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Six things to keep you awake at night

Think the global economic recovery is upon us? Here's what could postpone joy.

The start of a recovery from the worldwide recession could be unhinged by an outbreak of trouble in at least six different regions. Here, a riot policeman keeps watch during a friendly soccer match between Iraq and Palestine at Shaab stadium in Baghdad July 13, 2009. Iraq and Pakistan are both countries that have fragile political balances that could tip back to violence. (Mohammed Ameen/GlobalPost)

NEW YORK – When it comes to the global economy, the road back from hell is laced with geopolitical IEDs. Of late, the world has received a crash course (excuse the pun) in the chaos that financial charlatans can unleash on us all. Restoring order and stability to the global economy has been job one for President Obama, and everyone from Hugo Chavez to the House Financial Services Committee to my tailor in New Jersey seems to have an opinion on how he’s doing.

Even if the worst is now be behind us, it is worth remembering that geopolitical dangers, too, could send the world’s economies tumbling back toward the abyss. Here is a quick ranking of six raging global crises which could set the world’s hopes for recovery back. Any one of them, if mishandled by world leaders, could shatter the relative stability that has returned to global economics and ensure the recession goes on well into 2010.

First risk: Iraq’s relapse

At stake: American influence, U.S. fiscal health, oil prices, Mideast stability.

At the top of my list is the nearly forgotten conflict still raging in Saddam Hussein’s former fiefdom. The successful withdrawal of most American troops to barracks and the relative calm which has prevailed for nearly a year now threatens to lull the world into a sense of false progress. But, while the “surge” of American forces in 2007 and the U.S. military’s brilliant “Anbar strategy” of buying the loyalties of Iraq’s Sunni tribes has done wonders for security inside the country, the difficult decisions consistently get kicked down the road, such as:

  • No deal spelling out the right Kurds, Sunni, and Shia regions will have to central government oil revenues is in place.
  • Security, even though improved, continues to be fragile enough to discourage foreign energy firms from bidding on contracts, as the government’s effort to sell concessions in late June showed.
  • The radical Shia cleric Muqtada al-Sadr still has not shown his hand, preferring to await America’s departure before he makes his (Iranian-backed) move. With U.S. forces now due to dwindle below 50,000 by the end of 2010, the insurgency likely prefers to lay low now and fight another day.

All this is hardly cause for optimism, and a severe downturn in Iraq would cause an oil price spike that would impair any global recovery. The U.S., meanwhile, embroiled in Afghanistan, stripped of allies and exhausted after years of war, would have few good options, suffer another blow to its global prestige, and further damage to its national deficit as this expensive war drags on.

Risk 2: Mexico drug violence

At stake: Oil prices, refugee flows, NAFTA, U.S. economic stability.

A story receiving more attention in the American media than Iraq these days is the horrific drug-related violence across the northern states of Mexico, where Felipe Calderon has deployed the national army to combat two thriving drug cartels, which have compromised the national police beyond redemption.