Ukraine and the Game of Geopolitical Go


Image Credit: Sasha Maksymenko

by Elbay Alibayov

Political skills are frequently compared to chess-playing. However, it is the game of Go that comes closest to the art and craft of geopolitics. Go is a territorial game, where objective is to control more territory than the opponent. And the playground is big enough to allow performing poorly (or failing) in some areas but still winning the game by doing better on the board as a whole. Ukraine is the case in point.

Another milestone

Three years ago, on 18 March 2014, the self-proclaimed independent Republic of Crimea signed an accession agreement with Russia that resulted in forming new constituent entities within the Russian Federation. The agreement was signed two days after the citizens of Ukraine’s then Autonomous Republic of Crimea and city of Sevastopol voted to join the Russian Federation at the independence referendum (which was not recognized by the Ukrainian authorities). The move was (and still is) regarded in Russia as an historic act of “reunification”, while it was met with an outcry on the West and in the neighbouring countries, and was largely branded as the final act in “Russian annexation” of the Crimean peninsula (further to military occupation in February that created the conditions for the referendum).

For those observers who are familiar with historic background of the Russo-Ukrainian relations and their geopolitical context, it did not come as surprise though: the issue of Crimea (and especially the port of Sevastopol) and subsequent eastern Ukraine separatism are just another milestones on a long route of settling the relations between Russia and Ukraine in contemporary, post Soviet, history. Which itself is just a small section of a millennium long common history, with its numerous zigzags, highs and lows, infightings, controversies and moments of common pride (it is enough to remind that the Russian and Ukrainian statehood has started from Kievan Rus’ of 9-13th centuries; while Crimea becoming firmly part of the Russian Empire after the 1783 annexation and then changing hands in the course of the 20th century).

Sevastopol and national security

The irony of Russian geography is that, in spite of having a vast territory stretching from East Europe to the Far East, Russia is comparable to a land-locked country in terms of useful naval access to the world’s main theatres of action. That is why Crimean peninsula scores high in Russia’s national security strategy, and she cannot afford losing it. It is obvious that Crimea’s annexation was only an issue of time. The work in this direction started early in the post-Soviet times—already in the 1990s some Russian nationalist politicians were declared persona non grata, for meddling into Ukrainian internal affairs (under the pretext of protecting the interests of ethnic Russian or “Russian speaking” population).

Since the collapse of the Soviet Union, Russia and Ukraine were negotiating the division of fleet and military and naval bases inherited by the newly independent states. From 1997 Russia was leasing the military bases of Sevastopol port from Ukraine, as per Partition Treaty. For quite some time, the sides were using their bargaining chips (gas supply and transit from Russia vs. Sevastopol bases of Ukraine) within tolerable margins.

Things became complicated once the United States and the European Union backed pro-democracy opposition groups started challenging the established status quo. Even worse for Russia, once coming to power after the so-called “orange revolution” of 2004-05, they began openly threatening to discontinue the leasing (which was due to expire in 2017). The situation temporarily normalized when the pro-Russian president Viktor Yanukovych was installed in Kiev. The agreement was immediately renewed and extended for another twenty-five-year period until 2042 (known as the Kharkiv Accords).

However, the Euromaidan protests of the opposition forces in 2014 saw Yanukovych ousted, and that was a signal for the Russian military that the time has come for action. Russia simply could not allow this happening. Honestly speaking, no one (at least among actual or those aspiring to be great powers) would.


Crimea: a done deal

So where is Crimea now? The answer is simple and clear: Crimea is gone; forget it. It has quickly passed a grey zone (limbo, if you wish) of “no return—no further transformation” and has comfortably integrated into the Russian state. And it seems that, over time, everyone has accepted this stand of affairs.

No return means that there is no chance Crimea will be part of Ukraine ever again, given its strategic, even existential, importance to Russia: Crimean peninsula is the only place that hosts its Black Sea Fleet—one of very few outposts from where Russia can defend its southern borders and geopolitical interests in the region, as well as project its strategic offensive capabilities globally. Moreover, since the annexation Russia has deployed additional forces to strengthen its surface and sub-surface combatants and amphibious primary based in Sevastopol, Karantinnaya and Streletskaya Bays, as well as naval aviation and air defence located in nearby bases along with naval infantry.

On the other hand, there was a smallish chance that Crimea would be formally recognized as an independent state by other states and the UN any time soon. That meant no transformation into a fully fledged sovereign state; and declaring independence while being de jure part of Ukraine and de facto Russia’s satellite did not seem a feasible option, either. The only transformation from the grey zone practically justifiable (and the one that Russia did not hesitate undertaking) was integration—that is, Crimea becoming formally the part of Russian Federation. Therefore, for Russia (and by extension for all others) Crimea can be considered (at the very least, for the visible future) as fait accompli.

Eastern Ukraine: a prize no one dares to win

Eastern Ukraine, particularly people’s republics of Donetsk and Lugansk of the Donbass region (acronym for Donetsk [Coal] Basin), is following suit. The circumstances of Donbass are different from those of Crimea, but the destination is the same—into the grey zone where it becomes a low intensity irritant and a bargaining chip. The principal difference being that the Donbass entities are going to stay there at least in the immediate to medium term, if not indefinitely. There are reasons for that.

First comes the superiority of objectives. For Russia, the Donbass uprising has served as a supplement, to distract attention from Crimea and allow settling the primary issue (i.e., everyone to accept Crimea’s secession and integration, or annexation, even though without overwhelming formal recognition internationally) while creating a buffer zone and a constant irritant in Ukraine that will make the neighbor’s government vulnerable and more dependent on Kremlin, to extent necessary for keeping it on a safe distance from the meaningful, full-blown Euro-Atlantic integration.

Moreover, there is a principal difference between Crimea and Donbass in terms of conflict dynamics and political economy. The former was taken in a clinically performed operation and today is firmly controlled by Kremlin and does not seem to create any problems neither within its federal entity borders nor to its neighbours (I even read the reports in Russian media about how much Crimean Tatars, who initially were opposed to secession from Ukraine, come to “appreciate their newly obtained liberty”). For anyone raising their voice of concern (it still occasionally happens nowadays), the Russian Foreign Minister Sergey Lavrov has an immediate response pointing to Kosovo. Legalists may debate the nuances of course, but it hardly would affect the real situation on the ground.

This is not the case with Donbass and its two self-declared entities—Donetsk and Lugansk people’s republics. Political economy of the conflict here includes numerous non-state actors, ranging from separatist groups to anti-Russian paramilitary battalions with diverse ideologies and allegiance, and various gangs who proliferate from the chaos and lawlessness and thus are interested in sustaining the present situation rather than ending the war. They have seized control of many industrial sites and are engaged in all sorts of illicit production and smuggling activities as within the region so across the borders.


According to reports, separatists have seized control of steel mills, coal mines and other enterprises, and up until recent were trading with the government controlled territory.  In turn, paramilitary battalions (such as Azov, Aidar, Tornado), as revealed in international investigations, ignore the rule of law and “have been involved in widespread abuses, including abductions, unlawful detention, ill-treatment, theft, extortion, and possible executions.” Paradoxically, such groups may be of lesser headache in a low intensity conflict and lack of state control than in post-conflict situations when they play a destabilizing role and undermine the rehabilitation and state-building attempts of central authorities.

Next, Donbass is not of existential importance to Russia. Given the outdated infrastructure, degraded condition of coal mines and steel mills of the region (all demanding quite urgent and considerable investment with doubtful prospects of competitiveness), it does not represent such a great economic value to Ukraine either. The cost of physical rehabilitation is estimated in tens of billions dollars; who is going to pay for that?

To sum up, today neither Russia nor Ukraine has an appetite for fully embracing the Donbass, for it will come at prohibitive economic, social and political cost. The intricacy of Ukraine’s position is well summed in one of recent articles: “The good news is that Ukraine is prepared for all-out war with Russia; it is also prepared for and could cope with aid cutoffs from Washington and the end of sanctions. The bad news is that Kiev is thoroughly unprepared for the one scenario that could destroy Ukraine at little cost to Putin: Russia’s return of the Donbass.”

Power the aim, people not in equation

For the time being the strategic positioning of sides to the conflict over control of territories in Crimea and eastern Ukraine has been temporarily settled. “Temporarily” here may mean without meaningful change for decades to come, however. It appears that such a solution serves the interests of all state and non-state actors involved, directly or indirectly.

This is true for the status of Crimea, but becomes increasingly so with regards to Donbass and the implementation of Minsk II agreement that ought to bring peace to the troubled region. Two years after its signing, some analysts observe that “as the Minsk 2 process is now merely a self-sustaining diplomatic fiction, it has consequently become pointless; but it has also become indispensable. The present status quo and ‘neither war nor peace’ scenario is benefiting everybody, including the international community, as it justifies its lack of deeper involvement.”

“Benefits everybody”… well perhaps it is fair to say that it serves all but the ordinary citizens. And they are those who are paying the ultimate cost of the conflict. According to UN Human Rights Commissioner’s data, about ten thousand people have been killed (including two thousand civilians) and close to twenty-three-and-half thousand injured since the mid-April 2014. And it does not count the displacement, loss of jobs and hard earned property, the minimalist services and quality of life, insecurity of daily life and uncertain future, etc.

But hey… let me put it straight: people (whether human lives or their well-being) are never taken into geopolitical calculus by group actors, independently of what they claim in their public statements. Just look around… Whether we like it or not, the rule established by humankind since the dawn of civilization is that in political game, including the geopolitical game of Go, anything else but power can be sacrificed.



