We published the 2018 lookahead on Jan 3rd 2018 – a year on it’s time to see how many of the guesses were right. Below is the original text, and recent notes in bold.
Welcome to the W&Y’s annual look ahead. At 2,000 words it is brief, despite being more than twice the length of most of our articles, and yet 2,000 words means it is painting the future with a broad-brush. These are the outlines of trends we expect to continue or develop with just the occasional out and out detailed forecast including a boringly predictable one right at the end…
CHINA/EAST ASIA – 2018 is President Xi’s first full year since he was effectively crowned Emperor at the 19th Party Congress in the autumn. The Congress elevated his ideas to ‘Thought’ which in Chinese Communist parlance means he is regarded as a great intellectual who theories are up there with Chairman Mao.
Xi will consolidate his power, ensuring anyone promoted to senior positions will be loyalists. His anti-corruption campaigns will continue, as will his plans to modernise the armed forces. His biggest tests though will be in restructuring parts of the Chinese economy, and trying to ensure the North Korean powder keg is not ignited. All of these predictions did come to pass although the economic restructuring remains an early work in progress.
China’s ‘One Belt, One Road’ economic project will gather pace albeit hitting roadblocks along the way. This is part of Xi’s plan to create successful economic corridors from China to various parts of the world, which it is planned, will bring wealth to the Chinese interior regions of the sort now enjoyed by the coastal areas. The President knows – his support ultimately depends on delivering this, the Chinese are more interested in results than democracy. As above.
The slow burn competition between China and India will continue. Last year saw tensions rise in the Himalaya region. This was sorted out, but the issues haven’t gone away, and this year as India begins to project power into the Pacific via a modernizing navy, we can expect to see ‘issues’ between the two giants there as well. The Chinese will accelerate their island building in the South China Sea and as they begin militarizing them this will be a source of tension between Beijing and the U.S.A. Chinese/Indian tensions simmered all year and in response India slightly strenghtened ties with the USA including committing more, albeit informally to The Quad. The militarisation of the artifical islands did indeed accelerate.
Xi also knows that President Trump has vowed to halt North Korea’s nuclear programme and threatens to attack the regime. The best result for Beijing is that somehow Xi gets a compromise from the North Koreans, which allows Trump to save face, but which still shows the regional neighbours that China calls the shots in East Asia, and that therefore they should no longer put their trust in the USA. That will require some serious diplomatic work involving compromise. At the very least North Korea has to make ‘no first strike’ promises, but even that still leaves a nuclear armed regime, and a region that sees the limits of American power and acts accordingly. Beijing signed off on the Kim/Trump meeting but we failed to predict the summit and indeed how quickly tensions were eased.
Which brings us to Japan. The Japanese will continue Prime Minister Abe’s policy of slowly re-arming. Tokyo knows that their American allies are comfortable with this given China’s growing military power, and that in the event China eventually chases the U.S. out of the China Sea, it will be better prepared to take care of itself. Japan’s military rise is often overlooked because of China; however, it has once again become a major military power and will become even stronger in 2018. Japan will maintain support for ‘The Quad’ – the loose naval cooperation between Australia, USA, Japan, and India. Abe’s defence budget again increased and Japan took several measures to boost its armed forces.
United States – Despite howls of anguish at the coming to power of President Trump, American foreign policy in 2017 was not radically different to the years preceding it. There are two ways this may change this year.
Firstly, a strike on North Korea risks all-out war, possibly involving China. This remains in the category of ‘unlikely’ but as the situation reaches the point of either a nuclear armed North Korea, or war, missteps by either side risks conflict breaking out. A ‘limited strike’ on only the North’s nuclear facilities, or single target which the North Koreans could try and hide from its population is possible, but even that would risk a wider war. Unlikely was not a hard prediction, but it was the correct one.
In that event, the USA will be so pre-occupied its policy towards Iran will be on the back burner. However, if Pyongyang wins this game of nuclear poker (as it has to date) Washington will do what it can to reassure its allies in the Pacific, and then turn its gaze towards Tehran. The nuclear agreement (Joint Comprehensive Plan of Action) signed in 2015, will come under severe pressure. The Europeans will do everything they can to stick by it, but Washington will try and undermine it at every turn. If the deal breaks down, American sanctions will become ever more severe, the Iranians may re-start their nuclear activities, and the path will be clear for confrontation in 2019. Trump tore up the agreement and increased sanctions. The path for greater confrontation this year is now clear.
