2018 annual forecast


Eurasia is the world’s most expansive region. It connects the East to the West, forming a land bridge that borders Europe, the Asia-Pacific, the Middle East and South Asia. Forming the borders of this massive tract of land are the Northern European Plain, the Carpathian Mountains, the Southern Caucasus Mountains, the Tien Shan Mountains and Siberia. At the heart of Eurasia is Russia, a country that throughout history has tried, to varying degrees of success, to extend its influence to Eurasia’s farthest reaches — a strategy meant to insulate it from outside powers. But this strategy necessarily creates conflict throughout Russia’s borderlands, putting Eurasia a near constant state of instability.

13 MINS READDec 22, 2017 | 19:27 GMT
Eurasia connects the East to the West, forming a land bridge that borders Europe, the Asia-Pacific, the Middle East and South Asia.

Eurasia connects the East to the West, forming a land bridge that borders Europe, the Asia-Pacific, the Middle East and South Asia.

section Highlights
  • As its standoff with the West intensifies in 2018, Russia will look to expand its influence in the Asia-Pacific region and in the Middle East.
  • The United States and Russia will spar over sanctions and arms control agreements as Moscow strives to undermine the unity of NATO and the European Union through hybrid warfare.
  • Presidential and regional elections in Russia will serve as a crucial test for the Kremlin, which will have to deal with converging crises at home.
  • Though negotiations over the Ukrainian conflict will pick up over the next year, they will fail to produce a resolution to the war in Donbas.
  • Economic and security challenges will test governments across Central Asia and encourage Russia and China to collaborate more closely in the region to stave off instability.
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Moscow Looks to the East

As 2018 approaches, Russia — the linchpin of Eurasia — is undergoing a shift in its foreign policy. Years of deteriorating ties with the United States and Europe have led Moscow to recalibrate its priorities and strategy heading into the new year.

As part of this adjustment, Russia will intensify its focus on the Asia-Pacific in 2018. As North Korea draws closer to demonstrating that it has achieved a credible nuclear deterrent, Russia will continue its behind-the-scenes support for the North Korean government by supplying fuel and maintaining trade ties with the isolated country. It won't have much of an opportunity to act as spoiler or peacemaker in the brewing conflict with Pyongyang, however, since the North Korean administration will forge ahead in its quest for a nuclear deterrent regardless of Moscow's economic and logistical backing. Furthermore, mounting concerns over the rogue administration across the border will compel Russia to temper its support for North Korea. Nevertheless, Russia will work to maintain its influence in the country, which it will try to use as leverage in talks with the United States, as well as with Japan and South Korea. It will also look for opportunities to exploit differences among the members of the U.S. trilateral alliance with Japan and South Korea. And all the while, Moscow will stay in lockstep with Beijing over the North Korean problem, advocating a containment policy and nonmilitary responses.

China, in fact, will play an important role in Russia's foreign and domestic strategies in 2018. As Russia's largest trading partner, China has helped ease the country's economic dependence on the West. Moscow hopes to continue that trend in the coming years by securing Chinese investment across the country in the energy, transportation and agricultural sectors. In addition, Beijing will facilitate Moscow's efforts to bolster its financial systems and cyber capabilities, and the two will strengthen their defense ties through military exercises and cooperation, as well. Their relationship also will extend to joint initiatives elsewhere. In Central Asia, for instance, Russia and China have established a kind of division of labor: China concentrates on economic issues in the region, while Russia focuses on security matters. Redoubling their collaboration will enable both countries to insulate themselves from U.S. pressure and to challenge Washington's strategic position in various theaters around the world.

Top 5 Russian Trade Partners

But the growing partnership between Russia and China can go only so far in the long run. Beijing and Moscow, after all, are natural rivals with overlapping spheres of influence. So though they will keep broadening the frontiers of their cooperation for now, their alliance will eventually have to contend with diverging views and competing priorities. In the meantime, the burgeoning partnership won't sit well with Japan. Tokyo will offer financial support for strategic projects such as liquefied natural gas facilities to curb Beijing's increasing influence in Russia. Moscow, in turn, will be only too happy to accept.

Infrastructure Between Russia and China

Beyond the Asia-Pacific, the Middle East will figure prominently in Russia's foreign policy next year. The balance of power is shifting in the region now that coalition forces have all but defeated the Islamic State in Iraq and Syria. Moscow intends to use the clout that its role in the Syrian civil war has earned it to try to influence other foreign powers with stakes in the region to shift the balance in its favor. Russia has four goals for this endeavor: to gain leverage in its negotiations with the West; to contain and counter the threat of Islamic extremism; to turn its relationships with regional powers to its favor; and to increase its access to energy, arms and agriculture markets in the area. With the entire region in play, Moscow will cultivate partnerships with several countries in the Middle East and North Africa in an effort to undermine the U.S. position there. Russia, for example, will work to restore its military presence in the region by leasing an air base in Egypt and by increasing arms sales to Libya.