The roles of the US, Russia, Turkey, Iran and Israel in Syria: moving towards the end of the war

The war in Syria is at its critical junction point, where decisions taken by various state and non-state actors upon the choices available to them at this point of time have a capacity of deciding the fate of the conflict, this way or another. An excellent break down of interests, perceptions and choices presented by a seasoned political risk analyst Elijah J Magnier: “Syria looks both close to and far from the end of the war. There are still both military (against ISIS and al-Qaeda) and political battles (constitution, cease-fire, reconstruction) to be fought. Nevertheless, despite the US and Turkish occupation of Syrian territory which Damascus will have to face one day, there are clear signs that the war in Syria is on track towards its ending.”

Elijah J M | ايليا ج مغناير

The two superpowers have agreed to finish off ISIS in Syria

Al-Qaeda in Syria has lost the support of the people and the countries of the region

Hezbollah fears an Israeli-US-Saudi Arabia war but the facts speak otherwise

Published here:  v

Elijah J. Magnier – @EjmAlrai

The US and Russia have agreed to put an end to the “Islamic State” (ISIS/Daesh) as a priority in Syria, unifying the goal without necessarily agreeing on uniting efforts and coordinating the ground attack. Nevertheless, this beginning will lead the way towards the end of the war in Syria and pave the way to removing essential obstacles (that means all jihadists) on the peace process road.

The US in Syria and the difficult choices:

The United States has pushed hundreds of its special forces and elite troops into the north – east of Syria to maintain a military presence…

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Iran: Preserving the Past, Securing the Future

by Elbay Alibayov

In his recent article, Iran at a Crossroad in 2017, my former colleague Jose Luis Masegosa (who I had a privilege working with at the OSCE in Bosnia) analyses the internal political dynamics in Iran, viewed through the lenses of the forthcoming presidential elections scheduled for May, 2017. This is a timely attempt to look closely at one of the critical events to follow this year. The outcome of the election has a potential to influence not only the internal policies of Iran but to shape political and security processes much beyond its geographic boundaries–including geopolitical dynamics in the Middle East region and the global security arrangements, for many years to come.


Mr Rouhani attends a congress on 2017 Presidential elections, 25 February 2017

The Complexity of Iranian Politics

To understand the intricacy of developments in Iran, one has to employ the notion of complex systems. The complexity here derives from “multiple actors pursuing a multiplicity of actions and initiatives at numerous levels of social relationships in an interdependent setting at the same time. Complexity emerges from multiplicity, interdependency and simultaneity.” Sounds as something overwhelming, does it not? But that is not all. What makes the analysis and political forecasts even more difficult is that, being a complex system in and by itself (it is enough to note that Iran is a theocratic state with quite a significant modern democratic element in its constitution), Iran is a key component of another, highly complex system that is Middle East and North Africa region. And all of this at the most volatile and uncertain time in decades when the old, post-Second World War global governance is no more effective, while a new world order has yet to take its final shape.

In such a setting, it is important to understand the drivers (ideas and motivations) and decisions taken in each component by its multiple agents; but, even more importantly, the interaction between those connected yet still independently varying components—such as internal political processes in Iran and its neighbouring countries (particularly its rivals Saudi Arabia and Israel, but also increasingly Turkey); proxies and proxy wars in Syria, Iraq, Yemen; and foreign policies and regional ambitions of such global players as the United States and Russia; along with non-state actors that seem to become regular players, such as Islamist militants and terrorist organisations (in first hand, al-Qaeda and ISIL).

Internal Rivalry and the Influence of Externalities

The article of Jose Luis Masegosa focuses on the internal politics of Iran, particularly on the rivalry between pro-reform forces led by the incumbent President Hassan Rouhani and principlist conservative groups (frequently referred to in Western literature as “hardliners”) close to Supreme Leader Ali Hosseini Khamanei. The outcome, whatever seemingly favourable for the former forces, is vastly unclear at this point in time, and I dare to guess, will remain so up until the Election Day (which seems to be new normal, if to consider the recent Brexit and US Election 2016 surprises). As the author points out, it will largely depend on the Middle East policy of new US administration and its commitment to respecting the nuclear agreement (also known as Joint Comprehensive Plan of Action, JCPOA) signed between Iran and six world powers back in 2015.

So far, the indication of the future policy of Trump administration point to rather hard line against Iran (but not necessarily dismantling the JCPOA; at least not so overtly) and more reliance on its rivals–Saudi Arabia led coalition of Arab Gulf States and Israel. This has not gone unnoticed in Tehran, where both reformists and conservatives are closely following each and every statement of the new US President and his defence and security aides. And in the meantime, both camps are getting prepared for an epic battle at the ballot box, in a couple of month period.

While President Rouhani puts maximum effort in getting as much as possible benefits from the opportunities opened up thanks to the nuclear deal and in demonstrating some tangible economic improvements, his opponents are consolidating their ranks: Last week,  the Popular Front of Islamic Revolutionary Forces, a coalition of conservative groups,  has nominated ten “semi-finalists” for a single candidate (among them such prominent figures as Astan Quds Razavi Foundation Head and Assembly of Experts member Ebrahim Raisi; Expediency Discernment Council Secretary Mohsen Rezaee; Tehran Mayor Mohammad Bagher Ghalibaf; senior former nuclear negotiator Saeed Jalili; and former parliamentarian Ali Reza Zakani).

Generational Shift

One of interesting points made in the article of Jose Luis Masegosa is that this year’s election occurs in the broader environment of generational change in Iran. In terms of demographics, the fact that 60 percent of the country’s population are the young people under 30 years of age means that majority of polity, and thus significant part of the voter base, are people who were born in the Islamic Republic and do not have a point of reference to the Shah regime. Another observation of the author related to generational shift is that the leadership of Iran that has been comprised of politicians who ran the 1979 Revolution and established the Islamic Republic under the leadership of Ayatollah Khomeini is shrinking—the death of Ayatollah Ali Akbar Hashemi Rafsanjani is the latest loss among the old guard.

Whether present political elite (including theocratic leadership and the Supreme Leader himself) will be replaced in the coming years by more moderate politicians or by more aggressive actors (such as former president Mahmoud Ahmadinejad) of the younger cohort remains largely uncertain, and will depend on a host of internal and external factors and their combination and interplay at any given point in time. That is what complexity is about… so do not believe anyone who claims that they know what is going to happen in the next year—they are either manipulators or totally ignorant (or both).

How the Iranians will decide to secure the safe passage between the past and the future, without sacrificing either tradition or aspirations? And how do they see that future? That is the question of all questions for Iran today.

At a Junction Point

What is possible to say with certainty though, is that this year’s election in Iran come at the moment when both internal political processes underway and changes in regional and global political order have gained a magnitude which may turn it into make-or-break event for the Iranians. This reminds me of an interview given by the Shah of Iran Mohammad Reza Pahlavi back in 1961. Reflecting on the power of national unity at moments when the nation’s destiny is shaped, he has observed: “Twice in my reign I have seen Iranians rise up when all seemed lost… once during the Azerbaijan crisis [1946] and again in 1953 with the Mossadegh affair. … it was like telepathy—a kind of human antenna. The whole nation acted as one to save its past and its future.”

Ironically, in less than two decades the same very national unity challenged his power, effectively ending the longest lasting monarchic rule on the face of Earth. It seems that Iran is approaching yet another such junction point in its millennia long history of statehood. How the Iranians will decide to secure the safe passage between the past and the future, without sacrificing either tradition or aspirations? And how do they see that future? That is the question of all questions for Iran today.

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Global Security: Governance and Benevolence


Munich Security Conference 2017, 17-19 Feb 2017 (Image credit: MSC/Mueller)

Reflections on the week passed (13-19 February, 2017)

by Elbay Alibayov

I was following the Munich Security Conference this week. There was a bit of everything, which is perhaps only natural. My initial impressions (not an analysis or a detailed account of the event):

A lot of open discussions, good judgement and right, if not uneasy, messages (particularly coming from European representatives; I liked the address by EU’s foreign affairs chief Mogherini and Angela Merkel’s confident leadership, especially in the face of rather cautious, if not modest presentation by the US team).

Some narrow agenda driven stances and accusations (for example, an orchestrated attack of Turkey, Saudi Arabia and Israel against Iran as the only source of security problem in the Middle East; it is no doubt, but only part of the problem, the rest being contributed by themselves). It is time to recognise that there is not going to be peace, order and prosperity in the Middle East unless the region’s most influential actors learn to cooperate in spite of differences and disagreements on particular issues.

Some eyebrow raising events (like the formal meeting, at the sidelines of the conference, of two delegations from Iraq led respectively by PM al-Abadi and Kurdistan’s president Barzani) and inconsistencies (like both the Afghanistan’s President Ghani and Pakistan’s Defence Minister Asif rightfully claiming that their countries are at the forefront of fighting global terrorism, while on the same very day Pakistani military conducting border shelling and, according to local sources, crossing the border under the pretext of destroying the terrorist base in Nangarhar).

Some awakening calls on new global threats (namely, the warning of bio-terrorism by Bill Gates) and some disappointing news (like the admission by Thomas de Maiziere that there is no meaningful cooperation between European security organisations and the UN counter-terrorism body).

Whether this will translate into constructive and well thought out and coordinated action remains to be seen. One thing was clear is that the way international affairs are conducted has changed. Perhaps this was most explicitly stated by the Russian FM Lavrov in his call to embrace a new world order. Otherwise, the spirit of changed international affairs was expressed in the title of the security report published prior to the Conference: “Post-Truth, Post-West, Post-Order.”

It seems that everyone agrees that we are living in a sort of “ante” era of global governance—in between the “post” (as represented by the system established after World War II and amended after the end of Cold-War) and before the new system is established and functional. What this new global governance system will look like nobody knows yet; it only takes shape (also through various tests undertaken here and there by global and regional actors) but as an objective process moves forward, whether some like it or not.

