The document discusses the risk of war for the United States over short and long-term time horizons. In the near future, the risk of war is assessed as moderate (score of 2.5) as the US continues operations against terrorist groups in Afghanistan and Pakistan. Over five years, the risk is predicted to increase to high (score of 2.0) as the Taliban gains strength and the potential for a devastating terrorist attack on US soil increases. Continued involvement in Afghanistan poses ongoing risks and challenges to reducing the threat of war.

1. Introduction
The US history has witnessed numerous wars with active participation of American
Colonists or American Citizens. The chronology starting way back in the late 1600’s with
the battles of New England Colonies till the very recent terrorist attacks on WTC in 2001
AD, and still continuing with the current attacks on Pakistani terrorist outfits. As the US
grew to become the super power of the world, the risks of managing its status also
increased. Involvement in various international issues, even with the positive intention of
mitigating tension in sensitive regions like Afghanistan and Mexico, has led to the
country’s vulnerability to more wars.
“After the Allies’ victory in 1945, the US emerged as a world power and engaged in
global political and economic rivalry with the communist bloc, led by the USSR. This
rivalry prompted US participation in the Korean War, 1950–1953, and the Vietnam War,
1964–1973. Since the collapse of the USSR, the US has experienced both the benefits
and challenges of its role as the sole remaining military superpower.”1
This report, written in 2009, addresses the issue of war as a component of external
conflict faced by the United States. The main purpose of this report is to present the
degree of current risk with respect to war and also provide the readers with a forecast for
the period of one year and five years.
According to the ICRG risk, rating methodology war as a component of the external
conflict has a top score of 4.0, which represents minimum risk and least score of 0.0 that
represents a very high risk. Below is a table representing the level of risk based on a
percentage scale:
Very High Risk 00.0 to 49.9 percent
High Risk 50.0 to 59.9 percent
Moderate Risk 60.0 to 69.9 percent
Low risk 70.0 to 79.9 percent
Very Low Risk 80.0 to 100 percent
According to our study the United States has a war risk rating of 2.5, which indicates a
moderate risk. The following section will provide insights on the risk evaluation.
1
Political Risk Services, Country Report: United States of America: (USA, The PRS Group, Inc:2009) p.53

2. War – Score (2.5)
United States has historically been involved in many wars, “either cold or military”. With
the fall of Soviet Union in 1989, US became the sole super power and US economy
turned around primarily due to its advancement in IT sector2
. The wars have still been
going on and the consequences of the year 2003 war against Iraq have lead to social
tension that is more unpopular internationally than it has been in its history3
.
Although there has not been any invasion on the American soil since World War II, the
increasing drug war and illegal immigration from the open borders of Mexico pose a
threat in that the open borders of Mexico provide easy access to the extremist enemies of
the US government to enter the United States. The ongoing US attacks on terrorist outfits
in Afghanistan and Pakistan have resulted in statements from extremist group Taliban to
attack the United States in near future. As horrifyingly demonstrated by the September
2001 terrorist attacks in New York and Washington, extremist enemies of the US
government can cause significant destruction, massive casualties, and substantial
disruption of business activities. That said, the attacks apparently took several years to
implement, and the heightened alert of the country’s security apparatus since those
attacks decreases the risk that planned terrorist acts will be carried out successfully on US
soil.4
The United States is an Accountable (Alternating) Democracy currently led by President
Obama of Democratic Party. Since the war against terrorism is critical to the political,
economic, and financial stability of the country President Obama has pledged to repair
the damaged international reputation of the US and deal with terrorism strongly.
Following the terrorist attacks on the US in September 2001, the level of unity between
the presidency and the legislature has increased sharply and the decision of eliminating
terrorist threats is in consensus. Obama government’s efforts of working with the
Mexican government on the issue of illegal immigration, trying to eliminate Taliban and
al Qaeda from the world map indicated by the recent attacks, and the recognized fact that
the US is the super power of the world reduces the risk of war to moderate level.
2
The Economic Intelligence Unit, Country Profile: United States of America (London, The Economic
Intelligence Unit: 2008) p.9
3
The Economic Intelligence Unit, Country Profile: United States of America (London, The Economic
Intelligence Unit: 2008) p.9
4
Political Risk Services, Country Report: United States of America: (USA, The PRS Group, Inc:2009) p.26