Iran will serve an essential role in Russia's activities in the Middle East over the next year. Since the U.S presidential administration decertified the Joint Comprehensive Plan of Action — the deal halting Iran's nuclear weapons development — the agreement's future has come under greater doubt, and the threat of renewed economic sanctions has loomed larger over Tehran. Moscow will take advantage of the rising tensions between the United States and Iran to bolster its relationship with Tehran, building on the firm foundation it established through cooperation with Iran in Syria. Much as it does in its growing partnership with China, Russia sees in its ties with Iran an opportunity to counter the United States' strategic position. But their alliance, much like the one between Moscow and Beijing, also has clear limits, considering the conflicting interests of Russia and Iran in the Caucasus and in Central Asia.

Russia will hit similar roadblocks as it works to strengthen its relationships with Turkey and with Saudi Arabia in 2018. As Moscow tries to pursue common interests with Ankara — and to use their deepening ties to widen Turkey's rifts with NATO and with the European Union — the two will butt heads. Turkey, for example, will object to Russia's outreach to the Kurds and to Moscow's overtures to Ankara's rivals in the region. The mounting hostility between the Saudi Arabia and Iran, likewise, will hamper Russia's budding alliance with the kingdom.

Echoes of the Cold War

Though the Asia-Pacific region and the Middle East will take up more of Russia's attention in the coming year, Moscow's relations with the West will be no less important. Tensions are liable to rise in 2018 between Russia and the United States. Washington has signaled that it may ramp up its pressure on Russia in the coming year through a variety of means, including a heavier sanctions regime and lethal arms sales to Ukraine. At the same time, the United States is building up its ballistic missile defenses in Europe and Asia. The campaign will further strain its bilateral arms treaties with Russia, which will be all the more difficult to renegotiate since Washington has threatened Moscow with punitive measures for allegedly violating the Intermediate-Range Nuclear Forces (INF) Treaty.

Having come to grips with life under existing sanctions, Moscow is determined to avoid incurring more sanctions from Washington in 2018. With that in mind, Russia will highlight areas in which it would be willing either to work with the United States or to negotiate concessions, such as the peace process in Syria, talks with North Korea or the conflict in Ukraine. Moscow, meanwhile, will prepare for its ties with Washington to further deteriorate by shoring up its relationships in Asia and in the Middle East and by pursuing military buildups in its borderlands, for instance by permanently deploying the Iskander missile system in its exclave of Kaliningrad.

Adding to Russia's sanctions worries, the European Union will vote to maintain its punitive measures on the country throughout the next year. The bloc, however, won't follow suit if the United States slaps new sanctions on Moscow for political interference, despite the fact that 2018 will give Russia ample opportunity to meddle in Europe's affairs. As Italy prepares to hold general elections by May, the Kremlin will use its tried-and-true weapons of hybrid warfare — disinformation, propaganda and cyberattacks — in hopes of bringing a more sympathetic government to power in Rome. An administration led by the Five Star Movement, after all, could perhaps break the unanimous vote required to extend the EU sanctions against Russia in the future. Influencing the elections' outcome won't be easy, as Moscow learned during the recent political races in France and Germany. Even so, Russia will keep up its efforts to sow discord among the bloc's member states and their electorates, even if it doesn't accomplish its goals for the Italian election.

Russia's Internal Struggle

At home, Moscow will have a host of problems to contend with next year. Russia's worsening economic and financial straits will be one of its biggest challenges. After officially pulling out of recession this year, the country is settling into a prolonged period of stagnation. Banks are failing in near-record numbers, regional governments are defaulting on their debts, more and more businesses are going bankrupt, and a growing number of state firms need bailing out. These issues will stretch the Kremlin's finances, sap its sovereign wealth funds and force the government to borrow at least $18 billion more abroad. Finding funding could become even more difficult if the United States imposes sanctions to discourage Western markets from lending to Russia, though Moscow's growing economic ties in Asia and the Middle East will give it some alternative options. Either way, Russia's financial woes are too great for Moscow to shoulder. The Kremlin will have to let some businesses, banks and maybe even a regional government fail as it works to manage the fallout to avoid destabilizing the political system ahead of presidential and regional elections in 2018.

