Stratfor Quarterly Forecast
April 6, 1999
Our 1999 Annual Forecast issued on January 4, 1999 was entitled "A
New and Dangerous World." We certainly continue to stand by that title.
One of the predictions we made in that Annual Forecast was that "The
Serbs, supported by Russia, will test the United States in Kosovo. There
is increasing danger of a simultaneous challenge from Serbia and Iraq,
straining U.S. military capabilities dramatically." We are also content with
that forecast, but it was far from our most significant. At the end of all of
this, we remain convinced that the war over Kosovo, even if it lasts
another year, will be regarded historically as of little consequence except
as a symptom of a much deeper set of issues in the international system.
To see what we mean by these issues, we would like to begin our analysis
by calling your attention to a cluster of other predictions we made in our
Annual Forecast:
Russia will begin the process of recreating the old Soviet Empire in
1999. The most important question of 1999: will Ukraine follow
Belarus into federation with Russia?
Russia and China will be moving into a closer, primarily anti-
American alliance in 1999.
China will try to contain discontent over economic policies by
increasing repression not only on dissidents, but also on the urban
unemployed and unhappy small business people. Tensions will rise.
As we see it, there are two forces at work here. First, both Russia and
China are in economic decline relative to the United States and Europe.
This is a long-term trend rather than a passing cycle. That means that the
flow of investment and credit from the United States and Europe has, in
the case of Russia, disappeared, and in the case of China, contracted.
This tendency is not likely to be reversed for quite a while. Anticipated
inflows of Western capital controlled both Russian and Chinese
international behavior since the mid-1980s. Political and military tension
generally discourages loans and investments, and therefore Russia and
China were both motivated to moderate their international behavior.
Second, countries experiencing or expecting economic growth are not
focused on international politico-military competition. On the other hand,
during periods of economic decline, when foreign investment dries up, the
motivation to avoid conflict declines, and the interest in conflict increases.
Consider Russia. Its economy is a shambles and nobody but the IMF will
give it a dime, and even the IMF is hesitating. Russia has no carrot in front
of it to motivate cooperation, but it has several reasons to be
confrontational. First, confrontation is a means for extracting economic
concessions. Second, in a country torn apart by struggles over a
contracting economic pie, confrontation creates a psychological climate of
solidarity against enemies that helps stabilize the political system. Finally, in
nations seeking to revive their economies, defense spending is a superb
Keynesian tool, but one which needs the justification of tension.
But there are deeper reasons as well. We have heard a great deal about
interdependence. This is normally used to mean that nations that are
dependent on each other tend to cooperate. That is true only sometimes,
and mostly in the case where there is a growing economy masking
underlying differences. When China was prosperous, American preaching
on human rights was tolerable. With China's economy in decline, China
must exercise tight social controls in order to keep the lid on. Under these
circumstances, the U.S. preaching about human rights is intolerable,
because China's internal room for maneuver is substantially narrower than
it was before.
This brings us to the second point that we previously mentioned. There is
a tremendous imbalance in the international system. The United States is
overwhelmingly powerful politically, militarily and economically. It has
tremendous room not only for maneuver but also for experiment and
error. The risks to the United States in the current Yugoslav war, for
example, are minimal. The risks for Serbia and for the rest of Europe are
substantially greater. Because of America's room for maneuver and error,
it can take risks that place others in intolerable positions without seriously
exposing itself. That is very much what has happened since the end of the
Cold War.
Thus, where China and Russia have lost their motivation to cooperate with
the United States, they have simultaneously developed an interest in
resisting the United States. This is the most important fact of 1999 and it
will be the dominant reality of the Second Quarter. One of the reasons
that Milosevic was prepared to challenge NATO in 1999 where
previously he had backed down, was his sense that he was no longer
isolated. The sense of political support, coupled with some expectation
that Russia would at least be prepared to provide material in an extended
conflict, shifted his estimate of the situation substantially. It was not the
only factor, but it was certainly a major factor. Similarly, Saddam
Hussein's estimate of his ability to endure another allied air campaign
shifted dramatically when he began receiving active Russian cooperation.
Later this week, Chinese Premier Zhu Rongji will arrive in Washington.
