Risk Forecast 2019: Country Edition by kclgpris

RISK FORECAST 2019 COUNTRY EDITION

KCL Geopolitical Risk Society In partnership with

European Security Review

RISK FORECAST 2019

Contents FOREWORD & ACKNOWLEDGMENTS

OPENING REPORT: RUSSIA

AFRICA

BURUNDI CENTRAL AFRICAN REPUBLIC (CAR) MALI SOMALIA

EUROPE GERMANY GREECE ITALY SPAIN

AMERICAS BRAZIL CUBA UNITED STATES OF AMERICA

ASIA

7 9 10 12

14 15 17 19 21

23 24 26 28

30 CHINA LEBANON PAKISTAN SAUDI ARABIA SOUTH KOREA

SOURCES

31 33 35 37 39

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Foreword & Acknowledgments By Haya Chemaitilly, President of KCL Geopolitical Risk Society (GPRIS) On behalf of the KCL Geopolitical Risk Society, I would like to thank all the contributors that made publishing the first magazine dedicated to risk and forecasting possible at King’s College London. I am proud to launch a report covering a range of topics such as economic crises, environmental disasters and cyber-security issues coupled with a positive outlook to these analyses, through recommendations. This project was inspired by leading risk consultancies and forecasting businesses who produce yearly reports for the upcoming year to inform firms and governments. We wanted to join this arena by publishing our own country report for 2019 and shed light on states that need to be monitored in the upcoming year. Student’s opinion on forecasting risk differs from firms simply because of the ‘outsider’ status. While this status is usually negatively connoted, the society saw it as an opportunity: today’s students are tomorrow’s government officials, employers and responders to risk. By analysing the current key events that shape economic, political, military, cyber-security or environmental policy, our contributors become leaders and experts early on in their chosen fields. I am proud of the quality of the reports written by our talented GPRIS team, King’s students, European Security Review (ESR) contributors and the breadth of countries covered. I am most thankful for the amazing efforts put up by all participants to make this project come true. I would also like to thank Anton Muratov, ESR Editor in Chief, for all the help and support which made this publication possible. I hope that in the future, this report will become a regular publication and future ESR and GPRIS committees will launch a separate sector analysis report, to continue showing the outstanding level of publications present at UK universities.

Published January 2019. Disclaimer: The opinions expressed in this report are those of the authors only. They do not reflect the opinions or views of KCL GPRIS as a society, GPRIS committee members or the ESR editorial board.

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OPENING REPORT: RUSSIA By Anton Muratov, ESR Editor in Chief

Executive summary - Fears of Western sanctions have forced the Russian government to take measures to insulate the economy, thereby further isolating itself from the West. - Russia is recovering from the 2014-2016 recession. Despite strong macroeconomic indicators, it needs serious structural reforms to boost growth in the long run. - To ensure economic stability, which is mainly threatened by external factors, it should soften its political stance towards Europe and the West.

Context -

The Russian economy suffers from a dependency on exports of petrochemicals, widespread petty and high-level corruption, and a reliance on government intervention, exposing it to volatility.

The Russian economy took a hit in the global financial crisis but recovered and grew up to 2013. However, the fall in oil prices and international sanctions following its annexation of Crimea in 2014 led to a domestic economic crisis with high inflation rates, devaluation of the Ruble, and an incomplete recovery to pre-2008 levels of GDP.

Foreign investors pulled over $1 billion from Russian funds in 2018 alone, with net capital outflows reaching over $60 billion, a result of the prospect and actual effects of US sanctions as well as the fall in oil prices (1).

Why this country should be watched Leading into 2019, the Russian government took several measures to protect the economy in the future. For instance, Russian banks were told to find alternative payment systems if Russia were to be disconnected from SWIFT, as the State Duma - the lower house of the Federal Assembly - introduced a bill with measures to protect Russian businesses if the country were cut off from the internet (1), and the Central Bank of Russia 3

RISK FORECAST 2019 cut its US Dollar reserves in half, while increasing its share of Euros and Yuan (2). This is a sign that Russia is preparing for major economic pressures and sanctions in 2019, and considering Russia’s significant role in natural resource markets with its heavy metals and petrochemical industry, this could lead to undue consequences for the global economy.

Looming economic instability Russia’s resurgence on the global stage with Crimea’s annexation and support for the breakaway regions in Eastern Ukraine led to a coordinated and ongoing Western response in the form of economic pressure, largely through sanctions. While these sanctions have not led to a hoped-for policy change in the Kremlin, they have undoubtedly affected Russia’s economic performance. The consequences of years of neglecting to enact crucial reforms - related to pensions and economic diversification - have finally surfaced, leaving Russia with a volatile political environment, a reduced role on the international stage, and a weakened and unstable economy. The potential risks leading to economic instability include: Worrying macroeconomic indicators GDP growth forecasts vary from 1.4% to 1.8% in the 2019-20 period, marking a slow-down from the previous year, due to an increase in VAT as well as higher inflation and lending rates (1). A major oil tax reform is set to take effect in 2019, which makes the profitability of the oil industry highly volatile due to its dependence on oil prices (4). The Russian government is set on protectionist policies to boost domestic industry, particularly agriculture, in order to increase its self-sufficiency.

Sanctions Western sanctions have not achieved their goal of changing the Kremlin’s behaviour, they have however dealt a blow to the Russian economy by curtailing foreign investment, technology, and trade (5). Fears of future sanctions have motivated Russian authorities and businesses to put in place contingency plans. On the other hand, Russia is still exporting arms and agricultural products, and has increased cooperation with China and investment into 4

RISK FORECAST 2019 Africa. Lastly, the US’ pressure has failed to stop the planned Nord Stream 2 pipeline in the Baltic sea, transporting natural gas to the European Union, which should begin operating in 2019. Western sanctions will be continued and possibly expanded in 2019.

Civil unrest The year 2018 saw increased levels of social unrest due to poor living standards and especially the pension reforms - which 90% of Russians were against, according to opinion polls (6). The reform made President Putin’s approval rating drop from more than 80% to approximately 65% (despite efforts to distance himself from it) which means that the government cannot afford as many necessary-but-unpopular reforms in the future. In order to regain the public’s trust, the government could look to more brash foreign policy decisions, which are popular domestically, but have serious repercussions, as the conflict in Ukraine and Skripal poisoning incident have shown.

Ways forward Russia’s goal is to strengthen its economy against exogenous threats such as sanctions and oil prices, as well as from internal instability from social unrest. To avoid them, the government should aim at diversifying its economy beyond hydrocarbons and establish working trust with Europe by de-escalating military activities in Ukraine in exchange for relaxation of sanctions. Optimists point to the fact that the Central Bank of Russia is in the capable hands of chairwoman Elvira Nabiullina and macroeconomic indicators are improving. However, if Russia really wants to ensure economic stability in the longer run, it must soften its political stance towards the West, while implementing structural economic reforms.

AFRICA

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BURUNDI By Marie Keramitas

Executive summary - Since 2015: a politically fragile state facing high levels of poverty and food security. - High-stakes 2020 Presidential Elections to stabilise Burundi and its region. - A free, fair and transparent electoral process is essential to ensure credible elections and a legitimate government. - The humanitarian crisis can worsen and the country could become a failed state if elections trigger violence and accelerate conflict.

Key facts and context Burundi is one of worldâ&#x20AC;&#x2122;s poorest country and the most densely populated one in East Africaâ&#x20AC;&#x2122;s Great Lakes region. It faces important socio-economic challenges with 65% of its population living under the poverty line and an estimated 1.7 million people suffering from food insecurity (1). It is still suffering from the legacy of a twelve-year-long ethnically motivated civil war that began in 1994. The war involved clashes between transnational ethnic groups, Tutsis and Hutus, which means that conflict can easily spread from one state to another because these groups live in Rwanda, Burundi, Uganda and the Democratic Republic of Congo (DRC) (2). Since the re-election of former rebel Hutu leader, President Nkurunziza in 2015, there have been mass protests, an attempted coup, and armed opposition attacks (3). His opponents have claimed that a third term in office, beginning in 2015 is unconstitutional. Over 1,200 people have died and 400,000 Burundians have fled to nearby countries such as the DRC, Rwanda, Uganda, or Tanzania (4). This episode is considered as the worst political crisis in Burundi since the end of the civil war in 2005.

Why this country should be watched The 2020 presidential elections present an opportunity to achieve a long-awaited political stability. President Nkurunziza has confirmed he will not run for another term, reducing the prospect of Burundi falling into an authoritarian regime. At the same time, these elections also pose challenges such as exacerbated tensions and possibility of a conflict. This forecast is based on neighbouring DRCâ&#x20AC;&#x2122;s experience with delayed presidential elections in 2018, where tensions are also high and an escalation of violence can increase refugee flows (5). Ensuring free and fair elections take place and a peaceful transfer of power in Burundi is achieved will avoid internal confrontation between groups, massive displacement and refugee flows (2).

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A potential failed state While the elections provide a positive outlook in Burundi, currently, the country is in a fragile state. In 2018, over 3,6 million people needed humanitarian assistance. One Burundian out of four is subject to food insecurity, epidemics (cholera, malaria) and malnutrition. The UN Office for the Coordination of Humanitarian Affairs (OCHA) has estimated that the current situation requires $141.8M of financial assistance of which $78.8M has been funded (6). However, since 2015, the main aid donors, such as the European Union, have suspended funding operations (7). In addition, the Burundian government has been isolating itself from the international community, withdrawing from the International Criminal Court (8) and closing the countryâ&#x20AC;&#x2122;s UN Human Rights Office (9). The upcoming electoral process can trigger violence and/or accelerate conflict, first between government and the opposition and secondly, between Hutu and Tutsi groups. The government will have to allocate scarce resources towards defence with reduced external aid. In addition to causing the deaths and displacement of thousands of people, this reaction could severely aggravate the already serious humanitarian crisis. The weakening of institutions and the economy, the decline in foreign aid, the rise of political, ethnic and gender-based violence, as well as the lack of access to vital resources may lead Burundi to becoming a failed state.

Recommendations The Economic Community of West African States (ECOWAS) demonstrates how regional peace and security can be attained by adopting a rights-based approach and a democratic agenda (10). By promoting free, fair and transparent elections, the Burundian government could bring greater stability to its country as well as its region. This requires that the government does not modify electoral law or delay elections. Secondly, that it ensures the safety of opposition parties; political opponents should not fear security forces in the conduct of their political activities. Thirdly, electoral registers should be maintained to allow people to vote irrespective of race or gender (11). Lastly, allowing external bodies like the United Nations Development Program (UNDP) to monitor the elections can provide invaluable assistance by engaging with the ruling regime, security forces, opposition parties and civil organisations (12). A credible electoral process will generate legitimacy, reduce the risk of conflict and attract foreign aid and investment, which could all foster long-term development.