A warming of relations with Russia remains unlikely this year, which leaves the Ukrainian situation as a ‘frozen conflict’. There may be sporadic violence in the Donbass, but no more than that. America’s ‘Longest War’ (17 years) will continue to rumble on in Afghanistan with occasional fatalities among American forces, and the on-going mass killings of the Afghan people by the myriad groups fighting there. The warming of the India/USA relationship will continue in response to the increasing cooperation between China and Pakistan. All present and correct.
On the economic front the USA is highly unlikely to leave NAFTA even if President Trump has a Twitter fit. It’s always worth bearing in mind that hundreds of thousands of jobs in Texas and California (and elsewhere) depend on the trade deal. Washington is likely to get tougher on China notably on steel imports and intellectual property disputes. However, this is unlikely to lead to a full-blown trade war especially as the USA fears a recession may be on the horizon. Well, correct – but only just. NAFTA is still in force but a replacement, the USMCA, has been negotiated and Trump is expected to ask Congress to approve it sometime this year. The US President did indeed get tough on China re trade and it it did just fall short of a full blown trade war.
The results of the midterm elections in the autumn will determine whether the Democrats will attempt to impeach President Trump. So far there remains very little hard evidence upon which to mount a impeachment, but the investigation into Trump’s election campaign is growing wider and deeper and this will continue all year. Again, an easy prediction, despite breathless treporting that impeachment was imminent. However, the 2018 investigation has gathered info which Democrats will try to use against
EUROPE – More of the same: True believers in the EU project will continue to work towards their life’s work – a Federal Europe, sceptics will continue to work against it. The dream of ‘Ever Closer Union’ will die hard, but the W&Y believes it is dying. The divisions within the 27+1 will become more apparent with the core EU countries falling out badly with the Visegrad Group, especially Poland and Hungary. The on-going migrant/refugee crisis will continue, and continue to fuel right wing sentiment some of which will be translated into votes as will be seen in the Hungarian general election. The EU will continue to become less liberal. The Catalonia issue is far from resolved, nor will it become so this year. 2018 saw the EU take Hungary and Poland to court, the migrant issue continued to play heavily in the politics of mosts countries, the right wing increased its share of votes in the Hungarian election, and the Catalonia issue remain unresolved.
In Germany Mrs Merkel probably will form a coalition government by early spring and continue as Chancellor albeit a weakened one, if not then new elections will have to be called, at which point she may be finished. Whichever of these scenarios plays out President Macron of France will bid to become the most dynamic leader in the EU and increasingly will see himself as its saviour. Brexit will remain on track, but the British will become increasingly nervous about the timetable and will seek to buy time with as long a ‘transition period’ as possible. Those in the UK seeking to derail Brexit will continue to try and create the atmosphere in which Parliament must be given a binding vote on the EU deal in the hope of forcing a second referendum. Mrs Merkel did indeed form a coalition government but was so weakened she anounced when she will step down. As predicted Macron made his move, but failed badly. Brexit remains on track, but the way ahead is murky.
Russia – A wild punt perhaps, but…. Vladimir Putin will win the Presidential election in March, by a wide margin. Once he’s got that out of the way there’s a World Cup to host and a population to distract from economic failures. Slightly higher oil prices have, and probably will, continue to keep Russia’s economy going, but Putin knows he must diversify, and once he’s safely ensconced back in the Kremlin perhaps we will see if he has a vision to turn his country into a modern state. Adventures abroad? Less likely than in the past few years. The drawdown from Syria will take place but Russia is now firmly planted in Syria and the naval and air bases it has on lease will be developed commensurate with a policy to stay there for decades to come. The marriage of convenience with Iran over Syria will be strained but not broken as each needs the other to, at the very least, irritate the Americans. The ‘wild punt’ was of course irony – Vladimir won easily and then hosted a succesful World Cup. He did not though take any significant measures to diversify. The bases in Syria are now permanent, the uneasy relationship with Iran held.
