These are what we consider major mid- to long-term issues in the world that are linked to our annual forecast. The associated taskings will require monitoring for at least a week and likely longer, as they reflect ongoing processes that will develop over time.
All items from last week’s mid-term taskings remain active. Tomorrow we will follow up with our findings on this week’s daily Watch List items.
- Venezuela: Venezuela appears to be reaching a tipping point. The current level of instability is not permanent, and President Nicolás Maduro appears to be under significant pressure. The opposition appears to be gaining strength and is organizing itself better. It has constitutional reasons to press for a legal solution at some point before the end of the year. We need to be watching Venezuela very closely now and recheck our basic assumptions on how things are working there so that we are not caught off guard.
- The Balkans: There have been whispers and unreliable reports that Islamic militancy is growing in the Balkans. Hundreds of Bosnians have joined the Islamic State, Macedonia has claimed that IS recruiters hide in Kosovo, and Macedonia and Turkey are cooperating to arrest potential suspects in Turkey. Let’s separate myth from fact and figure out whether this really is a problem, and, if it is, how serious it could actually become.
- Japan-France: We are very closely tracking the economies of China and Germany and with good reason – they are the second and fourth largest economies in the world and are under immense pressure. We need to take a step back and look with equal depth at their peers – Japan and France, the third and sixth largest economies. Japan’s issues are well-documented, as it has overcome these issues despite all the usual prognostications. France less so. Let’s do zero-based analysis on both countries and follow through on the potential implications.
- Russia: Russia burned through 18 percent of its Reserve Fund last month. The deputy finance minister says the Reserve Fund will be depleted in 2017 and that Russia’s budget deficit will have to be covered by the National Welfare Fund. This is Russia’s great weakness, and we need to understand just how bad the situation is becoming and how that will affect Russian behavior. On the one hand, it may weaken Russia. On the other, weakness could make Russia more aggressive.
- China: Based on our current findings, it appears that China has been able to significantly curtail production in the coal sector to the point that China drove up the price of coal in recent weeks by increasing imports. China’s production of steel, however, appears to be continuing unabated, despite public statements from Beijing that oversupply in the steel industry is a problem that must be tackled by local producers. We need to better understand what Beijing wants and how/whether it can enforce what it wants.