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# The Global Intelligence Files

On Monday February 27th, 2012, WikiLeaks began publishing The Global Intelligence Files, over five million e-mails from the Texas headquartered "global intelligence" company Stratfor. The e-mails date between July 2004 and late December 2011. They reveal the inner workings of a company that fronts as an intelligence publisher, but provides confidential intelligence services to large corporations, such as Bhopal's Dow Chemical Co., Lockheed Martin, Northrop Grumman, Raytheon and government agencies, including the US Department of Homeland Security, the US Marines and the US Defence Intelligence Agency. The emails show Stratfor's web of informers, pay-off structure, payment laundering techniques and psychological methods.

## Re: Annual Forecast 2011

Released on 2012-08-24 05:00 GMT

Email-ID | 1691055
Date | 2011-01-17 09:52:26
From | alderman.liz@gmail.com
To | marko.papic@stratfor.com

Thank you Marko! I will read it with interest. Best Liz
On 1/17/11, Marko Papic <marko.papic@stratfor.com> wrote:
> Dear Liz,
>
> I wish you all the best in the New Year. I am forwarding to you our 2011
> Annual Forecast. Feel free to send me your questions and comments. I feel
> that we will have quite a lot to talk about in 2011 in regards to the
> Eurozone crisis.
>
> Cheers from Austin,
>
> Marko
>
>
> --
> Marko Papic
>
> STRATFOR
> Director of Analysis
> 700 Lavaca Street, Suite 900
> Austin, Texas 78701 - USA
> P: + 1-512-744-4094
> F: + 1-512-744-4334
> marko.papic@stratfor.com
> www.stratfor.com
>
>
> ----- Forwarded Message -----
>
>
> Annual Forecast 2011=20=09
>
> Stratfor logo=09
> Annual Forecast 2011
>
>
>
> January 12, 2011 | 1308 GMT
>
>
>
> Annual Forecast 2011
>
>
> PDF Version
>
> =95 Click here to download a PDF of this report
>
>
>
> Related Links
>
> =95 2010 Annual Forecast Report Card
> =95 Annual Forecast 2010
>
>
>
> Table of Contents
>
>
>
> =95 Introduction
> =95 Middle East/South Asia
> =95 The Global Economy
> =95 Former Soviet Union
> =95 East Asia
> =95 Europe
> =95 Latin America
> =95 Sub-Saharan Africa
>
>
> The year 2011 is one of preparation and postponement, as Washington, Beij=
ing
> and Moscow =97 among several others =97 are already looking to elections =
and
> leadership changes in 2012. The uncertainty of next year affects the acti=
ons
> of this year.
>
> One of the biggest questions in 2011 concerns Iraq. The United States is
> officially obligated to complete its withdrawal of combat troops from Iraq
> by the end of this year, a move that could reshape the balance of regional
> power. If the United States withdraws, it leaves Iran the single most
> powerful conventional force in the region, and leaves Iraq open to Iranian
> domination. The ripple effect alters the sense of security for the Saudis
> and other Arab regimes, forcing them to accommodate a more powerful Iran.
> This effectively ends the balance of power in the Gulf region, something
> that Washington can little accept.
>
> If Washington does not carry out a meaningful withdrawal, then Iran retai=
ns
> the option of stirring up militias and unrest in Iraq, increasing conflict
> and the attendant U.S. casualties, all while the U.S. presidential electi=
on
> season begins ramping up. From the political perspective, this is not
> acceptable. From the geopolitical perspective, allowing Iran (or any other
> single power) to dominate the region is unacceptable. We think the latter
> will take precedence over the former, and the United States will seek to
> retain a strong presence in Iraq rather than withdraw from the region.
> However, the United States is not likely to carry out any major military
> action against Iran.
>
> That leaves one path if the United States wants to get out of Iraq at some
> future point: an accommodation (even if quiet) with Iran to ensure both U=
.S.
> and Iranian interests. While it is not likely to be very public, we expec=
t a
> significant increase in U.S.-Iranian discussions this year toward this en=
d.
>
> While Washington looks to extricate itself from Iraq without leaving power
> in the region unbalanced, farther east China is struggling with its own
> economic imbalances. STRATFOR has long been perceived as bearish on the
> Chinese economy. We are less bearish than realistic, and the reality is t=
hat
> the longer an economic miracle continues to be miraculous, the more likely
> it is to end its amazing run. We cannot help but notice the similarities
> between China and its East Asian economic predecessors: Japan, South Korea
> and the Southeast Asian =93Tigers.=94 The Chinese have shown great resili=
ence,
> but the global economic crisis revealed the weaknesses of China=92s
> export-based model. While government investment now makes up the lion=92s
> share of the Chinese economy, Beijing is walking a very difficult path
> between rampant inflation and rapid economic slowing.
>
> As China=92s leaders search for a solution and try to avoid the social
> consequences of a slip in either direction, they are also focused on the
