(Bloomberg) – As the global economy is still in the grip of the Covid-19 crisis, the Eurasia Group sees the divided United States as a major risk this year for a world lacking leadership.
“In decades past, the world looked to the United States to restore predictability in times of crisis. But the world‘s preeminent superpower faces great challenges, ”Eurasia Group Chairman Ian Bremmer and Chairman Cliff Kupchan said in a key risks report for 2021.
Beginning with the difficulties facing the Biden administration in a divided United States, the report points to 10 geopolitical, climate and national risks that could derail the global economic recovery. A prolonged impact of Covid-19 and K-shaped recoveries in developed and emerging economies is the second most cited risk factor in the report.
Biden will struggle to gain new faith in the United States’ global leadership as he struggles to manage domestic crises, according to the report. With much of the United States questioning its legitimacy, political effectiveness, and the longevity of its “asterisk presidency,” the future of the Republican Party and the very legitimacy of the American political model are all in question, a- he added.
“A superpower torn in the middle cannot come back to business as usual. And when the most powerful country is so divided, everyone has a problem, ”said Bremmer and Kupchan.
The report lists the following main risks in 2021:
The report warns that the pandemic and its wide impact will not go away once vaccination is widespread. Uneven recoveries, gaps in access to vaccines and failed stimulus packages will drive up debt levels, leave workers displaced and fuel opposition to incumbent leaders.
For the United States, this will increase the polarization that fueled Donald Trump’s support. For emerging economies, the debt tightening could lead to financial problems, according to the report.
Some concerns are more likely to be “red herring” risks that have been overestimated, the report adds. These include the relationship between Biden and “Trump’s traveling companions” such as Turkish Recep Tayyip Erdogan, Brazilian Jair Bolsonaro, Briton Boris Johnson and Israeli Binyamin Netanyahu. The Biden administration will commit to common interests and leaders will adjust to the new status quo, the report says.
Fears of a global backlash against big American tech and an Iran-US. confrontation is also considered a lower risk.
© 2021 Bloomberg L.P.