Chinese Economy

June 2007 – ROBERT FOGEL, Economic Historian and Winner of the 1993 Nobel Memorial Prize in Economic Sciences: “The gradual loosening of constraints on expression in China is likely to continue over the next several decades. Whether or not these developments lead to a multiparty system of the American type remains to be seen. However, the government’s responsiveness to popular concerns indicates that political stability is likely to remain at the level required for continued long-term economic growth.” (Working Paper for National Bureau of Economic Research)

January 2009 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “China has expanded extraordinarily for the last thirty years. The idea that such growth rates can be sustained indefinitely or permanently violates basic principles of economics. At some point the business cycle, culling weak business, must rear its ugly head – and it will… There are structural limits to growth and China is reaching them. And in the case of China, slower growth means substantial social and political problems… China’s economy is not nearly as robust as it might seem, and its political stability, which depends heavily on continuing rapid growth, is even more precarious.” (The Next 100 Years)

What has happened: In 2015, the inherent structural weakness in the Chinese economy was revealed. Between July and September, Chinese statistics (already suspect) indicated that growth was 6.9 percent – the lowest level China has achieved since directly after the financial crisis in 2009. President Xi Jinping has undertaken a massive corruption campaign and China continues to censor information about social unrest and protests that are increasing throughout the country. Xi and the Communist Party will either succeed in exerting a dictatorial level of control over the country or intra-regional conflict, directly challenging China’s internal cohesiveness, will result.

U.S. Compromise with Iran

January/February 2012 – MATTHEW KROENIG, Author and Associate Professor: “But skeptics of military action fail to appreciate the true danger that a nuclear-armed Iran would pose to U.S. interests in the Middle East and beyond. And their grim forecasts assume that the cure would be worse than the disease – that is, that the consequences of a U.S. assault on Iran would be as bad as or worse than those of Iran achieving its nuclear ambitions. But that is a faulty assumption. The truth is that a military strike intended to destroy Iran’s nuclear program, if managed carefully, could spare the region and the world a very real threat and dramatically improve the long-term national security of the United States.” (Foreign Affairs)

January 2011 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “In the next decade, the most desirable option with Iran is going to be delivered through a move that now seems inconceivable. It is the option chosen by Roosevelt and Nixon when they faced seemingly impossible strategic situations: the creation of alliances with countries that had previously been regarded a strategic and moral threats. Roosevelt allied the United States with Stalinist Russia, and Nixon aligned with Maoist China, each to block a third power that was seen as more dangerous…Conditions on the ground put the United States in a similar position vis-à-vis Iran. These countries despise each other. Neither can easily destroy the other, and, truth be told, they have some interests in common. In simple terms, the American president, in order to achieve his strategic goals, must seek accommodation with Iran.” (The Next Decade)

What has happened: In March 2013, U.S. and Iranian officials began negotiating secretly about the parameters of a potential nuclear deal. In November 2013, this resulted in an interim agreement that eventually became the Joint Comprehensive Plan of Action, an international agreement between the U.S., Iran, China, France, Russia, the UK and the EU, to lift economic sanctions on Iran in return for controls on Iran’s nuclear activities. American and Iranian interests have converged to a degree in the Middle East, especially in the fight against the Islamic State. On Oct. 28, that informal cooperation resulted in Iran being offered a seat at the table in Vienna to discuss negotiations pertaining to the Syrian Civil War. The U.S. and Iran now have a formal, if still fragile, relationship.

Israel Will Not Strike Iran

Nov. 2, 2011 – Haaretz journalists: “Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak are trying to muster a majority in the cabinet in favor of military action against Iran, a senior Israeli official has said…Netanyahu and Barak recently persuaded Foreign Minister Avigdor Lieberman, who previously objected to attacking Iran, to support such a move…Leading ministers were publicly dropping hints on Tuesday that Israeli could attack Iran, although a member of the forum of eight senior ministers said no such decision had been taken.” (Haaretz)

January 2011 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “Israel lacks the conventional capability for the kind of extensive air campaign needed to destroy the Iranian nuclear program. Certainly it lacks the military might to shape the geopolitical alignments of the Persian Gulf region. Moreover, an Iran presented with its dream of a secure western border and domination of the Persian Gulf could become quite conciliatory. Compared to such opportunities, Israel for them is a minor, distant, and symbolic issue.” (The Next Decade)

What has happened: Though former Israeli PM and Defense Minister Ehud Barak claimed in Aug. 2015 that PM Benjamin Netanyahu wanted to strike Iran in 2010 and 2011, Israel has not struck Iran’s nuclear facilities with conventional forces because it does not have the ability to degrade Iranian capabilities.

