The geopolitical environment is the most dangerous it’s been in decades, and yet the global economy is faring well. Markets are taking hits and (mostly) bouncing back.

What’s wrong with this picture? Nothing … yet. The most serious geopolitical risks (a cyber confrontation with Russia, war with Iran, implosion in Europe, a true U.S.-China trade war) are more plausible than they’ve been, but none are particularly likely to play out in 2019. We are heading for serious longer-term trouble down the road, however. That’s the first of Eurasia Group’s Top 10 risks this year.

1. Bad seeds

World leaders are so busy dealing with local crises that they’re ignoring much bigger problems down the road. 2019 is the year “bad seeds” are being planted that will eventually threaten the entire global order.

Examples? Political institutions across the world’s advanced democracies, the transatlantic alliance, NATO, the European Union, the G20, the World Trade Organization, U.S.-China, Russia and the West… none of these will explode this year, but every one of them is headed in the wrong direction.

2. U.S.-China

The US-China relationship is broken, and even a truce in the trade war won’t fix it. Trust between the two sides is almost gone. Democrats and Republicans agree that China poses threats. The Chinese believe they can’t afford to back down. Both sides will work to make themselves less vulnerable to the other by reducing the connections that have so far bound them together.

3. Cyber-gloves off

Hackers build new skills, our digital dependency deepens, and there are still no realistic rules of the road to help avoid cyber-conflict. It’s hard to halt an attack. You can’t tell whether it’s a government, a thief, a terrorist or anarchist who’s shooting at you. Your cyber-defenses fast become obsolete. And 2019 will be the year the U.S. government goes on offense. The results are tough to predict.

4. European populism

The European Union will hold parliamentary elections in May, and populists will win more seats than ever before. They’ll also win a bigger role in the European Commission and European Council, helping them challenge current European policy on migration, trade, and enforcement of E.U. rules inside member states. Populists will also gain ground this year inside France and Italy—the E.U.’s third and fourth largest economies.

5. The U.S. at home

Their majority in the House gives Democrats real power for the first time since Donald Trump became president, and though he’s not likely to be removed from office, infighting in Washington will be especially intense in 2019. Trump will face challenges from Democrats, the media, the courts, and a growing number of investigations of his administration, his campaign, his businesses, and his family. Trump will return fire, raising the risk of a constitutional crisis. Markets may remain volatile.

6. The winter of our innovation

Security fears persuade governments to avoid foreign suppliers in areas critical to national security. Privacy concerns lead them to tightly regulate how citizens’ data can be used. Economic worries lead them to build barriers that protect their tech companies against foreign competitors. We see these trends in U.S.-China relations, but Europe and Japan are also imposing new restrictions. Brazil, India, and even California have adopted, or are considering, tough new data protection rules. Innovation depends on cooperation. Expect much less of that in 2019.

7. Coalition of the unwilling

Donald Trump now has imitators. Italy’s Matteo Salvini and Brazil’s Jair Bolsonaro used a playbook like Trump’s to win an election. Russia’s Vladimir Putin, Turkey’s Recep Erdogan, and North Korea’s Kim Jong-un have tactical reasons to promote the US president. Saudi Arabia’s Mohammed bin Salman and Israel’s Bibi Netanyahu need his support. These leaders don’t salute a common flag, but each will bolster Trump’s challenge to the international status quo.

8. Mexico

New president Andres Manuel Lopez Obrador is popular, and his party has big congressional majorities, but his bid to roll back the opening of Mexico’s economy, orthodox macroeconomic policies, privatizations, and deregulation threaten a return to the 1960s. In 2019, he’ll spend money Mexico doesn’t have on problems like poverty and security that resist straightforward solutions. And as he centralizes power, policymaking will become more erratic.

9. Ukraine

Vladimir Putin will not compromise on Ukraine, Russia’s most important neighbor. He wants a decisive say in that country’s future. Ukraine will hold a presidential election in March, and parliamentary elections in the fall. Russia will interfere to a far greater degree than their involvement in US and European elections. Both governments have political incentives to pick fights with the other. Though both want to keep their battles within limits, conflict can take on a life of its own.

10. Nigeria

Nigeria faces its most fiercely contested election since becoming a democracy in 1999. President Muhammadu Buhari lacks the energy and skill to meet Nigeria’s needs. His opponent, Atiku Abubakar, wants mainly to enrich himself and his allies. If Buhari wins, much-needed reforms must wait, and militant attacks on the oil industry will worsen. His failing health could add to political infighting. An opposition win would feed policy uncertainty. There’s also a wildcard risk: An inconclusive election result could create chaos.

Red herrings

In Brazil, Bolsonaro might be a nationalist and former army officer, but the public, the media, and Brazil’s political institutions won’t allow space for any dangerous centralization of power. The Saudi Crown Prince has made many enemies in recent years but he’s not going anywhere, and neither he nor the kingdom he will lead faces serious risks in 2019. Iran’s need to endure U.S. sanctions by protecting relations with Europe will limit the aggressiveness of its foreign policy, as it keeps its head down and tries to run out the clock on the Trump administration. Suspicion and competition between Russia and China will ensure they don’t move toward a genuine anti-Western alliance.

Just in time for the Kentucky Derby

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