Not to scare you or anything, but expect more turmoil in the world this year.
2015 will see more geopolitical challenges than 2014, according to Eurasia Group’s founder and president, Ian Bremmer. “There’s just a lot of geopolitical tension in parts of the world that can’t handle it very well,” he tells Yahoo Finance Editor-in-Chief Aaron Task in the attached video.
“Two of the world’s largest economies" -- the United States and China-- "actually look very stable,” Bremmer notes. “And yet neither of those countries want to do an awful lot to actually fix geopolitical concerns that don’t affect them very much.”
Critics of U.S. foreign policy say the United States has taken a step back from trying to ease global turmoil and some of problems in the world are a result. There is truth to that sentiment “but I don’t think that is it the United States is in isolationist mode," Bremmer says. "It’s not that the United States is cutting ties. But what the United States is doing is much more risk averse," and thus leaving Iraq and Afghanistan to fix upheaval themselves, and limiting involvement in places like Ukraine.
"It’s much less cost-intensive on the Americans," says Bremmer, "and therefore it’s much more unilateral.”
The U.S. is focusing largely on what Bremmer calls the weaponization of finance, one of his Top Risks for 2015. “The U.S. is becoming much more unilateral in the expression of its foreign policy and its national security. We see that with drones, we see that with surveillance. We also see it with the willingness to use the dollar and access to the American markets and the U.S. financial institutions as both a carrot and a stick.”
The Weaponization of Finance
The U.S. has imposed economic sanctions against Russia, Iran and North Korea. Instead of fighting these countries militarily, the strategy is to cripple them financially. With sanctions, the U.S. can achieve what it wants alone, at a time when assembling coalitions is increasingly difficult and support for militiary involvement is low.
But the weaponization of finance is not just about economic sanctions against nations, says Bremmer. The U.S. uses similar tactics against banks and other institutions that are in allied countries who may not want to support U.S. sanctions. “So we say ‘Okay, no problem. We’ll just fine you $10 billion or we’ll take away access, we’ll take away your license to do business in the U.S.,” says Bremmer. “That’s not exactly an economic sanction but that is using the almighty dollar, which is a much more effective tool than a nuclear arsenal.”
But while effective for the U.S., the weaponization of finance is weakening its relationship with Europe. Europeans don’t like the tactics, largely because their economies get hit harder by sanctions in Russia for example. And all of this comes at a time when countries in the EU are pushing back against U.S. multinationals. In November, the European Parliament voted to break up Google and weaken its power in the region. Google controls about 90% of all web searches in Europe. Other corporations like Microsoft, Apple and Starbucks have felt pushback in Europe over tax deals.
"The transatlantic relationship was the bedrock on which the post war environment was founded. That’s what made the American century,” says Bremmer. “As we look at 2015 and we start talking about 21st century policies of diplomacy and national security, we see the transatlantic relationship is eroding.”
And beyond Europe, risks are growing. Bremmer says, "You put all of that together in the context of a few countries that are actually trouble makers...the North Koreans, the Russians. I mean some rogue actors, big radicalism from terrorist organizations around the world, and suddenly 2015 starts looking a little bit scary."
"The last 20 years geopolitically have not been so interesting," Bremmer says. "They are starting to look very interesting."
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