Europe

<p>To the west of Eurasia lays Europe, a region predisposed to division. It is surrounded on nearly all sides by islands and peninsulas that make it difficult for Europe to cohere. The northern half of the continent, moreover, sits on a plain whose short, meandering rivers tend to empower countries without forcing them to work with others. The southern half is situated on more mountainous terrain that has historically impeded the creation of strong, unified economies. As a result, Europe is a continent riven by pockets of distinct cultures whose differences are all too often irreconcilable.</p>

Europe is a continent riven by pockets of distinct cultures whose differences are all too often irreconcilable.

The United States will continue to be the major economic, political and military power in the world but will be less engaged than in the past. Its low rate of exports, its increasing energy self-reliance and its experiences over the last decade will cause it to be increasingly cautious about economic and military involvement in the world.

Decade

The United States will continue to be the major economic, political and military power in the world but will be less engaged than in the past. 

European geography lends itself to political and economic fragmentation. Fundamental differences among Northern, Southern, Eastern and Western Europe have always prevented wholesale cooperation on the Continent, and the creation of the European Union never really reconciled those differences. If anything, it aggravated them when, beginning in 2008, it proved incapable of guaranteeing prosperity during times of economic and political duress. Many voters in Europe have since found sanctuary in the notion of the nation-state and, in doing so, have fueled feelings of nationalism, Euroskepticism, protectionism and isolationism. Those forces will tear the very fabric of the European project, leading to smaller alliances of like-minded countries.

European geography lends itself to political and economic fragmentation.

<p>The European Union will be unable to solve its fundamental problem, which is not the eurozone, but the free trade zone. Germany is the center of gravity of the European Union; it exports more than 50 percent of its GDP, and half of that goes to other EU countries. Germany has created a productive capability that vastly outstrips its ability to consume, even if the domestic economy were stimulated. It depends on these exports to maintain economic growth, full employment and social stability. The European Union&#39;s structures &mdash; including the pricing of the euro and many European regulations &mdash; are designed to facilitate this export dependency.</p><p>This has already fragmented Europe into at least two parts. Mediterranean Europe and countries such as Germany and Austria have completely different behavioral patterns and needs. No single policy can suit all of Europe. This has been the core problem from the beginning, but it has now reached an extreme point. What benefits one part of Europe harms another.</p><p><a class="connectedContentTrigger" href="/article/europe-rediscovers-nationalism" data-nid="268390" type="Assessments" title="Europe Rediscovers Nationalism" data-timestamp="1420984926">Nationalism</a>&nbsp;has already risen significantly. Compounding this is the Ukrainian crisis and Eastern European countries&#39; focus on the perceived threat from Russia. Eastern Europe&#39;s concern about Russia creates yet another Europe &mdash; four, total, if we separate the United Kingdom and Scandinavia from the rest of Europe. Considered with the rise of Euroskeptic parties on the right and left, the growing delegitimation of mainstream parties and the surging popularity of separatist parties within European countries, the fragmentation and nationalism that we forecast in 2005, and before, is clearly evident.</p><p>These trends will continue. The European Union might survive in some sense, but European economic, political and military relations will be governed primarily by bilateral or limited multilateral relationships that will be small in scope and not binding. Some states might maintain a residual membership in a highly modified European Union, but this will not define Europe.</p><p>What will define Europe in the next decade is the re-emergence of the nation-state as the primary political vehicle of the continent. Indeed the number of nation-states will likely increase as various movements favoring secession, or the dissolution of states into constituent parts, increase their power. This will be particularly noticeable during the next few years, as economic and political pressures intensify amid Europe&#39;s crisis.</p>

