The Most Volatile Countries In The World — 2015 Edition
It‘s nearly five months into 2015, and the world has witnessed massive change. Just take a look at the Middle East.
Saudi Arabia, along with members of the Gulf Cooperation Council (GCC) and other supporters, have begun strategic air strikes in Yemen and have threatened ground troops (estimated 150,000) all to limit the advancement of Houthi Shi’ite Rebels, who Saudi Arabia believes is backed by Iran. The same Iran that is preparing for a delivery of S-300 state of the art missile systems from Russia and is in the final phase of signing a nuclear deal with the P5+1 to the behest of Israel, who themselves have reportedly been allowed to use Saudi airspace to attack Iran and have threatened pre-emptive strikes on Iran should the nuclear deal be implemented.
That’s just touching the Middle East. There is still the problem of ISIS, the bloody civil war in Syria, the on-going collapse of Iraq, the challenge of the Kurds who want an independent Kurdistan. And this doesn’t take into account the needs of other Middle Eastern states like Qatar, Kuwait, United Arab Emirates and Oman.
(If you are confused, hopefully the graphic below will provide some clarity.)
And, that’s just one region of the world. What about Asia, Africa, Europe, and South America? Even North America, which has traditionally remained unaffected by changes around the world — specifically geopolitical changes— is facing challenges.
Read below for a briefing of the most volatile countries in the world.
Since the ousting of Gaddafi in 2011, Libya has gone from having the highest quality of life in Africa to being called a failed-state. However, things can always get worse. In late 2014, ISIS expanded into Libya, capturing Derna, close to both Italy and Egypt. As ISIS enters Libya, rival factions continue fighting for control over the country, even as world powers and the UN call for the fighting to stop. Oil output has declined significantly, from a peak of 1.7 million to just 500,000 barrels a day. Meanwhile, the Economist has said that the Beida government has told the National Oil Corporation (state owned) to deposit income into an offshore account, not the Libyan treasury. With al-Shabab in East Africa and Boko Haram in the West, ISIS entering Africa could create even more regional and global insecurity. With heightened political and social instability, Libya faces an uncertain future.
Things have taken a turn for the worst in Brazil, who is a member of BRICS. Economically, their economy has stalled. At Davos 2015, the Brazilian Finance Minister said economic growth “will be flat” this year. Meanwhile, unemployment rose to 5.9% in February and FT has reported that the Brazilian economy could shrink, recording its “worst performance since 1931”. Socially, things aren’t much better. A recent Petrobras scandal resulted in hundreds of thousands of protestors taking to the streets (270,000 in Sao Paulo alone), demanding the impeachment of President Rousseff. And, to top it all off, cities in Brazil are facing a massive drought. Brazil is the largest economy in Latin America. If it breaks down — economically, politically or socially — Brazil’s challenges could soon become regional.
The United States faces challenges that no other country in the world does. At the on-going IMF and World Bank meetings, one of the major themes is the changing US role in the world. The Chief Economic Advisor to the Indian government has said, “It’s (referring to the United States) almost handing over legitimacy to the rising powers” while the NY Times reports that anonymous officials are saying the role of the United States is their top concern. Politically, the United States faces an unprecedented amount of political gridlock, and even as candidates prepare for the 2016 election, questions persist as to what the United States should (or should not do) to remain at the top of the ladder. With China introducing a new bank (the Asian Infrastructure Investment Bank) and Russia continuing to challenge the established order, the United States faces increased volatility this year and in the future towards its status globally.
Greece is in a position that no country wants to be in. It has to choose between providing a safety net for its populations or facing a default on loans. Its debt to GDP ratio has grown from 98% in 2009 to 133% in 2010. Following debt restructuring programs, it is now 175%. The Guardian is reporting that the Greek economy has shrunk by 25% (along with wages) and youth unemployment now stands at 60%. But, the real problem is that if Greece defaults on its loans (or if the Syriza party which came to power by campaigning on anti-austerity decides to take a radical step), Greece could leave the European Union completely (“Grexit”). Other countries have proposed leaving the EU (like Britain where a recent poll found 51% would be in favour of an EU-exit) making a “Grexit” a precedent that other states may follow. If this happens, the future and stability of the European Union changes and the world’s biggest economic experiment faces significant challenges. Socially, Greece faced massive protests before Syriza was elected. If Syriza doesn’t deliver soon — in the form of jobs, standing up to the ECB/IMF or growing the economy — we could see the start of more social explosions in Greece.
The Usual Suspects
The above is only a brief overview of four countries whose volatility and change can bring about immense challenges for the world. However, let’s not forget the usual suspects.
Syria’s civil war has now claimed the lives of 210,000 people. Ironically, the Assad government, who has been embattled against ISIS since the war began, is now receiving indirect support from Western powers. If Western powers begin air strikes against ISIS in Syria, could the end of the Syrian Civil War be nearing?
Iran is in the final phase of signing a nuclear deal with the P5+1 nations that will result in all sanctions being lifted. While there is debate about whether this will pass through the US Congress, there is also challenges as President Rouhani says that sanctions have to be lifted the day the deal is signed. Iran is at a crossroads. If the deal succeeds and sanctions are lifted, Iran gets integrated back into the global economy and the world. If it fails, the deal will be dead in the water for an indefinite period of time, forcing Iran to potentially take radical steps.
Russia faces volatility as its economy reels from Western economic sanctions. The ruble alone has dropped 50% in value (compared to $US). However, the real volatility from Russia comes from its geopolitical actions on the world stage. Selling S-300 Missile Systems to Iran or publicly calling for the creation of a Palestinian state are all strategic geopolitical moves for Russia (they paused the sale of S-300 Missile Systems in 2009 at the request of the United States). It’s actions then, toward countries like China, India, Iran, North Korea, Greece and others, will continue to challenge (and upset) the established order.
Every single region of the world is facing an unprecedented amount of change. Europe has Greece, Germany and Britain to deal with. South America has Brazil, Argentina and Venezuela. Africa has Kenya, Nigeria and South Africa. Asia has divisions between China, India, Philippines, Vietnam and more. The United States is struggling to define its future in a world that is more and more becoming dominated by multiple powers.
If you are a business, the time has come to start preparing for geopolitical changes around the world. Your revenue, stock price, partnerships, supply chain are all at risk of being disrupted. Start taking steps now by analyzing geopolitical changes, identifying what they mean and integrating them into your broader strategy.
Don’t believe that geopolitics matters? Read the following headlines:
Joe Kaeser, president and chief executive officer of Siemens, has weighed in on geopolitical risks.www.msn.com
"What worries me ... is the geopolitical environment around the world, including Russia, and the Middle East," Fonterra…www.reuters.com
PRADA suffered a 28 per cent fall in net profit last year as the Italian fashion giant was hit by weaker sales of its…www.news.com.au
(Bloomberg) -- Cartier was closed for business on Moscow's upscale Petrovka Street this morning as shop assistants…www.bloomberg.com
Abishur Prakash | Co-Founder @ innovatingfuture.com