There is also one thought that does not leave me for many years, since the early 1990s when I first saw the face of human suffering in real life, not through the TV screen (shockingly, these were hundreds thousands of refugees and displaced people in my country, among them my relatives, forced from their places of residence by the Nagorno Karabagh conflict). After that, living and working in Bosnia (from Srebrenica to Sarajevo), in Kabul and Baghdad… it does not leave me alone… Isn’t this all suffering enough? What sort of moral impetus do we need to be humans?

Something is wrong with us as humankind. We may be (and are most of the time) benevolent as individuals but lack Humanity as organised groups. As groups, we easily humiliate, torture, kill. We feel little empathy for other’s sufferings. We fail to see the loss of a single life as tragedy. And when it happens en masse, it is only statistics and labels to us that matters. This is something that has not changed through the millenia of human history…

In the words of Hitchens, we have “downgraded” people to the level of “problems” (thanks to Shadi Hamid for sharing through Twitter this brilliant essay, A Valediction for Edward Said, written by Christopher Hitchens back in 2003). He wrote it about Palestinians, but his observation holds true to many other people: “People may lose a war or a struggle or be badly led or poorly advised, but they must not be humiliated or treated as alien or less than human.” No global security or development agenda will be working and delivering peace and prosperity unless we understand this.


Putin v West: Democracy’s Weak Will


Image credit: Felipe Dana/AP

The United States expelled 35 Russian diplomats at the end of December over claims that Russia had interfered in the US election. But is Russia’s strategy in the West really having a tangible impact on political outcomes and, if so, how should the West respond? Linda Risso writes that the West’s apparent weakness to Russian influence stems from a lack of political, economic and cultural cohesion, alongside a lack of direction when it comes to organising our multicultural and multi-ethnic societies.

With an unclassified US intelligence report indicating that Russia sought to help Donald Trump win the presidential election, ‘Putinism’ is now on everybody’s lips. Vladimir Putin, Russia’s President, has been portrayed more widely as a puppet master orchestrating wide-ranging cyber operations, surprise military exercises, and propaganda campaigns. The Economist recently published a special report that puts Putinism in context by placing it within the demographic, cultural and societal development of Russia since the fall of the Soviet Union. The overall picture is that while the man himself keeps his cards close to his chest, his track record shows he has a good eye for identifying the West’s weaknesses, and a natural gift for finding new ways to sharpen divisions and to widen the gaps within the West.

At a more profound level, Russia’s actions are seen as capitalising on the internal divisions of western societies. It exploits fears of globalisation and immigration, it foments resentment against ethnic and religious minorities, and it encourages criticism against established political parties as cosmopolitan urban elites that have allegedly lost touch with the real problems faced by real people. In other words, Russia wants the West to turn on itself: public against elites, religious and ethnic groups against each other, elites against experts, countries against their neighbours. A divided West is less clear about what it stands for and less eager to step in to protect its values and its allies.

There’s a distinctly active element to this strategy. For example, Buzzfeed has uncovered the extent to which Italy’s anti-establishment Five Star Movement have built up a network of websites and social media accounts to spread fake news, conspiracy theories, and pro-Kremlin stories to millions of Italians. Elsewhere, Marine Le Pen’s traditionally strapped-for-cash National Front, which feeds on a similar anti-establishment and populist platform, allegedly received a multimillion euro loan from Russian banks to finance its presidential and parliamentary campaigns in 2017.

Where anti-establishment movements are less powerful, Russia plays an altogether different kind of game. Markku Mantila, the head of the Finnish government’s communication department, has stated that they are becoming increasingly worried about Russian questioning of the legality of Finland’s 1917 independence. In the Baltic Republics, there is widespread concern about Russian media coverage galvanising Russian minorities within their own borders.

In parts of the Balkans, Putin is also enjoying strong support. As Dimitar Bechev explains, Russia knows how to make highly symbolic gestures: blocking a UN Security Council draft resolution describing the 1995 Srebrenica massacre as genocide, or abstaining from a UN vote to extend the mandate of the EU’s peacekeeping mission in Bosnia, EUFOR. The real significance of taking a stand on these issues is negligible, but it goes a long way toward ensuring the support of nationalist-minded Serbs and sewing divisions and tensions in the Balkans.

According to Andrew Parker, the incumbent head of MI5, Russia’s propaganda machine poses a real threat: troll farms, running around the clock, allegedly use social media and blogs as part of a continuous attempt to disrupt and manipulate news reporting. The head of Germany’s BND foreign intelligence service Bruno Kahl recently argued that Europe, and Germany in particular, are the primary focus of Russian cyberattacks.

Brexit is a slightly different story. It is not Russian-made, but it is definitely playing into Russian hands. Brexit absorbs the British government’s energies and attention, and a high proportion of Westminster resources are focused on the technicalities of triggering Article 50 and on new trade deals. On the continent, Brexit galvanises Eurosceptics and builds on the frustration of those who feel that they have been ‘left behind’ by globalisation. All this at a time when Europe faces the most challenging migration crisis since the end of WWII, and needs to navigate through a phase of deep economic transformation.

Different countries, different strategies. Yet, the pattern is the same: divide, undermine and embarrass the West. So what should the West do? Should we be concerned? Contrary to the logic of the Cold War, Russia today does not embody an alternative economic and political ideology. Rather, Putin fights for the survival of his government, which he feels is the only one in a position to ensure the future of Russia. If the West is weak and divided, if Russians see it as morally corrupt and politically chaotic, Russia’s own shortcomings are less marked. Once again in Russian history, foreign policy is primarily a tool for the control of power at home.

Ultimately, Putin is playing a rather old-fashioned power game, admittedly with an interesting mix of old and new tools. Internet trolling, fake news, cyberattacks, support for extremist groups, and even links with mainstream political parties, are all part of a coherent strategy to expose the idiosyncrasies and hypocrisies of the West and to widen existing rifts.

An essential point to keep in mind is that despite Putin’s bravado, he is not a gambler. In fact, he is considered a rather cool-headed pragmatist who – in the good Russian tradition – respects power when he sees it. When faced with a strong stand, Putin adapts, and circumvents the obstacle. He does not push tensions to a point of no return because he knows Russia’s inner weaknesses.

As Putin will nudge until he finds resistance, the West must show that it remains committed to defending itself, on all levels. NATO’s commitment to increase its military presence in the Baltic Republics goes in the right direction. However, western governments should never forget that all Russian leaders have always been sensitive to anything that can be perceived as a provocation and humiliation. Political and diplomatic dialogue must remain at the top of the agenda and they must go in tandem with a strong military presence. And this must happen not at ambassadorial level, as NATO prefers, but at the level of heads of states, which is the only one Putin – and all Russian leaders before him – recognise as worth pursuing.

But it is essential to understand that the West’s weakness is born out of our own lack of political, economic and cultural cohesion, of our patchy understanding of the consequences of long-term geopolitical shifts like globalisation and massive migration, and of our lack of direction about how to organise our multicultural and multi-ethnic societies. Edward Lucas – one of the most influential Kremlin observers – has argued that while the West is not militarily or economically weak, it is “weak willed”. The West does not have a convincing narrative of what it stands for and why: we stand up for democracy but we do not know to what extent, for example, the right to free speech should be restricted to ensure that all groups are represented but not threatened.

In order to be able to respond effectively to Russian trolling, it is not sufficient to silence the trolls themselves. Governments and civil society must put forward a strong narrative of what it means to live a western democracy today. Schools and universities must teach students how to deal with the information they find on the internet, how to recognise reputable sources and how to know the difference between being entitled to an opinion and understanding the value of expertise, evidence-based thinking and adopting a long-term perspective.

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This article was first published on EUROPP – European Politics and Policy, under a Creative Commons licence (CC-BY-SA-3.0)

2017 Annual Forecast: Sub-Saharan Africa

“Low commodities prices make for another challenging year for most Sub-Saharan African countries. Social unrest is not uncommon in these countries, nor is it uncommon for a strong central government to withstand them. But cracks are emerging in countries like Nigeria and South Africa, where political problems are likely to worsen in 2017.”


Photo: Gianluigi Guerccia/AFP

South Africa: Dissent in the Ruling Party

For South Africa, the difficulties of 2016 will inform the decisions of 2017. Weak economic recovery and political losses from municipal elections in August have eroded public support for the ruling African National Congress. The party will try to maintain its traditional support base among the rural and poor black working class even as the economy stagnates. To that end, the ANC will try to promote social welfare and appease pro-labor groups, even through state intervention, so that the left-wing elements of its support base do not defect to another party or challenge him within his own.

The stage is thus set for a competition over who will lead the ANC, the vote for which will be held during the party’s leadership congress in December 2017. President Jacob Zuma is supposed to abdicate his party chairmanship, and he wants his successor to come from the same ethnic Zulu and pro-labor circles as he did. But his rivals have other plans. In fact, a right-leaning, pro-business faction of the ANC is gaining steam, and if a challenger from that faction assumes control of the party, Zuma may be recalled as president in 2018.

Preserving Power

African rulers cling to power in a variety of inventive ways. Over the past few years alone, three long-serving rulers – the Republic of Congo’s Denis Sassou-Nguesso, Equatorial Guinea’s Teodoro Obiang, and Uganda’s Yoweri Museveni – did so through constitutional reform. In 2017, the leaders of Angola, Zimbabwe and the Democratic Republic of Congo will have to execute their own plans to retain power, if not for them than for those that are close to them.