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CENTRAL AFRICAN REPUBLIC (CAR) By Colombe de Grandmaison, GPRIS writer

Executive summary - CAR has suffered from sectarian violence since 2012 opposing Selekas (Muslim majority rebel groups) to anti-Balakas (Christian majority rebel groups). - UN mission MINUSCA has been widely unpopular. - Should the peace process fail, the current humanitarian and refugee crisis will worsen.

Why this country should be watched Although CAR is rich in minerals, it is one of the poorest countries in the world because of the latent sectarian violence especially since 2012 (1). Most of the territory remains insecure, unstable and plagued by human rights violations. Major towns are still in the hands of armed groups, while the government only controls the capital and its surroundings with the help of MINUSCA (United Nations Multidimensional Integrated Stabilization Mission in the Central African Republic). Armed groups have signed peace agreements but violence has not stopped and civilians are the first ones to suffer from these abuses. French presence in the region is decreasing but Russia and China are increasingly influent, selling arms to CAR’s army, facilitating negotiations with rebels and ensuring President Touadéra’s protection (2).

The risk of renewed violence and humanitarian disasters In April 2018, ex-Seleka groups reunited and threatened to attack capital city Bangui, leading to violence in the North and East. In the following months, sectarian violence rose both in Bangui and in parts of the country out of government control. The peace process has been put on hold and the arrest of former anti-Balaka leader Ngaïssona in late 2018 and his possible extradition to the International Criminal Court (ICC) may be another obstacle to peace. Meanwhile, civilians are suffering from the violence, with over 550,000 people currently facing food insecurity (3), about 11% of Internally Displaced Persons (IDPs) and over 10% of refugees in neighbouring countries (4).

Recommendations To regain control of the national territory, be an appropriate response to sectarian violence and reassert the government’s role, the Army must gain in strength, especially as MINUSCA is increasingly unpopular and Touadéra is criticized for failing to provide the peace promised when he was elected. However, the army should not fall under the influence of foreign powers. Russian arms sales and military training should be monitored, as Russian private military companies may be involved.

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MALI By Adèle Mainfroy

Executive summary - Mali faces high security and socioeconomic issues, due to Tuareg separatist movements from the North, Islamist militancy and a lack of economic opportunities that could fuel at any time popular discontent. - High poverty rates and dependence on agriculture could threaten political stability in the following year. In addition, the Libyan civil war has heavily influenced terrorist groups’ activities and levels of armament. Subsequently, the 2015 peace agreement has been difficult to implement and is weakened by Mali’s enduring insecurity (1). - The relative calm in which the 2018 presidential elections took place, as well as the enhanced commitment to the fight against jihadist terrorism by G5 Sahel partners give out positive signals in this security issue (2). However, if unresolved, this crisis could be a potential risk to nearby relatively more stable countries such as Côte d’Ivoire or Senegal.

Key facts and context Population of Mali: 18 million, 10% of which living in the North (3). Although it ranks as 20th poorest country in the world, its economic growth has reached 5.1% in 2018 (4). The last presidential elections of July-August 2018, re-elected President Ibrahim Boubacar Keïta. Foreign military forces present on the ground: - EUTM Mali (EU Training Mission in Mali) since Jan. 2013; - MINUSMA (UN Multidimensional Integrated Stabilization Mission in Mali) since April 2013; - EUCAP Sahel Mali (EU Capacity Building Mission in Mali) since April 2014; - French Operation Barkhane since August 2014.

Why this country should be watched Although Mali’s vulnerability to militancy, human trafficking and Islamist terrorism is not new, its fragile security situation marked by the rising insecurity in the central region of Mopti could have high negative spillovers over some of the continent’s most stable and developing countries such as Senegal, Guinea or Côte d’Ivoire. Amid Africa’s migrant crisis, the country’s historical ties and geographical proximity with Europe has also increasingly engaged European security interests. The insecurity spreading to countries such as Burkina Faso and Niger in the past year, affected by the actions of groups such as al-Mulathamun Battalion, Jama'at Nasr al-Islam wal Muslimin and the Islamic State in Greater Sahara, has further exemplified its key geopolitical position to prevent the region from falling into chaos and ensure sustained sub-Saharan development (5).

A key actor in fighting terrorism despite socio-political fragility 10

RISK FORECAST 2019 Mali’s exposure to social unrest and inter-communal conflict remains very high. As weak institutions and poor public services fuel public discontent and ethnic tensions, on which terrorism feeds off, the risk of social instability and violence still looms over the country’s recently improved security situation (6). In this context, France and other partners of the G5 Sahel (composed of Mali, Niger, Mauritania, Burkina Faso and Chad), backed up with the financial and material support of the EU, Saudi Arabia and more recently, Qatar, have adopted a more comprehensive approach in their regional counterterrorism strategy. Economic and social development goals have also been integrated in the 2.4 billion euros announced to be invested last December, covering educational and healthcare needs to minimize the risk of populations joining jihadist terrorist groups. Still, how unified and coordinated this security-development strategy will be implemented in Mali could influence the future development of the wider Sahel region (7).

Future directions Counterterrorism strategies in Mali should not be implemented intrinsically to tackle security issues but grasp the country’s fragile social and intercommunal stability to prevent violent escalation and place the protection of all civilians as a top priority. Malian forces, G5 Sahel and their partners’ collaboration with militia and armed groups, expanding beyond Malian borders, should work on protecting human rights of vulnerable people impacted by their violations such as torture and sexual violence (8). In addition, dealing with terrorism will require the Malian government to solidify national infrastructure and security capacities and pursue governance and justice reforms that peacefully address the core issues that currently fuel discontent, such as democratic governance and equitable international assistance (9). For greater success, cooperation in counterterrorism operations amongst Mali, G5 Sahel forces and their international partners should be complemented with enhanced governmental coordination between security and development goals to address existent root causes and promote longterm security.

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SOMALIA By Will Marshall, GRPIS blog Editor in Chief

Executive summary - Somalia, epicentre of conflict and violent extremism in the Horn of Africa, ranked second on the Fragile States Index in 2018 (1). - Government corruption and lack of legitimacy has meant that Islamist militant groups continue to control parts of Southern and Central Somalia. - US-led airstrikes against militants have failed to loosen AlShabaab’s grip over its tribal hinterlands, despite increasing casualties. - Piracy, organised crime and climate change are also factors which further deteriorate Somalia’s security situation.

One of the most fragile and unstable states in the world Since Siad Barre’s regime collapse in 1991, Somalia has been riven by tribal and sectarian divisions and fragmented into multiple regions ruled by warlords. The central authority’s degradation led to Islamist fundamentalist groups’ rise across the country, which the government has failed to suppress. The Islamic Courts Union (ICU), which controlled more than half the country, was defeated following a 2006 Ethiopian invasion. However, Al-Shabaab, ICU’s radical former youth wing, has emerged as a resilient insurgency group. While Al-Shabaab lacks the capacities held at its peak in 2010-12, the group is still well-entrenched in the Somali political and security environment. It manipulates tribal rivalries by promoting a sense of nationalism to gain a solid political support base across the country. It also controls humanitarian aid corridors to coerce Somalis into its ranks during droughts and famines.

Reasons to watch Somalia Al-Shabaab has significantly stepped up its terrorist campaign aimed at undermining the Somali government’s legitimacy: a major suicide attack in central Mogadishu claiming about 600 fatalities in October 2017, bombings and mass shootings throughout 2018, consolidation of its control over parts of Southern and Central Somalia. These areas, constituting a third of Somalia, are a key threat to regional security, giving Al-Shabaab a hinterland from which to recruit and plan sophisticated attacks even abroad, as the 2014 Garissa University Shootings in Northern Kenya (2). Western airstrikes, particularly American ones to dislodge the militants have proved unproductive, as Al-Shabaab is looking more entrenched than ever. UN and African Union peacekeeping forces are struggling to maintain hold over territory captured from the insurgents. The African Union recently announced plans to withdraw its 22,000-strong peacekeeping force by 2020, leaving security in the hands of the poorly-trained, poorly-equipped Somali National Army, raising the prospect that Al-Shabaab could see a resurgence in the future (3).

Piracy, Organised Crime and Climate Change

RISK FORECAST 2019 Al-Shabaab continues to represent the most pressing security issue in the Horn of Africa but piracy is an increasing one as well. After a period of decline in ship seizure on the Somali coast, there has been a notable uptick in incidences since 2017 (4). While broadly attributed to decreased vigilance and security on behalf of shipping companies, the fact that this has proved such a persistent issue is illustrative of the continued threat posed by piracy. Moreover, criminal enterprise thrives in Somalia’s lawless political environment. Al-Shabaab is known to be at the heart of a transnational criminal activities network which provides financial support to the militants. Through these networks, financial fraud and money laundering operations gave Al-Shabaab a significant stake in real estate markets in Mogadishu and Nairobi, by co-opting local elites and influencing regional economies (5). These networks also foment instability across the Gulf of Aden through activities such as human trafficking to Yemen. Somalia’s security issues are exacerbated by climate change’s effects throughout the last decade. Erratic and extreme weather patterns act as a ‘threat multiplier’: poverty resulting from drought and famine serves to provide a desperate pool of young recruits for militant organisations. Meanwhile, shifting migration patterns have increased tribal and sectarian divisions across the country, further hindering the government’s capacity to foster unity.

Policy recommendations Given the complex environment in which Al-Shabaab operates and its sophisticated tactics, both at an operational and strategic level to maintain pressure on the Somali government, international partners must adopt a comprehensive approach to counterinsurgency and stabilisation in Somalia: - The African Union and Western allies should commit to maintain a significant presence in the country until the Somali army has intelligence and logistical capacities to independently conduct counterinsurgency operations. - International aid must be made conditional on active efforts by the government towards goals such as eliminating corruption, sectarian biases and nepotism and investment in public services to provide a legitimate alternative to militant or warlord rule. - Empowering the Somali government and local NGOs to take the lead in solving their own issues, assisted by international expertise and funding, will lead to sustainable institutionbuilding.

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EUROPE

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GERMANY By Florin Farner, GPRIS Vice President

Executive summary - Germany’s radical far-right party Alternative for Germany (AfD) has risen in popularity since the 2017 election. - It threatens the country’s liberal values and reveals the people’s frustration with the current government. - The failure of the government to address issues as rising unemployment, immigration fuels support the party.

