A World of Constraints

By Jacob L. Shapiro

Geopolitics is not simply the intersection of geography and politics. At its core, understanding geopolitics is about understanding power. I would define power simply as the ability to either make someone do what you want them to do or make something happen that you want to happen.

The irony about studying power is that most don’t actually possess it, and for those who do, their ability to use it is ephemeral. It is easy when writing about politics to be seduced by what is possible. It is much harder to see what is impossible, but also much more useful.

The word “constraint” is what we use internally to describe the impossible. It is the geopolitical corollary to the Sherlock Holmes principle: “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” And it grounds our forecasting methodology. Once you have identified the constraints, whatever is beyond them, no matter what one says or believes, is not going to happen.

Take, for example, the burgeoning awareness in the world of the Italian banking crisis.

This was a development we forecast in December, and it has been striking to watch as the Financial Times on July 3 and the Wall Street Journal on July 4 picked up the story, citing sources that said Italy would flaunt EU regulations against using public funds to pump money into the system. From there it was off to the races, and the story was picked up by over 180 different newspapers, if Google News’ counting algorithms are to be trusted.

One of the questions that readers have posed to us and that we have debated internally is, why is the EU, and by extension Germany, being so tough on Italy? For over a year, Brussels, with Berlin’s backing, has shot down proposal after proposal from the Italians as they attempt to deal with the over 17 percent of non-performing loans that are weighing down their banking sector. Germany very clearly needs to preserve its access to the European market, and the existence of that market is dependent on not letting its third largest Continental economy go up in flames. Why not let the Italians bail out their banking system? And if that doesn’t work, why wouldn’t Germany take the drastic step of bailing the Italians out themselves?

There are a number of reasons, but the key one to understand is that German Chancellor Angela Merkel is not simply free to do as she pleases, or even to do what she thinks is best. The voters who elected her don’t want to bail out the Italians. The business interests intertwined with the German political elite don’t want to bail out the Italians either, and they have the luxury of taking this position because they are more insulated than the common depositor when it comes to the fall-out from the type of cascading systemic crisis that is possible. And German lawmakers, keen to preserve competition rules and deter other countries from risky banking practices, don’t want to see Rome use its own funds to bail out private institutions. People don’t intentionally walk into catastrophes. They are often dragged into them against their will.

And so Merkel, who just a few weeks ago huddled with Italian Prime Minister Matteo Renzi and French President François Hollande over how to save the EU in the wake of Brexit, is engaged in a public showdown with Renzi over Italy’s request to bend the rules. Merkel cannot bend, and Renzi cannot do nothing. The fact of the matter is, if she values her political career this is the position she has to take – she doesn’t have a choice. She will likely be relieved when Italy is forced to ignore EU directives and use public funds when the crisis arrives in earnest. She will also likely support small EU concessions and attempts to look the other way when Italy finds tools to skirt European regulations. This is what the obsolescence of the European Union looks like – each nation-state doing what it must for its best interest.

We have been focusing quite a bit on Europe in the weeks since Brexit, but there are some other recent salient examples of how difficult it is for leaders faced with constraints.

Yesterday afternoon, President Barack Obama announced that the U.S. would be leaving more troops in Afghanistan after the end of his second term than he had previously stated. He had said that by January 2017 there would only be 5,000 troops left.

This is a subject that we have addressed in the past, not just in terms of Afghanistan, but in terms of the full scope of foreign policy goals Obama set for himself before he ascended to the presidency. He was going to be the president who ended the wars in Afghanistan and Iraq, he was going to close Guantanamo Bay, he was going to be tough on environmental regulations, and he was going to pass comprehensive health care reform.

The wars in Afghanistan and Iraq will continue after Obama leaves office. The Taliban and the Islamic State will see to that. Guantanamo Bay will remain open, for reasons we have outlined in the past. Obama spent most of the political capital he had to get a compromised version of his vision for health care past Congress. In the intervening months, both Congress and the Supreme Court have reminded the U.S. public how little power a sitting president has, especially when both houses of Congress are held by the opposing party.

As we head into the Democratic and Republican conventions at the end of July, it will be worth remembering amid all the policy pronouncements and good intentions that U.S. presidents are weak executives. George W. Bush’s presidency was not defined by his policy goals but by 9/11. Obama’s was defined before he even got to office with the 2008 subprime mortgage crisis.

The big news out of China in the past week has been the sentencing of former Chinese President Hu Jintao’s top aide, Ling Jihua, to life in prison. There are those who lament the fact that current Chinese President Xi Jinping is tightening his grip on China. In the past six months, he has moved to assert his control over the Communist Party, the People’s Liberation Army, and even over economic policy, which is usually the purview of the premier.

This is something that we predicted Xi would do, and not because we have some deep window into Xi’s soul that others don’t. We saw clearly that 2016 was going to be a very difficult year for the Chinese economy and that the old export-centered high-growth model was running on fumes. The Communist Party had maintained control by ensuring prosperity (in this way, the party shares something deeply in common with the European Union), but Xi knew that prosperity was no longer assured and that something besides money was needed to bind his nation together.

The anti-corruption purges in which Xi has engaged the Central Commission for Discipline Inspection are not random, and they aren’t only targeting people who take bribes, though I’m sure they have got a few of those too. Ling was a top aide to a former president, one who was associated with the Communist Youth League of China, which we identified in May as an institution Xi had good reason to fear because of its ties to Premier Li Keqiang and its 90 million members. Many see Xi’s moves as a demonstration of strength. But they are motivated first and foremost by weakness. Understanding his limits is the key to understanding what he does.

If they possessed unlimited power, Merkel would be able to let Italy have its cake and eat it too, Obama would have the presidential legacy he wanted, and Xi wouldn’t have to crack down on potential rivals. But that is not how the world works, and so each must roll along in the currents in which they are inexorably caught, all the while appearing to be immensely powerful. When you pull back the wizard’s curtain, it’s an individual pulling levers, creating illusions and just trying not to screw up. Once you’ve realized that, what comes next becomes far more certain.