Countries shifting into opposing blocs, finds Political Risk Index

Shifting geopolitical alignments are dividing the globe into opposing blocs. This is one of the key findings of the latest Political Risk Index, launched by WTW and Oxford Analytica.

In the latest Index, Oxford Analytica rated the 61 countries and territories listed in the WTW Political Risk Index about their current and historical geopolitical alignment. The findings concluded that, of the major economies in the emerging world:

• 25 lean West, towards the US and/or Europe
• 18 lean East, opposing the Western powers on many key issues; and
• Another 18 are attempting to remain neutral

The survey also found that the Western bloc has lost ground in all world regions. Five years ago, 30 of the WTW Political Risk Index countries were in the Western Bloc with 13 of these countries strongly allied to the West.

In today’s findings, only six countries or territories in the Index rate as strong Western allies (including Jordan, Mexico, Qatar and Taiwan). Meanwhile, seven are rated as leaning strongly East (including Belarus, China, Mali, Myanmar and Russia).

Sam Wilkin, director of Political Risk Analytics, WTW, said “The findings suggest that countries such as Turkey, Saudi Arabia, Pakistan, Cameroon, and Uganda are ‘dealigning’ from the West.

“The West’s declining influence in the emerging world will create yet more risks for globalised business.”

Other key findings demonstrated that:

• In countries that shifted East (from neutrality or a Western alignment) over the past five years, on average, expropriation risks rose by 7%, economic freedom declined by 4%, and political rights fell by 10%.
• In “dealigning” countries, each of these risk indicators also worsened, and the dealignment trend is impacting more countries. These rising risks in part reflect the declining influence of the US and its allies.

The geopolitical alignment ratings in the Index are assigned by independent experts from Oxford Analytica’s global network. Countries and territories are selected for inclusion in the Index based on volumes of foreign investment and levels of political risk.