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TheTopFiveEventsin2014|Stratfor

TheTopFiveEventsin2014
GeopoliticalWeekly DECEMBER30,2014|09:00GMT TextSize

Stratfor
ByGeorgeFriedman
'Tistheseasontomakelists,andalistshallbemade.Wetendtoseeeachyearasextraordinary,andin
somesenses,eachyearis.Butinabroadersense,2014wasmerelyanotheryearinalongchainof
humantriumphandmisery.Warshavebeenwaged,marvelousthingshavebeeninvented,diseasehas
brokenout,andpeoplehavefalleninlove.Nonetheless,listsarecalledfor,andthisismylistofthefive
mostimportanteventsof2014.

1:Europe'sPersistentDecline
Thesinglemostimportanteventin2014wasonethatdidnotoccur:Europedidnotsolveitslongstanding
economic,politicalandsocialproblems.Iplacethisasnumberonebecauseregardlessofitsdecline,
Europeremainsacentralfigureintheglobalsystem.TheEuropeanUnion'seconomyisthelargestinthe
world,takencollectively,andtheContinentremainsacenterofglobalcommerce,scienceandculture.
Europe'sinabilitytosolveitsproblems,orreallytomakeanysignificantprogress,maynotinvolvearmies
andexplosions,butitcandisrupttheglobalsystemmorethananyotherfactorpresentin2014.
ThevastdivergenceoftheEuropeanexperienceisastroublingasthegeneraleconomicmalaise.
Experienceisaffectedbymanythings,butcertainlytheinabilitytofindgainfulemploymentisacentral
featureofit.ThehugeunemploymentratesinSpain,GreeceandsouthernEuropeingeneralprofoundly
affectlargenumbersofpeople.TherelativeprosperityofGermanyandAustriadivergesvastlyfromthatof
southernEurope,somuchsothatitcallsintoquestiontheEuropeanUnion'sviability.
Indeed,wehaveseenariseofantiEUpartiesnotonlyinsouthernEuropebutalsointherestofEuropeas
well.Nonehavecrossedthethresholdtopower,butmanyarestrengtheningalongwiththeideathatthe
benefitsofmembershipinaunitedEurope,constitutedasitis,areoutweighedbythecosts.Greecewill
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haveanelectioninthecomingmonths,anditispossiblethatapartyfavoringwithdrawalfromtheeurozone
willbecomealeadingpower.TheUnitedKingdom'sUKIPfavorswithdrawalfromtheEuropeanUnion
altogether.
ThereissignificantandgrowingriskthateithertheEuropeanUnionwillhavetobereviseddramaticallyto
surviveoritwillsimplyfragment.ThefragmentationoftheEuropeanUnionwouldshiftauthorityformally
backtomyriadnationstates.Europe'sexperiencewithnationalismhasbeentroubling,tosaytheleast
certainlyinthefirstpartofthe20thcentury.AndwhenaregionasimportantasEuroperedefinesitself,the
entireworldwillbeaffected.
Therefore,Europe'sfailuretomakemeaningfulprogressinfindingadefinitivesolutiontoaproblemthat
begantoemergesixyearsagohasoverwhelmingglobalsignificance.Italsoraisesseriousquestionsabout
whethertheproblemissoluble.Itseemstomethatifitwere,itwouldhavebeensolved,giventhethreatit
poses.Witheachyearthatpasses,wemustbeopentothepossibilitythatthisisnolongeracrisisthatwill
pass,butanew,permanentEuropeanreality.Thisissomethingwehavebeenpointingtoforyears,and
weseethesituationasincreasinglyominousbecauseitshowsnosignsofimproving.