Angola’s transition will be the smoothest. President Jose Eduardo dos Santos, who has run the country since 1979, has announced that he will not stand for re-election in August. Though the 74-year-old is stepping down without a fight, he has a carefully crafted plan in place to keep power in the hands of the ruling MPLA. Dos Santos will spend most of the year mentoring his designated successor, Defense Minister Joao Lourenco, and instructing him how to navigate the complex patronage network he spent several decades building. Dos Santos will also make sure his family’s interests, which extend into the state-run oil company and the country’s sovereign wealth fund, survive the transition.

Zimbabwe’s presidential transition will be considerably more ugly as the power struggle over the presidency intensifies in the lead-up to 2018 election. President Robert Mugabe, 92, will not voluntarily step down, but if he leaves office involuntarily, whether by force or by natural death, he will be replaced by Vice President Emmerson Mnangagwa, who has the support of the country’s security forces. (If Mugabe is still around, he can be expected to run for re-election.) Under Mnangagwa, Zimbabwe would be more likely to open itself up to Western institutions for financial relief, if only to shore up his own legitimacy.


Joseph Kabila, the president of the Democratic Republic of the Congo since 2001, has employed more creative tactics to stay in power. Kabila has already delayed the presidential election from 2016 to 2018, citing issues in voter registration and funding. There is no guarantee, of course, that the election will actually take place as planned, the possibility for 2017 elections notwithstanding. But even if it does take place, Kabila has plenty of time to find a successor or find another way to hold onto power. But the president may be overplaying his hand. He oversees an inherently weak patronage system in a country predisposed to rebellion and mired economic turmoil. By intensifying crackdowns in 2017 he risks losing critical international aid and military assistance from MONUSCO, the U.N. peacekeeping mission in the country. Such a loss would put him in an even tighter corner as he clings to power.

A Tough Year for Nigeria

Nigerian President Muhammadu Buhari has another tough year ahead of him. Oil prices remain low and challenges to his ruling are rising. One such threat comes from within his own All Progressives Congress party. Facing more resistance within the congress, Buhari will try to rely more on executive action to pursue his reform agenda and sustain an anti-corruption probe. But that will only galvanize the opposition – so much so that the main opposition party, the People’s Democratic Party, could seek an alliance with dissenting factions in the All Progressives Congress ahead of the 2019 presidential election. (As a matter of fact, the People’s Democratic Party has already announced that it would select a presidential candidate in the north, an attempt to divide Buhari’s northern support base.) And with less oil revenue at his disposal, Buhari will have limited means to win over new allies and prevent his base from fracturing.

The federal government will also be constrained in its ability to offer improved terms to the stakeholders of and militants in the Niger Delta region. Consequently, oil and natural infrastructure in the Niger Delta will continue to be the target of politically motivated violence in 2017.

Instability in Somalia

2016 was a trying year for Somalia’s security forces. Militant group al Shabaab came back with a vengeance, putting African Union peacekeepers and Somalia’s nascent army on their back feet. In 2017, the security environment will be even more fragile as AMISOM struggles to maintain its current troop levels, let alone increase them. And its fragility will give al Shabaab even more room to acquire territory and to pressure the international mission. Budget cuts, not to mention the conflict’s intractability, have already some AMISOM contributors reconsider their participation. Uganda has even said it would begin to withdraw its troops by December 2017. If AMISOM falls apart, then al Shabaab will flourish.

Ethiopian Unrest

Ethiopia will also de-prioritize its commitment to the African Union Mission in Somalia (AMISOM) in 2017 but for different reasons. In 2016, social unrest against the Tigray minority-dominated regime in Addis Ababa spread from mainly ethnic Oromo areas of the country to ethnic Amhara areas and beyond. In the latter half of the year, protests and skirmishes between armed opposition and government security forces extended to the outskirts of the capital, providing the greatest challenge to Addis Ababa in years. The government reacted by instituting a massive crackdown, including a six-month state of emergency that will continue into 2017.

The Ethiopian government will apply heavy-handed security measures to try to contain unrest, but it will be unable to do so among the marginalized ethnic groups in the countryside. There is therefore a possibility for the lightly armed opposition to cohere and upgrade to bigger weapons.

The country will continue to suffer from the ongoing drought, though the government will make progress on the Grand Ethiopian Renaissance Dam. With construction proceeding apace, Ethiopia could begin diverting water from the Nile River into a reservoir as early as 2017. Downstream, Sudan and Egypt will try to defend their own water security by gaining more influence in when, and how quickly, the reservoir is filled.

East African Integration: Moving Ahead

Having already established itself as an emerging producer, East Africa will make more progress in the energy field. The Ugandan-Tanzania pipeline, which will be built by France’s Total SA, the United Kingdom’s Tullow Oil, and China National Offshore Oil Co. Ltd., will begin its initial resettlement planning — an important requirement for Tanzania’s regulatory environment — in the beginning of 2017.

Other key regional infrastructure projects such as the Djibouti-Addis Ababa railway, whose trial service began in October 2016, will have regular service beginning in 2017. The railway, built and bankrolled by China, will significantly reduce the time and cost for shipping Ethiopian goods to Djibouti, which accounts for 90 percent of Ethiopia’s trade. The money saved will come at an opportune time for Ethiopia, struggling as it is with contests to its rule that show no sign of ending in 2017.

Less encouraging for the region is the status of the East African Community’s Economic Partnership Agreement with the European Union. The agreement, in the works since 2007, would guarantee EAC member states duty-free and quota-free access to the EU’s market in exchange for the EAC removing tariffs on over 80 percent of its imports from the European Union by 2033. But the deal has become hostage to the divisions of the East African trading bloc. Eager for the regional deal, the EU has granted the EAC an extension until early February to sign the deal as a bloc. However, persistent concerns of Tanzania over the effects of the EPA on its industrialization policy and its impact on Dar es Salaam’s nascent manufacturing sector will make implementation of the trade agreement exceedingly difficult.

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2017 Annual Forecast series on PolicyLabs:

2017 Annual Forecast is republished with permission of Stratfor

2017 Annual Forecast: South Asia


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“As in so many other regions, nationalism is on the rise in South Asia, and leaders there will use it to advance their political agendas.”

As in so many other regions, nationalism is on the rise in South Asia, and leaders there will use it to advance their political agendas. This will be particularly pronounced as India and Pakistan prepare for elections. And because this is India and Pakistan, nationalist rhetoric in one country will often demonize the other.

But they have very different domestic agendas. India will try to add to the modest progress it has made toward reform, particularly tax reform. And it will do so as its economic growth slows, thanks in part to recent demonetization schemes.

For its part, Pakistan’s military will use the threat of India as an excuse to maintain the status quo in its civil-military balance of power. It will also ensure that Pakistan’s ties with Afghanistan remain weak as instability in that country undermines progress on transnational energy projects, including the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline.

Honing an Image in India

2017 will be a crucible for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP). In 2014, the BJP became the first party in 30 years to win a majority in the lower house of parliament, at once dispelling, if only temporarily, the tradition of coalition government that has long defined Indian politics. But even with such a mandate, honoring promises of reform in a legislature as fractured and convoluted as India’s is difficult, prone to slow, uneven progress.

Now, the great challenge facing the BJP is to continue making progress on its promises and to streamline the country’s onerous land, labor and tax regulations, all in support of unleashing the labor-intensive economic growth India needs in order to absorb the 12 million people who enter the job market every year. This is no easy task. The sheer scale of reform in a stratified, billion-citizen democracy such as India is so immense that its implementation is measured not in years but in generations. And so Modi has taken the long view, having used his first five-year term to lay the groundwork for a second term in 2019.

To that end, Modi means to win state-level elections to bolster his party’s numbers in the upper house of parliament; doing so, of course, would make it easier to pass legislation. The elections in Uttar Pradesh, India’s most populous and electorally most important state, are particularly important. A victory there would substantially bolster the BJP’s numbers in the upper house and go a long way toward securing a presidential re-election in 2019.

The outcome of the election is less important than the strategy the BJP employed to win it. This is because the three remaining bills of the Goods and Services Tax (GST) failed to pass during the winter session of parliament. The opposition capitalized on the ill will generated by Modi’s demonetization campaign against black money (the measure entailed the withdrawal of 500 and 1,000 rupee notes from circulation). Modi expected this, of course, but he went through with the measure anyway as part of a bigger political calculation: He wanted to hone his image as a pro-poor, anti-corruption candidate ahead of the Uttar Pradesh elections.

Failing to pass all of the bills in 2016 means that the BJP will have to push back its April 1 deadline for implementing them and focus on passing the remaining ones in 2017. Other reforms will therefore have to be put on hold. Moreover, given that demonetization is a necessarily disruptive process for a cash-based, consumption-driven economy such as India’s, growth will slow in 2017. In turn, this will lower inflation rates and compel the Reserve Bank of India to loosen monetary policy.

The rise of the BJP also gave rise to nationalism, a trend that will continue throughout 2017. Its renaissance will force the BJP to take a hard line against Pakistan, but this, too, is at least partly a political calculation: Opposition to Pakistan cuts across party lines, so admonishing Islamabad will make it easier for the BJP to keep an otherwise fractious voting base intact.

India and Pakistan: A Smaller Risk of Escalation

August 2017 will mark the 70th anniversary of India and Pakistan’s independence, so nationalism in each country will be running high. This uptick in nationalism, not to mention the perennial cross-border militant attacks into Kashmir, will have governments on both sides of the border on high alert. And even though the newest evolution of India’s military doctrine, which is more tactical and precise than its forebear, will deter attacks and minimize the risk of escalation, it will not remove the possibility entirely.


