Morning Consult Counter/Consensus: Global Political Briefing, September 19, 2024

1.  Global Political Risk Ratings (Consensus)

Risky business. This week we launched Morning Consult’s Global Political Risk Ratings, high-frequency risk ratings for 36 markets derived from our daily political survey data. Rated countries are assigned both numeric scores and letter-based ratings, and are subject to ratings action (upgrades, downgrades), ratings watches, and forward outlooks that are issued monthly.

As we describe further in a companion methodology backgrounder, our ratings derive from a composite metric that is narrowly defined to reflect the degree of public support for incumbent governments, with higher risk (more negative values) associated with a greater likelihood of economic policy uncertainty and social unrest, per our ongoing validation work discussed therein. The chart below provides our full slate of ratings for September. 

Amid ongoing discussion about whether developed markets or, conversely, emerging and frontier markets pose greater political risk, our ratings affirm the increasingly consensus narrative that developed markets are starting to become the riskier bet. Whereas both sets of markets had similar average risk profiles several years back, they now show clear signs of divergence, with emerging and frontier markets having more favorable profiles (higher values indicate lower risk).

There are both political and economic reasons why this may be the case. With respect to the former, developed markets are increasingly argued to be plagued with political dysfunction that leads to erratic policymaking and government instability — patterns historically associated with less wealthy countries. On the economic side of the ledger, it may also be the case that residents of developed countries may simply be more dour about the state of political affairs at home because they can afford to be. By contrast, among residents of less wealthy markets where state capacity is often diminished, rosier evaluations of politics may predominate simply because the public perceives that their political leaders have fewer levers to pull and gives them a pass.

For corporates and asset managers whose business lines and portfolios require attentiveness to the political side of these dynamics, and for public sector entities monitoring stability issues in countries of concern, our ratings provide a novel set of tools to assess them systematically. The full slate of ratings is available here, along with our inaugural MACRO Political Briefing, which provides our assessment of ratings drivers and our forward outlooks for markets experiencing upgrades/downgrades and ratings watches this cycle, including the United States, Nigeria, Indonesia, Mexico, and Thailand. You can find our ungated project overview note here.

2.  France (Counter)

Mr. Brexit into the breach. President Emmanuel Macron’s appointment of Michel Barnier — best known for his role as chief E.U. Brexit negotiator — as Prime Minister after 60 days of waiting out the clock has struck some as a strange choice, if not an outright snub of the left after June 30 elections handed the left wing of the political spectrum a surprise victory. 

But Macron knows that absent an impressive display of strategic voting to hold the cordon sanitaire against the right, the results would have been very different. With right-wing parties clinching 33% percent of the vote in the first round, and a highly polarized body politic which skews strongly right, his choice is arguably a concession to voters, just not the ones who ended up with representatives in parliament. 

As we’ve noted in previous research, elections themselves are polarization engines, and France’s was no exception. The overall shares of French adults placing themselves at the extremes of a left-right ideology scale jumped roughly five points in the lead-up to the first round of legislative elections.

It appears that the bump in French polarization will be short-lived based on a trend reversal that began in August following the second-round elections. But with France already ranked third in our Political Polarization Rankings (higher ranks indicate greater polarization), a return to baseline will be cold comfort for those watching France’s highly fractious political scene with concern. 

3. Turkey-Israel relations (Consensus)

The feeling is mutual. Writers at the Economist recently claimed that Israel’s relationship with Turkey is at a breaking point. While the tensile strength of the bilateral relationship is an open question, we agree that the relationship is at its lowest ebb since we began tracking bilateral views in late 2021. The reason is clear: Hamas’ Oct. 7 attacks on Israel, and Turkey’s subsequent support for the organization, derailed a rapprochement from early 2022.

Things have gotten ugly. Turkish PM Recep Tayyip Erdoğan and Israeli PM Benjamin Netanyahu have traded jabs, with the Turkish PM comparing the Netanyahu to Hitler, and Netanyahu responding with accusations of Turkish genocide against Kurds. 

The bilateral relationship is not beyond repair, but public opinion on both sides will somewhat constrain the two leaders from pursuing a détente in the near future, and certainly until the situation in the Palestinian Territories reaches an equilibrium, no matter how shaky. We take hope from the fact that the two countries’ regional interests point in a generally similar direction, with both having more to lose than Iran and its proxies from a broader regional war. 

4. China-Africa (Counter)

This year’s Forum on China-Africa Cooperation (FOCAC) in Beijing included the hallmarks of top-down, elite-level diplomacy: “family photos,” eye-watering pledges of Chinese investment, and a new focus on military, law enforcement, and political party exchanges. Much of the discussion afterwards has been over whether this will make any difference to China’s standing on the continent. But in sub-Saharan Africa’s two largest economies — Nigeria and South Africa — China has been steadily gaining in popularity over the last two-and-a-half years. Nigeria in particular is one of China’s largest partners on the continent, receiving one twelfth of the entire amount pledged at FOCAC. 

2016 was the high-water mark of China’s frenzied overseas investment and lending, with a subsequent backlash coming both internally and externally, alongside the spread of narratives about “debt trap diplomacy” and attention on heightened corruption around Chinese projects. If the Nigerian and South African cases provide a signal of views continent-wide, the setback may have been temporary. 

In U.S. government circles, concerns around overall levels of indebtedness to China have partly given way to worries over focused resource capture, specifically of critical minerals used in high-tech products like climate-essential battery technology and semiconductors. And indeed, one of the focus areas of China’s new approach to Africa is investing in green energy and technology. 

This sets the stage for U.S.-China competition on the continent to heat up in coming years. Chinese narratives on the continent have taken on an overtly anti-Western tone by appealing to a “common history of colonization.” Concurrently, Chinese engagement in Africa has now clearly become more security-oriented with the emphasis on the Global Security Initiative. Previously, Chinese engagement had focused on elite capture and economic cooperation, but our data shows Beijing is enjoying success beyond its traditional playbook. 

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