Counter/Consensus: Political Risk Update, India-Canada Overtures, Israel's Comeback Kid

1. Mid-Year Political Risk Update (Counter)

DMs’ domestic durability. As we forecast in our Year Ahead report from January 2025, our Global Political Risk Ratings — aggregate metrics which measure popular support for the incumbent government and the direction in which one’s country is headed across 36 markets — suggested that 2024’s incumbent reckoning would continue into 2025.

Fast forward several months and — as our just-published mid-year update to that report makes clear — this forecast has largely proved accurate, with new chief executives coming to power in Canada (Carney), Germany (Merz), Romania (Bolojan) and South Korea (Lee), and (likely in the near future) in the Netherlands. Australia, which saw Prime Minister Anthony Albanese stick around, is the main outlier. As the world’s new incumbents get settled, our data is now signaling a more positive risk outlook on the domestic political front. Thus far, the improvement has been concentrated in the world’s developed markets.

This is good news for U.S. companies: With politics somewhat more settled domestically, business leaders can safely down-weight domestic political uncertainty in wealthier consumer markets as a source of operational risk and focus their efforts on navigating pressing geopolitical challenges with commercial implications.

Time is of the essence. As we discuss at length in our mid-year report, business leaders face a dizzying array of geopolitical pain points with pressing commercial implications, ranging from the U.S.-led trade war to perennially strained U.S.-China relations, the war in Ukraine, and Middle East tensions. For many of these, the Trump administration — which has raised anti-American sentiment the world over — is the common thread, and we expect it will continue to up the geopolitical ante through 2025 and beyond.

For more on these risks, where we think they’re headed, and the implications for U.S. business, check out the mid-year update to our geopolitical risk report here.

2. India-Canada Relations (Counter)

Reluctant reset. The ongoing rift in India-Canada relations began in September 2023, when then Canadian Prime Minister Justin Trudeau accused the government of his Indian counterpart, Narendra Modi, of direct involvement in the assassination of Sikh separatist and Canadian citizen Hardeep Singh Nijjar earlier that year. 

Relations deteriorated dramatically in October 2024 when Canada named India's High Commissioner Sanjay Kumar Verma and five other diplomats as "persons of interest" in the Nijjar investigation. When India refused to waive diplomatic immunity for these officials, Canada expelled all six. India retaliated by expelling six Canadian diplomats, including the acting high commissioner.

At the 51st G7 summit in Vancouver in June 2025, Canadian Prime Minister Mark Carney met with Indian Prime Minister Narendra Modi. Both leaders emphasized shared goals in clean energy, artificial intelligence, and counterterrorism, with Modi calling for "win-win cooperation." Many viewed this as a reset in relations. 

It is certainly an attempt at a reset, but one that our data suggests has yet to see firm public buy-in, even if the diplomatic interest is there. While we see slight upticks in Canadian adults’ favorability toward India and vice versa after the latest G7 summit, neither country has seen a rebound in sentiment to anything near pre-crisis levels. Indians in particular have remained steady in their diminished level of favorability of Canada, while Canadians have seen jumps and drops throughout the crisis at various event points. 

Carney, who took office in March, has prioritized trade with non-U.S. partners as part of a bid to reduce dependency on Canada’s testy neighbor to the south. Carney previously told reporters, “What Canada will be looking to do is to diversify our trading relationships with like-minded countries, and there are opportunities to rebuild the relationship with India.” Modi has also sought to expand trade with new partners, and Trump’s tariffs have motivated the leaders in their search for alternatives. 

In order for the reset to really take hold, resumption of normal diplomatic relations, including consular services, would go a long way toward convincing the public that relations are more or less repaired. Education and tourism have been cornerstones of the two countries’ cultural and economic relationship. The obvious barrier to going back to normal is that Canada’s investigation of Nijjar’s murder and of Indian interference is ongoing. And while India has agreed to cooperate with Canadian law enforcement, such cooperation could easily break down. The two sides will have to show discipline in litigating their differences behind closed doors, rather than in the court of public opinion, if the latter is ever going to rebound. 

3. Israel (Consensus)

Comeback kid. Only a month ago, we wrote that betting against a political survivor like Israeli Prime Minister Benjamin Netanyahu is always risky, even while we noted the cards stacked against him and speculated about early elections. Incredibly, if elections were held today, our data suggests Netanyahu might win them, thus making them less likely to be called. What happened? Iran. 

Israelis seem delighted not only by Israeli operations that took out key nuclear scientists and disabled certain anti-missile defenses, but by their leader’s skillful manipulation of the world’s most powerful man, U.S. President Trump. 

Netanyahu’s government has capitalized on the ensuing wave of national pride and a sense of restored deterrence. The strikes, widely covered in Israeli and international media, have been framed as a bold assertion of Israel’s security interests. Morning Consult polling shows a leap of around 30 points in Netanyahu’s approval ratings just after the strike, with Israelis’ views of his job performance reaching net positive numbers for the first time in years. The shift was particularly sharp among those who previously "strongly disapproved" of Netanyahu’s performance, and can be seen in a rise of those who now “somewhat approve.” 

The diplomatic dimension has also played in Netanyahu’s favor. His ability to secure tacit support — or at least acquiescence — from Washington has been interpreted domestically as a testament to his international clout. While critics warn of potential escalation and long-term risks, the immediate political effect has been to rally the public around the flag and its most experienced standard-bearer.

With the opposition fragmented and the public mood shifting, the prospect of early elections has receded. For now, our data indicates Netanyahu’s gamble appears to have paid off, cementing his status as Israel’s perennial comeback kid.