US-China relations have been rated the top political risk for global investors and market participants in 2010, which will likely be far more turbulent geopolitically than last year, when the world was busy fighting the financial crisis, Eurasia Group said on Monday.
India-Pakistan ties ranked eighth in the list of top 10 risks released by the New York-based political risk consulting firm in a note to clients. The two governments, it predicted, faced serious factors pushing them towards confrontation.
“With the world now coming out of recession, the risks are starting to shift to the challenges created by the emergence of a new global order,” Eurasia Group president Ian Bremmer and head of research David Gordon wrote in the note.
Fear factor: ‘Beating the retreat’ ceremony at Wagah. Eurasia Group says India-Pakistan ties rank eighth in the list of top risks. Altaf Qadri / AP
Such challenges pit developed and developing states, “the old unipolar system vs the emerging non-polar one, and the old dominant globalized system of regulated free market capitalism vs the growing strength of state capitalism.”
All three themes converge in US-China ties, according to a press statement from Eurasia Group. High US unemployment and strong Chinese growth will heighten tension, it said.
Key points of friction include climate change, nuclear non-proliferation, international trade, cyber security and armed conflicts around the world.
In the subcontinent, a decision by Pakistan to go after terrorists domestically provides “Islamic extremists with powerful incentives” to step up attacks on Pakistan’s urban centres and to try and reignite conflict with India, according to Eurasia Group.
The political risk consultancy rated post-election Iran, which faces a new round of United Nations sanctions, as the second biggest political risk of 2010, followed by European fiscal divergence as policy coordination in the continent erodes.