<p><a class="connectedContentTrigger" href="/article/germany-emerges" data-nid="236324" type="On Geopolitics" title="Germany Emerges" data-timestamp="1423558807">Germany has emerged</a>&nbsp;from this mass of nation-states as the most economically and politically influential. Yet Germany is also extremely vulnerable. It is the world&#39;s fourth-largest economic power, but it has achieved that status by depending on exports. Export powers have a built-in vulnerability: They depend on their customers&#39; desire and ability to buy their products. In other words, Germany&#39;s economy is hostage to the economic well-being and competitive environment in which it operates.</p><p>There are multiple forces working against Germany in this regard. First, Europe&#39;s increasing nationalism will lead to protectionist capital and labor markets. Weaker countries are likely to adopt various sorts of capital controls, while stronger countries will limit the movement of foreigners &mdash; including the citizens of other EU countries &mdash; across their borders. We forecast that existing protectionist policies inside the European Union, particularly on agriculture, will be supplemented in coming years by trade barriers created by the weaker Southern European economies that need to rebuild their economic base after the current depression. On a global basis, we can expect European exports to face increased competition and highly variable demand in the uncertain environment. Therefore, our forecast is that Germany will begin an extended economic decline that will lead to a domestic social and political crisis and that will reduce Germany&#39;s influence in Europe during the next 10 years.</p><p>At the center of economic growth and increasing political influence will be Poland. Poland has maintained one of the most impressive growth profiles outside of Germany and Austria. In addition, though its population is likely to contract, the contraction will most probably be far less than in other European countries. As Germany undergoes wrenching shifts in economy and population, Poland will diversify its own trade relationships to emerge as the dominant power on the strategic Northern European Plain. Moreover, we expect Poland to be the leader of an anti-Russia coalition that would, significantly, include Romania during the first half of this decade. In the second half of the decade, this alliance will play a major role in reshaping the Russian borderlands and retrieving lost territories through informal and formal means. Eventually as Moscow weakens, this alliance will become the dominant influence not only in Belarus and&nbsp;<a href="/article/poland-baltic-states-will-continue-promote-ukraines-western-ties">Ukraine</a>, but also farther east. This will further enhance Poland&#39;s and its allies&#39; economic and political position.</p><p>Poland will benefit from having a strategic partnership with the United States. Whenever a leading global power enters into a relationship with a strategic partner, it is in the global power&#39;s interest to make the partner as economically vigorous as possible, both to stabilize its society and to make it capable of building a military force. Poland will be in that position with the United States, as will Romania. Washington has made its interest in the region obvious.</p>

European Disintegration

Eurasia

<p>Eurasia is the world&rsquo;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&rsquo;s farthest reaches &mdash; a strategy meant to insulate it from outside powers. But this strategy necessarily creates conflict throughout Russia&rsquo;s borderlands, putting Eurasia a near constant state of instability.</p>

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

History shows that all too often the biggest threats to Russia come from within. Such is the case in the current era, a time when Moscow must manage a standoff with the West, a weak economy, limited financial resources, social unrest, demographic shifts and political infighting in the highest echelons of power. As its leaders try to prevent Russia from collapsing altogether, the country will cease to be the nominal democracy it is now and become an outright autocracy. But Moscow can use its alienation from the West to its advantage: Demonizing an external enemy is an effective way to shore up national support.

History shows that all too often the biggest threats to Russia come from within.

<p>It is unlikely that the Russian Federation will survive in its current form. Russia&#39;s failure to transform its energy revenue into a self-sustaining economy makes it vulnerable&nbsp;<a class="connectedContentTrigger" href="/article/when-oil-prices-drop-some-countries-lose" data-nid="268262" type="Assessments" title="When Oil Prices Drop, Some Countries Lose" data-timestamp="1415095208">to price fluctuations</a>. It has no defense against these market forces. Given the organization of the federation, with revenue flowing to Moscow before being distributed directly or via regional governments, the flow of resources will also vary dramatically. This will lead to a repeat of the Soviet Union&#39;s experience in the 1980s and Russia&#39;s in the 1990s, in which Moscow&#39;s ability to support the national infrastructure declined. In this case, it will cause regions to fend for themselves by forming informal and formal autonomous entities. The economic ties binding the Russian periphery to Moscow will fray.</p><p>Historically, the Russians solved such problems via the secret police &mdash; the KGB and its successor, the Federal Security Services (FSB). But just as in the 1980s, the secret police will not be able to contain the centrifugal forces pulling regions away from Moscow this decade. In this case, the FSB&#39;s power is weakened by its leadership&#39;s involvement in the national economy. As the economy falters, so does the FSB&#39;s strength. Without the FSB inspiring genuine terror, the fragmentation of the Russian Federation will not be preventable.</p>