Key facts and context - Globally, Germany is an economic powerhouse with a highly developed social market economy. It is the third largest exporter in the word, with motorcars and machinery being the largest export industries (1). - It is a federal country, where each autonomous state (Bundesland) has control over which policies are priorities and implement them. - The country is deeply integrated into the European Union (EU) and plays a crucial role in the drive towards further European integration.

Why this country should be watched Germany has been experiencing challenges recently, such as the Eurozone crisis, the refugee influx in 2015, and a terrorist attack in the capital Berlin, which killed 12 people at a Christmas market in 2017 (2). With income inequality gaps and unemployment on a rise, the population is criticising the current conservative government and showing their dissatisfaction by voting for a party that promises change: Alternative für Deutschland (AfD), the far-right party. The AfD uses the situation by responding to the population’s concerns, leading campaigns against immigrants, the EU and globalisation in general. And it is working, as it became the third biggest party in the German government (Bundestag) in the 2017 election by winning 13.3% of votes (3). This is very concerning, as the party is more than just a protest to current politics: several of its leaders have played down the holocaust and have given comments that resemble the opinions of neo-Nazis, revealing their radical drive towards old-German superiority over other people (4). Its audience supports this observation, as the party does not distinguish between middle class voters - concerned with economic issues - and radicals, thus inviting neoNazis, hooligans, and Islamophobics to its meetings (5).

A risk that is spreading to other state institutions This rise of the far-right needs to be watched closely because it is already contaminating other German institutions. Since it is the third largest party in the Bundestag, people holding influential government positions are more and more coming from the AfD. For example, the leader of the German Police Union, one of the two largest unions for German law-enforcement officers 15

RISK FORECAST 2019 with 94,000 members, is part of the far-right and spreads sentiments against immigrants and towards stronger border control (5). Furthermore, the party is advancing its access to the media and cultural discourses, which have great influences on the population’s opinions and believes towards political topics. If this continues, they will gain further support and most likely win further percentages in the 2021 state elections.

Ways forward German politicians need to monitor this shift to the right very closely to prevent the rise of a radical, antiEuropean party in the government. Due to Germany’s democratic foundation, parties cannot take active measures to limit the AfD’s influence throughout the country. Rather, it should address the cause of the party’s rising popularity, which is mainly a protest against the current government. The ruling Grand Coalition, made up by the conservatives (CDU), led by chancellor Angela Merkel, and the Social Democratic Party (SPD), needs to address the population’s concerns directly by concentrating less on promotion of financialization and focusing on the unemployment and inequality issue. It should also launch summits and other platforms that educate citizens about the country’s major concerns such as terrorism. This is because many AfD voters attribute welcoming refugees to the arrival of more terrorists. Therefore, more actions need to be taken to inform the population about the distinction between Islam and extremism. Local governments must emphasise this issue in particular, as this would be more successful in spreading awareness. If the government does not pay greater attention to the AfD, another 1933 could be around the corner.

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GREECE By Christina Lyons, ESR contributor

Executive summary - Greece has been stuck in a debt crisis for 10 years and has scheduled repayments to last up to 2059 (1). - In exchange for the large loans given by international creditors, Greece has been forced to draw austerity measures to strengthen the countryâ&#x20AC;&#x2122;s financial structures. As a result, the economy is now 25% smaller than when the crisis began in 2008. - The crisis has been characterised by falling salaries, rampant poverty and a youth unemployment rate of 46% (2). - This has caused widespread social unrest, with many blaming an incompetent government as one of the main drivers of their financial instability.

Key facts and context - Since 2008, Greece has owed $352 billion to international creditors â&#x20AC;&#x201C; more than 175% of its average GDP (3). - An array of factors including: adopting the euro as its currency in 2001 causing large budget deficits, excess government spending and unreliable data which splintered economic predictions, triggered the crisis. - Despite enacting drastic austerity measures, they failed to gather sufficient amounts of money needed for bailouts and by 2015, Greece became the first advanced economy unable to make an IMF repayment on time.

Why this country should be watched In order to maintain control over economic recovery, some Eurozone members and the IMF have proposed stricter supervision of Greece (4). The left-wing Government under Alexis Tsipras has been hesitant. The shipping, agricultural, and tourist industries are once again thriving, but domestic consumer spending is still well below pre-crisis levels. With the country just starting to regain its footing, any disruption to growth could have serious implications for both Greece and Europe.

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A slowing recovery Tentative recovery from the debt crisis, coupled with a government set to be restructured by the 2019 elections, leaves Greece in an insecure position for the year ahead, with the main risks being: Continued austerity August 2018 saw Greece officially exit its bailout programme. The country has been given a 10-year extension period for repayments, forcing Athens to stick to austerity measures for another forty years (5). Greece has been offered chances to make independent policy reforms, but concerns persist over how and when Athens will implement such reforms to fuel economic growth. Fragile international relations After Greece had admitted to lying about their debt levels to get around the Maastricht Criteria to join the Eurozone, European leaders have been untrusting of the Greek authorities, which has deeply hurt Greeceâ&#x20AC;&#x2122;s reputation and financial standing. Following the migrant crisis beginning in 2015, where Greece took in large numbers of migrants, Greek authorities have felt disrespected by their EU counterparts, leading to mistrust between the two parties. As such, the very limited trust between the EU and Greece could be detrimental to future negotiations and cooperation on Greek economic recovery. Youth unemployment As austerity measures have been predicted to carry on for another 40 years, opportunities for well-paid work are minimal. Since 2010, 400,000 people have left Greece in search for better opportunities abroad. Youth unemployment has risen in sync with rates of homelessness and substance abuse (6), and is a major impediment to economic recovery.

Ways forward Greek authorities can look to alleviate some of the negative effects of austerity measures on social welfare, and stimulate growth in the economy by redirecting military funding to economic sectors, as Greece consistently has one of the highest defence expenditures per GDP in Europe (7). In light of economic reforms and a growing economy, foreign companies may see opportunities for investments, particularly with Greeceâ&#x20AC;&#x2122;s natural resources and low labour costs. The unemployed youth is an untapped skilled labour force that should be looked to as a resource in the ongoing expansion of the agricultural, shipping, and tourist industries.

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ITALY By Flaminia Luck, ESR contributor

Executive summary - Italy faces both an economic and government crisis. - As the eight largest global economy and third in the Eurozone, Italy has the potential to plunge the region into financial crisis. - Italy’s national debt stands at €2.3 trillion and is the highest in the EU behind Greece (1). - The current coalition government is currently in an ongoing dispute with the European commission over its draft 2019 budget and whether it breaches EU policy.

Key facts and context - Italy’s government was formed in June 2018 after months of political deadlock. The coalition between the anti-establishment Five Star movement and the anti-immigrant Northern League is a first for Italy and is indicative of a highly divided country. - The older, more traditional parties such as the Democratic Party and Forza Italia fared badly in the latest election in favour of the younger, less mainstream parties with a populist message. Having failed to comprehend the depth of discontent in Italian society, the populist alternative swept up votes with the promise of economic and immigration reform. Though inconsistent on some issues, the coalition is unbending on its opposition to globalisation and the EU. - The budget put forward by the government advocates a radical alternative to the years of austerity and budget cuts carried out by previous administrations. The proposed budget contains a “citizens’ income” of €780 per month intended to “end poverty” (1). It also includes tax cuts for the self-employed earning under €65,000 per year as well as ambitious plans for pension reform aimed to lower the age of retirement and alleviate youth unemployment.

Why this country should be watched With a combination of political uncertainty, economic stagnation and populist sentiment, the coalition government could bring about the next financial crisis in one of the Eurozone’s largest economies (2). The financial risk accompanying the changes in government, particularly one distrustful of the EU, has meant investors are reluctant to put their capital at stake in a country with fluctuating markets. Italy was described as ‘too big to fail, yet also too

RISK FORECAST 2019 big to bail’, Italy is dangerously close to wreaking economic havoc and disrupting the stability of Europe.

An unstable country The coalition government’s unwavering disdain for the EU is a further impediment to economic growth (3) in a country already long in need of reforms coupled with: Debt With national debt at over €2.3 trillion, Italy holds the second highest debt-to-GDP ratio in the Eurozone. The proposed budget plans to tackle the debt crisis through investment and expenditure openly defy the EU’s fiscal policy of reducing debt annually and turning structural deficit into surplus. The Eurosceptic government further deteriorates the relationship between the EU and Italy, where only 44% of citizens support membership of the European Union. Unemployment Official unemployment figures stand at 11% at a national level and approximately 40% for the country’s youth. This figure is considerably higher in the South, reaching nearly 30% in some regions. This regional divide reveals the lack of opportunity and industry in the South where the poverty rate is more than twice that of the northern and central regions. Immigration A crackdown on immigrants since June has gathered criticism from human rights groups and international organisations including the United Nations who have accused the Italian government of ‘unashamedly embracing racist and xenophobic anti-immigrant and antiforeigner rhetoric’. This more hard-line stance on immigration is exemplified by the ‘Salvini Decree’ which was passed in November under claims to prevent terrorism, crime and human trafficking. The new law strips migrants of basic humanitarian protection and changes existing legislation on citizenship, residence permits and the length migrants awaiting repatriation can be held in government detention centres. Racial tensions will be further strained in 2019.

Recommendations The Five Star movement should see that in order to assure its own existence and Italy’s economic and social wellbeing, it must make concessions to the European Union on reforms and deficit targets. It should look to abandon the Northern League party, as they will only exacerbate Italy’s social problems by inciting racial tensions, and should instead focus on addressing the unemployment rate, particularly that of the youth.

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SPAIN By Alfonso Goizueta Alfaro, ESR contributor

Executive summary - Economic growth begins to slow: from 2,8% in 2018 to 2,2% this year (1). - Socio-economic reforms undertaken by the Socialist government are raising the threat of a new recession. Increasing minimum wages from €750 to €950 with such uncertain economic growth rate will have a severe impact on employment (2). - The lack of parliamentary support to pass a State General Budget (PGE) for 2019 will result in the budget of 2018 (which was prepared by a conservative government who had different growth rate predictions) being prorogued. - The government is weak and is expected to a call a general election soon. Traditional parties are decaying and the extreme right is on the rise. Radical secessionism in Catalonia remains Spain’s most pressing political issue.

