Re-Blogged From Stratfor
We would not be doing our jobs correctly if we only forecast the year ahead. Quite simply, we must be rigorous in examining the past, and that means taking a hard look at how well we did in determining the major trends of the year gone by. In every respect, 2017 was particularly unique because of the questions — and alarmism — surrounding the inauguration of U.S. President Donald Trump. Would the world see a dramatic warming of U.S. relations with Russia that would leave many Western allies in the lurch? Would a massive trade war break out between the United States and China? Would the Iran nuclear deal be torn up? These were all questions we sought to address as we pondered the changing dynamics of the global system. What follows are some of our key deductions, alongside honest appraisals of what we got right and wrong.
Personality Doesn’t Always Drive Policy
Our forecasting methodology emphasizes the importance of the constraining factors that shape state behavior. We also, for good reason, downplay the personality traits and policy whims of any one leader. This approach led us to assert that even as “the United States will have more room to selectively impose trade barriers with China, particularly in the metals sector, … the time is not right for a trade dispute.” We also maintained that U.S. threats to label China a currency manipulator were unlikely to materialize. Our more tempered forecast on trade has so far proved accurate. The United States did unilaterally impose selective trade measures against China, but a great deal of restraint was exercised on both sides to avoid a broader trade war that would have had a deeply destabilizing effect on the global economy. And though a unilateral pullout from the North American Free Trade Agreement still cannot be ruled out — especially as political constraints mount on both sides of the U.S.-Mexico border — we are sticking to our 2017 assessment. In short, the imperative of North American economic integration will likely endure in spite of the friction that comes with trying to modernize and revise the trade pact.
Trump’s victory led to much speculation in early 2017 over whether the United States would pursue a meaningful rapprochement with Russia and forsake its NATO allies. We cut through the hype in our 2017 forecast when we stated, “As Washington appears more willing to negotiate with Moscow on some issues, the United States still has every reason to contain Russian expansion, so it will maintain, through NATO, a heavy military presence on Russia’s European frontier.” The thrust of the forecast was correct, and the United States has maintained its imperative to contain Russia. However, we believed when writing the forecast that a potential move by the U.S. president to unilaterally repeal some Russian sanctions could provide Moscow with some relief, helped by cracks in Europe over whether to maintain existing sanctions. Instead, the intensification of a U.S. investigation into Russian ties to the Trump campaign team — along with the uncovering of details on Russia’s election meddling in the United States and Europe — simply made it too costly for the U.S. administration to follow through with Trump’s promise to start lifting sanctions. Indeed, the institutional constraints on the president came into full view when the Congress passed legislation specifically designed to tie the president’s hands on this issue.
Who’s In and Who’s Out in Europe
Meanwhile, across the Atlantic, we emphasized the role that Euroskepticism and anti-establishment sentiment would play in the pivotal French presidential election. We did, in fact, see that sentiment manifest in strong performances by the far-right National Front and also by the left-wing, led by Jean-Luc Melenchon. Still, it was impossible to foresee that a scandal embroiling Francois Fillon would destroy the center-right’s campaign and create space for a young moderate such as Emmanuel Macron to emerge victorious in the end. Though we had discussed the notion internally, we didn’t include in the forecast the idea that, in European elections, a reaction to the blunt form of populism and nationalism had taken root across the Atlantic. The Macron win and his agenda to promote EU integration while promoting French competitiveness ended up buying the European Union valuable time to try to reform itself. But the chasm between Germany and France over just how to reform the bloc is as wide as ever going into 2018.
When it came to the German election, we correctly assessed that the electorate would be willing to support emerging parties on the right and the left and how that support would undermine the traditional parties, leading to a fragmented Bundestag and messy coalition talks. There was also a lot of wishful thinking at the end of 2016 by Brexit pundits claiming that the United Kingdom might not end up following through with the divorce, or would at least soften the terms significantly. We correctly asserted that an early British election would only delay — not derail — the Brexit process and that the United Kingdom would take the bold decision to leave the EU single market, attempting instead to negotiate a new free trade agreement with the European Union.
The Three I’s: Iran, Iraq and the Islamic State
Our forecast on the Middle East was largely on point. We forecast that the Iranian nuclear deal would be threatened and that Russia-Iran ties would strengthen as a result, but that the deal would not collapse in 2017. (Going into 2018, however, the U.S.-Iran confrontation is bound to escalate.) We also asserted that the core of the Islamic State would be severely degraded but that a resolution to the Syrian civil war would remain out of reach. We specifically highlighted how the fall of Mosul would further divide Iraq’s Kurds and lead to a battle over the oil-rich city of Kirkuk.
A Central Asian Turnabout
Central Asia, meanwhile, showed that when enough counterevidence builds, it can force a re-evaluation of long-running trends. In 2017 we stated: “Instability, as is so often the case, will plague Central Asia in 2017. Such is the hallmark of a region marked by weak economies, the near constant threat of militant attacks and uncertain political transitions, which include the replacement of long-serving Uzbek leader Islam Karimov, who died in September, a looming succession in Kazakhstan, and presidential elections in Kyrgyzstan.” The unfortunate choice of the word “plague” was overly dramatic considering that Uzbekistan’s new leader, President Shavkat Mirziyoyev, has had a relatively smooth first year in power. And Kazakhstan appears set to undergo a stable transition once Nursultan Nazarbayev, its long-serving leader, steps down or passes away. Though these Central Asian countries still face a host of risks — from their vulnerable economies, internal radicalization and militancy, and demographic pressures — they have taken lessons from previous crises to manage their political transitions in a more orderly fashion than we anticipated. This matters because greater instability in Central Asia could draw China and Russia into more visible competition.
On that note, there are several points that we wish we had emphasized more strongly. We have long pointed to deepening collaboration between Russia and China. Indeed, we indicated how Russia would attempt to exploit the heightened crisis over North Korea and Moscow’s slow-moving negotiations with Japan to try to weaken the United States’ network of allies in the region. While we highlighted greater Sino-Russian collaboration in energy, defense and cyber technology in the forecast, we should have given more attention to the informal alliance developing between Moscow and Beijing in challenging the United States. Likewise, we said that North Korea would carry out additional nuclear tests and that Beijing would avoid significant sanctions pressure on Pyongyang, but the North Korea issue overall deserved a much more prominent focus in the forecast given the amount of attention it absorbed in 2017.
As a year, 2017 also served as an important reminder of the difficulty in timing the outbreak of conflict. We failed to include in our annual forecast the potential for a China-India military standoff at Doklam, given that New Delhi and Beijing generally take great care to manage their relationship at a political level. As it turned out, the slow buildup of infrastructure on both sides of the contested border threatened to eventually trigger a confrontation. When the Doklam standoff did break out in June, however, we rapidly applied our geopolitical framework to the tactical military constraints defining the standoff and confidently and correctly forecast that the border crisis would not lead to a conventional war between the Asian giants.