Middle East – After ISIS? The question will dominate the year. The caliphate has gone, but the group will still have the ability to make terror attacks in Syria, Iraq, Egypt, Libya, and elsewhere. This happened and ISIS remains a threat albeit a diminished one.
In Syria, Assad’s government forces, will consolidate the gains made last year. Hezbollah will be able to withdraw most of its fighters back to Lebanon. Iran will attempt to build semi-permanent bases in the country as part of its effort to dominate the region. Saudi Arabia will not accept this but is limited in its options. It will continue to wage war against the Iranian backed Houthi forces in Yemen and the fighting there is likely to continue for most of the year if not beyond. Because of Riyadh’s limited power in Syria, the task of keeping the Iranians at bay will mostly fall to Turkey. Ankara knows President Assad will now not be defeated, but it can still try to limit how much of Syria he controls while simultaneously attempting to ensure that Syria’s Kurdish region does not become autonomous. The Americans will leave limited numbers of Special Forces in both Syria and Iraq in case they feel they need to return in greater numbers. We did not forecast the extra gains Assad made. There was no significant withdrawal of Hezbollah forces. Iran is trying to build bases but is hampered by Israel. The Yemen war did indeed drag on all year. Turkey did try to limit Iranian influence in northern Syria and indeed moved against the Kurds militarily. The USA did leave its Special Forces in place.
There are no reasons to think an Israeli strike on Iran is likely. Hezbollah will be regrouping after its losses in Syria and so a major attack on Israel is unlikely this year. However, as Israel expects to be attacked at some point in the next few years, some within the government may argue for a preemptive strike athough that also is unlikely. The peace deal currently being finessed by the Trump White House team will be presented, the Saudis will be on board, and may be able to persuade the Palestinians to begin negotiating despite Trump’s recognition of Jerusalem as Israel’s capital. No Israeli strike on Iran, and no major Hezbollah strike on Israel. The flimsy White House peace plan was only ever sketched out and gained no traction.
Saudi Arabia’s young Crown Prince, Muhammed Bin Salman, will continue to slowly loosen the social restrictions on the population, while simultaneously accelerating the diversification of the economy which includes tax rises which will annoy people. The religious hardliners will push back, but its difficult to predict when and how. Correct.
ELSEWHERE – The Horn of Africa will increasingly become an area of competition for several powers, China, Turkey the USA, and Russia among them. Its strategic importance (Red Sea/Suez/ Gulf) is attracting attention for both economic and power projection reasons. To its west, the Sahel region of Africa may come to our attention as the jihadist groups there grow stronger which will further destabilize it. If so, there are knock on effects for the migrant/refugee routes up into Europe, and for the U.S., French, and other Special Forces operating there. Correct on the Horn of Africa, but despite some attacks in the Sahel there was not a major upsurge in violence.
President Zuma of South Africa may step down paving the way for elections and the opportunity for the new ANC leader, Cyril Ramaphosa to take power. He did. Even if Zuma stays in office, his power is draining away, and the reforming anti-corruption influence of Ramaphosa should be felt. However, South Africa’s deep economic problems will take years to turn around. Just north of South Africa is Zimbabwe where the new President, Emmeron Mnangagwa, is likely to prove to be economically more successful than his predecessor, Robert Mugabe, but equally repressive. We wrongly predicted the Venezuela government would collapse in 2017. It didn’t, but the country did. This is likely to be the state of affairs for 2018. The country is an economic basket case riven with hardships, division, and violence. However, the opposition lacks cohesion, and the armed forces remain loyal to the Maduro government. The country continued its death spiral, but the Government is still standing. President Raul Castro of Cuba will step down in April, this may be the catalyst for another spurt of modernization. He did, but the modernization has been slow.The Presidential elections in Brazil (Oct.) and Colombia (May) are an opportunity, in the first case, to break the political malaise of recent years, and in the second to build on the successful peace deal with FARC. Brazil malaise broken with right winger elected, the still fragile FARC deal held – some members went into politics, some into organized crime.
Oh, and Germany will win the World Cup finals in Russia…. As wrong as it could be…