The Call

Risk #5: The JIBs — Japan, Israel, Britain

Note: Today is the fifth in a series of posts that detail Eurasia Group’s Top Risks for 2013. There are now three big unfolding stories for international politics and the global economy: China’s rise, Middle East turmoil, and the redesign of Europe. The three countries with the most to lose from these trends are, respectively, ...

NGUYEN HUY KHAM/AFP/Getty Images
NGUYEN HUY KHAM/AFP/Getty Images

Note: Today is the fifth in a series of posts that detail Eurasia Group’s Top Risks for 2013.

There are now three big unfolding stories for international politics and the global economy: China’s rise, Middle East turmoil, and the redesign of Europe. The three countries with the most to lose from these trends are, respectively, Japan, Israel, and Britain. These three also happen to be America’s most reliable allies in the world’s three most important regions.

China’s expansion leaves Japan in a tough spot. The broadening and deepening of China’s consumer market creates opportunities for Japanese companies, but Beijing’s new assertiveness, particularly on territorial disputes involving Japan, is fueling nationalist anger inside both countries. The risk is not that the two countries will exchange fire, but that emerging frictions will undermine the exchange of everything else, reversing the momentum in a commercial relationship that’s crucial for Japan’s economy and its companies.

Israel’s worries bear more directly on the country’s national security. Syria’s civil war has already generated unrest in Lebanon. As international pressure over Iran’s nuclear program intensifies, the risk is rising that Tehran will lash out in unpredictable ways, including at Israel via proxies like Lebanon’s Hezbollah. In addition, Arab governments, eager to safeguard their popularity at home, will look to satisfy public demand for a harder line on Israel. The Muslim Brotherhood government in Egypt may prove less likely in 2013 to serve as a reliable diplomatic partner in resolving disputes with Hamas. Political officials in Turkey and Jordan, traditionally friendlier toward Israel, face internal pressures of their own to keep their distance. And though Washington will act as ultimate guarantor of Israel’s security, the Obama administration will continue the U.S. pivot toward Asia, spending less political capital and fewer resources to help resolve the various conflicts along Israel’s borders.

In Britain, David Cameron’s government faces growing pressure to hold a referendum on the country’s future in the European Union. A plurality of British voters now favor exit, and Tory politicians worry that if they hedge on the question, the increasingly popular UK Independence Party will grab a sizable share of their vote. If Britain eventually lands outside the EU, it will pay a significant price. Abandoning partners that buy half of Britain’s exports will come at a cost, and dozens of bilateral trade deals would have to be renegotiated. Outside the EU, Britain would also lose much of its international clout. Even if Britain remains a member, its unwillingness to help shape the eurozone redesign and engage on new financial regulations will leave London as a taker rather than a maker of the new rules of the European game.

Washington’s renewed focus on reducing spending will force the architects of U.S. foreign policy to lean more heavily on steady friends to help advance and defend U.S. interests around the world — at a moment when these three most important allies have serious problems of their own.

On Monday, we’ll profile Risk #6: Europe.

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