Key facts and context Catalonia, one of Spain’s most important regions, unilaterally declared independence after celebrating an illegal referendum in October 2017.The government intervened and accused regional authorities of treason. The current regional government is extremely radical and called to the seize the streets by far-left secessionist organisations such as the Committees for the Defence of the Republic (CDRs). The conservative government fell after a no confidence motion in June 2018. A socialist government supported by the extreme left parties and the secessionist Catalan parties came to power. The Socialist government is not taking a hard stand on secession because it needs Catalan parliamentary support.

Why this country should be watched The extreme right-wing party, Vox, gained 400,000 votes in the Andalusian regional election. Election polls estimate they would achieve around 9% of the votes in a general election. With the economy facing a potential slowdown, the political and economic environment in Spain is set for a volatile year.

Political instability The current Socialist government is in freefall: 9 out of 17 cabinet members are surrounded by some form of scandal and its parliamentary minority will make it impossible to pass the 21

RISK FORECAST 2019 PGE without conceding to the Catalan secessionist members of the Chamber (3). The potential risks to political stability include: Decline of centrist parties The gravest danger of this situation is that the Socialist Party (PSOE) risks implosion: its leaders are failing to understand that the socialist electorate is, above all else, Spanish. The policy of appeasement towards the Catalan secessionist attempt has already fractured the power of the Socialist Party in Andalusia, its long-time bastion. It is crucial that the PSOE recovers a centrist, non-radical position; a strong democracy like Spain’s needs a responsible centre-left political option, especially given that the radicalisation of the traditional centre-left (which has flirted with the anti-austerity, communist forces and with Catalan secessionism) is empowering more radical options both towards the left (Podemos, IU) and towards the right. Rise of extremist parties In Andalusia’s regional election, Vox gained 400,000 votes, many of which did not come from the right-wing parties but actually from the left. Many disenchanted left-wing voters have been attracted by the extreme-right populists’ combined sentiments of Spanish nationalism and anti-establishment ideals. As the centrist parties grow weaker, the extremes threaten to polarise society whilst provoking a halt in economic recovery and threatening the political cohesion of the EU. Stymied recovery The polarisation of politics can further threaten economic growth. A fragmented political spectrum makes it difficult to pass vital socioeconomic legislation such as the PGE. In order to pass legislation, Spain’s centrist political parties (PP, PSOE, C’s) will surely have to concede to the extremist parties (Podemos, Vox). These parties have political positions which include massive government expenditure, something which might threaten Spain’s slow but steady recovery and weaken the EU.

Ways forward Centrist parties in Spain need to develop a policy which diminishes the electoral force of extremes. Left-wing extremism feeds on economic hardship, whilst right-wing extremism feeds on the territorial crisis. After the next general election, the centrist parties (especially the conservatives PP and C’s) should reach a consensus in order to tackle the Catalan crisis and halt both a source of economic instability and a source of strength for the extreme right.

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AMERICAS

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BRAZIL By Aleksandra Kusnierkiewicz, GPRIS writer

Executive summary - The 2015-2017 economic crisis revealed weaknesses in the Brazilian governing system and plunged the country in the biggest recession of its history. - Far-right candidate Jair Bolsonaro won the 2018 presidential elections. His unpredictable policies may significantly affect the country’s political system. - Economic growth, investment and job creation are also threatened if the political uncertainty remains.

Context Brazil is a rising economic power. It has made major efforts to raise its population out of poverty, but the income inequality between the rich and poor remains high (1). Regionally: Brazil is South America’s most influential country and its biggest democracy, formerly leading several regional organisations such as the Union of South American Nations. Domestically: Brazil’s controversial far-right candidate, Jair Bolsonaro, won the presidential elections in October 2018. The elections followed the impeachment of former president Dilma Roussef, revelations of massive corruption amongst the country’s political elite and the worst recession in its history (2).

Why this country should be watched Brazil is the eighth largest economy in the world and Latin America’s biggest. It accounts for approximately half of South America’s population, territory and economic output. It also has the biggest military (3). The US recognizes Brazil’s strategic importance for the Western Hemisphere. However, Brazil is often omitted in important trade agreements and alienated from political debates. Meanwhile, China has been heavily investing in Brazil and cooperation has recently extended to a military sphere, with China becoming Brazil’s military partner. Brazil has the potential of becoming China’s most important strategic partner in the region, moving away from the US (3). This may significantly alter global power relations.

RISK FORECAST 2019

Key risks Slowing growth Given Brazil’s role in the global economy and financial markets, the elections’ results should matter to financial institutions around the world. The four-year long recession as well as multiple corruption scandals shaped Brazil’s economy in last years, coupled with a growing fiscal deficit (as a percentage of GDP) in 2018. Financial predictions show that Bolsonaro is unlikely to introduce policies necessary to fix Brazil’s major fiscal problems. Moreover, the newly-elected president has been repetitively announcing his plans for a greater army involvement in politics, which brings a threat of hyperinflation (4). S&P Global’s analysts lowered real GDP forecast for 2019 from 2.4% to 2.2%. According to S&P, the country’s economy will by highly affected by the new president’s policies regarding fiscal programmes such as pension reform and the deteriorating fixed investment (4). The continuing growth is important for Brazil’s international standing and global financial stability. Social issues and military involvement The country continues to face social issues due to high unemployment and one of the highest levels of income disparities in the world. Unemployment hits mainly women, youth and people of colour. Criminality rose during the past two years; in February 2018 a military intervention was used in Rio De Janeiro to curb vandalism. Therefore, the military legacy and influence, deeply rooted in Brazilian history, threatens the stability of Brazil’s democracy (5).

Recommendations Brazil could benefit from a further integration into the global economy and a skilful fiscal adjustment. A more open economy would allow the country to leverage its competitive advantages, such as natural resource-based industries. Competitive companies would most likely thrive, although uncompetitive businesses – and their workers - would be threatened. A more open Brazil may raise investor confidence in the post-elections uncertainty (6). However, the looming threat of military involvement in politics limits potential for reforms.

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CUBA By Mahault Bernard, GPRIS writer

Executive summary - Political change seems to be on its way: a new constitution including social, political and economic shifts will be approved in February. - Economic opportunities may arise from this, as strong emphasis is placed on economic reforms to boost living standards. - However, Cuba may need to find new partners to kick-start reforms, as US sanctions were reinstated under the Trump administration and historically regional allies all becoming right-wing.

Why monitor Cuba Cuba will face two main challenges this year. First, the referendum on the new constitution will decide on the political fate of the country: democratization or remaining in the everlasting memory of the 1959 revolution? Second, in order to strengthen its economy, Cuba must build new alliances. If tourists going to Cuba are amazed by vintage cars and the old way of living, these scenes only reflect a hard truth. Cuba has a weak economy caused by dictatorship, the embargo and economic mismanagement. The average wage is USD $30 per month, reflecting high poverty rates (1). The Cuban economy relies on agricultural products and needs reforms (2). While this does not mean giving up on a socialist society and economy, these problems need to be addressed; the underground economy would represent 80% of the Cuban economy (3). Due to the Venezuelan economic crisis, hurricane Irma and the restoration of sanctions by President Trump, the Cuban economy is now smaller than it was in 1985 (4).

Domestic challenge: towards democratization? Cuba was governed by the Castro Brothers for 60 years and is now ruled by Miguel DiazCanel who came to power in April 2018. Raul Castro has ushered in a first wave of liberalization: economic reforms in 2011 allowed citizens to buy and sell cars and residential real estate as well as opened up the country to more foreign investment (1). This triggered a rise in self-employment and bank loans. However, this promotion of private initiative also led to rising inequalities (3). Despite these reforms, citizens still experience low living standards. More changes were introduced during the past few years: the lifting of economic sanctions by President Obama, increasing tourism - almost 5million tourists in 2017 (4) - or the launch of internet access (5). For people that had never been able to have access to international news or to travel, this constituted a revolution that was not likely to be stopped. Could Miguel Diaz-Canel bring change, greater freedom of speech and better living standards to the island? Born after the revolution, the new president wears jeans, likes The Beatles but does not lack â&#x20AC;&#x2DC;ideological firmnessâ&#x20AC;&#x2122; according to Raul Castro (3). Change seems on it way. A project of new constitution was launched this summer. The draft constitution includes the introduction of economic, political and social changes like private property, the promotion of foreign investment or the idea of presumption of innocence. This constitution that will replace 26

RISK FORECAST 2019 the 1976 Soviet-era one was adopted by the Assembly in early January and will be submitted to approval in a national referendum on February 24th. What is really revolutionary for Cuba is the way this constitution was created: during three months after the first draft was written, Cuban people could present proposals for modifications. In this country with only one political party, 783,174 proposals were submitted to the government. Almost nine million Cubans participated to the debate. In addition, according to a Cuban NGO, the number of political prisoners has never been so low (5127 this year) (3). The new constitution could help materialize democratic and economic changes.

Foreign policy: new alliances US-Cuba relations improved during Obama’s mandate: in 2014, diplomatic relations with the country were restored. This led to opening the US embassy, lifting sanctions, a visit to Cuba by Obama in 2016 and removing Cuba from the terrorist list. However, the election of Trump has resulted in a radical change in the relations between the two countries. In January 2017, Trump restored sanctions on Cuba (6). As Cuba celebrated the 60th anniversary of the revolution on January 2nd, Raul Castro said: “the US government seems to take the course of confrontation with Cuba and to present our peaceful and supportive country as a threat to the region” (7). In South America, Venezuela’s crisis has impacted Cuba (8). It was its main economic partner. Now Cuba is getting oil from Russia and China, but these supplies do not fill the gap created by the Venezuelan crisis. In Brazil, the election of the far-right president Jair Bolsonaro also made relations between the two countries more difficult. For instance, the 20,000 Cuban doctors working in remote areas in Brazil were relocated to Cuba this winter (9). In addition, Boslonaro did not invite Diaz-Canel to his inauguration as a clear sign of disagreement. More generally, Brazil, Argentina, Chile and Peru now all have right-wing leaders that are not likely to build strong relationships with Cuba.

Recommendations The country, still living through the revolution, has an increasingly aware population about the rest of the world, thus demanding higher living standards. It may be achieved through economic reforms such as a diversification of the economy and new partnerships to ensure securing crucial supplies as oil.

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UNITED STATES OF AMERICA By Anton Muratov, ESR Editor in Chief

Executive summary - Despite recent rapid but volatile growth, many economists and academics have pointed to signs of a potential slowdown in the economy in 2019 and beyond. - The divided congress will paralyse politics, turning President Trump to measures not requiring congressional approval such as deregulation while focusing on healthcare, immigration, and trade. - With the 2020 elections on the minds of many politicians, and in need of a popularity boost, President Trump will pursue a more unilateral foreign policy, given the departure of Defense Secretary Jim Mattis and Chief of Staff John Kelly.