Image Credit: Narinder Nanu/AFP/Getty Images

It is in this context that the India-Pakistan rivalry will take shape in 2017. The election season in India will promote anti-Pakistan rhetoric, which will only encourage Pakistan to continue to respond to intensifying cross-border shelling by Indian troops. (Incidentally, tensions have escalated since 2014, the year Modi came to power and the year NATO withdrew most of its troops from Afghanistan, enabling Pakistan to turn its attention from its border with Afghanistan to its border with India.)

But Pakistan has elections too, slated for 2018, and this year Prime Minister Nawaz Sharif will begin his own campaign for an unprecedented fourth term. Criticism from the opposition that he is too weak on India will compel him to take a much tougher stance.

Militancy as a Means to an End

In 2017, South Asian militancy will be used as a means to political ends. India will continue to work with Afghanistan to construct the Chabahar Port in Iran, much to the chagrin of Pakistan, which believes New Delhi is also providing aid to secessionists in Balochistan. The aid, Pakistan suspects, is itself a way to sabotage the China-Pakistan-Economic-Corridor, a central tenet of Sharif’s campaign promise to reduce the country’s natural gas shortages. Accordingly, Islamabad will resist calls to arrest members of the Taliban who live in Balochistan, using them as levers to force Washington and Kabul to include Pakistan again in negotiations with the Taliban.

Pakistan’s Government Remains Steadfast

Underlying the dynamics of the region is how much power Pakistan’s military, and particularly the army, has in the country’s politics. It has ruled for nearly half of the country’s 69-year history. It is too early to say how Gen. Qamar Bajwa, the country’s recently appointed army chief, will alter the civil-military balance of power. But it is clear that the threat from India — real or perceived — will push the army to maintain the status quo, even in light of two milestones recently passed on the way to civilian rule: the completion of a democratically elected president’s five-year term in 2013, and the abdication of power by an army chief after one three-year term in 2015.

Either way, the Pakistani government will remain steadfast in its role in the Afghan conflict — which is to say, Islamabad will obstruct talks, if it allows them to emerge at all, if it feels as though it is being sidelined by Afghanistan or by the United States. But what also stands in the way of resolution are the divisions within the Taliban — manifested most notably this year by its Doha faction, which began vocalizing calls for the Taliban to transition from an insurgency into a viable political movement – divisions that will become all the more apparent in 2017. Instability will hamper progress on transnational energy projects such as the Turkmenistan-Afghanistan-Pakistan-India pipeline, which highlight the country’s role as an energy bridge linking energy abundant Central Asia with energy deficient South Asia.

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2017 Annual Forecast series on PolicyLabs:

2017 Annual Forecast is republished with permission of Stratfor

2017 Annual Forecast: Latin America


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“NAFTA will remain largely intact despite U.S. campaign promises made to the contrary.”

Trade Stays Intact

The North American Free Trade Agreement will remain largely intact in 2017 despite U.S. campaign promises made to the contrary in 2016. The fact of the matter is that the trade ties and supply chains of North America are so tightly bound that a sudden and dramatic reversal to an agreement such as NAFTA would contravene the interests of all its members. The United States will nonetheless renegotiate the deal, albeit gradually, to honor the campaign promises made by president-elect Donald Trump. Those talks will likely extend beyond 2017.

That is not to say the United States is without options for improving the terms of the contract. The Trump administration could increase regional content requirements for products to qualify for tariff-free export to the United States and use non-tariff barriers more selectively. Mexico will have much more at stake in the negotiations, but its imperative is far simpler. It means to leverage its low labor costs and its high number of free trade agreements to maintain as much of the status quo as possible on trade and to maintain foreign direct investment flows into domestic manufacturing. And so Mexico will have a few tools to use against the United States. Mexico could influence the Trump administration by allying with businesses and states that would be hurt by more expensive labor and goods. (As a matter of fact, it has already begun to do so.) It could, moreover, leverage intelligence cooperation on counternarcotics operations to try and shape the dialogue.

Lower investment flows that could result from the uncertainty surrounding the NAFTA negotiations could hurt Mexico in the meantime. But even this will be tempered by Mexico’s proximity to the United States and its multitude of free trade agreements. Canada, with its advanced economy and high labor costs, will receive much less scrutiny. The Canadian government has indicated its willingness to take part in the NAFTA talks and will be seeking measures to protect its own manufacturing sector.

Canada could also renegotiate NAFTA’s investor-state dispute settlement, which allows an investor to sue a foreign government in international arbitration without going through domestic courts. Having been challenged under the ISDS procedure, Canada will certainly want to revisit its terms, even if a business-friendly Trump Cabinet were to resist measures that undermine foreign corporate protection abroad.

The negotiations will be slow going, no matter how they play out. Many of the points up for discussion would still center on concentrating economic production in North America, where supply chain interdependencies are developing organically.

A Tighter Energy Bloc

The Trump administration will loosen regulations on domestic energy, enabling North America to more easily integrate as an energy bloc. It plans to streamline the process for federal permits on energy projects and to pull back from climate change initiatives, measures that could also provide a relative boost to the coal and nuclear power industries. They could also enable the beleaguered U.S. energy sector to rebound after a prolonged depression in the price of oil. A gradual recovery in North American production will, in turn, allow for a modest increase in global oil prices since it will take time for increased North American oil output to offset coordinated production cuts by the world’s oil producers.

Canada and Mexico will meanwhile continue to make measured progress in energy integration with the United States. In Canada’s case, this will include increased cross-border pipeline construction and supply integration. In Mexico’s case, it will entail implementing broader energy reforms, including further liberalizing domestic energy prices and loosening Pemex’s dominance in refining and distribution.

The Pinch of Low Prices

Latin American commodities exporters will continue to feel the pinch of low commodities prices in 2017. The economies of Brazil, Argentina, Chile and Colombia will begin to recover somewhat, but slow demand growth from China, low oil prices and an oversupply of agricultural commodities such as soybeans will otherwise keep exports largely depressed.

Further stunting economic growth and fiscal health is the strength of the U.S. dollar. Colombia, Brazil, and Chile have substantial dollar-denominated debt, which will become harder to repay or rollover. For Venezuela, which is already on the edge of default, heavier debt payments will increase the risk of default. For Brazil, Chile, Mexico and Argentina, more expensive debt payments amid the general commodity downturn will limit the amount governments can spend on domestic priorities.

A modest increase in global oil prices could meanwhile bring temporary relief for oil producing nations in Latin America. Even a temporary hike would be a welcome reprieve for central governments, which would then have a little more leeway in managing public finances. For Venezuela, a country already in an extreme state of economic deterioration, even a slight rise in oil prices could lower the odds that it will default on its foreign debt.

And so, faced as they are with relatively low export growth, certain Latin American countries will seek increased access to markets abroad by advancing trade agreements with nations outside the region. In light of the demise of the Trans-Pacific Partnership and the rise of new if limited NAFTA negotiations, Mexico will tentatively try to enter discussions on trade deals with Asian states, particularly with China. The countries that comprise Mercosur, or the Common Market of the South, will also continue to negotiate with the European Union on a future trade agreement, though political constraints on both sides of that dialogue could drag things out.

A Make or Break Year for Venezuela

The price of oil will make or break Venezuela in 2017. Venezuelan state oil and natural gas company Petroleos de Venezuela  faces a much higher risk of default on its foreign debt this year, but even a slight rise in the price of crude could buy the government valuable time. Still, this does not put Caracas in the clear. A debt default would reduce the lending and foreign capital Venezuela’s energy sector depends on and would lower the country’s oil output. The subsequent loss of oil revenue would hasten the decline of already reduced food imports, compelling more Venezuelans to either flee the country or to rise up in protest.

To avert this crisis and preserve its power, the government will probably choose to cut imports rather than miss its debt payments. But this will only incite unrest. Venezuela’s attempts to deal with runaway inflation will create additional triggers for unrest. The Venezuelan government will try to introduce higher denomination bills in the new year to keep up with rising prices. But if such measures are implemented haphazardly, they will inflict further economic pain on the population and raise the likelihood of further unrest.

Some political unrest is all but unavoidable. As the threat of default looms, Venezuela’s currency will likely further weaken, driving inflation even higher than it is now. (Inflation is high because the government cut exports to keep making its debt payments.) The ruling party will try to contain unrest through security crackdowns and through increased control of the nation’s food distribution networks.

But the fate of the government rests in the hands of the armed forces. So far, the various factions of the government, including the armed forces, have presented a mostly united front against the political opposition. But there is dissension in the ranks; some factions are inclined to hold on to power as long as possible. If Caracas defaults on its debt, the government would initially band together to tighten internal security, but its cohesion would be tested by the intensity and duration of the ensuing unrest. If factions of the armed forces believe siding with the government threatens their power, they may have to reconsider where their loyalty lies.


Image Credit: Fernando Fergara/AP

Colombia: Processing a Peace Deal Quickly

The Colombian government’s main priority in 2017 will be to implement the revised peace deal it struck with the Revolutionary Armed Forces of Colombia (FARC) in late 2016. Bogota knows it must act quickly, while it still has the momentum and political authority to do so. The government received fast-track legislative powers in December, so it will be able to pass legislation underpinning the FARC deal more quickly throughout the year. The administration of Jose Manuel Santos will begin the process of demobilizing the rebels with the intent of having as much of the peace deal implemented as possible by the time it leaves office in 2018.

Brazil: Questioning Political Stability Again

Brazil will begin its climb out of economic recession this year, though growth will be hampered by relatively weak global demand for export commodities such as soybeans and iron ore and sluggish trade growth with its trading partners.

