Weakness in China's economy is the "major uncertainty" facing the globe in 2014, hedge fund titan George Soros declared last week.
That's wrong, acccording to Ian Bremmer, president of Eurasia Group, who says geopolitics, not economics, pose the biggest risks in 2014.
For the past five years the world has been alternatively -- and sometimes simultaneously -- worried about a meltdown in the eurozone, a hard-landing in China, Japan's debt burden, and America's debt ceiling and political dysfunction, Bremmer notes. "Every single one of those things has receded. Even my buddy Nouriel Roubini, 'Dr. Doom', says the economics are picking up. What remains and we are concerned about is that the geopolitics aren't good."
To be clear, Bremmer does not adhere to the idea that the U.S. is in 'terminal decline', a view that has gathered currency since the 2008 financial crisis. But "the commitment of the U.S. to allies abroad is absolutely in decline," he says. "U.S. foreign policy as a force that drives relationships and orientations of other countries around the world is absolutely in structural decline."
While some countries -- like Israel, the U.K., Canada and Japan -- are inexorably linked to the U.S. for economic or security reasons (or both), many more -- including Germany, France, Turkey, Saudi Arabia, South Korea, Brazil, and Indonesia -- "all have governments that consider it unwise to align too closely with the U.S., and they are preparing to shift their international orientation accordingly," according to Bremmer.
There will be "very significant knock-on consequences" from this decline of U.S. foreign policy, he continues. For instance, defense manufacturers such as Lockheed Martin and Raytheon will face new challenges trying to sell arms abroad while tech giants Apple, Google and Yahoo (our corporate parent) will have a harder time doing business in Germany and France, "given concerns of NSA and Snowden," Bremmer says.
Clearly, President Obama "deserves some credit" for this decline, Bremmer quips. For example, the President's failure to make the Trans-Pacific Partnership Agreement (TPP) a priority "slows this enormous economic liberalization of trade and capital toward the U.S.," he says.
But Bremmer says the President is only responsible for about one-third of the decline of U.S. influence abroad, saying much of it is "structural in the U.S." because of the growth in domestic energy production and rising issue of income inequality. "Many just don't think we should be doing this stuff," he says.
And while Bremmer is fairly sanguine about the near-term effects, history shows American isolationism doesn't work out very well in the longer term for anyone -- other than dictators and totalitarian regimes.