Monday, January 05, 2009

What to Expect in 2009

Ian Bremmer, contributing editor for TNI and president of the Eurasia Group, opens his predictions for the coming year with the following observation:
We'll see more state intervention in the global economy. Second, that intervention will be both reactive and uncoordinated by a series of local, regional, and national political actors who have decidedly non-global (and in many cases non-market) views of the cost/benefit equations that attend their policy decisions. In short, politics will drive the global economy more directly, and more inefficiently, in the coming year than at any point since World War II.

Some of what worries him:
The locus of the world's terrorism/security risks has been moving steadily eastward over the past decade--from Israel/Lebanon to Iraq/Iran and now to Afghanistan/Pakistan/India. An increase in Islamic radicalism, given the brittleness of local political institutions and a serious economic downturn, is a growing risk for a number of countries around the world (Algeria, Egypt, Somalia, and Yemen being a few worth particular focus). But nothing comes close to South Asia. Pakistan's problems are creating spillover effects in Afghanistan and India; and responses from both countries (and from the United States) will exacerbate Pakistan's political instability and increase security tensions across the region. Perhaps the biggest risk of all--a major terrorist attack inside the United States--is more likely to come from terrorists operating out of Pakistan/Afghanistan than from anywhere else.

And on Iran/Israel:
Despite credible international political pressure over the coming months, Iran's nuclear program will proceed apace. Barring direct military action, Iran will likely have the capacity to develop a nuclear bomb (if it so chooses) by the end of the year (probably the beginning of fourth quarter). The Obama administration will try to engage Tehran diplomatically. When that fails, it will continue sanctions, including a focus on shutting down suspect Iranian state accounts and financial transactions--an effort that will sting in a low oil price
environment. Ultimately, that's it for the Washington strategy.

The Israeli government ... is under much greater domestic pressure to take action. that's particularly true with the entire Israeli political spectrum having tacked to the right in recent months, the Labor party essentially disintegrating, and the strong possibility that Likud leader Benjamin Netanyahu will become the next prime minister. At the very least, Israel will provoke conflict through a stronger focus on national security in this heightened threat environment. Over-reaction in Gaza over the past weeks is one example, a display designed in part to demonstrate seriousness of intent to the Iranian government. But Iranian overreaction is equally likely, with enhanced political and military support from Tehran for proxies in the Palestinian territories and Lebanon.

Iran will hold its own presidential election in June. The country's hardliners are critically unpopular on the economy, but they're much stronger on national security, geopolitics, and the nuclear issue, giving them all the motivation they need to take a strong stance in reacting to real and perceived Israeli slights.

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