Wednesday, 9 January 2019

Eurasia Group Forecasts The Biggest Geopolitical Risks of 2019: The Nigeria, Buhari, Atiku Connection

Leading geopolitical and political risk advisory firm, Eurasia Group founded by Ian Bremmer asserts that, the global geopolitical environment is at its most dangerous in decades. Here is a look at Eurasia’s top predictions for risks that could impact the world in 2019. Risk number 10 on the list chronicles what might pan out if either of the two top presidential candidates in Nigeria's forthcoming presidential election, Buhari or Atiku wins.

1. Bad Seeds
Global decision-makers are so consumed with addressing -- or failing to address -- the daily crises that arise from a world without leadership that they’re allowing a broad array of future risks to germinate, with serious consequences. The outlook for institutions like the European Union and the World Trade Organization, as well as the U.S-China relationship and that between Russia and its neighbors, is negative.

2. U.S.-China
There’s been a long-held view in Washington and Beijing that the best way to manage their rivalry was to try to keep the relationship as amicable as possible -- for as long as possible. That’s changed, especially in the U.S., which is embracing an openly confrontational approach under President Donald Trump amid a months-long trade war between the world’s two largest economies. Expect more discord in the arenas of technology, economics and security.
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3. Cyber Gloves Off
This year is likely to be a turning point in cyber competition. For the first time, the U.S. will be undertaking a serious effort to establish real deterrence by projecting its cyber power in much more assertive ways. This show of strength is not only unlikely to create an effective system of global deterrence, but it could well backfire.

4. European Populism
When the EU holds parliamentary elections in May, euro-skeptics from both the left and right will win more seats that ever before. In the past, fringe parties gained support by blaming Brussels for domestic problems. Now they’re winning by promising to ignore EU rules. The unprecedented influence of these new parties will undermine Europe’s ability to function.

5. U.S. at Home
This will be a chaotic year for U.S. domestic politics. Eurasia’s Meredith Sumpter says there’s a 40 percent chance of impeachment articles being brought against Trump. While the odds of Trump being impeached and removed from office remain low, political volatility will be exceptionally high.
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6. Innovation’s Winter
Eurasia predicts a reduction in the financial and human capital available to drive technological development. It blames three factors: security concerns leading states to reduce their exposure to foreign suppliers; privacy concerns causing governments to more tightly regulate how their citizens’ data can be used; and economic concerns leading countries to put up barriers protecting their emerging tech champions.

7. Coalition of the Unwilling
Trump’s election was a blow to the decades-long commitment by Washington to protect a U.S.-led global order. Since then, Trump has collected some fellow travelers -- a coalition of world leaders unwilling to uphold the those principles, with some even bent on bringing the system down. These leaders will have an increasingly disruptive effect on the international order.

8. Mexico
The country’s new president, Andres Manuel Lopez Obrador, begins his term with a degree of power and control over the political system not seen in Mexico since the early 1990s. For AMLO, making Mexico great again means taking it back to the 1960s and 1970s -- with more spending, more interventionist and lower quality policies. Until now, Mexico had been in a different political and economic cycle than the rest of Latin America, with a lower category of political risk. This year, it will look much more like its southern neighbors.

9. Ukraine
President Vladimir Putin sees Ukraine as vital to Russia’s sphere of influence. Their shared historic, political, and cultural links have undergirded Russia’s actions since long before the Ukraine’s 2013-2014 Maidan revolution. Putin believes Russia should have a big say in Kiev’s future. But that will pose a problem in the March presidential elections and ensuing parliamentary ballot, in which Russian interference -- whether to support or undermine particular candidates -- is a certainty.

10. Nigeria
The country faces its most fiercely contested election since the transition to democracy in 1999. One candidate is the incumbent, Muhammadu Buhari. He is an elderly, infirm leader who lacks the energy, creativity, or political savvy to move the needle on Nigeria's most intractable problems. His opponent is Atiku Abubakar, another gerontocrat who would focus on enriching himself and his cronies, avoiding the difficult and politically unpopular tasks necessary for reform.
Buhari is the frontrunner. A second term for him would mean the country at best muddles through the next four years, with little progress on critical policy priorities like tax reform or a restructuring of the energy sector. Buhari would be a lame duck from day one, with powerbrokers in his own party quickly shifting their focus to the next electoral cycle in 2023. And if Buhari's health problems continue or worsen, the situation will get worse. The president's continual medical leaves abroad impaired governance his first term. A repetition would again remove him from decision-making and the public eye for months at a time, leaving investors to wonder who is calling the shots and whether they're qualified for the job.

A Buhari reelection also carries tail risks. A politically weak president, for health or other reasons, would open the floodgates for political infighting, increasing the chances that his ruling All Progressives Congress implodes. That would turn a policy slowdown into paralysis. The risk of attacks on oil infrastructure would also rise, because the absence of strong leadership in Abuja would make it harder to negotiate with the Niger Delta's various militant groups.

A win for the challenger, Atiku, would create a brief, superficial boost to the country's image—largely because of his better health and keener intellect. But it would also pose the risk of a return to an even more rent-seeking governing style. 

Atiku's policy priorities are unclear and untested: He had previously promised to deregulate the oil and gas sector but recently pledged to reduce gasoline prices by 50% from already below-market levels. That would swell subsidy costs and endanger long-term debt sustainability. He's also unlikely to champion a tax reform that's critical to Nigeria's fiscal sustainability. Atiku would face significant infighting within his People's Democratic Party as well, as leaders try to hold him to his promise to serve only one term (a pledge he's likely to retract). 

The election will be close, and a challenged or inconclusive result is possible.
Then there's a dangerous wildcard outcome. The election will be close, and a challenged or inconclusive result is possible. That, in turn, could trigger a political crisis in which neither candidate has a legitimate claim to power. If the vote is close enough to trigger a runoff, Nigeria's constitution requires the second round of voting to occur within seven days of the first, a tough timeline to meet given the complexity of organizing national elections in the country. This could be a recipe for severe uncertainty in Africa's most important market.

*Brexit
U.K. Prime Minister Theresa May has almost no chance of passing her unpopular withdrawal agreement when she puts it to a vote later this month. That promises a very messy 2019 in Europe. For Eurasia Group, Brexit was an asterisk because three years after the vote, almost any Brexit outcome remains possible.
(Adds number one risk in second paragraph.)

Culled from: Bloomberg


Additional reporting on Nigeria from: Eurasia Group