2018 Annual Forecast Overview from Stratfor

2018 Annual Forecast Overview from Stratfor 

-- Maj Gen P K Mallick,VSM (Retd)

It is time for taking stock of what has happened in 2017 and forecasting for 2018.

Stratfor has come out with its 2018 Annual Forecast. It looks at the key geopolitical trends that will shape the global balance of power in the next year. Below is an overview of Stratfor’s 2018 Annual Forecast.

Reckoning With North Korea: Though the threat of war on the Korean Peninsulacan’t be ruled out, the United States will probably try to avoid a costly preventive strike against the North’s nuclear weapons program that would plunge the global economy back into recession. Instead, Pyongyang’s demonstration of a viable nuclear deterrent next year will spawn a new and more unstable era of containment.

Hedging All Around: Deepening collaboration between China and Russia will pose a strategic threat to the United States, spurring Washington to try to check the budding partnership by reinforcing its own allies in the Eurasian borderlands. The fluidity of alignments among great powers will increasingly define the international system as Moscow and Beijing balance against each other, just as many U.S. allies hedge their relationships with Washington.

Putting Trade Ties to the Test: The White House will forge ahead with an aggressive trade agenda that targets China, Mexico, South Korea and Japan. While the U.S. trade agreement with South Korea hangs by a thread, congressional and legal checks on U.S. executive power will have a better chance of keeping the North American Free Trade Agreement intact. The United States’ increasing unilateralism in trade will expose the weaknesses of the World Trade Organization, but it won’t shatter the bloc or trigger a trade war.

Revisiting Iran: North Korea’s nuclear weapons achievements will fuel a hard-line U.S. policy toward Iran, jeopardizing the Joint Comprehensive Plan of Action. As the United States, Saudi Arabia and Israel close ranks against Iran, proxy battles across the Middle East will intensify. But Iran won’t walk away from its nuclear deal with the West. Russia will nevertheless exploit the tension mounting between Washington and Tehran, as well as its advantage on the Syrian battlefield, to expand its influence in the Middle East at the United States’ expense.

Managing an Oil Exit Strategy: Major oil producers hope to stay on track to rebalance the global oil market in 2018. As the expiration of their pact to limit production and draw down inventories approaches, compliance will slip among OPEC and non-OPEC participants alike. Even so, Saudi Arabia and Russia may be able to work together to counteract an expected uptick in U.S. shale output. 

The Next Phase of China’s Reform: Chinese President Xi Jinping will take on entrenched local interests as the central government tackles the next phase of its reform agenda: wealth redistribution. A slowing property sector and corporate debt maturities will compound financial pressures on China’s northeastern rust belt in 2018, but Beijing has the tools it needs to prevent a systemic debt crisis.

France Finds Its Voice: France will find itself on more equal footing with Germanynext year as it defends Southern European interests and debates eurozone reform. The possibility of a more Euroskeptic government emerging in Italy will send jitters through financial markets, but the country won’t leave the currency zone.

Populism Persists in Latin America: Popular frustration with the political establishment will make for a more competitive election season in three of Latin America’s biggest economies: Mexico, Brazil and Colombia. Should a populist president take office in Mexico, Congress will block him from enacting any sweeping policy changes. Meanwhile, Brazil and Argentina will have a narrow window in which to implement domestic reforms and push ahead with trade talks in the Common Market of the South before political constraints start piling up against them.

Explaining India’s UN Vote on Jerusalem

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By Shairee Malhotra

India voted in favor of the UNGA resolution on Jerusalem despite its bonhomie with the U.S. and Israel.

In a major diplomatic setback to the United States and President Donald Trump, 128 countries voted in favor of a UN General Assembly resolution rejecting U.S. recognition of Jerusalem as the capital of Israel. This included India, which voted against the United States and carried forward New Delhi’s principled position on the issue – a month before Israeli Prime Minister Benjamin Netanyahu’s scheduled visit to India.

Govt directs NGOs to open accounts in designated banks within a month for transparency

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An employee counts US dollars at a Forex dealer's office in Mumbai. The government has designated 32 banks, including foreign ones, for NGOs to open an account without for better compliance and transparency.

The home ministry has directed all NGOs, business entities and individuals who receive funds from abroad to open accounts in any of the 32 designated banks, including one foreign, within a month for higher level of transparency.

Afghanistan in 2017: Achievements and Challenges

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By M. Ashraf Haidari

Any assessment of where Afghanistan stands today needs to be put into its historical context. In doing so, it should be recalled that even before the advent of the present conflict, Afghanistan had been one of the least developed countries in the world. The country’s development was hindered by competing Russian and British empires for more than two centuries. The imperial tensions and rivalry effectively reduced Afghanistan to one of the most isolated buffer states in the world. But before the colonial era, Afghanistan had been the roundabout of the ancient Silk Road, indeed, its gateway to the north, south, east, and west for commercial and civilizational interactions.

