With an eye on every corner of the world, our global forecast for the final quarter of 2018 shows little respite for careworn countries, trade agreements under strain, trouble ahead in emerging markets, little progress in resolving conflicts and broad shifts in alliances.
It promises to be an especially fractious quarter as the United States continues to spar not only with adversaries but allies as well. The simmering trade dispute with China will continue, Russia will struggle to break its stalemate with the West, Europe has a litany of problems to address, and anything could happen on the Korean Peninsula.
All eyes will be fixed on the White House this quarter as it launches a trade offensive whose collateral damage will span the globe. As economic and political pressure mounts against China, North Korea will use a temporary detente with the South to undermine the United States' containment strategy against it.
An emerging nuclear crisis on the Korean Peninsula will rise to the top of the United States' agenda this quarter, reducing the priority of less pressing issues as Washington works furiously to avoid -- and prepare for -- the worst. As the White House's gaze remains fixed on Pyongyang's arsenal, Europe, Japan and China will turn their attention inward to wrestle with important questions about their political futures.
Federal investigations and budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won't mitigate the White House's rhetoric, or broader speculation that the United States is retreating from the global stage. And though mixed messages from the U.S. administration won’t result in Washington abandoning its traditional allies, they will spur more unilateral action by U.S. partners in the Middle East, Europe and Asia.
Trade will be at the forefront of many leaders' minds this quarter as a new U.S. administration settles into the White House. Uncertainty surrounding the White House's intentions will linger, prompting the United States' biggest trade partners to look for new economic relationships elsewhere. Some will leverage security cooperation and promises of investment to get on Washington's good side -- or, at the very least, to try to fend off its punitive action.
If the study of geopolitics focuses on the structural forces shaping the international system, then domestic elections only rarely matter. Leaders tend to bend to their environment, not the other way around. And yet in the final months of 2016 the United States, still the world's only superpower, will choose a president in an election that will shape U.S. foreign policy more than usual.
The Brexit referendum, and the fallout from it, will be among the most heavily scrutinized themes of the next quarter. And though it may have been the most visible confirmation of the European Union's disintegration, the seeds of its departure were sowed years earlier.
North Korea's likely achievement of a viable nuclear deterrent next year will give rise to a new and more unstable era of containment. As the specter of war looms in the Asia-Pacific, China and Russia will band together while the United States cracks down even harder on Iran -- as well as its own trade partners.
Long-arching trends tend to quietly build over decades and then noisily surface as the politics catch up. The longer economic pain persists, the stronger the political response. That loud banging at the door is the force of nationalism greeting the world's powers, particularly Europe and the United States, still the only superpower.
2016 is shaping up to be an unsettling year for much of the world. The United States and Russia are still locked in an intractable standoff. Nationalism is resurfacing in Europe. The price of oil and other commodities are low. Chinese consumption is falling. And countries around the world are more resolved than ever before to intensify their military campaigns against the Islamic State.
As we look at what 2015 holds in store, we know the oil markets are oversupplied, Europe and China will continue to stagnate, and Russia will work under heavy constraints to deny the West a strong foothold in crucial areas of its periphery while the rest of the world deals with the repercussions of these trends. The ebb and flow of this tumult is covered in the forecast that follows.
After spending more than a decade absorbed in intractable conflicts across the Islamic world, the United States will finally start to catch its breath in 2014. As U.S. troops draw down their presence in Afghanistan, Washington will go to great lengths to develop an understanding with Tehran. Negotiations will face major hurdles, and a final settlement that lifts the economic embargo on Iran will be a bridge too far for 2014. However, our longtime readers probably will not be surprised by the underlying depth and sincerity shared by Tehran and Washington that will sustain this detente over the course of the year.
At the beginning of 2012, we argued that the international system is undergoing a generational transformation -- the kind that occurs every 20 years or so. The cycle we are now in started in 2008-2009, when global financial contagion exposed the underlying weaknesses of Europe and eventually cracked China's export-oriented economic model. The Middle East then began to deviate from its post-World War II paradigm with an attempted resurgence by Iran, the regional rise of Islamists and the decline of age-old autocratic regimes in the Arab world.
Our forecast for 2012 is framed by the idea that we are in the midst of what we might call a generational shift in the way the world works. The processes are still under way, and we will therefore have to consider the future of Europe, China and the Middle East in some detail before drawing a conclusion.
The year 2011 is one of preparation and postponement, as Washington, Beijing and Moscow -- among several others -- are already looking to elections and leadership changes in 2012. The uncertainty of next year affects the actions of this year. One of the biggest questions in 2011 concerns Iraq.
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.