Context - A positive economic environment under President Trump, with the unemployment rate decreasing since the Obama presidency, and the GDP steadily climbing. - President Trump has either threatened to, or already pulled out of, several key alliances and international deals, emphasising his nationalist “America First” policy, whilst reducing the role of the US on the international stage. - Democrats’ house victory in the midterms will allow them to act as a limited check on President Trump, when everyone will be focused on the 2020 presidential election, where the field of democrats to oppose trump is already filling up.

Why this country should be watched Donald Trump’s presidency has been marked by a departure from the status quo. His disregard for the alliances that America fostered over several decades of trust and cooperation, as well as erratic decision making such as the withdrawal from the Paris Agreement and the Iran nuclear deal, have left America’s allies around the world less trusting of it. With the rise of Chinese influence, and calls for the establishment of a European army to move past being America’s security protectorate, 2019 will be another key year for the US in its shifting position in world politics.

Political volatility Due to the divided congress, President Trump will focus on issues that are not in need of congressional approval, such as his deregulation policies. With 2020 on the horizon, and his popularity low, Trump will look to rouse support from his nationalist base, often ending in 28

RISK FORECAST 2019 decisions that go against the national interest, and threaten the stability of American politics and society (1). Trade disputes The trade war is a political matter, as President Trump has aimed to decrease the trade deficit by targeting China (2), the US’ biggest trading partner, which accounts for 65% of the deficit (3). A substantial agreement will not be reached by the March 1st deadline, and most likely either an alternative deal will be made to soften protectionist policies, or talks will be extended through 2019. However, the unpredictability of the trade war negotiations and escalations could still lead to volatility in global markets. With Trump looking to strangle the WTO to get his way (4), the fate of the rules-based order of international trade is at stake in 2019. Economic slowdown The bond market seems to be signalling an upcoming business-cycle downturn in the next few years, as is the ISM Manufacturing Index, meaning the US will see its GDP growth slow in 2019 and beyond (5). The rising corporate debt levels, as well as other concerning indicators such as the “speculative excesses” in the high-risk leveraged loan market (6), are potential risk areas in the financial sector that could exacerbate the next financial crisis. With the Trump presidency set on deregulation, it is doubtful that these issues will be addresses in time, and the US, along with the rest of the world will experience a slowing economy (7). Immigration reform With millennials being set to outnumber baby-boomers in 2019 (8), and the DACA immigration programme still being battled over in courts, the debate over America’s demographics and immigration laws will reignite in 2019. At the time of writing this report, Congress has still not passed a budget bill, due to President Trump’s refusal to sign any bill without funding for a southern border wall. Democrats, who are the majority in the House of Representatives, are most likely going to have to increase border security spending, however are unlikely to fund a physical wall. The key debate over immigration reform will only lead to more divisions in a splintered America (9).

Ways forward With 2019 set to be a chaotic year and the president himself being a source of the furore, it is up to civil society to pressure congress into keeping America stable. While this will be difficult in a divided congress, the idea of a strong and independent congress is supported on both sides. Congress should first act as a check in not allowing Trump to abuse the powers of the executive, second, to reclaim its foreign policy powers and third, to be proactive in regulating the financial industry. If the Democrats want to unseat Trump in 2020, it is crucial to unite around the goal of regaining power, and not to allow a fracturing of the party.

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ASIA

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CHINA By Luka Powell, GPRIS writer

Executive summary - The US-China Trade War was the biggest risk to the economy in 2018 and it is likely to persist throughout 2019. This is due to the threat placed on the global supply chain as a result of the declining factory output, reduced domestic phone chip orders and the decreasing global demand for smartphones (1). - In December 2018, the planned US tariff increases on $200 billion worth of Chinese goods was delayed by 90 days to allow for negotiations, however, it is unlikely that a resolution will be achieved in 2019 (2). Simultaneously, China’s manufacturing factory activity shrank for the first time in two years. As a response, policymakers have started to invest in the aerospace industry to boost other sectors of the economy.

Context China was greatly impacted in 2018 by the start of trade wars with the US. The US started placing tariffs on goods it imported from China, such as solar panels, and Beijing has retaliated on other goods it imports. Moreover, the Chinese government has strengthened its approach to reducing pollution, which has created a dent in industrial activity. Both events have contributed to the Chinese growth’s slowdown.

Why this country should be watched Throughout 2019, China will continue to greatly influence geopolitics. The efforts to achieve military expansion and attempts to undermine sanctions on North Korea will underline China’s pivotal role in geopolitics and security in 2019. Beijing is also conducting military expansion in the East and South China seas, triggering a defensive approach by the US and its allies to try and encourage Beijing to slow military activities. In addition, the continuing trade war with the US will also remain significant. Hostilities’ effects have been evidenced by the fall of China’s Purchasing Managers Index (PMI) in December of 2018 to below 50.0 for the first time since July 2016 and the weakest reading since February 2016 (1). The PMI provides information about the business environment’s state to company decision-makers and analysts in order to shape their buying and investment decisions. The figure for China represents a deterioration of the economic environment. The effects of this worsening have been felt in other Asian economies. In Taiwan, manufacturing was at its lowest since September 2015 and Malaysian manufacturing fell to its lowest since 2012 (2). Share prices in Europe and America also dropped after the reveal of China’s contracting PMI.

An increased threat to global supply chains As one of the world’s largest economies, China’s activity greatly affects the world economy and the continued trade war presents a number of risks, the most pertinent of which is the risk to global supply chains. 31

RISK FORECAST 2019 Technology The demand for smartphones has substantially decreased both in the world and in the Chinese domestic market, which is likely to pose a number of risks for the global technology supply chain. This comes after old Apple iPhone models were banned in China in December 2018, over a chip dispute. In January 2019, Apple Inc. lowered its outlook for revenues in the first quarter of 2019 after noticing a large slowdown in demand from China, signalling the beginning of these effects (3). Global factories China’s final two months of 2018 foreshadow a number of risks for global factories in 2019. In November, China’s industrial output experienced its lowest growth rates in nearly three years and earnings growth rates at industrial firms fell for the first time since 2016. In December, Chinese factories received few export orders, with a significant decrease on long-term orders. This signals the risk of a wider effect on global supply chains, not only on technology, as December displayed weakened factory activity in Europe as well as Asia (3).

Recommendations Chinese leaders have already promised to cut taxes as well as banks’ reserve requirement ratios. China has also tried to lobby European leaders by promising improved market access and investment terms. This is likely to curtail the effects of the US-China trade war and reduce damage to the global supply chain. Simultaneously, the government should promote investment in other competitive and growth-enhancing industries, such as aerospace, especially to reduce reliance on manufacturing industries. China plans on becoming one of the world’s top three aerospace powers by 2030 and has the second highest space budget - USD $8 billion per year - after the US. This is because President Xi Jinping has identified aerospace as a key sector in the quest to modernizing China’s economy, which it will achieve by developing independent spacecraft technology. The recent landing of Chinese rover Chan’ge 4 on the Moon’s far side is an example of this step forward (4).

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LEBANON By Haya Chemaitilly, KCL GPRIS President

Executive summary - Lebanon is plagued by three crises: political, economic and refugees; - CEDRE aid pledged 11 billion USD in loans to develop the economy; - Fiscal adjustments through political action needed to receive aid, especially public debt management; - Public corruption is increasing and tensions between different political parties further institutional paralysis, preventing reforms.

Key facts and context - Lebanon is deeply affected by the Syrian refugee crisis: as of 2016, it has welcomed an estimated 1.3 million refugees. With a population of over 6 million, 20% hold refugee status (1). - A Saudi-Iranian theatre of dispute: financial assistance by the Kingdom whereas Iran supports militarily and financially Hezbollah, political party and militant group. - Since the end of the Civil War (1990), the confessional political system has been deepening divides between different sects and undermining national unity. - International rating agencies have been downgrading Lebanon from “stable” to “negative” due to rising public deficits and decline in deposit growth (2).

Why Lebanon should be watched In April 2018, the CEDRE conference ("Conférence Economique pour le Development, par les Réformes et avec les Entreprises") was organised by international and European nongovernmental organisations as well as donor countries like France. It gathered $11 billion in aid to build infrastructure for development and foster economic growth (3). The interest is to develop Lebanon to avoid the outflow of refugees to Europe, which will not accept any more. In addition, this country’s stability is crucial to avoid another conflict between regional powers, and it can be achieved by developing the economy. However, receipt of aid is attached to conditionalities, namely reforms concerning management of public finances.

Potential economic recession Lebanon has always had a robust banking system and relatively liberal economy which attracted FDI and fostered economic growth: in 2010, annual GDP growth was around 8% (3). However, the Syrian civil war started a period of sluggish growth and today, annual GDP growth is around 2%. The current economic crisis revealed the weaknesses of the economy which

RISK FORECAST 2019 could lead to its collapse sooner than expected. Some of the most alarming signs of the recession include: Shrinking commercial lending Increased regulation on lending, an end to subsidised mortgages and higher interest rates to attract foreign investment and monetary stability has left firms unable to get credit and expand their businesses - slowing down growth. A real estate bubble Cost of housing is very high and ongoing constructions inflate real estate prices. Coupled with incomes that are not rising as fast and limits on residential mortgage credit, purchasing decisions are at a halt. Unsustainable situation of public finances Public Debt-to-GDP ratio is the third-highest in the world: 152% of GDP (4). In addition, current account deficits are in a dramatic imbalance of more than 20% because of low exports and high imports. Governance issue Politicians are lining their pockets with public money and political disputes have prevented government unity for the sake of national development. Without politiciansâ&#x20AC;&#x2122; commitment to development, Lebanon is doomed to an economic recession beginning with a possibility of the government defaulting on its debt.

Ways forward A strong Central Bank maintains investor confidence and positive consumer expectations by securing foreign exchange reserves and limiting speculation against the Lebanese pound. However, deeper structural adjustments are needed to strengthen the Lebanese economy. This is achieved through economic reforms, to avoid the misuse of public money and obtain CEDRE aid. One of these reforms is privatising inefficient state-owned enterprises such as the electricity company, for increased transparency in public finances and improved services and revenue collection. Until then, Lebanese citizens must either trust their government and wait, or organise themselves into pressure groups and push for reforms through protests.

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PAKISTAN By Umer Ahmed, GPRIS writer

Executive summary - China has fuelled immense investment into Pakistan through the OBOR initiative, but not necessarily with fair terms which is leading Pakistan to review the agreements. - Water scarcity is another issue with increasing importance, and will require significant financial resources to be dealt with. A more equal share of benefits from Chinese investments could help solve the crisis.