> next major generational leadership transition, slated to begin in 2012. T=
his
> discourages any radical or daring economic policies, and stability will
> remain the watchword as the politicians jockey for position. But given the
> status of the Chinese economy, and the continued effects internationally =
of
> the global slowdown, daring policies and ideas are perhaps what China nee=
ds.
> While Beijing is likely to procrastinate in making any radical economic
> policy changes, and thus avoid the likely short-term chaos that could
> entail, the longer the leaders delay fundamental action, the worse things
> may be when the system starts to unravel.
>
> Meanwhile, Russia will continue to attempt to roll back U.S. influence in
> Eurasia and solidify its own. Russia has largely completed its retrenchme=
nt
> to the borders of the former Soviet Union, with the notable exception of =
the
> Baltic states and to a lesser extent the Caucasus, and Moscow is now secu=
re
> enough to shift from its more assertive stance to one that appears more
> conciliatory. This new strategy will play to all its relationships around
> the world, but will be effective in moving Russia=92s influence farther b=
eyond
> its former Soviet sphere and into Europe =97 where the United States has =
been
> dominant since the end of the Cold War. Russia=92s focus this year is to =
mold
> understandings with states like the Baltics, while entrenching its strong
> relationship with Germany. Moscow knows that its time to act freely is
> ticking down as Russia watches the United States wrap up some of its
> commitments in the Middle East, but Moscow will also be looking internall=
y,
> as the political elite position themselves ahead of the 2012 elections.
>
>
> Annual Forecast 2011
>
>
> Annual Forecast 2011Middle East/South Asia
>
>
> The most important question in the Persian Gulf is the degree to which the
> United States will draw down its forces in the region. The answer to this
> question determines the region=92s geopolitical reality.
>
> Other than the United States, the greatest military power in the Persian
> Gulf region is Iran. Whether or not Iran acquires nuclear weapons, it is =
the
> major conventional power. Should the United States remove all effective
> military force in Iraq and limit its forces in Kuwait, two things would
> happen. First, Iraq would fall under Iranian domination. Second, the stat=
es
> on the Arabian Peninsula would have to accommodate the new balance of pow=
er,
> making concessions to Iranian interests.
>
> Should the United States not remove its forces from the region, Iran would
> have the option of launching guerrilla operations against U.S. forces, us=
ing
> its surrogates in Iraq. That would escalate casualties in Iraq at a time
> when the U.S. presidential campaign would be getting under way.
>
> The core prediction STRATFOR needs to make for the region, therefore, is
> whether the United States will withdraw its forces. We do not believe a
> withdrawal is likely in 2011. While a new Iranian-sponsored insurgency is=
a
> possibility, a dramatic shift in the balance of power due to withdrawal
> would be a certainty. Pressure on the United States from Saudi Arabia and
> its allies in Iraq not to withdraw will be heavy, so the United States wi=
ll
> keep enough forces in Iraq to block Iran. STRATFOR expects this will lead=
to
> greater instability in Iraq , but the United States will be prepared to p=
ay
> that price.
>
> The chance of surgical strikes targeting Iranian nuclear facilities is ve=
ry
> low, inasmuch as the Iranian response would be to attempt to block the
> Strait of Hormuz. While it is possible for the U.S. Navy to keep the stra=
it
> clear, it cannot control the market reaction to military activity there. =
The
> consequences of failure for the global economy would be enormous and too
> great a risk without a much broader war designed to destroy Iran=92s
> conventional forces (naval, air and land) from the air. This could be don=
e,
> but it would take many months and also run huge risks.
>
> Given that the United States will not completely withdraw and will not
> launch a major military strike unless pressed by unforeseen circumstances,
> it is likely that the United States will reach out to Iran =97 either the
> government or significant factions within it =97 in order to reach some s=
ort
> of accommodation guaranteeing U.S. interests in the Persian Gulf and Iran=
ian
> interests in Iraq. These talks will likely be a continuation of secret ta=
lks
> held in the past, and if an accommodation is reached, it might be informal
> in order to minimize political repercussions in both countries.
>
> In Turkey , 2011 is an election year, with parliamentary elections schedu=
led
> for June. The ruling Justice and Development Party (AKP) is unlikely to l=
ose
> the election overall, but the vote will highlight the core secular-religi=
ous
> divide within Turkey. As it seeks to consolidate itself at home, the AKP =
in