<p>To Russia&#39;s west, Poland, Hungary and Romania will seek to recover regions lost to the Russians at various points. They will work to bring Belarus and Ukraine into this fold. In the south, the Russians&#39; ability to continue controlling the North Caucasus will evaporate, and Central Asia will destabilize. In the northwest, the Karelian region will seek to rejoin Finland. In the Far East, the maritime regions more closely linked to China, Japan and the United States than to Moscow will move independently. Other areas outside of Moscow will not necessarily seek autonomy but will have it thrust upon them. This is the point: There will not be an uprising against Moscow, but Moscow&#39;s withering ability to support and control the Russian Federation will leave a vacuum. What will exist in this vacuum will be the individual fragments of the Russian Federation.</p><p>This will create the greatest crisis of the next decade. Russia is the site of a massive nuclear strike force distributed throughout the hinterlands. The decline of Moscow&#39;s power will open the question of who controls those missiles and how their non-use can be guaranteed. This will be a major test for the United States. Washington is the only power able to address the issue, but it will not be able to seize control of the vast numbers of sites militarily and guarantee that no missile is fired in the process. The United States will either have to invent a military solution that is difficult to conceive of now, accept the threat of rogue launches, or try to create a stable and economically viable government in the regions involved to neutralize the missiles over time. It is difficult to imagine how this problem will play out. However, given our forecast on the fragmentation of Russia, it follows that this issue will have to be addressed, likely in the next decade.</p><p>The issue in the first half of the decade will be how far&nbsp;<a class="connectedContentTrigger" href="/article/estonia-azerbaijan-american-strategy-after-ukraine" data-nid="236189" type="On Geopolitics" title="From Estonia to Azerbaijan: American Strategy After Ukraine" data-timestamp="1395734902">the alliance stretching between the Baltic and Black seas</a>&nbsp;will extend. Logically, it should reach Azerbaijan and the Caspian Sea. Whether it does depends on what we have forecast for the Middle East and Turkey.</p>

Russia's Internal Struggle

Middle East and North Africa

<p>The Middle East and North Africa is the world&#39;s crossroads. It encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between. The story of the region, as is so often the case of places stuck between foreign players, is the story of trade, exchange and conflict. The traditional powers of the region are Turkey and Iran &mdash; Saudi Arabia and Egypt are the current Arab powers &mdash; and their competition for influence over the region&#39;s weaker states makes the Middle East and North Africa an arena of violence and instability.</p>

The Middle East and North Africa encompasses the Arabian Peninsula, the mountains of Iran, the plains of Turkey, the deserts of the Levant, the lands north of the Sahara and all coasts in between.

Though the Middle East has never been a picture of stability, the region has had at least a semblance of order for the past hundred or so years, held together as it was by authoritarian regimes that for all their failings managed to keep the region from devolving into outright chaos. That is no longer the case. The fall of Saddam Hussein gave Iran, the Middle East’s premier Shiite power, an opportunity to extend its influence from the Persian Gulf to the Mediterranean Sea. Its rise has galvanized the region’s Sunnis, led by Turkey and Saudi Arabia, against Iran in a series of proxy wars throughout the region. The disarray has given extremist groups the space to operate and has all but invited outside powers like Russia and the United States to intervene and exploit as they see fit. And though these powers may intend to avoid the quagmire that is the Middle East, competing agendas and transnational threats will challenge those intentions.

Though the Middle East has never been a picture of stability, the region has had at least a semblance of order for the past hundred or so years. That is no longer the case.