Afghanistan Mining Potential, Challenges And Way Forward – Analysis

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By Mohammad Ismail Amin

Afghanistan’s strategic location is not only of an immense importance but also the tremendous natural resources the country possesses. According to AISA research, there are various types of valuable minerals in Afghanistan that are yet to be unearthed. Afghanistan potential as a rich country in terms of natural resources is of significant to driving the country’s donor dependent economy into a self-sufficient state. Lack of peace, exploitation of minerals by warlords, lack of regulation and infrastructure have not allowed the country to stand on its feet.

Why Track 2 with Pakistan has no future

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Those who were close to late J. N. Dixit, one of India’s most distinguished diplomats, would know that he had a keen sense of humor, at times of a kind bordering on the bawdry. The latter invariably surfaced when he commented on our ‘Track 2’ protagonists. On a serious note, Indians only delude themselves into thinking that they practice Track 2 diplomacy. The ABC of Track 2 is actually a lot more than traveling business class and staying in five-star hotels.

What Does China Want in Djibouti?

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Jeff Becker

China’s base commander in Djibouti has operational and diplomatic experience that makes him well-suited to manage China’s growing military presence in the country.

China’s base in Djibouti continues to make headlines. In late November, the People’s Liberation Army (PLA) garrison there conducted its second live-fire exercise, the first having been conducted in September. This second exercise also coincided with Djiboutian President Ismail Omar Guelleh’s three-day visit to Beijing, where he and Chinese President Xi Jinping reportedly discussed both China’s military facilities in the country while also reaching an agreement to provide Djibouti with additional loans for further infrastructure construction. Meanwhile, plans for a pier at the base housing the garrison, which would allow it to support PLA Navy ships independent of the adjacent Doraleh Multipurpose Port, as well as construction of a 400 meter helipad,continue to move forward.

What China can teach us on research

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By Claude Arpi

During his report to the 19th CPC National Congress, President Xi Jinping disclosed his plans for the future of the People's Liberation Army (PLA).

He said: 'We will make it our mission to see that by 2035, the modernisation of our national defence and our forces is basically complete; and that by the mid-21st century our people's armed forces have been fully transformed into world-class forces.'

Beware Chinese Influence but Be Wary of a China Witch Hunt

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Elizabeth C. Economy

The recent spate of articles and books on rising Chinese influence in the Australian and New Zealand political systems has prompted U.S. officials, journalists, and others to take a harder look at how Beijing is shaping U.S. policy toward China. Already there have been articles in the press suggestingthat university and think tank scholars are likely targets for Chinese influence. Yet before any steps are taken to counter this perceived influence, we need to spend time understanding the nature and implications of what the Chinese government is doing to ensure not only that we get the response right but also that we protect against a witch hunt in which American scholars and analysts are attacked with innuendo instead of real evidence. My personal observations suggest that there are some fairly straightforward challenges that Chinese influence presents to U.S. political integrity and, in some cases, equally straightforward measures that the United States government as well as private institutions and actors can undertake to respond.

China’s Creditor Imperialism

BRAHMA CHELLANEY

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Just as European imperial powers employed gunboat diplomacy, China is using sovereign debt to bend other states to its will. As Sri Lanka's handover of the strategic Hambantota port shows, states caught in debt bondage to the new imperial giant risk losing both natural assets and their very sovereignty. 

BERLIN – This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. It was a major acquisition for China’s Belt and Road Initiative (BRI) – which President Xi Jinping calls the “project of the century” – and proof of just how effective China’s debt-trap diplomacy can be.

Propping Up The Chinese Economy: Credit Versus Fiscal Stimulus

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Sophia Chen and Lev Ratnovski

Credit booms are addictive. Credit supports growth and the perception of wealth. Yet credit booms are risky, and are often followed by financial busts and economic slowdowns. The challenge is taming credit without hurting growth.

Mainland China is experiencing a major credit boom. As of end-2016, total social financing - a broad measure of credit - exceeded 200 percent of GDP. The credit-to-GDP gap - a measure of financial vulnerability - is the second highest among 44 economies covered by BIS (after Hong Kong SAR).

Jihad: The Misfortune of Misinterpretation

By Angie Gad

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Islam has been plagued with faulty interpretations, misrepresentations in the media, and extremists hijacking the religion. Over the years, I’ve encountered many who are ill-informed about Islam but express genuine curiosity and an eagerness to understand. The topic of greatest confusion to them is typically reconciling the violent acts of extremists with all other peaceful Muslims. To address this, I begin with the concept of jihad.

