In its annual list highlighting the top geopolitical risks, the group says “2018 does not feel good.”
It predicts a “big unexpected crisis” to happen this year, one that could be the equivalent of the 2008 global financial meltdown.
Here are the top five risks facing the world in 2018, according to Eurasia Group.
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China fills a vacuum as U.S. recedes
In the absence of strong U.S. leadership, China faces less of a struggle setting international standards, the group predicts.
“Trump has renounced the U.S. commitment to Washington-led multilateralism and generated much uncertainty about the future U.S. role in Asia, creating a power vacuum that China can now begin to fill,” Eurasia stated.
Combine that with the strongest Chinese president since Mao Zedong and one of the weakest U.S. presidents in modern history and you end up with a “moment of global reordering,” the group said.
There hasn’t been a major geopolitical crisis since 9/11, but now there is more room for a mistake which could provoke a serious international conflict, according to the group.
The biggest risks of accidents come from potential cyberattacks, the mounting tensions between the West and North Korea, battlefield accidents in Syria, Russia and U.S. relations, and terrorism.
“We aren’t on the brink of World War III,” Eurasia said.
“But absent a global security underwriter, and with a proliferation of subnational and non-state actors capable of destabilizing action, the world is a more dangerous place.”
Global tech cold war
The latest wave of technological advancements, such as artificial intelligence (AI), is coming at a time of broader tensions within the internet, the group stated.
There is also a race between the U.S. and China for a breakthrough technology.
“Both countries’ tech giants are speeding to master AI and supercomputing among other highly investment-intensive, next-generation technologies. The winner could well dominate the coming decades, both economically and geopolitically,” Eurasia said.
Defining year for Mexico
The group predicted Mexico will have a tough year in 2018, which will depend on the North American Free Trade Agreement (NAFTA) negotiations and the presidential election in the summer.
If U.S. President Donald Trump decides to walk away from NAFTA, the Mexican economy would “suffer disproportionately,” given the country’s deep reliance on trade with the U.S., according to Eurasia.
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Voter anger is also running high because of “high-profile corruption cases, a deterioration of the security situation, and sluggish economic growth,” the group added.
Trump has it in for Iran and 2018 will be a source of major tension between the two countries, according to Eurasia.
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The Iran nuclear deal will probably survive in 2018, but there is a “substantial chance that it won’t,” pushing the region into a period of real crisis.
If the nuclear deal falls, Iran would ramp up its nuclear program and the threat of a U.S. strike would hang over the region, boosting oil prices, the group said.