2:UkrainianandRussianCrises
Historically,tensionsbetweenRussiaandtheEuropeanPeninsulaandtheUnitedStateshavegenerated
bothwarsandnearwarsandtheredrawingofthebordersofboththepeninsulaandRussia.The
NapoleonicWars,WorldWarI,WorldWarIIandtheColdWarallendedindramaticredefinitionsof
Europe'sbalanceofpoweranditsmap.Followingfromourfirstmajoreventoftheyear,theeventsin
UkraineandtheRussianeconomiccrisismustrankasthesecondmostimportantevent.
StratforforecastseveralyearsagothattherewouldbeadefiningcrisisinUkrainethatwouldbethe
openingtoanewandextendedconfrontationbetweentheEuropeanPeninsulaandtheUnitedStateson
onesideandRussiaontheother.WehavealsoforecastthatwhileRussiahasregionalpower,itslong
termsustainabilityisdubious.ThesameinternalfactorsthatbroughttheSovietUnioncrashingdownhaunt
theRussianFederation.Weassumedthatthe"littleColdWar"wouldbegininthemid2010s,butthat
Russiandeclinewouldnotbeginuntilabout2020.
Wehaveseenthefirstact,andwecontinuetobelievethatthefinalactisn'timminent,butitisnoteworthy
thatRussiaisreelinginternallyatthesametimethatitistryingtocopewitheventsinUkraine.Wedonot
expectRussiatocollapse,nordoweexpecttheUkrainiancrisistoevolveintoabroaderwar.Nevertheless,
itseemstomethatwiththiscrisiswehaveenteredintoanewhistoricalphaseinwhichaconfrontationwith
significanthistoricalprecedentsisreemerging.Thepossibilityofconflictisnotinsignificantthepossibility
thatthepressuresonRussia,internallyandexternally,mightnotspeedupthecountry'sowncrisiscannot
bediscounted.Certainlytheconsequencesofoilprices,internaleconomicdislocation,thevolatilityofthe
rubleandsanctionsallmustgiveuspause.
TheRussiansthinkofthisasaneventtriggeredbytheUnitedStates.InthenewspaperKommersant,Iwas
quotedassayingthattheAmericancoupinUkrainewasthemostblatantinhistory.WhatIactuallysaid
wasthatifthiswasacoup,itwasthemostblatantinhistory,sincetheUnitedStatesopenlysupportedthe
demonstratorsandprovidedaidforthevariousgroups,anditwasquiteopeninsupportingachangein
government.ThefactthatwhatIsaidwascarefullyeditedisofnoimportance,asIamnotimportantinthis
equation.ItisimportantinthatitrevealsaRussianmindsetthatassumesthatcovertforcesareoperating
againstRussia.Thereareforcesoperatingagainstit,butthereisnothingparticularlycovertaboutthem.
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ThefailuresofRussianintelligenceservicestomanagetheUkrainiancrisisandtheweakeningofthe
RussianeconomyraiseseriousquestionsaboutthefutureofRussia,sincetheRussianFederalSecurity
ServiceisafoundationoftheRussianstate.AndifRussiadestabilizes,itisthedestabilizationofanation
withamassivenuclearcapability.Thus,thisisoursecondmostimportantevent.

3:TheDesynchronizationoftheGlobalEconomy
Europeispredictedtoseelittletonogrowthin2015,withsomeareasinrecessionorevendepression
already.Chinahasnotbeenabletorecoveritsgrowthratesince2008andismovingsidewaysatbest.The
UnitedStatesannouncedarevisionindicatingthatitgrewatarateof5percentinthethirdquarterof
2014.Japanisindeeprecession.Thatthemajoreconomiccentersoftheworldarecompletelyoutof
synchwitheachother,notonlystatisticallybutalsostructurally,indicatesthatamajorshiftinhowtheworld
worksmaybeunderway.
ThedirepredictionsfortheU.S.economythatwerefloatedinthewakeofthe2008crisishavenot
materialized.Therehasbeenneitherhyperinflationnordeflation.Theeconomydidnotcollapse.Rather,it
hasslowlybutsystematicallyclimbedoutofitsholeintermsofbothgrowthandunemployment.The
forecastthatChinawouldshortlyovertaketheUnitedStatesastheworld'sleadingeconomyhasbeen
delayedatleast.TheforecastthatEuropewoulddemonstratethatthe"AngloSaxon"economicmodelis
inferiortoEurope'smorestatistandsociallysensitiveapproachhasbeendisproven.Andtheassumption
thatJapan'sdysfunctionwouldleadtomassivedefaultsalsohasnothappened.
Thedesynchronizationoftheinternationalsystemraisesquestionsaboutwhatglobalizationmeans,and
whetherithasanymeaningatall.Butamajorcrisisisoccurringineconomictheory.Theforecastsmade
bymanyleadingeconomistsinthewakeof2008havenotcometopass.JustasMiltonFriedmanreplaced
JohnMaynardKeynesasthedefiningtheorist,weareawaitinganewcomprehensiveexplanationforhow
theeconomicworldisworkingtoday,sinceneitherKeynesnorFriedmanseemsufficientanylonger.A
crisisineconomictheoryisnotmerelyanacademicaffair.Investmentdecisions,careerchoicesand
savingsplansallpivotonhowweunderstandtheeconomicworld.Atthemoment,theonlythingthatcan
besaidisthattheworldisfilledwiththingsthatneedexplaining.

