Annual Forecast 2010
By: Stratfor.comJanuary 8, 2010
Executive Summary
The dominant theme of 2009 was the global recession. A series of financial developments in the United States damaged the U.S. banking system and spread from there to the rest of the global economy. Everyone-whether purchasers of high-tech goods or sellers of raw commodities-was deeply affected. As the year turns anew, that recession has ended. The recovery in place is unsteady, but appears to have put down sufficient roots to hold.

Two major evolutions will dominate 2010. The first is a continuation of a trend STRATFOR has been following for years: Russia's resurgence as a major power. In the 1990s the United States became very comfortable with the idea of Russian weakness, and in the 2000s the wars in Afghanistan and Iraq utterly consumed U.S. military capacity. With the recent decision to send even more forces into Afghanistan, the U.S. preoccupation with the Islamic world will become all-consuming, allowing Russia to do as it pleases in its near abroad.

For Russia, 2010 will be a year of consolidation-the culmination of years of careful efforts. In the coming year, Russia will excise the bulk of what Western and Turkish influence remains from Ukraine, Kazakhstan, Belarus, Armenia and Azerbaijan, and try to lay the groundwork for the reformulation of a political union in much of the former Soviet space. That project will not be completed in 2010, but by year's end it will be obvious that the former Soviet Union is Russia's sphere of influence and that any effort to change that must be monumental if it is to succeed.

Contributing to the Russian consolidation is a sharpening crisis in the Middle East.

Israel believes that Iran's nuclear program has matured sufficiently to constitute a material threat to the survival of the Jewish state. International diplomatic efforts to contain that program are not simply intended to forestall a future nuclear threat from Iran, but also to prevent an Israeli strike on Iran-a strike that could quickly spiral into a general melee in the world's premier energy artery, the Persian Gulf.

The mix of players and motives-Israel insisting on real controls and willing to act unilaterally, Iran evading real controls and retaining its ability to act decisively in Iraq and Afghanistan, Russia seeking to keep the conflict brewing in order to distract all from its efforts in the former Soviet Union, and the United States simply wanting everyone to calm down so it can focus on its wars-all but guarantees that a crisis will erupt in 2010. The only questions are whether that crisis will be limited to "simply" the Persian Gulf, and whether it will be military in nature.

Elsewhere in the world, there will be many developments that will not rise to the omnipresence these issues will have in 2010, but are nonetheless critical on the regional level.
  • The global recession is over and a building, albeit tentative, recovery is putting down roots in many places. Its permanence or robustness is hardly a foregone conclusion, but the carnage of early 2009 is certainly a thing of the past. What has taken the place of the global economic crisis are a series of aftereffects that are regional in character: China's struggles with its export-led economy when export demand is tepid, and Europe's growing banking crisis.
  • The increase of U.S. forces into Afghanistan is an attempt to change the rules of the war. The real heat from the conflict in 2010 will not be in Afghanistan, but in Pakistan, where the conflict is expanding beyond the border region.
  • In Europe, the Lisbon Treaty-now fully entered into force-finally will allow Germany and France to assert meaningful leadership of the European Union.
  • The effects of Mexico's drug war are spreading rapidly, as the cartels focus their efforts along the drug supply chain into both Central America and the United States. For Central America, the violence and corruption that now permeates Mexico will become ever more familiar.
  • With internal transitions complete and civil wars resolved, Angola and South Africa have both matured as independent powers. Now begins their cold war.

Geopolitical Profile

Middle East
Iran's nuclear program has progressed without being slowed by international efforts. This is unacceptable to Israel, and so the Jewish state is both becoming more concerned about its national survival and playing up the threat to force more decisive action. The Israelis have said that unless the Americans can halt Iran's nuclear activities (whether through the use of "crippling sanctions" or military action), they will have no choice but to launch a military strike of their own to neutralize the program.

Despite its desire to avoid war, the United States understands that should such an attack occur, it would have to participate for two reasons. First, while Israel could undoubtedly throw the Iranian program back a few years, Israel lacks the reach to destroy it. Iran, cognizant of the threat it faces, has not only done extensive work to conceal the physical elements that make up its nuclear program, it has also distributed its various parts across the country. Israel will need U.S. military assistance in terms of bunker-buster ordnance to successfully penetrate facilities that are deep underground and spread across great distances. Second, Iran would undoubtedly retaliate in a number of theaters, and one of those theaters would be the Strait of Hormuz, the world's most densely trafficked energy transport route-thus threatening to throw off the global economic recovery through rising oil prices.

U.S. participation would increase the likelihood of success in a strike against Iran's nuclear facilities, and only the United States has the resources to both strike at the facilities and engage Iran's retaliatory capabilities in the Strait of Hormuz. But none of this means that the Americans want a war in 2010. Washington wants nothing more than to focus its efforts on the expanding war in Afghanistan and withdrawing from Iraq. It desperately wants to put Iran off for another day. But the Israelis are forcing the issue, and the Russians are amplifying the Iranian threat-as part of a plan to keep the Americans occupied in the Middle East-by encouraging Tehran to remain defiant.

STRATFOR does not have sufficient evidence to forecast that war lingers at the end of this road, but that is a distinct possibility which may slide toward probability as the year wears on, and certainly as Iran comes closer to being able to build a nuclear bomb. The year 2010 will be about Israel attempting to force a conflict, the Americans attempting to avoid it, the Iranians preparing for it and the Russians manipulating all sides to make sure that a resolution to the standoff does not come too soon.

Elsewhere, Turkey continues to gain prominence, working toward a status more representative of a country of its geographic, demographic and economic heft. But Turkey's emergence is still a very new phenomenon, and Ankara wishes to avoid any decisive conflicts until it is more confident of its position. It also remains constrained by domestic political wrangling. Turkey currently lacks the tools to prevent a military conflagration between the Americans and Iranians-and it certainly does not wish to become involved itself. It also lacks the stomach to face off against the Russians in the Caucasus, and could well lose what footholds it has there in 2010. Ergo its influence will expand like a gas into any region which other major powers have neglected. In 2010, Turkey's efforts will be concentrated upon two areas: the Balkans, where the geopolitical contest is a bit of a free-for-all (especially Bosnia, where the other players have mixed feelings), and Iraq, where the Americans are trying to leave.

That American withdrawal will severely test the ability of Iraq's factions to work together through the series of political arrangements that have held to date largely due to American browbeating. Iraq's increased factionalization in 2010 is a guarantee at this point, whether due to the U.S. departure, Iranian meddling, as a consequence of deteriorating Iranian-U.S. relations or some combination of these. The first taste of what is to come will be ushered in by parliamentary elections scheduled tentatively for early March. The first recourse by any group that feels slighted will be to reactivate the militias that turned the country into a bloodbath in the recent past. No matter which way the balance of power shifts-and it is likely to shift away from the Kurds toward the Sunnis-Iraq is in for a very tough year, one that will be an important test of its ability to function more sustainably.

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