Context Pakistan harbours one of the largest Chinese investments globally through the China Pakistan Economic Corridor (CPEC), as part of the One Belt One Road Initiative (OBOR). The OBOR is a multibillion dollar development strategy led by the Chinese government for infrastructure and investment to 71 countries in Europe, Asia and Africa.

Why this country should be watched OBOR infrastructure projects in Pakistan include the Karakorum Highway linking the GilgitBaltistan province (Pakistan-Administered Kashmir) to the Xinjiang province in China. There were also aims for the improvement of the special economic zones for investments, especially the deep seaport of Gwadar which aims to be the cornerstone of Chinese investment, aiming to provide China with a direct link to the Arabian Sea and therefore a quicker passage to the African continent. The energy sector is also seen as a target for Chinese energy security plans, with investments in the world’s largest solar energy farm, the Quaid-e-Azam Solar Park. This set of infrastructure projects aims to provide 70,000 jobs directly and 1.2 million jobs indirectly (1).

A water crisis While the population may benefit from jobs, the Pakistani government is facing important economic problems due to this constant Chinese investment in the country. Thus, Pakistan may aim to get a loan from the IMF to pay back its debt. However, Pakistan must invest in another pressing issue which will require a lot of financial resources: water scarcity. The IMF ranked Pakistan as third in the countries likely to face a water shortage. This is corroborated by the United Nations Development Programme and Pakistan Council of Research in Water and Resources which predict that Pakistan will “run dry” by 2025. Karachi, the most populous city in the country with a population of approximately 20 million, has over the past few years faced a crisis in terms of water supply: in the summer 2018, an approximate 40% of Karachi was without water supply for 15 days, meaning citizens had to wait lengthy periods of time to get water. This crisis is also liked to other aspects of the economy: Energy An approximate 32.3% of Pakistan’s energy mix consists of energy generation from hydroelectric power (2). Coupled with the controversial results about the Quaid-e-Azam solar

RISK FORECAST 2019 park - which produces energy inefficiently and at a very high cost - water scarcity is likely to exacerbate issues. Agriculture Two of Pakistan’s main crops, rice and sugarcane, are heavily water intensive thus requiring plenty of irrigated land. This problem is augmented with high population growth in Pakistan demanding a higher quantity of crops and more water to irrigate those crops. This has led to a 7.4% increase in sugarcane production in 2016-2017and a 6.4% increase in rice production in 2017-2018 compared to the previous years (3). Both these crops have shown good economic return for Pakistani farmers, by increasing their price, which only serves to worsen the situation. Regional conflicts However, many transboundary rivers in Pakistan start in the neighbouring countries of India (Indus, Ravi, Jhelum, Chenab) and Afghanistan (Kabul). This raises significant irrigation and energy issues as dam building by India and Afghanistan (so that they can themselves secure water supplies on the upper course of rivers) affects the lower-course of the river in Pakistan. This is exacerbated by the ongoing border disputes with these two neighbouring countries.

Recommendations Pakistan aims to fix its water scarcity issue by building its largest dam – the Diamer-Bhasa dam – to address both water and energy security issues. However, on the longer term, the country will have to look for alternative sources of energy generation; Pakistan could exploit its large wind potential thanks to the presence of many ‘wind corridors’ in the Sindh province, by investing in wind energy farms. Moreover, the newly incumbent Pakistani government also aims to use more negotiation terms to gain a fairer share of Chinese investment in the country – based on the failure of the solar park project. Negotiations have already started in late 2018, by demanding a review of OBOR agreements, and improve Pakistan’s economic outlook (4).

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SAUDI ARABIA By Hugo Tuckett, GPRIS writer

Executive summary - Saudi Arabia’s historically close relationship with the US and a number of European powers is primarily based on oil trade and military deals negotiated with these nations. - Following the murder of Jamal Khashoggi, a critic of the Saud dynasty, these Western nations have come under criticism for their dealings with Riyadh and the military support they provide. Moving forward, it might be necessary for Western states to reframe their relationship with Saudi Arabia given the domestic pressure they face to combat the dynasty’s actions.

Key facts and context -

The Kingdom of Saudi Arabia is one of the largest and most important players in the Middle East. Its stature is built on its role as the birthplace of Islam and one of the major oil producers (1). As a major oil exporter, it has created an economic interdependence with the West – this has seen many Western nations export vast amounts of military equipment to the Kingdom (2). The country is ruled by the Al Saud dynasty which holds a monopoly of political power. Whilst King Salman ascended the throne in 2015, the nation’s de facto ruler is Prince Mohammed who controls all major levels of government including the economy and defence (3).

Why this country should be watched Many Western powers have stressed the key role Saudi Arabia plays in maintaining security and countering extremism and terrorism in the Middle East - this includes their membership of the US-led coalition battling the Islamic State. In addition, Saudi Arabia is hugely influential in the global economy, with access to vast amounts of oil reserves - the Kingdom claim a further 260bn barrels still to be extracted (2) - and supports key defence and military industries in the US and Europe. Riyadh also stands out for its espousal of a puritan Sunni Islam, this includes public beheadings and restricted rights toward women (1).

Will the Kingdom see its relationship with the West affected? Following the murder of US-based journalist and critic of the Al Saud dynasty, Jamal Khashoggi, Western relationships with Saudi Arabia have become strained due to domestic pressures (3). Despite previously being close to the Saudi royal family, following the arrest of several friends, Khashoggi started to write opinion pieces for the Washington Post criticising the 37

RISK FORECAST 2019 Saud regime and lack of free speech. Following his murder on the 2nd October in the Saudi consulate in Turkey, there have been widespread allegations that Saudi Arabia carried out the assassination with Prince Mohammed at least having knowledge of the plan (4). This has been followed by US Senators voting to blame the Prince for the murder of Khashoggi and insisting that the Kingdom hold accountable those responsible. Furthermore, under the War Powers Act, the US Senate voted to end US backing for the Saudiled war on Yemen in response to the journalist’s murder (3). Whilst this vote is non-binding, and with Trump committing to veto any action that threatens US involvement, it does signal the lack of unconditional support for the Al Saud dynasty. Additionally, UK foreign secretary Jeremy Hunt flew to Riyadh to request Prince Mohammed cooperates more fully with the Turkish investigation of the murder – deeming it “unacceptable that the full circumstances behind the murder still remain unclear” (5). However, it so far appears that the murder of Khashoggi has only impacted lower levels of government and interest groups. In the UK, diplomats and Ministry of Defence officials met with their Saudi counterparts to finalise negotiations to sell more Typhoon jets to Riyadh (6). Furthermore, US President Donald Trump claimed in early December that he will not take strong action against Saudi Arabia or Prince Mohammed for the murder and dismemberment of Khashoggi (7).

A conditional relationship to appease domestic pressure recommended As described by Adam Schiff, Democratic Representative of California, “Trump and his family have built overwhelming reliance on the Crown Prince (Prince Mohammed) that the relationship is now, in their view, “too big to fail” (8). To some degree, this statement is true since several Western governments rely on oil and the financial incentives of military contracts. In order to move forward in the wake of Jamal Khashoggi’s murder, it might be necessary to separate economic interests and the political practices of Prince Mohammed in their dealings with Saudi Arabia in an effort to appease domestic pressures. This would see the valuable and necessary oil Saudi Arabia produces to be considered separately from the actions of the dynasty including suppression of free speech and public capital punishments – many of which challenge central tenets of the liberal order. However, this move would be highly challenging to effectively execute given Saudi Arabia’s efforts to use their oil wealth to increase the influence of Islam and particularly the Saud monarchy’s ultra-conservative version (1).

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SOUTH KOREA By Jae Hyun Lee, ESR contributor

Executive summary - South Korea has a complicated history with North Korea. Despite peaceful negotiations, it should maintain its security interests when increasing cooperation with the North. - The development of Mega-Free Trade Agreements such as the Trans-Pacific Partnership puts South Korea and its lack of natural resources in a difficult position concerning further economic development and status in the international trade market.

Context - Following the decolonisation of South and North Korea by Imperial Japan in 1945, the two countries have remained in dispute regarding reparations for Japanâ&#x20AC;&#x2122;s actions. - The inter-Korean summit took place on April 27th, 2018, between North Korean leader Kim Jong Un, and South Korean President Moon Jae-in. - South Korea has multiple Free Trade Agreements (FTAs) with nations in order to compensate for the lack of natural resources within the country, the most significant being the one with the United States, known as KORUS. However, with the emergence of Mega-FTAs such as the TPP, Korea remains disadvantaged by competing with its larger neighbours (1).

Why this country should be watched North Korea has established its potential power and influence in the past several years. Its nuclear weapons arsenal poses a significant threat that the entire world recognises. A peaceful agreement between the North and the South, where South Korea is the ambassador, would be an ideal scenario. But with increased connection with the North and amplified publicity, it is difficult to predict what would happen next. The Mega-FTAs pose a significant threat to Koreaâ&#x20AC;&#x2122;s position in the international market. Although Korea is starting to trail behind, its importance in the global market should not be overlooked.

Unstable international relations 39

RISK FORECAST 2019 In 2019, South Korea will face many pressing issues, however the most significant ones are related to its foreign policy, and particularly its interactions with its Asian neighbours, such as North Korea, and its relationship with the United States. The potential risks to the stability of its international relations include: Inter-Korean relations In 2018, South Korea and North Korea reached unprecedented understanding of each other. Solidified with the inter-Korean summit on April 27th, both countries have agreed to work towards complete peace between each other. Significant strides towards the development of such peace and general understanding between the two countries were made in 2018 (2). However, North Korea and its leaders have a history of erratic behaviour and a fear of losing their grasp on political control. Therefore, despite the peaceful agreement, North Korea persists to be a potential threat (3). Moreover, with talks of reunification in the air, the two countries may actually stand to experience further division and conflict, as their economies and living standards, as well as basic ideological standpoints, are drastically different. Emergence of Mega-FTAs South Korea has negotiated many free trade agreements over the past two decades, with over 50 countries participating in them (4). The lack of natural resources within the peninsula has made efficient diplomacy in trade absolutely necessary. As a member of the Asia Pacific Economic Cooperation (APEC), South Korea has remained dependent on foreign countries. With the emergence of Mega-FTAs, South Koreaâ&#x20AC;&#x2122;s position as one of the most practiced trade dealers could be undercut. Moreover, with the economic developments in China and the US, South Korea could easily be caught in the two giantsâ&#x20AC;&#x2122; conflict. A Mega-FTA that would unify trade between nations could have a detrimental impact on the Korean economy.