U.S.-Israel Relationship Wanes

April 2011 – MICHAEL OREN, Historian and Former Israeli Ambassador to the U.S.: “These benefits of the U.S.-Israel relationship are of incalculable value to the United States, far outweighing any price. Americans know that Israelis have always stood by them, ready to share technology, intelligence, and innovation — ready to aid them in conflict and to make the painful sacrifices for peace. Israel may be one of a handful of countries that fully fits the definition of ally, but its willingness to support the United States unwaveringly makes it the partner par excellence, America’s ultimate ally.” (Foreign Policy)

January 2011 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “The Arab-Israeli balance of power is out of kilter. Egypt and Jordan have opted out of the balance, and Israel is free to create realities on the ground. It is not in the interest of the United States for Israel, or for any country, to have freedom of action in the region. The US will reshape the regional balance of power partly by drawing back from Israel. This does not pose an existential threat to Israel – Israel is in no danger of falling and does not depend on the United States to survive. That was in the past. It is not the case in the next decade. Relations between two nations can’t be frozen in an outdated mode.” (The Next Decade)

What has happened: U.S. President Barack Obama perhaps said it best to Jeffrey Goldberg on Mar. 2, 2012 in an interview with the Atlantic: “I think that in the end, Israel’s leaders will make determinations based on what they believe is best for the security of Israel, and that is entirely appropriate.” While Israel and the United States continue to work together on many fronts, most notably intelligence sharing, the strategic interests of both have fundamentally diverged. The United States is aggressively pursuing a balance of power strategy in the Middle East and the relationship with Israel now exists within the context of that balance of power, and not as an unimpeachable reality.

Cracks Emerge in the European Union

Feb. 7, 1992 – THE MAASTRICHT TREATY, WHICH ESTABLISHED THE EUROPEAN UNION: “This Treaty marks a new stage in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen. The Union shall set itself the following objectives: To promote economic and social progress which is balanced and sustainable, in particular through the creation of an area without internal frontiers, through the strengthening of economic and social cohesion and through the establishment of economic and monetary union, ultimately including a single currency in accordance with the provisions of this Treaty; To assert its identity on the international scene in particular through the implementation of a common foreign and security policy including the eventual framing of a common defense policy, which might in time lead to a common defense; To strengthen the protection of the rights and interests of the nationals of its Member States through the introduction of a citizenship of the Union to develop close cooperation on justice and home affairs…” (Maastricht Treaty)

January 2009 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “It is unreasonable to talk of Europe as if it were one entity. It is not, in spite of the existence of the European Union. Europe consists of a series of sovereign and contentious nation-states. The European Union is a schizophrenic entity. It has created a free-trade zone and a European currency, which some members of the free-trade one use and others do not. It has failed to create a political constitution however, leaving individual nations sovereign – and there never has produced a united defense or foreign policy. Underneath the surface of the EU, the old European nationalisms continue to assert themselves.” (The Next 100 Years)

What has happened: The European debt crisis, which began in late 2009, has exposed the ineffectiveness of the European Union’s governing institutions. Germany uses the EU to secure markets for its exports and when Germany does not get what it wants, it reacts because of its own national interests and with little regard for the economies of the countries on which its export economy is dependent. In 2015, there was some talk of Greece leaving the European Union because it could not afford to pay back its debt. That crisis has been averted for now but continues to loom on the horizon, to say nothing of other states like Italy with worrying economic numbers. Refugees from the Syrian civil war have completely overwhelmed the European Union not because the EU lacks resources to deal with the issue but because the EU’s governing institutions have not come up with a way to deal with the crisis that is acceptable to all members. The Czech Republic, Poland, Slovakia, Hungary and Latvia have all fought attempts by the EU and Germany to force refugee quotas on member states. Freedom of movement even disappeared, with fences being built and border controls reinstated on the Austria, Hungarian, Slovakian borders just to name a few.

Russian-U.S. Relations

July 7, 2009 – PRESIDENT BARACK OBAMA SPEAKING AT THE NEW ECONOMIC SCHOOL GRADUATION IN MOSCOW: “But I believe that on the fundamental issues that will shape this century, Americans and Russians share common interests that form a basis for cooperation. It is not for me to define Russia’s national interests, but I can tell you about America’s national interests, and I believe that you will see that we share common ground.” (Speaking at the New Economic School graduation in Moscow)

January 2009 GEORGE FRIEDMAN, Geopolitical Futures Founder: “For the next generation, until roughly 2020, Russia’s primary concern will be reconstructing the Russian state and reasserting Russian power in the region. Russia is the immediate strategic threat to Europe. Russia’s grand strategy involves the creation of deep buffers along the northern European plain, while it divides and manipulates it neighbors, creating a new regional balance of power in Europe. Russia will use some of its wealth to create a military force appropriate to protect its interests and buffer zones to protect it from the world. Russia’s future actions will appear to be aggressive but will actually be defensive.” (The Next 100 Years)

What has happened: The American attempt to “reset” relations with Russia in 2009 has been a failure. The West, and the U.S. in particular, underestimated both Russian strength and determination to protect itself from challenges to its fundamental security interests.

