Editor's Note:Below is the introduction to STRATFOR's Annual Forecast for 2008. Following the introduction are links to each regional section of the 35-page forecast. There also is a printable PDF of the report in its entirety. We've also provided a report card of our 2007 forecasts highlighting where we were right and where we were wrong. There are three major global processes under way that will continue to work themselves out in 2008. First, the U.S.-jihadist war is entering its final phase; the destruction of al Qaeda's strategic capabilities now allows the United States to shift its posture — which includes leveraging the Sunni world to finish the job begun in Iraq — and enables Washington to begin drawing down its Middle Eastern forces. Second, an assertive Russia is re-emerging and taking advantage of the imbalance in U.S. power resulting from the war. Third, oil at historical highs and continued Asian — particularly Chinese — exports have created a massive redistribution of financial might that is reshaping the international financial architecture. These processes intersect with each other, as well as with a fourth phenomenon: It is a presidential election year in the United States, which remains the center of gravity of the international system. These are the trends that shape our global forecast. Normally in an election year, U.S. attention on global affairs dwindles precipitously, allowing other powers to set the agenda. That will not be the case, however, in 2008. U.S. President George W. Bush is not up for re-election, and there is no would-be successor from the administration in the race; this frees up all of the administration's bandwidth for whatever activities it wishes. Additionally, Bush's unpopularity means that each of the White House's domestic initiatives essentially will be dead on arrival in Congress. All of the Bush administration's energy will instead be focused on foreign affairs, since such activities do not require public or congressional approval. Contrary to the conventional wisdom, 2008 will see the United States acting with the most energy and purpose it has had since the months directly after the 9/11 attack. 2007 Annual Forecast Report Card Such energy is not simply a result of this odd hiccup in the American political system but of a major shift in circumstance on the issue that has monopolized American foreign policy efforts since 2003: Iraq. The Iraq war was an outgrowth of the jihadist war. After the 2001 invasion of Afghanistan, the United States realized it lacked the military wherewithal to simultaneously deal with the four powers that made al Qaeda possible: Saudi Arabia, Syria, Iran and Pakistan. The first phase of the Bush solution was to procure an anchor against Afghanistan by forcing Pakistan into an alliance. The second was to invade the state that bordered the other three — Iraq — in order to intimidate the remaining trio into cooperating against al Qaeda. The final stage was to press both wars until al Qaeda — the core organization that launched the 9/11 attack and sought the creation of a pan-Islamic caliphate, not the myriad local extremists who later adopted its name — broke. As 2008 dawns, it has become apparent that though this strategy engendered many unforeseen costs, it has proven successful at grinding al Qaeda into nonfunctionality. Put simply, the jihadist war is all but over; the United States not only is winning but also has an alliance with the entire constellation of Sunni powers that made al Qaeda possible in the first place. The United States will attempt to use this alliance to pressure the remnants of al Qaeda and its allies, as well as those in the region who are not in the alliance. This leaves Iran, the region's only non-Sunni power, in the uncomfortable position of needing to seek an arrangement with the United States. The year 2008 will still be about Iraq — but in a different way. Iran cares deeply about the final status of Iraq, since every united Mesopotamian government has at some point in its history attempted a Persian invasion. Yet for the United States, the details of intra-Iraqi negotiations and security in Iraqi cities now are irrelevant to its geopolitical concerns. Washington does not care what Iraq looks like, so long as the Sunni jihadists or Tehran do not attain ultimate control — and evolutions in 2007 have made both scenarios impossible in 2008. Iran recognizes this, and as a result Washington and Tehran are ever less tentatively edging toward a deal. It is in this context — as an element of talks with Iran — that Iraq still matters to Washington, and this is now the primary rationale for continued involvement in Iraq. The United States will not completely withdraw from Iraq in 2008 — indeed, it likely will have 100,000 troops on the ground when Bush leaves office — but this will be the year in which the mission evolves from tactical overwatch to strategic overwatch. (Roughly translated from military lingo, this means shifting from patrolling the cities in order to enforce the peace to hunkering in the desert in order to ensure that Iran does not try to seize Iraq and the Arabian Peninsula beyond.) In the aftermath of the November 2007 Annapolis, Md., conference and the declassification of a National Intelligence Estimate on the nonexistence of the Iranian nuclear program, the ball is in the Iranians' court. A U.S.