Of conflicts, confrontation, currencies and cyber war

GJonathan Eyal

The Statesman

07 Jan 2015

overnment officials invariably plan for the worst, rather than the best. And journalists also have a tendency to look for the negative rather than the positive: It’s always more exciting to report on a country in trouble rather than write articles about places where things are going well.

So, any attempt to identify the major strategic events which will dominate this new year merits a healthy dose of scepticism. Nevertheless, some global political developments are already evident and, sadly, quite a few of these look like taking a turn for the worse.

From Arab spring to Arab storm

The Middle East is one region capable of supplying endless gloom. Five years after the popular uprisings once optimistically dubbed as the Arab Spring, the outcome is an Arab storm. Libya, Syria, Iraq and Yemen are melting down and, together with Lebanon, will spend most of this year just trying to survive.

The omens are not good: too much violence has taken place, too many weapons are circulating and too many militias are fighting each other for any likelihood of a return to the old order. At best, these countries will become loose federations controlled by a variety of warlords.

The chances are high that the Islamic State in Iraq and Syria (ISIS) terrorist organisation - or the Islamic State as it now likes to call itself - will be crushed: ISIS is already unpopular with many of its volunteer fighters and is facing a formidable US-led military coalition. It is also likely that Turkey will enter the fray, delivering a decisive blow against ISIS.

Yet none of this will prevent the old borders of the Middle East from melting down, almost precisely a century after they were traced in bold colour lines on a single sheet of paper by Mark Sykes and Francois Georges-Picot, two colonial officials representing Britain and France, respectively.

On a more positive note, odds are better than even for the conclusion of a deal with Iran over its nuclear weapons. And there is a possibility the general election in Israel, scheduled for March 17, will result in a defeat for Israeli Prime Minister Benjamin Netanyahu, ushering in a new government, more amenable to a dialogue with the Palestinians.

But even if the nuclear standoff between Iran and the West ends, the broader but equally thorny issue of Iran’s influence in the region and its championship of the Shi’ite Muslims against the Sunni majority will remain unanswered. Nor is it evident that there is anyone in the Palestinian camp willing or able to strike a permanent peace deal with Israel, even if an incoming Israeli government is ready for negotiations.

Meanwhile, although the kings of Morocco, Jordan and Saudi Arabia, as well as the sheikhs and emirs of Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman look stable and secure, some of them are affected by infirmity or old age, and most are hurt by the low prices for oil and gas, which seem set to continue for most of 2015.

In short, the Middle East would be lucky to just mark time, to prevent an inherently bad situation from getting worse.

Europe goes back in time

And Europe, the continent which supposedly banished wars, won’t fare much better. As President Sauli Niinisto of Finland - a country which borders Russia and has always tried to maintain friendly ties with Moscow - pointed out at the start of the year, the Russian invasion of Ukraine and the subsequent fighting which has claimed the lives of 5,000 people in that country has taken Europe "back in time". War, as the Finnish president put it, "is no longer only news from far-off lands; it’s reality in today’s Europe".

European governments will struggle to save what they can of their relationships with Russia: it is possible that some of the economic sanctions currently imposed on Russia will either be lifted or quietly allowed to expire.

And despite his defiant machismo, Russian President Vladimir Putin is also looking for a way out of the current crisis, since his economy is groaning under the weight of the sanctions, and is likely to enter into a recession this year.

Yet, ultimately, the confrontation between Russia and the rest of Europe is here to stay, for it is a tussle about spheres of influence, one in which neither side can give way.

The euro, Europe’s single currency, will also be tested this year. That’s not so much because of the Jan 25 elections in Greece which are seen as a referendum on the euro zone, but more because of growing evidence that, unless serious stimulus measures are undertaken, Europe seems condemned to potentially irreversible economic decline.

Dr Mario Draghi, president of the European Central Bank which manages the currency, won plaudits when he promised "to do whatever it takes" to prevent the euro’s collapse. During this year, he may have to redeem both this pledge and his more recent vow to pull Europe’s economies out of the abyss. The chances are that he will succeed in the first objective of defending the currency, but not in the second of spurring economic growth.

For Dr Draghi may well be confronted by the same quandary facing Japanese Prime Minister Shinzo Abe: In the absence of more structural reforms, "quantitative easing" - the injection of extra cash into the banking system - is not in itself sufficient to stimulate growth. Investors are already anticipating troubles: The euro is currently trading at its lowest level this decade.

Asia’s nuclear race

At first sight, Asia is in better shape. The leaders of China and Japan have met and shaken hands. Both enjoy unassailable powers at home, which means that they can afford to take risks in their bilateral relations. All interested governments now want to play down their competing claims over the South China Sea. And even North Korean leader Kim Jong Un has proclaimed himself ready to sit down for talks with his southern neighbour.

Still, there are plenty of troubles ahead in Asia as well. The 70th anniversary of the end of World War II this August can reignite dangerous historic passions. The slightest mishap in the South China Sea can erupt into renewed naval confrontations. And the chances of a summit between North and South Korea remain virtually nil; indeed, a much more likely outcome is that North Korea undertakes another nuclear test this year, defying everyone, including China.

But the most dangerous nuclear threat in Asia - and one few seem interested in discussing - is the current race between China and India to develop and deploy ballistic missiles, each carrying payloads of different nuclear warheads capable of being directed at different targets.

That could unleash a far more dangerous arms race between the two giants, one not that dissimilar from the old Cold War confrontation between the US and the Soviet Union. Signs of this race may become obvious as early as this year.

And if this is not enough, there is the global rise of cyber warfare as a weapon of choice in any future conflict. That much was clear from the recriminations between China and the US last year, and from the recent showdown between the US and North Korea.Expect this year to produce further developments on this score, including the adoption of a new US strategy explicitly aimed at deterring cyber attacks and at punishing alleged perpetrators.

All very depressing? Undoubtedly. But not inevitable, for the way many of these crises ultimately develop will depend on the behaviour of the world’s most powerful nations: the US and China. The new, Republican-controlled US Congress is certain to push president Barack Obama towards more assertive foreign policy choices. But that’s not necessarily a hindrance to better cooperation between Washington and Beijing.

Meanwhile, China could use its influence to persuade countries such as Russia or Iran - to name but a few - that cooperation delivers better results than confrontation; signs of this are patchy, but sometimes evident.

In essence, the gradual eclipse of the USA has created a much more uncertain global strategic environment. But it has also provided an added imperative for China to prevent this from disintegrating into global chaos.