Brazil’s political stability will meanwhile be called into question – again. The corruption investigation into state oil firm Petroleo Brasileiro could ensnare much of Brazil’s lower house and senate. If lower-level politicians are mainly implicated, the government could withstand such a blow. It would be harder to overcome, however, if the investigation implicated higher-ranking officials in the administration of President Michel Temer — himself an interim figure who replaced Dilma Rouseff after her August impeachment.

Riskier still is a separate investigation concerning possible illegal donations to Temer’s re-election campaign as vice president in 2014. If additional evidence leads to a conviction, Temer would be ordered to step down from his post. Such a scenario, of course, probably would not hurt Brazil’s long-term economic prospects or affect the economic reform bills the president has already begun to move through the legislature. But it would throw Brazilian politics into utter disarray and would discourage foreign investment that Brazil certainly needs in the short term.

In Argentina, the Opposition’s Consent

In Argentina, economic growth will pick up again in 2017, but moderately high inflation and reduced trade with Brazil, not to mention with the rest of Mercosur, will keep that growth in check. The state of the economy will come into play in the lead up to legislative elections in October, during which the government will try to cater to as many constituents as possible. The administration of Mauricio Macri will therefore refrain from implementing major austerity measures to curb the budget deficit.

And it will be unable to cut back on costly fund transfers to Argentine provincial governments – and on compensation to labor unions. Macri will continue to face domestic challenges from an increasingly united political opposition and from the backlash over utility price hikes, which are meant to raise state revenue and make natural gas projects more attractive in the long run. A more united opposition will limit what the ruling party can pass through parliament and prevent it from enacting economic reform without the opposition’s consent.

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2017 Annual Forecast series on PolicyLabs:

2017 Annual Forecast is republished with permission of Stratfor

2017 Annual Forecast: East Asia


Image Credit: Johannes Eisele/AFP/Getty Images

“China remains the center of gravity in the Asia-Pacific, and the economy remains the center of gravity in China.”

China remains the center of gravity in the Asia-Pacific, and the economy remains the center of gravity in China. After three decades of rapid economic growth fueled by low-cost exports and state-led infrastructure investment, China is in the early stages of a protracted shift toward an economic growth model grounded in private consumption and high value-added manufacturing. Increased consumption will certainly help to ease the economic pain expected in 2017 – namely, stagnant exports and weak growth in the construction sector. But it will be many years before consumption becomes China’s engine for growth. In the meantime, China’s leaders will have little option but to use state-led infrastructure investment, however inefficient it may be, to maintain the country’s economic health and thus ensure social and political stability.

The Definition of Chinese Policy

China’s economic well-being will therefore depend on Chinese policy. And what will define Chinese policy more than anything is President Xi Jinping’s efforts to consolidate power over the Communist Party and over the state’s institutions ahead of the 19th Party Congress, which will take place around October. Xi’s administration will do all it can to contain any social or economic instability that might threaten his political objectives and status within the Party, an imperative that will include sidelining potential rivals and moving allies into key government posts. (As many as five of the Politburo Standing Committee’s seven members may retire this year, so Xi’s cause is as urgent as ever.) Until then, he will also continue to employ his anti-corruption drive to displace rivals and threats to his power.

That is not to say that amid all this political maneuvering Chinese leaders will ignore economic reform entirely. Where appropriate, authorities will take measured steps forward on initiatives such as a nationwide property tax and property registration system, and they will continue to encourage consolidation in heavy industries. But where such reforms create the risk of instability by, say, undermining employment or corporate solvency, they will be diluted or deferred. Instead, the government will use a tried-and-true method to maintain growth — credit creation and robust state-led spending on infrastructure and other construction-related industries — as Xi focuses on tightening his grip on the political system.

This economic strategy is not without serious risks. Corporate debt in China has reached perilous heights and is disproportionately concentrated in resources, construction and other heavy industries that suffer from overcapacity and inefficiency and that likely hold the lion’s share of nationwide nonperforming loans. Even more concerning, corporate debt is maturing more quickly than ever across all industries, especially heavy industries and the construction sector, forcing companies to take on even more debt to invest and to cover old debt.

Corporate debt will be no less concerning in 2017. Despite unprecedented credit creation and robust government spending in 2016, the real estate sector – on which many of the above industries depend – saw continued declines in completed investment and construction starts last year. Taken together, these factors point to the steady degradation of credit and investment as tools of macroeconomic management and suggest that Beijing will have to expend even greater resources than in 2016 to maintain the economic status quo. The government has the resources to do so, of course, but maintaining the status quo in 2017 will only exacerbate corporate debt concerns in 2018 and beyond.

Breaking Diplomatic Norms

Daunting though China’s internal challenges to economic stability may be, Beijing also faces pressing external challenges: a potential eurozone crisis and new trade policies under the Trump administration. During his presidential campaign, Trump pledged to label China a currency manipulator and to impose across-the-board tariffs on U.S. imports of Chinese goods. Though the former promise is unlikely to materialize, the administration could, if it wanted to, impose tariffs and anti-dumping restrictions on imports of goods such as steel from China. But even that would be fairly inconsequential; targeted protectionist measures would have a marginal impact on China’s economic trajectory and would only encourage corporate supply chains to diversify in other parts of Asia with cheaper labor and large consumer markets. This dynamic will stir tensions between the two economic superpowers – tensions that could spill over into other spheres of U.S.-China relations, such as the status of and Washington’s relationship with Taiwan.

Trump has made clear his willingness to break with diplomatic norms governing U.S.-China relations, particularly his intent to use the question of Taiwan’s status as a bargaining chip in negotiations with China on other fronts, including cybersecurity, North Korea’s nuclear program and trade. Beijing is unlikely to make any concessions on Taiwan, and Washington knows this. Instead of fundamentally re-evaluating Taiwan’s status, the Trump administration will try to use the Taiwan issue to get concessions from Beijing. China can retaliate with trade barriers on selected goods and can threaten to limit cyber and military cooperation with the United States, as well as more openly confrontational actions in the South China Sea or elsewhere. In the near term, Washington’s willingness will give Taipei some breathing room from China. But the island will carefully manage cross-strait ties to avoid a direct confrontation with Beijing. China can be expected to use diplomatic isolation, military intimidation and targeted economic coercion to increase pressure on Taiwan, a critical node in the global tech supply chain that is deeply integrated with the mainland.

Beijing will also work, overtly or otherwise, to ensure that a favorable candidate prevails in Hong Kong’s chief executive election, which is set to take place in March. The election will surely incite protests, but it is nonetheless an opportunity for Beijing and Hong Kong to improve their relationship — even though Beijing has designs to integrate Hong Kong further into the mainland.

But Hong Kong and Taiwan are just two of many features in China’s evolving strategic environment. Throughout 2017, eager to boost the economy’s slow but steady shift up the industrial value chain, China’s government will continue to promote overseas investment into sectors such as high-tech manufacturing, culture and entertainment, and information and communications technologies. Beijing will meanwhile capitalize on the opportunity created by the Trans-Pacific Partnership’s demise to promote alternatives of its own divising: the Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia-Pacific.

Continued economic weakness at home, combined with the government’s efforts to curb illicit capital outflows, may slow the momentum of Chinese outbound investment somewhat in 2017. But it will not halt China’s efforts to enhance infrastructural, economic and security ties to Central and Southeast Asia. The biggest obstacles confronting initiatives such as One Belt, One Road — the massive development and infrastructure strategy to better connect China to the rest of Asia, Europe and East Africa — in 2017 are local opposition and security risks in places such as Central Asia, Pakistan and Indonesia.

A New Strategy in the South China Sea

Things are changing in the South China Sea. In its waters, China’s influence has steadily grown in recent years, thanks to a campaign meant to expand and modernize the Chinese military and to develop the sea’s islands. In 2016, however, the pace of expansion appeared to slow somewhat. In part, the slowdown was due to an international court of arbitration’s ruling against China’s maritime territorial claims. But it was also due to the fact that China, having achieved many of its goals in the South China Sea, is now replacing a strategy of aggressive expansion with a strategy that, in addition to coercion, leaves some room for cooperation. In fact, Beijing has increasingly sought to cooperate with potentially amenable claimants, such as Malaysia and the Philippines, by making conciliatory gestures on economic and maritime issues. At the same time, Beijing has continued to press more outspoken critics of its regional claims through limited punitive economic measures and other confrontational actions.

China will try to maintain this strategy in 2017. To that end, it will prefer to handle disputes on a strictly bilateral basis, and it will likely extend concessions to areas such as energy development and potentially sign a code of conduct that limits its actions.

And though this strategy eased maritime tensions somewhat in 2016, it may have more mixed results in 2017. Challenging its success will be a strained relationship with the United States, Vietnam’s continued ventures into maritime construction activities, and the entry of countries such as Indonesia, Singapore, Australia and Japan – none of them claimants to the South China Sea’s most hotly contested waters – into regional maritime security affairs.

Beijing will be particularly concerned about Japan, which will expand economic and maritime security cooperation with key South China Sea claimants. (Tokyo may also work more closely with the United States in the South China Sea and the East China Sea.) Beijing may try to counter U.S.-Japanese cooperation by imposing an air defense identification zone, which would in theory extend Chinese control over civilian aircraft in the South China Sea, though doing so would threaten China’s Southeast Asian relationships. And though China would probably prefer to be as conciliatory as it can as the situation warrants, heightened great power competition in the Asia-Pacific may compel it otherwise. The more Japan is involved, the more China will have to balance, with different degrees of success, its relationships and its interests with members of the Association of Southeast Asian Nations (ASEAN).

Japan’s Pride of Place

Greater involvement in the South China Sea, however, is just one piece of the Japanese puzzle. In the two decades following the end of the Cold War, Japan found itself strategically adrift. Today, buffeted by demographic decline, China’s rise and a growing recognition across the Japanese political spectrum that change is necessary, Tokyo is in the early stages of reviving Japan’s economic vitality and military power — and reclaiming its pride of place in the region.

