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Politics

Lack of US leadership tops 2017 risk ranking

Also beware a 'forceful' China and a destabilizing Europe, warns Eurasia Group

NEW YORK -- Potential moves by the U.S. to shed its role as global leader present the biggest risk for investors in 2017, according to Eurasia Group, a U.S.-based political risk consultancy headed by Ian Bremmer. The annual ranking is closely watched by market players.

In the company's latest forecast of the top 10 global political risk factors, published Tuesday, "Independent America" topped the list. Citing President-elect Donald Trump's "America first" philosophy and his pledge to "make America great again," the company said the country may move away from the usual sense of responsibility it has toward playing an indispensable role in world affairs.

  

Next on the list was China, whose leadership is set to undergo a major reshuffling in autumn. The third-biggest risk factor was Europe, with Eurasia Group citing the declining authority of German Chancellor Angela Merkel, whom the company said has played a large role in maintaining stability in the region.

In 2016, the top two biggest risk factors were "The hollow alliance [of the U.S. and Europe]" and a "Closed Europe," respectively.

That year, Britain voted to leave the European Union in a referendum, and Trump, who has been critical of NATO, was elected U.S. president. Should a Trump-led U.S. distance itself from its allies, international organizations and commercial treaties, investor risk would grow.

Bremmer has for years warned of what he calls a "G-Zero world" -- a world with no global leader due to a diminishing U.S. role. With Trump's election victory, the G-Zero world is "now fully upon us," according to Eurasia Group's latest report.

In China, the new lineup of President Xi Jinping's administration will be selected at the Communist Party's 19th National Congress. The report said the leadership change, which coincides with the start of Xi's second term, will be "one of the most complex events since the beginning of China's reform era [which started in 1978]."

According to the report, "Because Xi will be extremely sensitive to external challenges to his country's interests at a time when all eyes are on his leadership, the Chinese president will be more likely than ever to respond forcefully to foreign policy challenges."

In Europe, elections in France and Germany are expected to be held this year.

Although Merkel has taken the initiative in trying to maintain stability in the region in the face of crisis, Europe has "never needed a strong Merkel more," the report said.

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