Annual Forecast 2008 - January, 2008

I think the following geopolitical forecast for 2008 by Stratfor is a must read. Although it has some weak areas, such as wishful thinking, this forecast, or geopolitical analysis if you will, paints a very clear picture, a picture that involves an eventual confrontation between the Russian Federation and the West, perhaps by proxies. Regardless of Russia's impressive forward momentum as of late, Moscow will need to at one time or another beat-up on someone. Simply put, Moscow needs to spill blood to make a strong political statement. Although it ruthlessly crushed the Western backed Chechen insurgency, Russia has not yet been ready to project its military power outside its borders. Perhaps the time for that is now nearing. Moscow has embarked on a long-term agenda to modernize its ballistic missile forces, its air defenses and, more importantly, it is once again actively presenting itself as a geopolitical factor upon the high seas, the undisputed realm of American might. Nevertheless, all the indicators are here, there will be a clash between Russia and the West, it's only a matter of time. Most probably this inevitable clash will come to pass in the Balkans and/or the Caucasus.

Arevordi

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Annual Forecast 2008: Beyond the Jihadist War -- Former Soviet Union

January, 2008

Russia enters 2008 in the strongest geopolitical position it has known since the Cold War’s end. The rampant decay of its military has largely been halted, new weapons systems are beginning to be brought on line, the country is flush with petrodollars, its debt has vanished, the Chechen insurgency has been suppressed, the central government has all but eliminated domestic opposition, the regime is popular at home, and the U.S. military is too locked down to make more than a token gesture to block any Russian advances.

Yet Russia faces challenges to match its power. Chinese pipelines to Kazakhstan and Turkmenistan (to be constructed in 2008) threaten to divert the energy that until now could only flow northward and serve Russian purposes. NATO and the European Union occupy Russia’s entire western horizon and are flirting with expanding their memberships. Rising defense modernizations in Asia are forcing Russia to deal with two military fronts — something at which Moscow never really succeeded during Soviet times. And the European Union plans to separate Kosovo from Serbia, making a mockery of the Kremlin’s efforts to keep the province attached. Finally, while Russia’s military is improving, it still faces massive challenges — ranging from a bloated and unskilled conscription force to mass corruption within the officer corps that siphons away a sizeable minority of resources the Kremlin is allocating to the military.

If Russia is to secure its long-term future in the face of a rising China and ever-expanding EU and NATO, 2008 must be the year of action. The former Soviet Union region will have three main developments in 2008. First, the consolidation that began in Russia’s energy sector in 2003 will culminate. This will be the year that state giants Rosneft and Gazprom swallow up — whether formally or through “alliances” — most of the remaining independent players in the country’s energy industry. This is being done not just to solidify central control — although that is a leading reason — but also to strengthen what has become Russia’s most reliable foreign policy tool. The year 2007, however, could well have been the high point in Russia’s ability to influence Europe with control of its energy policies. In 2008 a number of natural gas import projects will begin operation in Western Europe, reducing that region’s dependency on Russian energy and allowing the Western European states to be more dismissive of Russian interests.

Second, and far more important, the Russians need a defining confrontation with the West. Russian power is at a relative peak, and American power at a relative low. It is a temporary circumstance certain to invert as the United States militarily extricates itself from Iraq, and one that Russia must exploit if it seeks to avoid replicating the geopolitical retreat of the 1990s. By “confrontation” we do not necessarily mean a war — simply a clash that starkly lays bare Russia’s strengths against Western weaknesses. This requires adjusting EU and NATO attitudes so they both deeply consider Russian national interests in their decision-making. The Kremlin must publicly display that it can make the West back down. Success would adjust perceptions of pro-Western forces throughout the former Soviet Union and significantly boost Russia’s efforts to expand its influence. Failure would entrench the opposite.

There are a number of places where Russia might create such a decisive challenge, but the most logical place is Kosovo. While the West is prepared to rubberstamp Kosovo’s independence, there is little of military, economic or political value there for the West. For Russia — which has publicly invested much political capital in opposing Kosovar independence — European success would be more than a slap in the face. It would undermine Russian power at a fundamental level and demonstrate that even the European Union — whose unity on issues of foreign policy is shallow and whose military capability as a coherent whole is negligible — can simply ignore Moscow. Moscow must prevent this from happening, and it is likely that some sternly quiet conversations with the Europeans will be successful at (yet again) pushing back a final decision on Kosovo. Simply put, for the Western world, Kosovo is not even remotely worth an escalating conflict with Russia.

