The world at risk

Russia

With parliamentary elections coming up in December 2011, expect more populist rhetoric from the ruling party. Prime minister Putin has already promised to increase pensions, which has created a structural deficit that can only be solved by tax increases or cuts to infrastructure projects. One provincial governor recently said for 16,000km of roads they only had enough money to repair 100km. The economic outlook is very bleak, warns Alex Nice from Chatham House. The only major projects which will be built come what may are the 2014 Sochi Winter Olympics and 2018 World Cup projects.

North Korea

North Korea’s aggression towards its southern neighbour could well escalate in early 2011. November’s deadly missile attack was enough to alarm the many architects working in the south.

But the death of North Korea’s “Dear Leader”, Kim Jong-il, could have more significant consequences. Pyongyang watchers say this is imminent as he would only have anointed his son if he were seriously ill. The big question is whether Kim Jong-un is strong enough to resist a military coup. If he was deposed the country could swing either way — to military escalation or reunification with the south.

Middle East/Qatar

Architects will be falling over themselves to bid for stadium projects and all the accommodation which will have to be built to cater for football fans descending on the desert state of Qatar in 2022. But it is worth bearing in mind the pressure being placed on the US to take military action against Iran before it gets the bomb, especially by Israel. Obama is resisting but time is running out and Steve Davies from the IEA places the odds of him caving in this year at one in three. If America attacks Iran the entire Middle East region will become highly unstable.

USA

The US economy is in terrible shape, with the housing market and the commercial property sector still in a state of decline. A fifth of mortgage holders are in negative equity — and rising. Meanwhile investors are waiting until the commercial property market bottoms out, meaning less work for architects. There is also a danger of multilateral currency wars especially with a resentful China, which has been hit hard by all the dollars leaking out of the US after the Federal Reserve printed an extra $500 million for quantitative easing purposes.

EU

There is a 50:50 chance of the Euro collapsing in the late spring, according to Steve Davies from the IEA. As the contagion spreads from Greece and Ireland to Portugal and Spain, there is a danger that all four countries will default on their national debt and be forced to leave the Euro or be bailed out by Germany. The big question is whether Germany will have the appetite to rescue a country as large as Spain. If the so-called PIGS revert to their old currencies property would be massively devalued so investors — architects’ clients — might go bust.

Nigeria

A surge in violence is predicted ahead of April’s flashpoint elections, but it is what is likely to happen afterwards that should worry foreign investors. The power-sharing arrangement between the Muslim north and Christian south is set to collapse, sparking further sectarian violence and government paralysis. Former US ambassador John Campbell goes so far as to warn of a coup.