The Tactical Side of Russia’s Arms Sales to the Middle East

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By: Anna Borshchevskaya

Summary

Russia is the world’s top arms exporter, second only to the United States. The Middle East and North Africa (MENA) region has emerged in recent years as Moscow’s second most important arms market after Asia. Moscow has made great strides in this region since Vladimir Putin came to power, and especially in recent years, after it embarked on major military reform following August 2008. Arms sales matter to the Kremlin because they are a major source of financial gain, but these arms sales are also a tactical foreign policy instrument for wielding influence.

To Stop North Korea, Deterrence Will Beat War Every Time

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Doug Bandow

Secretary of State Rex Tillerson has been roughly treated by the White House of late. Perhaps that explains his dismissal of the possibility of deterring North Korea, a military midget compared to Joseph Stalin’s Soviet Union and Mao Zedong’s China.

When asked why it was not possible to contain the far weaker Democratic People’s Republic of Korea, he responded: “The difference is that with the past behavior of North Korea, it is clear to us that they would not just use the possession of nuclear weapons as a deterrent. This would become a commercial activity for them.”

Noam Chomsky: In the Trump era, severe threats to “organized human life”

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Lucien Crowder

Noam Chomsky, though a linguist of enormous stature, is best known outside his original field for an intense, left-leaning political engagement that has entailed pointed criticism of US foreign policy and an abiding interest in nuclear weapons and other technology-based threats to human civilization. In this interview, Chomsky speaks with Bulletin senior editor Lucien Crowder about the Trump administration’s policies on climate change, nuclear modernization, North Korea, and Iran – and about an intensification of “the extremely severe threats that all of us face.” 

Silicon Valley Is Turning Into Its Own Worst Fear

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We asked a group of writers to consider the forces that have shaped our lives in 2017. Here, science fiction writer Ted Chiang looks at capitalism, Silicon Valley, and its fear of superintelligent AI.

This summer, Elon Musk spoke to the National Governors Association and told them that “AI is a fundamental risk to the existence of human civilization.” Doomsayers have been issuing similar warnings for some time, but never before have they commanded so much visibility. Musk isn’t necessarily worried about the rise of a malicious computer like Skynet from The Terminator. Speaking to Maureen Dowd for a Vanity Fair article published in April, Musk gave an example of an artificial intelligence that’s given the task of picking strawberries. It seems harmless enough, but as the AI redesigns itself to be more effective, it might decide that the best way to maximize its output would be to destroy civilization and convert the entire surface of the Earth into strawberry fields. Thus, in its pursuit of a seemingly innocuous goal, an AI could bring about the extinction of humanity purely as an unintended side effect.

Che, Stalin, Mussolini and the Thinkers Who Loved Them

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Aram Bakshian Jr.

Why are intellectuals and thinkers, who normally face persecution and risk under dictatorial regimes, nonetheless attracted to tyrants and would-be liberators?

WE LIVE in the age of self-proclaimed “public intellectuals,” although precisely what they are has never been adequately explained. Are public intellectuals, like public transportation, providers of a useful service available to all comers? Or, like certain other public conveniences, does one have to pay before the door swings open offering access and relief? Are they sources of enlightenment to citizens, policymakers and politicians, or are they, to borrow a phrase originated by Kipling and popularized by Prime Minister Stanley Baldwin, the latest heirs to “power without responsibility—the prerogative of the harlot throughout the ages”? Baldwin, speaking in Depression-era Britain, was referring to unscrupulous press lords who exerted unchecked influence on public opinion; in some ways, the influence of the new public intelligentsia on today’s popular opinion is similar.

Middle Powers in International Relations

By Allan Patience

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Realism’s theoretical dominance in International Relations (IR) – especially its focus on the power of superpowers and its state-centric view of international society – has been challenged by the collapse of the Soviet Union and the global transformations characterising the post-Cold War era. One of those transformations is the way in which “states neither great nor small” are gaining increased recognition amid the disruptive multi-polarity of the current global disorder. Scholars such as Martin Wight and Carsten Holbraad, whose earlier writings about middle powers were overlooked in mainstream IR, are now acknowledged for their scholarly prescience. Bringing middle powers back into mainstream IR theorising is obviously overdue. There are two problems in the theorising of middle powers in contemporary IR scholarship that obscure their positioning and potential in post-Cold War international politics: (1) its intellectual history has been neglected; (2) “middle power” itself is a vague concept.

