukrainian hands after an embarrassing Russian retreat wrapped up over the weekend. Still, Ukrainian authorities have much work to do to restore electricity, water access, and medical supplies in the province.
18: Mehran Karimi Nasseri, an Iranian refugee who made Paris' Charles de Gaulle airport his home for 18 years, died at the airport’s Terminal 2F on Saturday. Nasseri, whose story inspired the film "The Terminal" starring Tom Hanks, was granted refugee status in France and lived at a hostel for a period but recently returned to the airport where he died.
A view shows the city centre without electricity after critical civil infrastructure was hit by a Russian missile attacks, in Kamianske, Dnipropetrovsk region, Ukraine.
Hard Numbers: Ukraine’s battered power grid, Turkey slashes interest rates, the Philippines scraps Russia deal, Black Death’s lingering effects
40: Up to 40% of Ukraine’s energy infrastructure has been seriously damaged since Russia began its latest bombardment on Oct. 10. The Ukrainian government on Thursday told residents to charge all their appliances ahead of more disruptions to the power grid, which are being felt as far west as Lviv.
3: President Recep Tayyip Erdoğan, in a bid to lower borrowing costs and boost his reelection chances, has slashed Turkey’s benchmark interest rate for the third consecutive month – from 12 to 10.5% – despite record-high inflation. Long opposed to tightening monetary policy, Erdoğan says growth is more important than price stability.
16: The Philippines confirmed Thursday that it's scrapping a deal to buy 16 military helicopters from Russia. It's the first time new Philippine President Ferdinand Marcos Jr. has weighed in on the touchy issue of relations with Moscow, as he tries to thread the needle of getting along with both mighty neighbor China and the US, a treaty ally.
700: A new study reveals that a mutation that helped people survive the Black Death 700 years ago is linked to a series of auto-immune diseases impacting people today, including Crohn’s disease. Researchers believe that the event – which killed as many as 200 million people – shaped human evolution.
Will Nepal cash out?
Like much of the world, Nepal saw digital payments soar during the pandemic.
Tulsi Rauniyar, a young Nepalese documentary photographer, experienced the transition firsthand. With COVID making human touch a big concern, e-commerce and cashless transactions became more commonplace — so much so that Rauniyar herself rarely uses cash anymore. This technological globalization is increasingly helping female entrepreneurs and businesswomen succeed in Nepal. But it still needs to reach rural areas — where many hard-working women are unaware of these transformative technologies.
Watch our recent livestream discussion on remittances and other tools for economic empowerment.
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A shopper pays with a euro bank note in a market in Nice, France, amid sky-high inflation.
Hard Numbers: Eurozone inflation record, Saudi woman sentenced for tweeting, US life expectancy drops, Russia cuts off gas to EU … again
9.1: Year-on-year inflation in the Eurozone’s 19 countries rose to 9.1% in August, up from 8.9% last month. It’s the highest rate on record since the group began recording in 1997, and will put pressure on the European Central Bank to again raise interest rates, raising the likelihood of a recession in some EU countries.
45: A Saudi woman has been sentenced to 45 years in prison after a court convicted her of using the internet to "tear the kingdom’s social fabric.” Though Saudi officials have not released many details on the case, a human rights NGO said the woman used a pseudonym to tweet her political opinions.
76: Average life expectancy in the US dropped to 76 in 2021, down three years from 2019. The dip was more pronounced among white Americans and is partly attributable to the pandemic.
745: Russia has again completely halted natural gas deliveries to the European Union via the 745-mile-long Nord Stream 1 pipeline under the Baltic Sea. The pipeline was already operating at just 20% capacity after Russia slashed supply because the EU hit Moscow with sanctions over Ukraine. For now, this move has not impacted global gas prices.