<p>The Middle East &mdash; particularly the area between the Levant and Iran, along with North Africa &mdash; is experiencing national breakdowns. By this we mean that the nation-states established by European powers in the 19th and 20th centuries are collapsing into their constituent factions defined by kinship, religion or shifting economic interests. In countries like Libya, Syria and Iraq, we have seen the devolution of the nation-state into factions that war on each other and that cross the increasingly obsolete borders of countries.</p><p>This process follows the model of Lebanon in the 1970s and 1980s, when the central government ceased to function and power devolved to warring factions. The key factions could not defeat the others, nor could they themselves be defeated. They were manipulated and supported from the outside, as well as self-supporting. The struggle among these factions erupted into a civil war &mdash; one that has quieted but not ended. As power vacuums persist throughout the region, jihadist groups will find space to operate but will be contained in the end by their internal divisions.</p><p>This situation cannot be suppressed by outside forces. The amount of force required and the length of deployment would outstrip the capacity of the United States, even if dramatically expanded. Given the situation in other parts of the world, particularly in Russia, the United States can no longer focus exclusively on this region.</p><p>At the same time, this evolution, particularly in the Arab states south of Turkey, represents a threat to regional stability. The United States will act to mitigate the threat of particular factions, which will change over time, through the use of limited force. But the United States will not deploy multidivisional forces to the region. At this point, most countries in the area still expect the United States to act as the decisive force even though they witnessed the United States fail in this role in the past decade. Nevertheless, expectations shift more slowly than reality.</p><p>As the reality sinks in, it will emerge that, because of its location, only one country has an overriding interest in stabilizing Syria and Iraq, is able to act broadly &mdash; again because of its location &mdash; and has the means to at least achieve limited success in the region. That country is&nbsp;<a class="connectedContentTrigger" href="/article/turkeys-strategy" data-nid="235899" type="On Geopolitics" title="Turkey's Strategy" data-timestamp="1334653089">Turkey</a>. At this point, Turkey is surrounded by conflicts in the Arab world, in the Caucasus and in the Black Sea Basin. But Turkey has avoided taking risks so far.</p><p>Turkey will continue to need U.S. involvement for political and military reasons. The United States will oblige, but there will be a price: participation in the containment of Russia. The United States does not expect Turkey to assume a war-fighting role and does not intend one for itself. It does, however, want a degree of cooperation in managing the Black Sea. Turkey will not be ready for a completely independent policy in the Middle East and will pay the price for a U.S. relationship. That price will open the path to extending the containment line to Georgia and Azerbaijan.</p><p>We expect the instability in the Arab world to continue through the decade. We also expect Turkey to be drawn in to the south, inasmuch as its fears of fighting so close to its border &mdash; and the political outcomes of that fighting &mdash; will compel it to get involved. It will intervene as little as possible and as slowly as possible, but it will intervene, and its intervention will eventually increase in size and breadth. Whatever its reluctance, Turkey cannot withstand years of chaos across its border, and there will be no other country to carry the burden. Iran is not in a position geographically or militarily to perform this function, nor is Saudi Arabia. Turkey is likely to try to build shifting coalitions ultimately reaching into North Africa to stabilize the situation. Turkish-Iranian competition will grow with time, but Turkey will keep its options open to work with both Iran and Saudi Arabia as needed. Whatever the dynamic, Turkey will be at the center of it.</p><p>This will not be the only region drawing Turkey&#39;s attention. As Russia weakens, European influence will begin inching eastward into areas where Turkey has historical interests, such as the northern shore of the Black Sea. We can foresee Turkey projecting its power northward certainly commercially and politically but also potentially in some measured military way. Moreover, as the European Union fragments and individual economies weaken or some nations become oriented toward the East, Turkey will increase its presence in the Balkans as the only remaining power able to do so.</p><p>Before this can happen, Turkey must find a domestic political balance. It is both a secular and Muslim country. The current government has attempted to bridge the gap, but in many ways it has tilted away from the secularists, of whom there are many. A new government will certainly emerge over the coming years. This is a permanent fault line in contemporary Turkey. Like many countries, its power will expand in the midst of political uncertainty. Alongside this internal political conflict, the military, intelligence and diplomatic service will need to evolve in size and function during the coming decade. That said, we expect to see an acceleration of Turkey&#39;s emergence as a major regional power in the next 10 years.</p>

Rebalancing Power in the Middle East

Asia-Pacific

<p>The Asia-Pacific is home to more people than any other region. Centered on the western rim of the Pacific Ocean, this region includes the easternmost countries of continental Asia as well as the archipelagos that punctuate the coast. Several of these countries, most notably China, experienced rapid economic growth in the second half of the 20th century, giving the region a new sense of global economic relevance that continues today. That relevance, however, depends largely on China, a power in transition whose rise is testing the network of U.S. alliances that have long dominated the region. How effectively Beijing manages its transition will shape the regional balance of power in the decades to come.</p>

Centered on the western rim of the Pacific Ocean, the Asia-Pacific region includes the easternmost countries of continental Asia as well as the archipelagos that punctuate the coast. 