Policy Roundtable: What to Make of Trump’s National Security Strategy

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1. Introducing the 2017 National Security Strategy Roundtable

By William Inboden

Every time an American president releases a new National Security Strategy, it provokes a round of commentary on the document itself as well as an additional round of hand-wringing over whether such strategy documents matter at all. The release earlier this week of President Donald Trump’s inaugural National Security Strategy was no exception. If anything, the commentary became even more intense because of the unusual and (it is both obligatory and hackneyed to say it) unprecedented nature of the Trump presidency. Concerning the question of whether these strategy documents bear any weight on the actual conduct of American national security policy and strategy, ultimately that will be a question for historians to decide in the fullness of time, when the archives are opened and assessments can be made of to what extent a strategy document shaped or even resembled the policies that were implemented. However, it bears noting that the extensive commentary and attention that each strategy receives — this one being no exception — indicates that the document matters at least enough for those who think and write about strategy for a living to pay it some heed.

A New Space Race?

Martand Jha

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After a long time, the issue of outer space affairs is assuming a central position in the discourse of both national and international security.

On December 11, Donald Trump signed a new space policy directive which instructs NASA to focus on sending humans to the moon. The last time the United States sent its astronauts to the moon was way back in December 1972 during the Apollo 17 mission. After a gap of forty-five years, the United States is looking forward to a manned lunar mission.

Military robots are getting smaller and more capable

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ON NOVEMBER 12th a video called “Slaughterbots” was uploaded to YouTube. It is the brainchild of Stuart Russell, a professor of artificial intelligence at the University of California, Berkeley, and was paid for by the Future of Life Institute (FLI), a group of concerned scientists and technologists that includes Elon Musk, Stephen Hawking and Martin Rees, Britain’s Astronomer Royal. It is set in a near-future in which small drones fitted with face-recognition systems and shaped explosive charges can be programmed to seek out and kill known individuals or classes of individuals (those wearing a particular uniform, for example). In one scene, the drones are shown collaborating with each other to gain entrance to a building. One acts as a petard, blasting through a wall to grant access to the others.

Pentagon’s Third Offset may be dead, but no one knows what comes next

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By PAUL MCLEARY

In 2012, the Pentagon’s senior leadership secretly established a new office to work on state-of-the-art weapons. For the next four years, officials there labored away quietly on projects ranging from swarming microdrones to hypervelocity projectiles, until the Pentagon finally revealed the organization’s existence.

This shadowy division, called the Strategic Capabilities Office, or SCO, formed part of a larger military strategy to advance technology, known as the Third Offset.

Terrorist Networks Eye Bitcoin as Cryptocurrency’s Price Rises

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YAYA FANUSIE 

Signs are increasing that jihadist groups are looking to capitalize on the rising value of bitcoin, as massive price increases for the cryptocurrency in recent months garner growing public attention. Cold, hard, untraceable cash remains their preferred medium for transmitting funds, but new online activity shows that some jihadist groups are soliciting bitcoins, which can be acquired and spent without any government or banking intermediary.

When Seeing Isn't Enough To Believe

from STRATFOR

In 1896, cinema pioneers Auguste and Louis Lumiere debuted a short film showing a train pulling into a station. Audience members reportedly fled the Paris theater in terror, afraid they would be run down. Though the train on screen could do them no harm, of course, the experience, and the danger, nevertheless felt real. Today, filmgoers are a savvier lot, well-versed in the many feats that camera tricks and postproduction can accomplish. But a certain threat still lurks in the deceptions of the cinema - only now the dangers are often more real than the objects and actors depicted on screen.

US foreign policy prompted Russia to become 'masters' of cyberwarfare, Blackstone's Studzinski says

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John Studzinski, vice chairman at Blackstone Group, told CNBC that Russia has "astutely" chosen to prioritize investments in cyberdefense over military spending

Ties between Russia and the U.S. have plummeted to their lowest level since the Cold War era

Russia has been "an employer of asymmetric means of recovering power … and what is more asymmetric than cyberwarfare?" Mark Malloch-Brown, former deputy secretary general of the United Nations, said.

Cybersecurity: India as vulnerable as any other country in the world, says Eugene Kaspersky

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Eugene Kaspersky, the third most famous Russian brand after vodka and AK, as The Economist said, has the visage of a lapsed hippy in the 28th floor room at the ITC Maurya in the heart of Delhi. His hint of chubbiness is well served by a trimmed beard, long mane, blue denim jeans and white shirt to look his part as a maverick entrepreneur.

Kaspersky, the eponymous head of the famous cyber security firm, is an advocate for an international treaty prohibiting cyberwarfare. He called US whistleblower Edward Snowden, whom Russia now hosts, a traitor for violating his contract with the US National Security Agency (NSA). And currently he is in the centre of a bitter battle against the US government for branding him a Russian spy.