Tag: China

The 29 December Financial Times published its annual round of predictions for the New Year and invited readers to chime in with their own. Here are mine. I have omitted a few of their questions as being of local interest (e.g. the future of Jacob Zuma as president of South Africa), as inherently unpredictable (the precise points of the growth rates, the US Fed fund rate and the S&P index a year from now), as well as banal CEO gossip (the fates of Blankenfein, Dimon and the like). I have added a few questions of my own, marked with an asterisk. See you in twelve months.

Will Article 50 be triggered in the first quarter of 2017?

Yes, unless it is delayed by either the Supreme Court or last minute political manoeuvers, which would buy time for compromises on all sides to seek softer conditions for Brexit. Once it is triggered, the grounds will definitely be set for a hard Brexit with consequences which are unpredictable but will likely bear no good for Britain or Europe, though beneficial to both the US and Russia if they can avoid coming to conflict over the morsels spread out between them.

Marine Le Pen win the French presidency?

No. Enough of the left-centre vote will shift to François Fillon’s “poujadiste” candidacy to defeat her in round two, compensating for the votes Le Pen will attract from the disaffected and unemployed working class. If she were to prevail, France would likely leave the Euro and seal a bargain with Russia and the US, creating a pseudo-Vichy state in the heart of a disintegrating Europe. Brexit would become even harder than before, as historical Anglo-French animosity rises again.

Angela Merkel win re-election in Germany?

Yes. She will have shifted enough to the right to forestall the AfD, but will still need to devise a motley parliamentary coalition, one including the SDP and the FDP, who will return to the Bundestag. Even supposing major terrorist attacks, the AfD will not gather enough support to rule without a coalition for which there would be no potential partners.

The Iran nuclear deal collapse?

No. Whatever Trump and the Republican hawks might like to believe, the JCPA is an international treaty with six signatories. The US can of course withdraw, but doing so would put it at odds with its potential partner Russia, whose interest is to maintain the nuclear club as is and who will, up to a point, continue to protect the Iranian position. With the exception of Germany, the continental Europeans will drift towards Russia, in the case of France no matter who wins the presidentials. In any event, the Iranians have cards of their own to play.

Trump and Putin do a Syria deal?

Yes, though this deal will be just one stage in the ongoing Great Game now turning around the Middle East. The Assad regime will be enscounced in a rump state while the interests of the Kurds will be sacrificed to those of other powers, which are all, let us note, non-Arab: Turkey, Iran, Russia and, yes, Israeli. This in no way means the end of slaughter and mayhem.

ISIS be destroyed as a significant global force?

No, if “global force” means to support and direct sporadic terrorism outside of the retrenched territory it will control even after the lost of Mosul and Raqqa. The division of labour in the alliance behind Assad (land forces and militia supported by Iran, air force courtesy of Russia) will be insufficient to root out ISIS, which will derive sustained legitimacy and hence attract adherents as the sole armed defender of Sunni ultra-orthodoxy. Expect Turkey, whose primary concern is the Kurdish threat to its unity, to be nominally involved but no more. Neither Russia nor rump Syria nor Turkey would want to see a strong US force with boots on the ground.

* There be progress on a two-state solution in Palestine?

No. A two-state solution is already beyond reach. Part of any Russian-US Syrian deal will be to confirm Israel as the sole governing power in “historical Zion”, an arrangement to which Russia can readily agree in exchange for its bolstered presence in historical Mesopotamia and on the Mediterranean. The presence of an nuclear-armed Jewish state sitting between Egypt and the Shia crescent running from Iran through Iraq and to the Bakaa Valley, conforms to Trump’s bruited model of allied nuclear-armed states. His “defense” of Israel will score him considerable domestic points.

* Cyberwar break out between the US and Russia?

No. Global cyberwar began full-time in the Naughts but is still at the stage of incremental experiment and deployment. We should not imagine a bi-polar conflict, since China will be seeking cyber advantages of its own. This is the future of warfare, since even physical combat is controlled by algorithm and AI.

* China accept containment?

No. Moreover, why should it?  The Chinese will continue to create faits accomplis within the maritime zone defined by the Nine-Dash-Line and, albeit slowly, pursue their territorial ambitions to the West along the so-called New Silk Road. They will promote and stabilize the reminbi insofar as they can while they slowly begin to disengage from their US paper holdings, though these remain potential pressure points in retaliation against American provocations. The demise of the TPP was an unexpected windfall for Xi Jingping, making it even less likely than before that the rise of China can be stymied. All Asian states including those as far away as Afghanistan and Australia need to readjust their strategy in terms of China’s power. This process will continue in 2017.

North Korea successfully test a nuclear-capable missile?

No, though sooner or later they will, unless Kim Jong-un cuts a deal with the US. China would be ambiguous to say the least about the privileged rapprochement such a deal would imply, since, as the conflict between China and the US heats up, a nuclear North Korea could serve as a useful pawn the former can play against both South Korea and Japan. The latter have no choice but to shelter under the US umbrella, paying more for it.

Trump build the Mexican border wall?

Yes, if by “wall” we mean more partial barriers along the border, not necessarily a unbroken structure resembling the Great Wall of China. The growing damage to the Mexican economy and collaterally to US businesses sectors and consumers dependent on low cost immigrant labour will, on the other hand, exacerbate undocumented migration to the US. Mass deportations are not feasible but we should expect considerable bluster on this issue over the next year.

* Trump “tear up” NAFTA?

No, but it will be re-negociated, at least in part. In general, the demise of the TPP and the TTIP will seriously damage world trade, setting off a geopolitical recession and possibly a new age of protectionist merchantilism. With its large internal market, the US has perhaps less to lose than countries more dependent on exports. In the intermediate and long range though, the largest internal market in the world is China’s, India’s next. Trump’s economic chickens will not be coming home in 2017, though four years down the road the Federal government will fiscally devastated, as least the non-military sectors of it. This will fulfill the wish of the many on the right who want government out of their lives, including in health care, the environment and the regulation of the marketplace and banking for common social good.

* Registry of Muslims?

No. Expect, however, stricter, racially determined immigration rules and regulations, plus even more exacting and arbitrary US border point checks in which profiling will play an egregious role.

* Trump stuff the Supreme Court?

Yes. This is one issue Trump and recalcitrant Republicans can agree on. The Supreme Court will be reactionary for the whole next generation, ruling in favour of the privileges and the values of the shrinking white minority.

* Finally, is there anything good to look forward to in 2017?

No, alas.