In 2017, the administration of Prime Minister Shinzo Abe will make notable progress in that regard. In addition to expanded involvement in the South and East China seas, the Abe administration is likely to ramp up Japan’s diplomatic and economic outreach in Southeast Asia. Meanwhile, Abe will pursue a peace treaty with Russia over longstanding territorial disputes. (Even without a formal treaty, the two countries will deepen bilateral trade and investment.) Above all, Japan will expand bilateral diplomatic and security cooperation with the United States, seeking to ensure Washington’s commitment and involvement in the region. At the same time, Japan will take advantage of opportunities opened by potential changes to the United States’ regional strategy – namely, a shift from multilateral partnerships like the failed Trans-Pacific Partnership to bilateral relationships – to play a more active leadership role to constrain China.

Abe will use his strong political position – the ruling coalition has supermajorities in both houses of the Japanese parliament – to press his agenda at home. In 2017, Abe will do what he can to maintain the first two ‘arrows’ of his economic plan — monetary easing and fiscal stimulus — while pushing forward with structural reforms (the third arrow) in areas such as labor, women’s workforce participation and immigration. His administration may also seek to capitalize on heightened regional security competition and uncertainty over Washington’s regional position to press for constitutional reforms meant to normalize Japan’s military forces.

Northeast Asia Bound

Caught between a rising China and a resurgent Japan, both North and South Korea find themselves entering new and precarious strategic waters, albeit in different ways. Naturally, the prospect of a nuclear North Korea has put China, South Korea and Japan on edge – so much so that it has disproportionately contributed to Seoul’s and Tokyo’s military expansions in recent years. In 2017, North Korea may carry out additional nuclear missile tests for technical purposes and to remind the world, and especially Washington, of the country’s strategic importance. This will pressure Seoul to build up its defenses and procure more arms, though its current political crisis may hinder its progress. While Washington can be expected to expand its sanctions regime against North Korea, it will also petition Beijing to pressure Pyongyang as well. But such efforts may be made in vain: Barring signs of a collapse of the North Korean government, Beijing will avoid putting significant pressure on Pyongyang.

A Welcome Change for the Economy

The prospect of a modest recovery in global commodities demand will be a welcome change to exporters such as Australia and Indonesia, but a decline in prices triggered by a slowdown in China’s housing sector remains a real risk. In the year ahead, Asia’s emerging economies may fall victim to potential trade protectionism in the United States, to U.S.-Chinese trade disputes, to a likely increase in the pace of U.S. Federal Reserve interest rate hikes, and to China’s continued efforts to consolidate heavy and resource-related industries. The countries most at risk to economic shock are those with greater exposure to foreign lending (Malaysia and Indonesia), those with undiversified economic and trade profiles (Cambodia), and those faced with domestic political uncertainty and instability (Thailand and South Korea). Still, Asia’s smaller economies will continue to pursue regional economic, trade and investment integration, untouched as they are, so far, by the rising wave of trade skepticism in other parts of the world.

Southeast Asia

Thailand will focus on domestic affairs in 2017 as it mourns the death of King Bhumibol Adulyadej and as its military government tries to maintain domestic social and political stability. Its first major test will come during national elections, which are scheduled to take place sometime in the second half of the year.

Meanwhile, the Philippines will continue to strike a balance between its partnership with the United States and its warming ties with China. (An unexpected confrontation over the Scarborough Shoal could change that dynamic.) This strategy will give Manila more space to focus on domestic issues, such as political reform and ongoing peace negotiations in the south. As long as President Rodrigo Duterte’s popularity is high, no serious threats will emerge to his power in 2017. His domestic initiatives and foreign policy agenda, however, will require a lot of political capital to maintain, even as they threaten to aggravate internal power struggles between members of the government and political elite.

With Malaysian elections possibly in the offing in 2017, political fragmentation and economic uncertainty will test the delicate ethnic and social cohesion that has been in place since the country’s independence.

Likewise, concerns over domestic social, political and economic stability in Indonesia will both drive and constrain ongoing fiscal and economic reforms. These concerns come at a precarious time for Indonesia, a time when Jakarta is shifting its focus from ASEAN-wide mechanisms to bilateral negotiations to secure its maritime interests.

For Vietnam, 2017 will be a year of the status quo. It will continue to try to ease its economic dependence on China, and its unstable fiscal conditions and rising debt load will constrain ongoing political reforms.

Australia will seek to play a more prominent role in promoting regional trade and investment integration in the Asia-Pacific region. It will also try to ensure maritime security along vital trade routes. Domestically, however, the country will struggle to overcome growing political divisions and legislative gridlock.

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2017 Annual Forecast series on PolicyLabs:

2017 Annual Forecast is republished with permission of Stratfor

2017 Annual Forecast: Middle East and North Africa


Image Credit: Safin Hamed/AFP/Getty Images

“It is tempting to think the Syrian civil war will end this year, but that is not the case.”

The United States will be no less engaged with the Middle East in 2017 than it was in 2016. It will, however, be more judicious in its engagement, giving other countries an opening to compete for influence. The competition will play out primarily in and around the Syria-Iraq battlefield, which will continue to implicate its neighbors and countries much farther afield. Developments in the fights inside Syria and Iraq will aggravate sectarian tensions and intensify the ongoing rivalry between Turkey and Iran.

Resisting the Temptation About Syria

It is tempting to think the Syrian civil war will end in 2017, now that the forces loyal to Bashar al-Assad have retaken the critical city of Aleppo. Indeed, they now control a few major cities and have the luxury of consolidating the gains they have made. But the conflict will not end, at least not in 2017. The loyalists are simply pulled in too many directions to achieve a decisive victory. In addition to holding their territory in the north, they must now try to clear the rebels located between Aleppo and Damascus and around Damascus itself. They will also be drawn to areas held by the Islamic State in the eastern city of Deir el-Zour, where their comrades are currently besieged. Retaking territory in the energy belt around Palmyra will be a priority too. Put differently, there is still a lot work left for them to do, and any number of things can shift the balance of power in such a conflict-ridden country.

The constraints on the loyalists, however, are but one factor preventing the conflict’s resolution. In 2017, the presence of foreign powers will also complicate the Syrian battlefield, much as it has in years past. The United States will adapt its strategy in Syria, favoring one that more selectively aids specific groups in the fight against the Islamic State rather than those fighting the al-Assad government. Washington will, for example, continue to back Kurdish forces but will curb support for rebels in Idlib. The consequences of which will be threefold. First, Turkey, Qatar and Saudi Arabia will have to increase their support for the rebels, including the more radical ones, the United States has forsaken. Second, their support will give radical elements room to thrive, as will the reduced oversight associated with Washington’s disengagement. Third, Russia will be able to cooperate more tactically with the United States and its allies as it tries to exact concessions, including the easing of sanctions, in a broader negotiation with Washington.

Notably, Russia will cooperate only insofar as it helps Moscow achieves those goals, but given Moscow’s limited influence on the ground in Syria, there is only so much it can actually do. Still, that will not stop Russia from trying to replace Washington as the primary arbiter of Syrian negotiation.

While other powers are preoccupied with the fight against the Islamic State, Turkey will expand its sphere of influence in northern Syria and Iraq, driven as it is by its imperative to block Kurdish expansion. In Syria, the presence of Russian troops will probably prevent Turkey from venturing any farther south than al Bab in northern Aleppo. From al Bab, Turkey will try to drive eastward toward the town of Manbij to divide and thus weaken areas held by the Kurds. Turkey will also lobby for a bigger role in anti-Islamic State operations in Raqqa. Turkey will deploy more of its own forces in the Syrian fight, both to obstruct the expansion of Syrian Kurdish forces and degrade the Islamic State.

There are, of course, some drawbacks to Turkey’s strategy. Namely, it runs the risk of clashes with Russian and Syrian Kurdish forces. Ankara will thus have to concentrate on maintaining closer ties with Moscow to avoid complications on the battlefield, even as it manages tensions with the United States over Washington’s continued support for the Kurds.

In Iraq, too, Turkey will extend its influence in the north – notably, to where the Ottoman Empire’s border was once drawn through Sinjar, Mosul, Erbil and Kirkuk. And as it does, it will compete with Iran for influence in the power vacuum left by the Islamic State’s defeat in Mosul. Baghdad, for its part, will struggle to control Nineveh province once the Islamic State loses Mosul. Meanwhile, Turkey will bolster its proxies to position itself as the patron state of the region’s Sunnis.

Turkey’s resurgence threatens Iran’s arc of influence across northern Syria and Iraq, and Tehran has plenty of ways it can respond. The government will encourage Shiites in Baghdad to resist what they will characterize as a Turkish occupation. It will also rely on Shiite militias to block Ankara by contesting territory and exploiting divisions among Iraqi Kurds. Saudi Arabia and the rest of the Gulf Cooperation Council, who have comparatively less influence Iraq, will rely on Turkey to uphold Sunni interests.

The fall of Mosul will further divide Iraq’s Kurds. The inevitable scramble for territory and influence will pit the Turkey-backed Kurdistan Democratic Party against the Patriotic Union of Kurdistan, which is more closely aligned with Iran. Kirkuk, a city and province awash in oil, will be particularly contentious. The KDP will try to keep what it has gained there, while Baghdad, backed by Iran, will try to take it back. This will impede sustainable cooperation in energy production and revenue-sharing operations between Baghdad and Iraqi Kurdistan.