For the past three decades, cheap exports and government-led investment have sustained economic growth in China. And in doing so, they have ensured political stability in one of the world’s largest and most populous countries. But leaders in Beijing understand that that model is unsustainable, and they have therefore begun to develop a new economic model, one built on consumption, an expanded services sector and technological innovation. The move from the old to the new will test the Communist Party’s will to reform and shake the very foundations on which its legitimacy stands.

China cannot evolve economically without also evolving politically. 

<p>China has ceased to be a high-growth, low-wage economy. As China&#39;s economy slows, the process of creating and organizing an economic infrastructure to employ low-wage workers will be incremental. What can be done quickly in a port city takes much longer in the interior. Therefore, China has normalized its economy, as Japan did before it, and as Taiwan and South Korea did in 1997. All massive expansions climax, and the operations of the economies shift.</p><p>The problem for China in the next decade are the&nbsp;<a class="connectedContentTrigger" href="/article/urbanization-and-demographics-could-skew-chinas-economic-rebalancing" data-nid="268130" type="Assessments" title="Urbanization and Demographics Could Skew China's Economic Rebalancing" data-timestamp="1409735705">political and social consequences of that shift</a>. The coastal region has been built on high growth rates and close ties with European and American consumers. As these decline, political and social challenges emerge. At the same time, the expectation that the interior &mdash; beyond parts of the more urbanized Yangtze River Delta &mdash; will grow as rapidly as the coast is being dashed. The problem for the next decade will be containing these difficulties.</p><p>Beijing&#39;s growing dictatorial tendencies and an anti-corruption campaign, which is actually Beijing&#39;s assertion of its power over all of China, provide an outline of what China would like to see in the next decade. China is following a hybrid path that will centralize political and economic powers, assert Party primacy over the military, and consolidate previously fragmented industries like coal and steel amid the gradual and tepid implementation of market-oriented reforms in state-owned enterprises and in the banking sector. It is highly likely that a dictatorial state coupled with more modest economic expectations will result. However, there is a less likely but still conceivable outcome in which political interests along the coast rebel against Beijing&#39;s policy of transferring wealth to the interior to contain political unrest. This is not an unknown pattern in China, and, though we do not see this as the most likely course, it should be kept in mind. Our forecast is the imposition of a communist dictatorship, a high degree of economic and political centralization and increased nationalism.</p><p>China cannot easily turn nationalism into active aggression. China&#39;s geography makes such actions on land difficult, if not impossible. The only exception might be an attempt to take control of Russia&#39;s maritime interests if we are correct and Russia fragments. Here, Japan likely would challenge China. China is building a large number of ships but has little experience in naval warfare and lacks the experienced fleet commanders needed to challenge more experienced navies, including the U.S. Navy.</p><p>Japan has the resources to build a significantly larger navy and a more substantial naval tradition. In addition, Japan is heavily dependent on imports of raw materials from Southeast Asia and the Persian Gulf. Right now it depends on the United States to guarantee access. But given that we are forecasting more cautious U.S. involvement in foreign ventures and that the United States is not dependent on imports, the reliability of the United States is in question. Therefore, the Japanese will increase their naval power in the coming years.</p><p>Fighting over the minor islands producing low-cost and unprofitable energy will not be the primary issue in the region. Rather, an old three-player game will emerge. Russia, the declining power, will increasingly lose the ability to protect its maritime interests. The Chinese and the Japanese will both be interested in acquiring these and in preventing each other from having them. We forecast this as the central, unsettled issue in the region as Russia declines and Sino-Japanese competition increases.</p><p>International capitalism requires a low-wage, high-growth region for high rewards on risk capital. In the 1880s it was the United States, for example. China was the most recent region, replacing Japan. No one country can replace China, but we have noted&nbsp;<a href="/article/pc16-identifying-chinas-successors">16 countries</a>&nbsp;with a total population of about 1.15 billion people where entry-level manufacturing has gone after leaving China.</p><p>To identify these countries, we looked at three industries. The first was garment manufacturing, particularly low-end and of garment parts like coat linings. Second was the manufacturing of footwear. Third, we looked at cellphone assembly. These industries require low capital investment, and manufacturers move their facilities around rapidly to take advantage of low wages. Industries of this sort, such as inexpensive toys in Japan, served as a foundation for manufacturing sectors to evolve into broader low-wage products in high demand. The workforce, frequently women at first, expanded dramatically as new low-wage industries moved in. The wages were low on a global scale but very attractive on the local scale.</p><p>Like China during its takeoff in the late 1970s, these countries tend to be politically unstable, with uncertain rule of law, poor infrastructure and all of the risks advanced industrial businesses try to avoid. But companies from other countries excel in these environments and have built business models around this.</p><p>The map of these countries shows that they are concentrated in the Indian Ocean Basin. Another way to look at it is that these are the less developed countries (or regions) in Asia, East Africa and Latin America. Our forecast is that in this next decade, many of these countries &mdash; and perhaps some not identified &mdash; will collectively take on the role that China had in the 1980s. This would mean that by the end of the decade, they would be entering an intensifying period of growth in a much wider array of products. Mexico, whose economy exhibits potential in both low-end manufacturing and higher-end industry in a cost-competitive environment, stands to benefit substantially from its northern neighbor&#39;s investment and healthy level of consumption.</p>