4:TheDisintegrationoftheSykesPicotWorld
SirMarkSykesandFrancoisGeorgesPicotwereBritishandFrenchdiplomatswhoredrewthemapofthe
regionbetweentheMediterraneanSeaandPersiaafterWorldWarI.Theyinventedcountrieslike
Lebanon,Jordan,SyriaandIraq.Someofthesenationstatesareinturmoil.TheeventsinSyriaandIraq
resembletheeventsinLebanonagenerationago:Thecentralgovernmentcollapses,andwarlords
representingvariousgroupstakecontroloffragmentsofthecountries,withconflictsflowingacross
internationalboundaries.ThustheIraqicrisisandtheSyriancrisishavebecomehardtodistinguish,andall
ofthisisaffectinginternalLebanesefactions.
Thisisimportantinitself.ThequestionishowfarthecollapseofthepostWorldWarIsystemwillgo.Will
thenationalgovernmentsreassertthemselvesinadecisiveway,orwillthefragmentationcontinue?Will
thisprocessofdisintegrationspreadtootherheirsofSykesandPicot?Thisquestionismoreimportant
thantheemergenceoftheIslamicState.RadicalIslamismisafactorintheregion,anditwillassertitselfin
variousorganizationalforms.Whatissignificantisthatwhileaforce,theIslamicStateisinnopositionto
overwhelmotherfactions,justastheycannotoverwhelmit.ThusitisnottheIslamicState,butthe
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fragmentationandthecripplingofnationalgovernments,thatmatters.SyrianPresidentBasharalAssadis
justawarlordnow,andthegovernmentinBaghdadisstrugglingtobemorethanjustanotherfaction.
Werethedynamicsoftheoilmarketstodaythesameastheywerein1973,thiswouldrankhigher.Butthe
declineinconsumptionbyChinaandtheriseofmassivenewsourcesofoilreducetheimportanceofwhat
happensinthisregion.Itstillmatters,butnotnearlyasmuchasitdid.Whatisperhapsthemostimportant
questioniswhetherthispresagestheriseofTurkey,whichistheonlyforcehistoricallycapableof
stabilizingtheregion.Iexpectthattohappeninduecourse.ButitisnotclearthatTurkeycantakethisrole
yet,evenifitwishedto.

5:TheBirthsofAsherandMira
Iwasgiventwonewgrandchildrenthisyear.Forme,thismustbelistedasoneofthefivemajoreventsof
2014.Iamawarethatitislesssignificanttoothers,butInotonlywanttoannouncethem,Ialsowantto
pointoutanimportanttruth.Thetreeoflifecontinuestogrownewbranchesinexorably,eveninthefaceof
history,adversityandsuffering.Thebroadforcesofhistoryandgeopoliticsshapeourlives,butweliveour
livesinthesmallthings.AsmuchasIcareabouttheotherfourmattersandIdoIcaremuchmorefor
thebirthandlivesofAsherandMiraandmyothergrandchild,Ari.
Lifeisexperienceinthecontextofhistory.Itislivedinintimatecontactwiththingsthathistorywouldnot
noticeandthatgeopoliticswouldnotseeassignificant."Therearemorethings...thanaredreamtofin
yourphilosophy,"HamletsaidtohisfriendHoratio.Indeed,andtheirnamesareAsher,MiraandAri.This
mustnotbeforgotten.
HaveahappyNewYear's,andmayGodgrantyoupeaceandjoyinyourlives,inspiteofthehandof
historyandgeopolitics.

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