3. One year Forecast Period:
War – Score (2.5)
The President Obama-led democratic government was elected for a 4 years term and for
the next 18 months there is an 85% probability that Democrats will remain in power5
.
With the current policies in place, Washington’s attention zeroing down on Afghanistan,
and the strong steps already taken by increasing the U.S. forces in Afghanistan the threat
of war should go down in future but since these strategic actions take time to show results
the war risk for the 12 months period remains the same at a score of 2.5 on scale of 4.0.
Amidst several other issues such as Iraq, Somalia, Russia, which contribute to the risk of
war the big issue US faces and shall continue to face in the near future is Afghanistan.
The US is withdrawing its troops from Iraq gradually to free up more resources for
Afghanistan. Despite an ongoing Afghan war the US is still searching for answers to
some basic questions that are critical to identifying how much war risk US will have in
future. What is the relationship between the war against the Taliban and the war against
al Qaeda? If the United States encounters difficulties in the war against the Taliban, will
it still be able to contain not only al Qaeda but other terrorist groups? Does the United
States need to succeed against the Taliban to be successful against transnational Islamist
terrorists? These are some of the questions that President Obama wants to address. The
overreaching goal of the US since 9/11 has been to prevent further attacks by al Qaeda in
the United States and this goal has kept the US in a war state consistently.
In nearly eight years of war, US intelligence and special operation forces have maintained
pressure on al Qaeda in Pakistan and reduced its power by disrupting its command,
control and communication and isolating it. The situation is very different with Taliban, it
is essential to recall, the Taliban won the Afghan civil war that followed the Soviet
withdrawal despite Russian and Iranian support for its opponents.6
The United States at
present does not control enough of Afghanistan to deny al Qaeda sanctuary, can’t control
the border with Pakistan and lacks intelligence and troops for defeating the Taliban.
Ultimately the US must protect itself from the radical Islamists, but cannot create a
united, pro-American Afghanistan. So, the US strategy now is to try sending more troops
and negotiating with the Taliban, mirroring the strategy used in Iraq. Since the Taliban
don’t seem inclined to make concessions to the United States and don’t think that the
United States can win the negotiations may take a long time in future and until then the
war risk in United States would remain moderate to high.
5
Political Risk Services, Country Report: United States of America: (USA, The PRS Group, Inc:2009) p.19
6
http://www.stratfor.com/weekly/20090126_strategic_divergence_war_against_taliban_and_war_against_al
_qaeda

4. Five Years Forecast Period:
War – Score (2.0)
In the wake of gaining power and control over international territories, the US currently
finds itself amidst severe war crisis that seems never ending. President Obama’s decision
to move troops from Iraq to Afghanistan and deploy additional military forces in the
Afghan region to battle the Taliban indicates that the government fears retaliation and in
effect more war. The US is currently going through perhaps the biggest economic
downturn in the post World War II era leading to a decline in economic and political
power America enjoyed in the international community until not too long ago and the
increasing number of enemies of the state make the United States more sensitive to war.
Sending more troops to Afghanistan seems to be a mere defense mechanism the US is
adopting at this point because despite several years old invasion in Afghanistan, the US
forces have still not been able to control the Taliban and al Qaeda, which is unearthed at
this point can also pose a serious threat in the future. Over the years, despite consistent
attacks by the US military, the Taliban have regrouped, and increased their operations in
Afghanistan and Pakistan. This war for the US has become fairly big because it is no
longer a war against the Taliban; for people from that part of the world it is war that the
US started against the Islamic world. The Taliban has great deal of support from many
Afghan and Pakistani tribes, which help them build a strong infrastructure to fight this
war against the United States. “The conflict with Taliban has now become a conventional
guerrilla war.”7
It is as much important for the US to get out of this war situation at the earliest to retain
its economic and political influence on the international community as it is to eliminate
the Taliban and al Qaeda from the world map to ensure another 9/11 is not repeated.
In the course of next five years there may be a change in the government in the United
States although there is a 65%8
probability that the Obama government will be re-elected.
Although, the way Republican Party handled the war against Iraq in 2003 was highly
ridiculed by the international community and if the republicans come into power again
the war situation may get worst but the current situation under Obama administration
with respect to war in no better. With the US getting more and more involved in this war
against Islamic terrorism promoted by al Qaeda and the Taliban, the chances of reducing
war risk in the next five years are very slim. With the Taliban gaining confidence that the
US can not defeat them, they may face some damages by the US attacks on minor targets
based on poor intelligence but may prepare for a big devastating attack on the US soil in
the next five years period. This critical war environment of the US increases the risk from
moderate to high.
7
http://www.stratfor.com/weekly/20090126_strategic_divergence_war_against_taliban_and_war_against_al
_qaeda
8
Political Risk Services, Country Report: United States of America: (USA, The PRS Group, Inc:2009) p.19

5. Conclusion - Affect of War on the US investment environment:
War is a very critical factor in the political risk assessment of the United States. The
increasing involvement of the country in wars whether active or passive gives agenda to
the opposition political parties and in effect poses risk to the government stability. In
such an environment where the US is already seen as a hobbled hegemon because of the
ongoing financial crisis, it being war stricken makes the investment environment least
attractive for the foreign investors.
However, the US has been involved in various wars historically; the issue with
Afghanistan is most sensitive because the US is dealing with two different radical groups.
Although it appears that the US is attacking Taliban outfits on their land but the threat of
counterterrorist activities on American soil can not be ignored.
Due to the continuous war situation, the government needs to increase the defense budget
and if that comes at the cost of other budget allocations, it may affect the overall
infrastructure and other resources development that may be imperative for the foreign
investment environment.
Since the Afghan war is against the Islamic terrorist groups, it creates a barrier in the
minds of ethnic groups especially from the middle-eastern countries and the suspicious
behavior towards Muslims coming to United States post 9/11 discourages any possible
investors from that part of the world.
To conclude we can say that because the US still enjoys the status of being the super
power of the world, the war factor has not yet affected the foreign investment
environment in the country adversely. However, the war risk can increase in the
following years tremendously if the Afghan war continues and incident like 9/11
reoccurs. If the Obama government fails to resolve the Afghan issue satisfactorily and
soon, it may lead to government instability adding more to the overall political risk in the
United States. In that case, the US will find it difficult to gain foreign investors’
confidence.