There are many other options, of course. The former pro-Western Soviet republic of Georgia, long a thorn in Moscow’s side, has two secessionist regions that rely on Russia for their economic and military existence. Russia could easily absorb them outright and thus break the myth that American protection in the Caucasus is sustainable. Gazprom could swallow up Russian-British joint oil venture TNK-BP, destroying billions in U.K. investment in a heartbeat. Union with Belarus would return the Red Army to the European frontier and turn the security framework of Eurasia inside-out overnight. And once again there is Ukraine, which just finally elected the anti-Russian Yulia Timoshenko as prime minister. Timoshenko has sworn to counter Russian influence in Ukraine’s energy sector and push back against Russia’s natural gas price hikes. The year 2008 could look eerily similar to the end of 2005, when Gazprom cut natural gas supplies to Ukraine, hitting Europe particularly hard. Then again, Russia could use the Ukraine conflict as an excuse to cut supplies to Europe anyway.

However, the third trend of 2008 is a monumental obstacle to Russia achieving its goals: an internal clan war. After years of turning Russia’s various factions against each other, Putin has finally secured control for his inner circle. But now that inner circle is tearing itself apart. For the most part, this is what good governance looks like for an authoritarian leader — Putin constantly has to arrange for internal feuds to keep the various power brokers from setting their sights on him. But this has led to fratricide across the Russian landscape, with the most pitched battles being fought in the justice, defense and energy spheres, bleeding away energy that could otherwise be used to further Russia’s international agenda. There is one final problem that Russia faces, and at present the Kremlin is unwilling even to admit that problem exists. China is stealing Central Asia, building a network of infrastructures that will make it more attractive for the Central Asian states to integrate with China than to use Soviet-era links to Russia.

The key is Kazakhstan, the only Central Asian state to share a border with Russia. Should Astana shift into China’s sphere, all of the other Central Asian states not only will find it in their best economic interests to follow, but also will enjoy the buffer of the world’s sixth-largest country (in terms of land area) between them and an angry Russia. It is nearly certain that Russian diplomats are going to have some very direct heart-to-hearts with their Kazakh counterparts, and we do not rule out some accidental polonium poisonings in Astana in 2008. Failing that, this could well go down in history as the year Moscow “lost” Central Asia. The Central Asian problem is about more than simply resources. While Russian diplomats have long waxed philosophic about a multipolar world in which Russia and China team up to reduce U.S. influence, the truth is that not only do Moscow and Beijing not trust each other — each would quickly sell the other one up the river in order to cozy up to the United States. Russia’s need to pave a path to confrontation to the West almost dictates that China will attempt to be the best friend Washington could ever have. Russia will have to play hardball to keep Central Asia, and China will likely have U.S. economic and political assistance in countering.

Source: http://www.stratfor.com/analysis/ann...r_soviet_union

In related news:

U.S. May Not Feel Super, but It Is Still World's Sole Superpower

Troubled and uncertain? Yes. But whether we or the rest of the world like it or not, the U.S. is still the top economic and military dog. The United States is reeling. Fears of a recession are growing and the stock market is off to one of its worst starts ever. U.S. foreign policy is in disarray. Washington is paralyzed by gridlock. The number of Americans saying the country is on the wrong track is approaching 70% -- even higher in some polls. Is America losing its way at home and abroad? The private intelligence firm Stratfor, which assesses the state of the world in a series of detailed annual reports, says worried Americans aren't taking a long enough and realistic enough view.

Stratfor says it does these net assessments by "being stupid" -- simply looking at things as they are without any preconceived notions, much as it would examine the status of any foreign country. "The operative term for the United States is 'huge.' The size of its economy and the control of the world's oceans are the two pillars of American power, and they are intimately connected," Stratfor says. "So long as the United States has more than 25% of the world's GDP and dominates the oceans, what the world thinks of it, or what it thinks of itself, is of little consequence. Power is power and those two simple, obvious facts trump all sophisticated theorizing."

The report examines both the economy and U.S. foreign policy in detail and finds various weaknesses and challenges -- but also plenty of plusses. While there have been numerous setbacks in Iraq, the United States has prevented an Islamic alliance from forming by creating, even if it was unintentional, a larger and more violent split between Sunni and Shiite (also known as Shia) Muslims. Stratfor warns American attention on Iraq and Afghanistan must not prevent it from paying attention to the growing power of Russia, although "the Russians have a long way to go before they would pose a significant threat to American interests."

Stratfor says a recession soon is possible but unlikely. "What we are seeing now is economic growth, stable interest rates and equity markets, and profound anxiety over the future of the financial system. That is not how an economy looks six months or a year before a depression. Those who believe that major economic disaster is just around the corner have acted on that belief and the markets have already discounted that belief."

Source: http://www.kiplinger.com/businessres...8-strafor.html