Ways forward South Korea is put in a difficult situation regarding its neighbours, seeing as overextending its hand to North Korea could lead to repercussions from the US, while not taking seriously the North Korean threat could lead to a deadly and unexpected military confrontation. Therefore, President Moon must attempt to become a balanced mediator in establishing the recognition of North Korea as an independent and sovereign state while maintaining South Koreaâ&#x20AC;&#x2122;s security, and also the interests of the United States. Furthermore, in cementing its place as a crucial actor in the Asian trade market, South Korea must more boldly assert its strategic and economic interests, and not concede them in making future free trade agreements.

RISK FORECAST 2019

SOURCES Cover page and regions page: Pictures under a Creative Commons (CC) license: http://www.kunm.org/post/nm-firm-hopes-offer-wi-fi-space-travelers Maps All maps distributed under a CC license, from the WikiCommons database. Russia 1. Intellinews.com. (2018). OUTLOOK 2019 Russia. [online] Available at: http://www.intellinews.com/outlook-2019-russia153984/ 2. Doff, N. and Andrianova, A. (2019). Russia Buys Quarter of World Yuan Reserves in Shift From Dollar. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2019-01-09/russia-boosted-yuan-euro-holdings-as-it-dumpeddollars-in-2018 3. Sanghi, A. (2018). Russia Economic Report, November 2018, No. 40: Preserving Stability; Doubling Growth; Halving Poverty – How?. [online] Documents.worldbank.org. Available at: http://documents.worldbank.org/curated/en/215711545408416700/Russia-Economic-Report-November-2018-No-40Preserving-Stability-Doubling-Growth-Halving-Poverty-How 4. Khartukov, E. (2018). Demystifying Russia’s Oil and Gas Taxes. [online] Oil & Gas Journal. Available at: https://www.ogj.com/articles/print/volume-116/issue-6/general-interest/demystifying-russia-s-oil-and-gas-taxes.html 5. Doff, N. (2019). Here's One Measure That Shows Sanctions on Russia are Working. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2018-11-16/here-s-one-measure-that-shows-sanctions-on-russia-are-working 6. Zeveleva, K. (2018). Analysis: Russian protests turn focus to social and economic justice. [online] Monitoring.bbc.co.uk. Available at: https://monitoring.bbc.co.uk/product/c200i9kc Burundi 1. UN News (2018). “Burundi must take lead in launching inclusive dialogue to end political crisis – UN Envoy”. Available at: https://news.un.org/en/story/2018/11/1026381 [Accessed 26 Dec. 2018]. 2. Kanyangara, P. (2016). “Conflict in the Great Lakes Region”. Accord. Available at: https://www.accord.org.za/conflicttrends/conflict-great-lakes-region/1026381 [Accessed 26 Dec. 2018]. 3. Crisis Group (2016). “The African union and the Burundi Crisis: Ambition Versus Reality”. Available at: https://www.crisisgroup.org/africa/central-africa/burundi/african-union-and-burundi-crisis-ambition-versus-reality [Accessed 26 Dec. 2018]. 4. World Bank (2018). “The World Bank in Burundi”. Available at: https://www.worldbank.org/en/country/burundi/overview [Accessed 26 Dec. 2018]. 5. Maclean, R. (2018). “DRC Protests About Election Delay Put Violently Down”. The Guardian. Available at: https://www.theguardian.com/world/2018/dec/27/congolese-soldiers-fire-air-quell-protests-against-election-delay [Accessed 26 Dec. 2018]. 6. UN Office for the Coordination of Humanitarian Affairs (2018). “Burundi: Humanitarian Response Plan 2018 – Janvier – Decembre 2018”. Relief Web. Available at: https://reliefweb.int/report/burundi/burundi-humanitarian-response-plan2018-janvier-d-cembre-2018-janvier-2018 [Accessed 26 Dec. 2018]. 7. Moore, J. (2016). “Burundi Quits International Criminal Court”. The New York Times. Available at https://www.nytimes.com/2017/10/27/world/africa/burundi-international-criminal-court.html [Accessed 26 Dec. 2018]. 8. The Guardian (2017). “EU Suspends Aid to Burundi”. Available at https://www.nytimes.com/2017/10/27/world/africa/burundi-international-criminal-court.html [Accessed 26 Dec. 2018]. 9. Kaneza, E. & Keaten, J. (2018). “Un Rights Office: Burundi’s Government Has Asked Us to Leave”. Available at https://www.washingtonpost.com/world/africa/un-rights-office-burundis-government-has-asked-us-toleave/2018/12/06/5b204424-f947-11e8-8642-c9718a256cbd_story.html?noredirect=on&utm_term=.6c96cbd4a6ed [Accessed 26 Dec. 2018]. 10. Nantulya, C. (2018). “East Africa Won’t Tackle Burundi Crisis”. Human Rights Watch. Available at https://www.hrw.org/news/2018/12/07/east-africa-wont-tackle-burundi-crisis [Accessed 26 Dec. 2018]. 11. Cowell, F. (2018). “The impact of the Ecowas Protocol on Good Governance and Democracy”. African Journal of International and Comparative Law. 19(2). 12. UNDP (2009) “Elections and Conflict Prevention Guide”. Available at: http://www.undp.org/content/undp/en/home/librarypage/democraticgovernance/electoral_systemsandprocesses/elections-and-conflict-prevention-guide.html [Accessed 26 Dec. 2018] CAR 1. https://www.bbc.com/news/world-africa-13150040 2. https://orientalreview.org/2017/12/15/russia-want-sell-arms-central-african-republic/ 3. https://www.aljazeera.com/indepth/inpictures/top-10-countries-risk-humanitarian-disaster-2019181213184843061.html 4. https://www.unhcr.org/central-african-republic-situation.html Mali 1. https://www.bti-project.org/en/reports/country-reports/detail/itc/mli/ity/2018/itr/wca/ 2. https://news.un.org/fr/story/2018/10/1027012 3. https://www.bti-project.org/en/reports/country-reports/detail/itc/mli/ity/2018/itr/wca/ 4. https://gfs.eiu.com/Article.aspx?articleType=rf&articleid=1917447375&secId=7

RISK FORECAST 2019 5. https://www.cia.gov/library/publications/the-world-factbook/geos/ml.html 6. https://gfs.eiu.com/Article.aspx?articleType=rf&articleid=1917447375&secId=7; https://www.garda.com/crisis24/country-reports/mali 7. https://www.francetvinfo.fr/monde/afrique/politique-africaine/g5-sahel-2-4-milliards-d-euros-pour-endiguer-lesviolences-djihadistes-grace-au-developpement_3089053.html 8. https://reliefweb.int/report/mali/regions-risk-preventing-mass-atrocities-mali 9. https://www.bti-project.org/en/reports/country-reports/detail/itc/mli/ity/2018/itr/wca/ Somalia 1. Livingstone, I. (2018). Somalia, facing severe challenges, also shows signs of hope. Brookings Institution online: https://www.brookings.edu/blog/order-from-chaos/2018/05/03/somalia-facing-severe-challenges-also-shows-signs-ofhope/ 2. BBC (2017). “Who are Somalia’s Al-Shabab?” https://www.bbc.co.uk/news/world-africa-15336689 3. Houck, C. (2018). “‘We’re Finding It Difficult to Hold’ Territory in Somalia: Senator”. Defense One online: https://www.defenseone.com/threats/2018/03/were-finding-it-difficult-hold-territory-somalia-senator/146376/ 4. Monks, K. (2018). “Piracy threat returns to African waters”. CNN Online: https://edition.cnn.com/2017/05/25/africa/piracy-resurgence-somalia/index.html 5. Chesson, G. et al (2017). Somalia’s Organized Crime Networks: A New Framework to Degrade Al-Shabaab. International Affairs Review, Winter 2017: http://www.iargwu.org/sites/default/files/articlepdfs/Somalia%27s%20Organized%20Crime%20Networks.pdf Germany 1. Central Intelligence Agency “World Factbook”, https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2078rank.html 2. BBC (2017) “Christmas attack: German governments admits mistakes in aftermath”, https://www.bbc.co.uk/news/worldeurope-42410414 3. The Guardian (September 2017) “What the stunning success of AfD means for Germany and Europe” https://www.theguardian.com/commentisfree/2017/sep/24/germany-elections-afd-europe-immigration-merkel-radicalright 4. The Guardian (October 2018) “AfD leader accused of echoing Hitler in article for German newspaper”, https://www.theguardian.com/world/2018/oct/10/germanys-afd-leader-alexander-gauland-accused-of-echoing-hitler-innewspaper-article 5. Der Spiegel (September 2018) “How the Alternative for Germany Has Transformed the Country”, http://www.spiegel.de/international/germany/how-the-alternative-for-germany-has-transformed-the-country-a1227360.html Greece 1. The Balance (2018). Greek Debt Crisis Explained [Online]. Available: https://www.thebalance.com/what-is-the-greecedebt-crisis-3305525 2. BBC News (2018). Greece Debt Crisis [Online]. Available: https://www.bbc.co.uk/news/topics/czv6nvnzw9pt/greecedebt-crisis 3. MoneyMorning (2015). How much does Greece owe? [Online]. Available:https://moneymorning.com/2015/03/25/howmuch-does-greece-owe-4-charts-that-put-greek-debt-in-perspective/ 4. DW Business (2018). Greece due to exit bailout in August: creditors [Online] Available: https://www.dw.com/en/greecedue-to-exit-bailout-in-august-creditors/a-43562265 5. The Guardian (2018). Greece ‘turning page’ as eurozone agrees to end financial crisis [Online]. Available: https://www.theguardian.com/world/2018/jun/22/eurozone-greece-financial-crisis-deal 6. The Borgen Project (2017). The Youth Unemployment Rate in Greece [Online]. Available: https://borgenproject.org/youth-unemployment-rate-in-greece/ 7. Business Insider (2015). Greece's military budget is getting bigger even as the country's economy lurches towards mayhem [Online] Available: https://www.businessinsider.com/why-greeces-military-budget-is-so-high-2015-6?r=US&IR=T Italy 1. BBC News. (2018). Italy budget: Rome vows to stick to plans, despite EU concerns. [online] Available at: https://www.bbc.co.uk/news/world-europe-46343033 2. Financial Times. (2018). Italy’s face-oﬀwith Brussels has echoes of the Greek debt crisis. [online] Available at: https://www.ft.com/content/02ae8692-d765-11e8-aa22-36538487e3d0 3. Ewing, J. and Horowitz, J. (2018). Why Italy Could Be the Epicenter of the Next Financial Crisis. [online] Nytimes.com. Available at: https://www.nytimes.com/2018/10/12/business/italy-debt-crisis-eu-brussels.html Spain 1. Jorrin, J. (2018). El FMI baja la previsión de crecimiento de España y alerta de que incumplirá el déficit. [online] El Confidencial. Available at: https://www.elconfidencial.com/economia/2018-11-21/fmi-gobierno-pib-espanolprevision_1660274/ 2. Maqueda, A. (2018). El Banco de España dice que la subida del salario mínimo costará 150.000 empleos. [online] EL PAÍS. Available at: https://elpais.com/economia/2018/10/31/actualidad/1541000545_325669.html 3. Jones, S. (2018). Honeymoon over for Spain's socialists as rivals seize on scandals. [online] The Guardian. Available at: https://www.theguardian.com/world/2018/oct/25/honeymoon-over-for-spain-socialists-as-rivals-seize-on-scandals