Turkey: No Shortage of Challenges

For all of Turkey’s challenges abroad, it has no shortage of them at home. Kurdish militant attacks are a perennial problem, of course, and Ankara’s role in strangling Islamic State escape routes in Syria will meanwhile make it a prime target for attacks in 2017. But perhaps more important, the ruling Justice and Development Party (AKP) will hold a referendum in 2017 on constitutional amendments meant to strengthen the presidency under Recep Tayyip Erdogan. The AKP has still has substantial support despite a highly polarized electorate, but the economy it helms is shaky. Turkey’s dollar-denominated debt will grow as the dollar strengthens, and the lira’s instability will spook investors, who are already alarmed about the country’s political crackdowns. Those crackdowns will also complicate Turkey’s EU accession talks. Not that Turkey expected to make much progress in that regard; it simply needs to keep the dialogue going over migrant controls to keep a foothold in the West and to maintain market access to the European Union.

A Test for U.S.-Iran Relations

2017 will test the durability of U.S.-Iranian relations. The new U.S. government is expected to be less tolerant of what it sees as Iranian aggression — naval harassment and ballistic missile testing, for example — even if it does not directly infringe on the nuclear deal. Strong U.S. responses to such aggression would, from Iran’s point of view, be a violation of the agreement, but Iran can be expected to challenge the agreement only if the United States does first. (Russia stands to benefit from U.S.-Iranian tensions. In its search for additional leverage against the United States, it will tighten its relationship with Iran through economic and military deals, knowing that Tehran will use Russia to balance against Washington as the questions emerge about the nuclear deal’s viability.)

Still, the Iran deal will survive the year, despite U.S. threats to the contrary. For all the heated rhetoric surrounding U.S.-Iranian relations, Washington has little interest in becoming mired in further Middle East conflicts, least of which with Iran. Likewise, Iran needs to boost its economy, something it will not be able to do without the foreign trade, investment and interaction the nuclear deal allows.

The Iranian economy, in fact, will be perhaps the determining factor in the presidential election, scheduled to take place in May. President Hassan Rouhani, a moderate by Iran’s standards, will try to argue that the partial removal of sanctions and the stabilization of the inflation rate will benefit ordinary Iranians. His hard-line opponents in the Islamic Revolutionary Guard Corps accuse him of being soft on the United States, however, and conceding too much control of the economy to international parties.

Regardless of the election’s outcome, Iran will remain under the influence of conservative politicians. And these politicians are beholden to the supreme leader, who distrusts the United States but also understands the need to re-enter the global economy. The gradual increase of oil production will help in that regard, but questions surrounding the sustainability of the Iran nuclear deal, not to mention the direction of U.S. policy, could prevent Iran from achieving its economic goals.

The Path to Gulf Reform

Saudi Arabia will relish the deterioration of U.S.-Iran relations. And, like Turkey, it will be driven to bolster its regional proxy battles with Iran. However, Riyadh will have to weigh expensive foreign campaigns against mounting pressures at home. After slashing capital expenditures and trimming its public sector bill in 2016, Saudi Arabia will be able to reduce its budget deficit in 2017. Still, the path to reform has been slow and bumpy, and it will be difficult for Saudi Arabia to translate its ambitious Vision 2030 and Vision 2020 plans into tangible directives its struggling private sector can follow. With more than four times more money set aside this year than last for implementing Vision 2020 directives, Saudi leaders will pressure the public and private sector to begin shifting operations accordingly and create more jobs.

Meanwhile, Riyadh will prepare for Saudi Aramco’s initial public offering, which will take place in 2018, and will broaden the scope of its Public Investment Fund to adopt riskier investments abroad in a bid to turn its wealth repository into a true sovereign wealth fund. Mimicking countries like Kuwait and the United Arab Emirates, Saudi Arabia will continue to diversify its overseas investments into various tech sectors — a tried and true way to generate revenue in the long term. The United Arab Emirates will lead a Gulf-wide initiative and put technical preparations in place to set up a standard value-added tax levied at 5 percent. The initiative is slated to kick off in early 2018.

Saudi citizens will clamor for change as the drive toward reform presses on, but the government will prioritize the economy over social reform. Even a modest social reform risks alienating the Saudi religious establishment, whose support for the House of Saud will need to manage homegrown jihadist threats.

The rest of the Gulf Cooperation Council will act in concert to curb Iranian influence and defend against common economic and security threats. But there are cracks in the façade of unity. Saudi Arabia will struggle to steer Yemen toward a negotiated settlement while the United Arab Emirates firms up its position in southern Yemen. Oman, known for its relative neutrality, will not participate in the GCC’s antagonizing of Iran.

North Africa

These same dynamics will appear in the GCC’s foreign policy in North Africa. Saudi Arabia will continue to give its allies economic and security support in exchange for their support of its foreign policy in places like Yemen and Syria. The United Arab Emirates will be a more moderate voice, however, and in its moderation it will undermine the credibility of Saudi Arabia.

Egypt will be economically stable enough in 2017 to formulate a foreign policy independent of Saudi interests. To that end, it will try to attract funding from as many external partners as possible. Now that Cairo has devalued its currency, agreed to a deal with the International Monetary Fund and enacted more fuel subsidy reforms, it must implement more fundamental, structural reform, such as reducing public sector wages and raising tax revenue. The government of President Abdel Fattah al-Sisi will be only modestly successful in that regard, hamstrung as it is by the legislature and the people, who bear the brunt of the country’s economic malaise.

Egypt will meanwhile remain involved in Libya, where Egyptian and Emirati support for nationalist Gen. Khalifa Hifter, who commands the Libyan National Army, is beginning to pay off. Hifter will be able to strengthen his military and political control in eastern Libya and will expand his control into Western Libya, but he will be unable to do so entirely. The Libyan National Army will try to rally militias to its cause, but not all of them will want to fight for Hifter. Regardless, Hifter’s divisiveness is bound to impede U.N.-led negotiations to form and approve a unity government. And so Libya will continue to be a battlespace among rival militias that will limit the potential for a lasting peace deal in 2017. Whoever wins this competition will win Libya’s oil wealth.

The Islamic State, meanwhile, will lose a lot of its power but will find refuge and allies in the far reaches of Libya. At the same time, al Qaeda-linked militias will continue to quietly expand their influence.

The State of the Islamic State

The Islamic State will lose power elsewhere too. Military campaigns in Iraq and Syria will degrade the group as a conventional military force but will do little to degrade it as terrorist or insurgent force. Dispersed throughout the areas they once controlled, remnants of the Islamic State will remain relevant by exploiting ethnic and sectarian divisions throughout Iraq and Syria. Terrorist attacks will therefore return to Iraq in spectacular form. (Despite the military setbacks in Iraq, the Islamic State will have a little more latitude to operate in Syria, where the coalition effort to fight Islamic State is far more convoluted.)

Islamic State attacks abroad, however, will be a much more limited threat. Militants returning home from Iraq and Syria are certainly a risk for Western countries, but they are a risk that will be mitigated by heightened awareness and intelligence oversight and increased risk of interdiction. More resourceful grassroots terrorists that do not have to rely on extensive networks and capabilities will be the bigger threat from Islamic State in 2017, especially for the West.

While the Islamic State has commanded the attention of the international community, al Qaeda has been quietly rebuilding itself, honing its capabilities in multiple theaters to stage its comeback. Al Qaeda nodes that have restyled themselves under various names in Libya, Algeria, Mali, Tunisia, Egypt and Yemen are likely to become more active and influential. Al Qaeda in the Arabian Peninsula is particularly concerning. The tacit agreement it had with Saudi Arabia in Yemen has broken down, making the kingdom a viable target for the jihadist group.

Jihadists will remain active elsewhere, too, though their attacks will be relatively unsophisticated. If attacks become more complex in places like Indonesia and Bangladesh, it means more experienced fighters in the Middle East successfully found their way back home.

In Nigeria, Wilayat al Sudan al Gharbi, better known by its former name, Boko Haram, will continue to adopt al Qaeda’s targeting strategy, which focuses on military and Western targets while refraining from attacking civilians and Muslims. The faction of the group under the leadership of Abubaker Shekau, however, will continue to attack mosques, Muslims, markets, civilians and other soft targets.

Israel Emboldened

2017 will present Israel with a variety of opportunities, the biggest of which will come from its security guarantor, the United States. With Republicans firmly in control of the executive and legislative branches of government in the U.S., Israel will have freer rein to pursue its interests without rebuke. The country will benefit from a more assertive U.S. policy on Iran, and through Washington may try to place even more restrictions on Iranian uranium enrichment — after all, the new U.S. administration is liable to be more receptive to intelligence collected on Iran, especially if it points to infractions of the nuclear deal. An emboldened Israel will also probably accelerate settlement development in the West Bank, even if doing so incites attacks from Palestinian militants. An escalation in Israeli-Palestinian frictions will stress Israel’s relationships with Jordan and Egypt, both facing internal stresses of their own. (The Palestinian issue will also notably be a source of competition between Turkey and Egypt. Ankara will try to develop better relations with Palestinian groups while managing a normalized but still tense relationship with Israel.)

But 2017 will also present Israel with a variety of challenges. To its north, it will have to contend with Hezbollah, arguably more powerful and experienced than it has been in years thanks to its heavy participation in the Syrian civil war. But Hezbollah has its hands full. It will consolidate territory in Syria for regime loyalists, it will fend off political challenges in Lebanon and it will meanwhile keep its eye on Israel. Worried about Hezbollah’s military strength, cognizant that it will have a window of opportunity, and unencumbered by Washington’s reproach, Israel is likely to intensify its operations in Syria and Lebanon in an attempt to weaken Hezbollah and limit their access to advanced weaponry.

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2017 Annual Forecast series on PolicyLabs:

2017 Annual Forecast is republished with permission of Stratfor