U.S.-Russian Relations

Oct. 22, 2012 – PRESIDENT BARACK OBAMA AND GOVERNOR MITT ROMNEY: President Obama: “Gov. Romney, I’m glad that you recognize that al-Qaida is a threat, because a few months ago when you were asked what’s the biggest geopolitical threat facing America, you said Russia, not al-Qaida. You said Russia, not al-Qaida, you said Russia. And the 1980s, they’re now calling to ask for their foreign policy back because, you know, the Cold War’s been over for 20 years…” Governor Romney: “…Excuse me. [Russia] is a geopolitical foe… and Iran is the greatest national security threat we face.” (Presidential debate)

January 2009 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “During the first phase of Russia’s reassertion of power, until about 2010 or so, Russia will be grossly underestimated. It will be perceived as a fractured country with a stagnant economy and a weak military. In the 2010s, when the confrontation intensifies on its borders and its immediate neighbors become alarmed, the greater powers will continue to be dismissive. The United States in particular tends to first underestimate and then overestimate enemies. By the middle of the 2010s, the United States will again be obsessed with Russia. There is an interesting process to observe here. The United States swings between moods but actually, as we have seen, executes a very consistent and rational foreign policy. In this case, the United States will move to its manic state but will focus on keeping Russia tied in knots without going to war.” (The Next 100 Years)

What has happened: In 2012, two American candidates for the presidency spent time in a debate trying to demonstrate that neither thought Russia was America’s most pressing geopolitical challenger. Fast forward two years and Russia had sent troops and supported separatists in eastern Ukraine and annexed Crimea. The West responded with economic sanctions on Moscow, which, combined with a downturn in global oil prices, have hit Russia hard. The U.S. underestimated Russia, and, from 2015, Russia has been the U.S.’s most potent challenger in the world.

Russia Re-Asserts Itself in Ukraine

Dec. 13, 2013 – PAULA DOBRIANSKY, Former Undersecretary for Global Affairs under George W. Bush: “Hundreds of thousands of Ukrainians, enraged by President Viktor Yanukovych’s recent rejection of painstakingly negotiated trade agreements with the European Union, continue to protest Yanukovych’s apparent turn toward Moscow and the corruption and cronyism of his government. There is a clear danger that the demonstrations will escalate, bloodshed will ensue and Ukraine’s fragile democracy will unravel. The Obama administration is doing a good job of crisis management — stressing the need to respect the right of peaceful assembly and urging calm — but that is not enough. It is essential for the United States to exercise strong leadership, reverse Yanukovych’s turn toward Moscow and spur Ukraine to reengage with the European Union, so as to honor the Ukrainian people’s clear civilizational choice.” (Washington Post Op-ed)

January 2009 – GEORGE FRIEDMAN, Geopolitical Futures Founder: “The Russians must dominate Belarus and Ukraine for their basic national security. Ukraine and Belarus are everything to the Russians. If they were to fall into an enemy’s hands — for example, join NATO — Russia would be in mortal danger. From the Russian point of view, NATO expanding into Ukraine threatens Russian interests in the same way as if the Warsaw Pact had moved into Mexico. The Russians will respond to subtle American power grabs by trying to increase pressure on the United States elsewhere in the world, such as in the Middle East.” (The Next 100 Years)

What has happened: Russia could not tolerate a Western-sympathizing government in Kiev, with the support of France, Poland, Germany and the United States. Russia felt its fundamental national security interests were being threatened in Ukraine in February 2014 and responded with a predictable level of hostility and force. As Russia’s underlying economic weakness has been exposed as a result of low oil prices, Russia is now trying to find a way to come to an agreement favorable to Moscow in Ukraine and one of its strategies in doing so has been to deploy its military forces to Syria.

Geopolitical Futures
Geopolitical Futures (GPF) was founded in 2015 by George Friedman, international strategist and author of The Storm Before the Calm and The Next 100 Years. GPF is non-ideological, analyzes the world and forecasts the future using geopolitics: political, economic, military and geographic dimensions at the foundation of a nation.