RISK FORECAST 2019 Brazil 1. https://www.bbc.com/news/world-latin-america-18909529 2. https://www.bloomberg.com/graphics/2018-brazil-election/ 3. https://theglobalamericans.org/2017/10/strategic-importance-brazil/ 4. https://www.forbes.com/sites/mayrarodriguezvalladares/2018/10/06/brazilian-elections-should-matter-to-financialinstitutions/#6256a9f04374 5. https://import-export.societegenerale.fr/en/country/brazil/economy-country-risk 6. https://www.wilsoncenter.org/article/economy-and-trade-brazil-2018-understanding-the-issues Cuba 1. "U.S.-Cuba Relations Timeline." Council on Foreign Relations. https://www.cfr.org/backgrounder/us-cuba-relations. 2. "Cuba." OEC - Brazil (BRA) Exports, Imports, and Trade Partners. https://atlas.media.mit.edu/en/profile/country/cub/#Complexity_and_Income_Inequality. 3. "À Cuba, Raul Castro Passe Le Relais." ARTE. Accessed January 03, 2019. https://www.arte.tv/fr/videos/081327-019A/a-cuba-raul-castro-passe-le-relais/. 4. Rathbone, John Paul. "Cuba after the Castros: Escaping a Long Shadow." Financial Times. April 08, 2018. https://www.ft.com/content/2b60de5a-2d24-11e8-a34a-7e7563b0b0f4. 5. "Cuba." Freedom House. August 31, 2017. https://freedomhouse.org/report/freedom-net/2016/cuba. 6. Harris, Gardiner. "Trump Tightens Cuba Embargo, Restricting Access to Hotels and Businesses." The New York Times. November 08, 2017. https://www.nytimes.com/2017/11/08/us/politics/trump-tightens-cuba-embargo-restrictingaccess-to-hotels-businesses.html. 7. "Cuba Celebrates 60 Years of Revolution amid Challenges and Change." From AFP. Yahoo! News. January 02, 2019. https://www.yahoo.com/news/cuba-celebrates-60-years-revolution-amid-challenges-change-193231519.html. 8. AKE-SS. "Cuba: A Frontier Economy in Crisis." AKE International. June 14, 2017. https://akegroup.com/2017/06/14/cuba-frontier-economy-crisis/. 9. Schipani, Andres. "Cuba Pulls Doctors from Brazil on Bolsonaro Comments." Financial Times. November 15, 2018. https://www.ft.com/content/853c6574-e869-11e8-8a85-04b8afea6ea3. United States of America 1. Patrick, S. (2019). The Liberal World Order Is Dying. What Comes Next?. [online] Worldpoliticsreview.com. Available at: https://www.worldpoliticsreview.com/articles/27192/the-liberal-world-order-is-dying-what-comes-next 2. Rahn, W. (2019). US-China economic dispute is 'not about trade'. [online] Deutsche Welle. Available at: https://www.dw.com/en/us-china-economic-dispute-is-not-about-trade/a-47051929 3. Amadeo, K. (2018). US Trade Deficit by Country, With Current Statistics and Issues. [online] The Balance. Available at: https://www.thebalance.com/trade-deficit-by-county-3306264 4. Hanke, J. (2018). World trade returns to the law of the jungle. [online] POLITICO. Available at: https://www.politico.eu/article/wto-gatt-trade-tariffs-dispute-back-to-gatt-law-of-the-jungle-returns-to-tradeland/ 5. Economist Intelligence Unit (2019). United States Forecast. [online] Available at: http://country.eiu.com/United%20States/ArticleList/Updates/Economy 6. Adrian, T., Natalucci, F. and Piontek, T. (2018). Sounding the Alarm on Leveraged Lending. [online] IMF Blog. Available at: https://blogs.imf.org/2018/11/15/sounding-the-alarm-on-leveraged-lending/ 7. Kennedy, S. (2019). World Economy Wobbles on Eve of Davos With Politics to Blame. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2019-01-19/world-economy-wobbles-on-eve-of-davos-with-politics-toblame 8. Fry, R. (2018). Millennials expected to outnumber Boomers in 2019. [online] Pew Research Center. Available at: http://www.pewresearch.org/fact-tank/2018/03/01/millennials-overtake-baby-boomers/ 9. Cox, D. (2018). Growing Divide on Immigration and America’s Moral Leadership. [online] PRRI. Available at: https://www.prri.org/research/growing-divide-on-immigration-and-americas-moral-leadership/ China 1. Woo, Ryan, and Lusha Zhang. "China Factory Activity Shrinks for First Time in over Two Years" Reuters. December 31, 2018. https://ca.reuters.com/article/businessNews/idCAKCN1OU01C-OCABS 2. Cable, Jonathan. "U.S.-China Trade War Takes Toll on Global Manufacturing." Reuters. January 02, 2019. https://www.reuters.com/article/us-global-economy/u-s-china-trade-war-takes-toll-on-global-manufacturingidUSKCN1OW058. 3. Mayeda, Andrew, and Jenny Leonard. "Apple’s China Trouble Makes Trump’s Trade War Harder to Defend." Bloomberg.com. January 03, 2019. https://www.bloomberg.com/news/articles/2019-01-03/trump-s-trade-waradvantage-slips-as-apple-cites-china-slowdown 4. Rincon, Paul. “What does China want to do on the Moon’s far side?” BBC News. January 04, 2019. https://www.bbc.com/news/science-environment-46748602 Lebanon 1. L’Orient Le Jour, (2018). “Plus de 400 réfugiés syriens quittent le Liban”. Available at: https://www.lorientlejour.com/article/1149318/plus-de-400-refugies-syriens-quittent-le-liban.html [Accessed 24 Dec. 2018]. 2. Azar, G. (2018). “Lebanon’s credit rating takes another hit”. An-Nahar. Available at: https://en.annahar.com/article/916444-lebanons-credit-rating-takes-another-hit [Accessed 24 Dec. 2018]. 3. Import-Export Solutions (2018). “Country Risk of Lebanon: Investment”. Société Générale. Available at: https://importexport.societegenerale.fr/en/country/lebanon/country-risk-in-investment [Accessed 10 Dec. 2018].

RISK FORECAST 2019 4. The Economist (2018). “Lebanon’s economy has long been sluggish. Now a crisis looms”. Available at: https://www.economist.com/middle-east-and-africa/2018/08/30/lebanons-economy-has-long-been-sluggish-now-a-crisislooms [Accessed 10 Dec. 2018]. Pakistan 1. https://www.theguardian.com/world/2018/oct/14/relations-with-pakistan-remain-stable-says-china 2. https://www.sdpi.org/publications/files/Pakistan%20Energy%202035-FINAL%2020th%20October%202014.pdf 3. https://www.dawn.com/news/1428966 4. https://www.straitstimes.com/asia/south-asia/pakistan-rethinks-its-role-in-chinas-belt-and-road-plan-financial-times Saudi Arabia 1. BBC News. ‘Saudi Arabia Country Profile’. https://www.bbc.co.uk/news/world-middle-east-14702705. 2. Davies, R. ‘How much damage can Saudi Arabia do to the global economy?’. https://www.theguardian.com/world/2018/oct/15/how-much-damage-can-saudi-arabia-do-to-the-global-economy 3. BBC News. ‘Senators vote to end US backing for Saudi war on Yemen’. https://www.bbc.co.uk/news/world-us-canada46561520?intlink_from_url=https://www.bbc.co.uk/news/topics/czjmg5rvl57t/jamal-khashoggi-death&link_location=livereporting-story. 4. Batrawy, A. ‘Saudi Arabia Issues Angry Rebuke After Congressional Resolution on Khashoggi’. https://talkingpointsmemo.com/news/saudi-arabia-issues-angry-rebuke-after-congressional-resolution-khashoggi. 5. Wintour, P. ‘UK piles pressure on Saudi Arabia of Khashoggi killing’. https://www.theguardian.com/world/2018/nov/12/uk-jeremy-hunt-pressure-saudi-arabia-khashoggi-killing. 6. Doward, J. ‘Jamal Khashoggi murder fails to stop Britain selling arms to the Saudis’. https://www.theguardian.com/world/2018/nov/11/jamal-khashoggi-murder-britain-sells-arms-to-saudi-arabia. 7. Collins, K. and Gaouette, N. ‘Trump signals US won’t punish Saudi crown prince over Khashoggi killing’. https://edition.cnn.com/2018/11/20/politics/trump-saudi-arabia/index.html 8. Barnes, J., Schmitt, E. and Kirkpatrick, D. ‘”Tell Your Boss”: Recording Is Seen to Link Saudi Crown Prince More Strongly to Khashoggi Killing’. https://www.nytimes.com/2018/11/12/world/middleeast/jamal-khashoggi-killing-saudi-arabia.html South Korea 1. EU Centre in Singapore (2013). The Rise of Mega-FTAs. [online] Available at: http://www.eucentre.sg/wpcontent/uploads/2013/10/Fact-Sheet-Mega-FTAs-October-2013.pdf 2. AP (2019). South Korea Defense Report Doesn't Refer to North as Enemy. [online] Available at: https://www.nytimes.com/aponline/2019/01/14/world/asia/ap-as-koreas-diplomacy.html 3. Cronin, P. (2019). Give Peace With North Korea a Chance, but Remember Plan B. [online] Foreign Policy. Available at: https://foreignpolicy.com/2019/01/14/give-peace-with-north-korea-a-chance-but-remember-plan-b/ 4. Customs.go.kr. (2017). FTA Trend in Korea. [online] Available at: http://www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000002320&layoutMenuNo =23225

RISK FORECAST 2019