Madeleine Albright's visit earlier this year to China was a disaster, with
both sides essentially trading insults. This visit has also begun with the
Chinese blasting the American position on human rights. Given the mood
in Washington concerning China, Clinton will not be able to appear too
conciliatory, regardless of his inclinations. Since China wants what Clinton
is not in a position to deliver -- American investment and loans -- and
since China itself is concerned about the long-term intentions of the United
States, the visit will be at best pleasantly irrelevant and at worst another
hostile confrontation.
The inevitable result of this is the creation of a new Sino- Russian alliance
designed to block the United States. We understand that there are many
issues dividing Russia and China, but none are as great as the issues that
divided the United States and China in 1972 and that proved no bar to
cooperation then. We cannot be certain how far this alliance will progress
in the Second Quarter of 1999, but we are convinced that it will move on
apace and will be a dominant theme of the international system in the next
few months.
Along with that realignment, we will see Russia increasingly asserting itself
in the former Soviet Union. We continue to foresee a major crisis in
Russo-Ukrainian relations, with Ukraine, in the face of Russia's growing
tension with the West, increasingly under pressure to work in tandem with
Russia and Belarus. We also expect to see Russian pressure increasing on
the Baltic States. In addition, a major Russian focus will be on the
Caucuses, where, from the Russian standpoint, the situation has become
intolerable. Russia is not quite ready to tackle the Central Asian problem,
but that will come shortly as well.
The simultaneous deterioration in Russo-American and Sino- American
relations is not accidental. The same forces driving the United States away
from each are driving the two together. At the same time, it will not be the
United States that is most immediately effected by the emerging
constellation. Rather, the most important consequences will be for
Germany and Japan. Germany stands directly across the Polish plain from
re-emergent Russia. NATO's expansion has been geographically irrational
and unsustainable. NATO will have to address that problem in the near
term. At the very least, NATO will now have to expand to include at least
Slovakia and will have to make a critical strategic decision on the Baltics.
These decisions cannot be postponed for years, as NATO planners
would like. Growing tension with Russia will force NATO to deal with
these issues immediately. The driver on this issue will not be the United
States, which will be far less trusted in Europe after Kosovo, but
Germany. As Russia emerges, Germany will have to make strategic
decisions in ways it has been unable to do for half a century. The
Slovakian and Baltic decision will place Germany in an unexpected and
not wholly welcomed position as geopolitical decision-maker. Without
those decisions, Poland cannot be defended and that is Germany's
problem.
The same is true for Japan. As U.S.-Chinese relations deteriorate, Japan
will have to define not only its relationship to the United States, but also its
relationship to itself, its constitution and its self-image. Japan is clearly
moving toward the acceptance of a geopolitical and politico-military role
in relation to North Korea, which, each time it tests a new missile,
threatens Japan. Japan is rapidly evolving into a normal nation- state with
its own strategic and military interests. It will not reach that stage this
quarter or perhaps even this year, but caught between a new East-West
tension, it will reach that stage soon.
In the immediate future, the critical issue is the manner in which Russian
and Chinese antagonism toward the U.S. will recondition regional crises.
A tense and fragmenting Indonesia is a very different place when the U.S.
and China are working together than when they are political competitors.
Iran behaves differently when it can play the U.S. off against Russia than
when the two are working together. As the Russian and Chinese
antagonism to the U.S. matures, lesser states will return to an old patterns
of behavior, seeking patrons among the great powers and playing them off
against each other. We have already seen what that can lead to in Serbia.
Imagine Castro with a close friend in Moscow again. If U.S.-Russian
relations deteriorate, Cuba becomes a strategic asset to Russia regardless
of ideology. At the very least, it becomes a bargaining chip. Castro, like
many other leaders of lesser countries, would dearly like to have value to
a great power somewhere. Everyone becomes more valuable when great
powers are competing.
This is not to say that the Cold War is being reborn. First, ideology is not
the key this time around. Second, Russia is not now a global power and
will spend a generation rebuilding its former empire, assuming it ever
manages to do so. Finally, China's internal tensions and geographical
location limits its ability to project power decisively. America will remain
the preeminent power, as idiosyncratic and unpredictable as ever. But
what is certain is that the next quarter will continue the process of ushering
in a new and dangerous world. Each regional problem will now take on
global implications, bringing us to a "globalism" in a way very different than
what was meant by the economists in 1991. |
