Terra Firma

1. Iran

Near-certain escalation of the international conflict over Iran’s nuclear programme and American and Sunni Arab anxiety over Iran’s growing influence in Iraq and the broader Middle East make Iran the most significant global political risk for 2007. The United States will attempt to step up pressure on Iran on several diplomatic fronts. These efforts are highly unlikely to compel Iran to renounce its right to a nuclear programme. By the end of 2007, the risk of military actions against Iranian nuclear sites will again add upward pressure on oil prices. In addition, a more self-confident Iran is driving the risk of growing conflict between Shia and Sunni in neighbouring states. This trend is most obvious in Iraq. But it is also visible in Iran’s support for Hizbullah in Lebanon and for Hamas in the Palestinian Territories, as well as in tensions between Bahrain’s majority Shia and its ruling Sunni minority.

2. Nigeria

President Olusegun Obasanjo, his rivals, and would-be successors appear likely to dig in their heels in the conflicts that have already generated considerable uncertainty and violence in the run-up to April’s national elections. Threats to Nigeria’s political stability will continue to generate violence, particularly in the Niger Delta, with increased amounts of oil shut in. The country’s internal troubles also pose risks for regional stability in West Africa. Nigeria has acted as peacekeeper, model of moderation and economic stabilizer for a number of its West African neighbours. The presidential election is not the only source of current turmoil. Balloting for regional governorships has already produced politically inspired bloodshed, as local politicians use militia groups and criminal gangs as proxies with which to fight political battles by other, more violent, means.

3. Iraq

The risk is growing that Iraq’s central government will collapse, plunging the country into all-out civil war. The Bush administration is extremely unlikely to withdraw significant numbers of troops from Iraq until it has made one more (high risk) attempt to stabilise the country. De facto partition and devolution of power to local players is the likeliest ultimate outcome, though Iraq is unlikely to reach that point in 2007, because the US and nearly all the Arab states will spend considerable effort to delay that result. Any US decision to target Moqtada al Sadr and the Mahdi army Shiite militia group over which he exercises considerable influence is likely to further alienate the Shia of Iraq’s south. Any US escalation against Baathist or al Qaeda-affiliated Sunni insurgent groups could further strain US – Saudi relations, given the closeness of the House of Saud to certain Sunni tribes in Iraq. The Saudis have already signalled deep discomfort with any political or military solution in Iraq that appears to leave the Sunni minority at the mercy of the country’s Shiite majority.

4. Turkey

Turkey’s presidential (May) and parliamentary elections (November) pose substantial risks for the political and social stability that the country has enjoyed since 2002. The risks are magnified by Turkey’s high current account deficit and its dependence on financing from the International Monetary Fund. Presidential elections will increase tensions between Turkey’s most determined secularists and Prime Minister Erdogan’s ruling Justice and Development Party (AKP), particularly if Erdogan decides to seek the presidency. Turkey’s parliamentary elections could produce an unsteady coalition government that would be likely to undermine the fiscal discipline necessary to honor commitments to the IMF and progress on the reforms needed to keep Turkey’s bid to join the European Union moving forward.

5. Russia

2007 will see America’s (and, to a lesser extent, Europe’s) relations with Russia deteriorate faster than those with any other major state. President Vladimir Putin’s consolidation of domestic political power within the Kremlin and high commodities prices leave the Kremlin in a strong position to pursue a nationalist agenda intended to rectify what it feels are the political and economic wrongs visited on the country by the United States, European Union and NATO during the 1990s. The Russian government will continue to assert ever tighter economic control over strategic sectors of the country’s economy and political influence in Ukraine, Belarus, the Caucasus and others areas the Russian government considers within the country’s traditional sphere of influence. Russia will also aggressively approach energy sales to Europe and elsewhere, demanding acquisition of refining and distribution assets abroad and provoking resistance and recrimination from some countries.

6. China

The lead-up to the five-yearly Communist Party Congress in October will further expose disputes over policy and power at the highest levels of China’s government. During the congress, President Hu Jintao hopes to formalise the most far-reaching changes in government policy priorities in over a decade. To do that, he must elevate from within the party’s ranks those who share his vision of “harmonious socialist development” and sideline officials associated with former top leader Jiang Zemin and his Shanghai clique, who have promoted policies intended to spur economic growth at all (social and economic) costs. Hu has moved extremely cautiously to date; the changes he will propose could easily elicit a political backlash.

7. Pakistan/Afghanistan

Pakistani President Pervez Musharraf’s ability to maintain the peace and to balance political forces inside and outside of his country is diminishing. He has increasingly been forced to cede local authority in the provinces along the Afghan border to fundamentalist militants. Public patience with his government within the country may be approaching its natural limit. Key political allies, particularly those least sympathetic to his ties with Western governments, may find advantage in abandoning him. In addition, Musharraf’s inability to cripple militancy along the border poses a growing problem for President Hamid Karzai’s government in Afghanistan. A lack of foreign troops and capital has kept the new Afghan government from asserting its power beyond the confines of Kabul, and the Taliban have retaken strongholds in some parts of the country. As the security situation in Afghanistan deteriorates, Pakistan’s partnership with the United States will face growing pressure. Risk is growing that Afghanistan and the tribal areas of northwestern Pakistan may again become a training ground for international terrorism.

Ian Bremmer, President, Eurasia Group

Ian Bremmer is president of Eurasia Group, the world’s largest political risk consultancy. He is also a columnist for Slate, a contributing editor at The National Interest, and a political commentator on CNN, Fox News and CNBC.