-Iranian deal — no matter how beneficial it would be for both states — is not inevitable. But STRATFOR finds it unlikely that Tehran would choose strategic confrontation with both the United States and the Arab world when the benefits of cooperation — and the penalties for hostility — are so potent. A framework for future relations, as well as for co-dominion of Iraq, is likely to emerge in 2008. Still, frameworks come slowly, and crafting such a framework will require the bulk of American forces currently in Iraq to remain there for most of the year. The United States will draw forces down and eventually regain its bandwidth for other operations, but 2008 will not be the year that the United States returns to policing the world on a global scale. And considering the still-mounting costs of regenerating military capabilities after six years of conflict, manpower expansion and acquisitions, such force recovery might not even occur in 2009. The United States could have more energy and political freedom to act, but military realities will anchor the lion's share of Washington's attention on the Middle East for — at the very least — the year to come. And Afghanistan, and therefore Pakistan, will have to be dealt with, regardless of what happens in Iraq. This means 2008 will be similar to 2007 in many ways: It will be a year of opportunity for those powers that would take advantage of the United States' ongoing distraction. However, they will face a complication that was absent in 2007: a deadline. The Iraqi logjam is broken. Unlike in 2007, when Iraq appeared to be a quagmire and other powers therefore sensed endless opportunity, those hostile to U.S. interests realize that they only have a limited window in which to reshape their regions. Granted, this window will not close in 2008, since the United States will need to not only withdraw from Iraq but also rest and restructure its forces; but the United States no longer is mired in an open-ended conflict. The state with the greatest need to take advantage of this U.S. occupation, bar none, is the Russian Federation. Moscow knows full well that when the Americans are finished with their efforts in the Middle East, the bulk of their attention will return to the former Soviet Union. When that happens, Russia will face a resurgent United States that commands alliances in Asia, Europe and the Middle East. Russia must use the ongoing U.S. entanglement in the Middle East to redefine its immediate neighborhood or risk a developing geopolitic far less benign to Russian interests than Washington's Cold War policy of containment. Russia needs to move — and it needs to move now. And there are a host of secondary powers that will be interacting within the matrix of American actions in 2008. Some — such as Syria and Saudi Arabia — want to be included in the U.S. Iraqi calculus and will have their chance. Others — namely South Korea, Taiwan, Australia and Japan — are looking for new ways to work with Washington as they adapt to their own domestic government transitions. All of Europe is shifting back to a power structure that has been absent for two generations: the concert of powers, with all of the instability and mistrust that implies. Others will be pursuing bold agendas, not because of the United States' distraction but because they are rising to prominence in their own right. Angola will rise as a major African power to rival South Africa and Nigeria. Brazil will lay the groundwork for reasserting its long-dormant role as a South American superpower. Turkey — now the strongest it has been in a century — will re-emerge as a major geopolitical weight in the eastern Mediterranean, albeit one that is somewhat confused about its priorities. Quietly developing in the background, the global economy is undergoing a no less dramatic transformation. While we expect oil prices to retreat somewhat in 2008 after years of surges, their sustained strength continues to shove a great deal of cash into the hands of the world's oil exporters — cash that these countries cannot process internally and that therefore will either be stored in dollars or invested in the only country with deep enough capital pools to handle it: the United States. Add in the torrent of exports from the Asian states, which generates nearly identical cash-management problems, and the result is a deep dollarization of the global system even as the U.S. dollar gives ground. The talk on the financial pages will be of dollar (implying American) weakness, even as the currency steadily shifts from the one of first resort to the true foundation of the entire system. This will be a year in which the United States achieves more success in its foreign policies than it has since the ousting of the Taliban from Afghanistan in late 2001. But the actions of others — most notably a rising Russia — rather than U.S. achievements will determine the tenor and fury of the next major global clash.