China in Transition

Americas

The Americas stretch from the Arctic Circle in Canada to the southern tip of Chile. This geographically, culturally and politically diverse region is home to the United States, a nation whose geography helped it become the foremost economic and military power in the world &mdash; an ascendance aided in part by bringing Mexico and Canada into its sphere of influence. Farther south, the nations of South America are like islands, separated by vast spaces of impenetrable mountains, rivers and jungles. Try though these countries may to integrate more closely, deeper ties such as those that characterize North America will prove elusive.

This geographically, culturally and politically diverse region is home to the United States, a nation whose geography helped it become the foremost economic and military power in the world

At the center of the international order stands North America. The great power on the continent — and, by extension, the world — is the United States. Buffered by vast oceans, integrated by extensive river networks, blessed with arable lands and awash in natural resources, the United States is uniquely suited to capitalize on its geographic advantages — and to project the power those advantages confer. And it will maintain its power as long as it maintains unity on the continent in which it resides. Even if other nations rise to challenge the United States in the coming decades, the United States will be the first among equals.

At the center of the international order stands North America. The great power on the continent — and, by extension, the world — is the United States.

<p>The United States continues to make up more than 22 percent of the world&#39;s economy. It continues to dominate the world&#39;s oceans and has the only significant intercontinental military force. Since 1880, it has been on an uninterrupted&nbsp;<a href="/article/geopolitics-united-states-part-1-inevitable-empire">expansion of economy and power</a>. Even the Great Depression, in retrospect, is a minor blip. This expansion of power is at the center of the international system, and our forecast is that it will continue unabated.</p><p>The greatest advantage the United States has is its insularity. It exports only 9 percent of its GDP, and about 40 percent of that goes to Canada and Mexico. Only about 5 percent of its GDP is exposed to the vagaries of global consumption. Thus, as the uncertainties of Europe, Russia and China mount, even if the United States lost half its exports &mdash; an extraordinary amount &mdash; it would not be an unmanageable problem.</p><p>The United States is also insulated from import constraints. Unlike in 1973, when the Arab oil embargo massively disrupted the U.S. economy, the United States has emerged as a&nbsp;<a href="/article/looking-signs-us-energy-revolution">significant energy producer</a>. Although it must import some minerals from outside NAFTA, and it prefers to import some industrial products, it can readily manage without these. This is particularly true as industrial production is increasing in the United States and in Mexico in response to the increasing costs in China and elsewhere.</p><p>The Americans also have benefited from global crises. The United States is a haven for global capital, and as capital flight has taken hold of China, Europe and Russia, that money has flowed into the United States, reducing interest rates and buoying equity markets. Therefore, though there is exposure to the banking crisis in Europe, it is nowhere near as substantial as it might have been a decade ago, and capital inflows counterbalance that exposure. As for the perennial fear that China will withdraw its money from American markets, that will happen slowly anyway as China&#39;s growth slows and internal investment increases. But a sudden withdrawal is impossible. There is nowhere else to invest money. Certainly the next decade will see fluctuations in U.S. economic growth and markets, but the United Stares remains the stable heart of the international system.</p><p>At the same time, the Americans have become less dependent on that system and have encountered many difficulties in managing &mdash; and particularly, in pacifying &mdash; that system. The United States will become more selective in assuming responsibilities politically in the next decade, and even more selective in military interventions.