Russian Economic Woes

The contests, slated for March and September 2018, respectively, will serve as a test for President Vladimir Putin and his detractors alike. Despite the buzz in Western media, however, Putin has no credible challenger for his office. His opponents represent an array of ideologies and personalities, and the government will seize on their differences to keep the opposition divided. Still, the ruling United Russia party understands that the swelling tide of protest movements, particularly among young Russians, requires a new strategy. The Kremlin, to that end, will roll out fresh messaging to target the youth vote and try to energize the electorate. And in the likely event that Putin wins another term in office, his administration will use his victory to restore faith in his legitimacy. The various opposition groups, in turn, will hold protests across Russia in the run-up to the vote and may even stage mass demonstrations around Putin's re-election.

Unrest won't be the only political challenge awaiting Putin in his next term. Infighting within the Kremlin will increase next year. While powerful elites such as Chechen leader Ramzan Kadyrov and oil tycoon Igor Sechin break with Putin to pursue their own agendas, the president will consolidate a coalition of his most loyal advisers to protect him and help him implement his policies. Putin won't fully crack down on the renegades, but he could undertake reshufflings in his administration to limit their power. The result will be an ever-more centralized, authoritarian presidency and a progressively more fragmented political system.

Compared with the presidential election, the regional votes promise to be a tighter race for United Russia. Liberal opposition groups made gains in this year's regional elections. To slow their progress in the 2018 contest, the Kremlin will keep exploiting the divisions between them. Moscow may also crack down to try to curb protests across the country, while allowing some demonstrations to continue as a way to ease the political pressure building in Russia.

The Fight for Russia’s Borderlands

Just beyond Russia's borders, the new year will bring its share of activity and instability. Ukraine, for example, will spend 2018 gearing up for its own presidential and parliamentary elections to follow in 2019 — its first since the snap votes that followed the Euromaidan uprising in 2014. Leading up to the 2019 elections, protests and government shake-ups are likely, and early legislative votes are possible. But the country won't deviate from its Western-oriented foreign policy as it weathers another year of war in the eastern part of its territory. Though the United States and Russia will proceed with negotiations over the conflict in Donbas — and may even make some headway on the issue of U.N. peacekeepers in the region — a broader resolution will remain elusive in 2018. As a result, Ukraine will continue to receive political, economic and security backing from the United States and its Western allies while it strives to further its economic, energy and security integration with Poland and the Baltic States. Russia, meanwhile, will ramp up its hybrid warfare campaign — including cyberattacks and assassinations — against the country and its supporters.

Southwest of Ukraine, elections could plunge Moldova into political turmoil next year. If the November vote goes in President Igor Dodon's favor — and to the detriment of the coalition that has long ruled the country — Moldova could start rolling back its efforts at integration with the European Union, at odds with the interests of pro-European groups. At the same time, it would probably also begin collaborating more closely with Russia on economic and security issues. Large protests before and after the elections are possible.

Next year will kick off a busy election season in the Caucasus, too. Armenia, Azerbaijan and Georgia will each hold presidential elections in 2018. More than the outcomes of these votes, though, the larger states nearby will influence foreign policy in the region. Azerbaijan and Georgia, for instance, will continue their efforts to forge closer energy, infrastructure and security ties with Turkey, while Armenia strengthens its military partnership with Russia and fortifies its economic links with Iran. Along the way, Tehran and Ankara will be careful not to challenge Moscow's strategic position in the Caucasus. Russia will remain the primary arbiter in the Nagorno-Karabakh conflict between Armenia and Azerbaijan, working to prevent the dispute from escalating while at the same time supplying both sides with arms.

Instability in Central Asia

The states of Central Asia, like so many of their fellow former Soviet republics, are in for a year of political transition. In 2018, Kazakhstan will probably follow in the footsteps of Uzbekistan and Kyrgyzstan, which underwent mostly smooth transfers of power this year. Kazakh President Nursultan Nazarbayev will move forward with plans for his succession, having ruled his country since before the Soviet Union's collapse. Rather than risk destabilizing Kazakhstan by suddenly surrendering his office, Nazarbayev will instead gradually devolve power to Parliament and to key members of the political elite, while overseeing the country's operations from behind the scenes.

But even if the transition goes off without a hitch, Kazakhstan and the other Central Asian states will face numerous threats to their stability in the next year. Low energy prices will compound the socio-economic pressures in the region, giving rise to protests. Uzbekistan will try to alleviate the strain by enacting economic reforms designed to attract foreign investment. It will also make efforts to improve its relations with neighboring Kyrgyzstan and Tajikistan in a bid to help ease border disputes and disagreements over resource allocation.

Dealing with the growing threat of militancy will be a steeper task, given the region's internal security concerns and its proximity to Afghanistan and Syria. Governments across the region will resort to crackdowns and a more centralized power structure to mitigate the risk to their security. In addition, the region's two most influential external powers — Russia and China — will step up their security efforts in Central Asia in 2018. Moscow will focus on expanding its security presence there while Beijing assumes a more active role in counterterrorism efforts.

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