</p><p>For a century, the United States has been concerned about the emergence of a hegemon in Europe, and in particular of either an accommodation between Germany and Russia or a conquest of one by the other. That combination, more than any other, might be able to muster a force &mdash; between German capital and technology and Russian resources and manpower &mdash; capable of threatening American interests. Therefore, in World War I, World War II and the Cold War, the United States was instrumental in preventing this from occurring.</p><p>In the world wars, the United States came in late, and though it absorbed fewer casualties than other countries, it nevertheless suffered more than was comfortable for it. In the Cold War, the United States intervened early and, at least in Europe, had no casualties. Based on this, the United States has a core policy imperative that is almost automatic: When a potential European hegemon arises, the United States will act early, as in the Cold War, in building alliances and deploying sufficient force in primarily defensive positions.</p><p>This is happening now against Russia. Though we forecast the decline of Russia, Russia poses danger in the short term, particularly with its back against the wall economically. Moreover, whatever we forecast, the United States cannot be certain that Russia will decline and indeed, if it launches a successful expansionary policy (politically, economically or militarily), it may not decline. Therefore, the United States will take measures according to its imperative. It will try to build an alliance system outside of NATO, from the Baltics to Bulgaria, encompassing as many nations as possible. It will try to involve Turkey in the alliance and have it reach to Azerbaijan. It will deploy forces, proportional to the threat, in those countries.</p><p>This will be the primary focus in the early part of the decade. In the second part, Washington will focus on trying to assure that Russia&#39;s decline does not result in nuclear disaster. The United States will not become involved in trying to solve Europe&#39;s problems, it will not have a war with China, and its involvement in the Middle East will be minimal. It will conduct global counterterrorism operations but will do so with the full knowledge that those operations will be only partially effective at best.</p><p>The Americans will have an emerging problem. The United States has 50-year cycles that end with significant economic or social problems. One cycle began in 1932 with the election of Franklin Roosevelt and ended with the presidency of Jimmy Carter. It began with a need to rebuild demand for products from idle factories and ended in vast overconsumption, underinvestment and with double-digit inflation and unemployment. Ronald Reagan&#39;s presidency laid the groundwork for restructuring American industry through a change in the tax code and by shifting the focus from the urban industrial worker to the suburban professional and entrepreneur.</p><p>We are now about 15 years from the end of this cycle, and the next crisis will make itself felt in the second half of the next decade. It is already visible. It is the&nbsp;<a class="connectedContentTrigger" href="/article/crisis-middle-class-and-american-power" data-nid="236154" type="On Geopolitics" title="The Crisis of the Middle Class and American Power" data-timestamp="1388484080">crisis of the middle class</a>. The problem is not inequality; the problem is the ability of the middle class to live a middle class life. Currently, the median household income in the United States is about $50,000. Depending on the state you live in, this is actually about $40,000. That allows the literal middle to buy a modest home and live frugally outside major metropolitan areas. For the lower middle class, the 25th percentile, this is almost impossible.</p><p>There are two causes. One is the rise of the single-parent household. Having two households is twice as expensive. The other problem is that the same incentives that led to the badly needed re-engineering of the American corporation and vastly improved productivity also limited job security and income for the middle class. This is not a political crisis yet. It will become one toward the end of the next decade, but it will not be addressed until the elections of 2028 and 2032. It is a normal, cyclical crisis, but painful nonetheless.</p>

DECADE FORECAST: 2015-2025

Europe

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