> 2011 will work toward a more coherent foreign policy, trying to learn from
> past efforts that had unexpected results .
>
> Egypt begins the year with the successors of ailing 82-year-old Egyptian
> President Hosni Mubarak at odds over the pending transfer of power. The
> various factions =97 both in his National Democratic Party and the army =
=97 do
> not agree on who can best ensure regime stability and policy continuity o=
nce
> Mubarak is no longer in a position to lead. Another complication is that =
the
> presidential election is scheduled for September, and it is not clear
> whether Mubarak will run for a sixth five-year term. While the various
> elements that make up the state will be busy trying to reach a consensus =
on
> how best to navigate the succession issue, several political and militant
> forces active in Egypt will be trying to take advantage of the historic
> opportunity the transition presents. While the opponents of the regime =
=97
> both those who seek change via constitutional means and those who prefer
> extra-constitutional methods =97 are not yet organized enough, the rifts
> within the government also create vulnerabilities for Egypt , where regime
> change will have profound implications for the region and beyond.
>
> In Israel, concerns remain about Hezbollah, the most serious threat Israel
> faces. But Hezbollah is focused on matters in Lebanon, and Syria has its =
own
> interests at stake, so another major Israel-Hezbollah war in 2011 is
> unlikely. In Gaza, on Israel=92s southern flank, things are not quite as
> stable. Hamas has an interest in maintaining a short-term truce with Isra=
el,
> but pressure from competing Islamist movements and Israel=92s ongoing eff=
orts
> to prevent Hamas from strengthening will likely lead to clashes within the
> year, though not to the extent seen in 2008-2009.
>
> In Afghanistan, the U.S.-led International Security Assistance Force (ISA=
F)
> saw some successes on the battlefield in 2010, and more can be expected in
> the year ahead. However, the ISAF has neither the troop strength nor the
> staying power to truly defeat the Taliban through military force alone. T=
he
> success or failure of the counterinsurgency-focused strategy therefore re=
sts
> not only on the military degradation of the Taliban, but also on the abil=
ity
> to compel the Taliban to negotiate some degree of political accommodation.
> Some movement toward a negotiated settlement this year is possible, and
> Pakistan will try to steer Washington toward talks (in the hopes that
> Islamabad will be able to influence the eventual outcome of those talks),
> but a comprehensive settlement in 2011 seems unlikely at this point. The
> Global Economy
>
>
> The United States will experience moderate to strong growth in 2011. Unli=
ke
> in other major economies, consumer activity comprises the bulk of the U.S.
> system =97 some $10 trillion of the $14 trillion total. That $10 trillion=
is
> approximately half of the global consumer market. (The combined BRIC stat=
es
> =97 Brazil, Russia, India and China =97 account for less than one-third o=
f that
> amount). As the U.S. consumer goes, so goes the world.
>
> When measuring what the U.S. consumer is going to do, STRATFOR consults
> three sets of data: first-time unemployment claims (our preferred method =
for
> evaluating current employment trends), retail sales (the actual consumer=
=92s
> track record), and inventory builds (an indicator of whether or not
> wholesalers and retailers will be placing new orders, which in turn would
> require more hires). As 2011 begins, the first two figures look favorable=
to
> economic growth, while the last indicates employment may be slow to recov=
er.
>
> STRATFOR pays close attention to two other measures on the economy: The S=
&P
> 500 Index indicates investors=92 risk appetite, and total bank credit as =
made
> available by the U.S. Federal Reserve indicates how functional the financ=
ial
> system is. Because the 2008-2009 recession was financial in origin, STRAT=
FOR
> pays particular attention to what investors and banks are doing and
> thinking. Both measures are strongly positive as 2011 begins.
>
> But while the United States may be gearing up for a strong performance, t=
he
> same is not true elsewhere in the world.
>
> Europe faces a structural problem. The euro was designed for and by the
> Germans, who want a strong currency and high interest rates to keep
> inflation in check and to attract the capital required to maximize their
> high value-added system of first-rate education and infrastructure. The
> Southern Europeans, in contrast, have economies that do not add nearly as
> much value. They must remain price competitive to generate growth, and the
> only reliable means they have of doing that is to sport a weak currency. =
Put
> simply, people will pay more for a German car, but they will only pay so
> much for a Spanish apple.
>
> Yet these economies (and others) are enmeshed into the eurozone. The
> financial crisis is depressing the euro, which would normally help the
> southern European states, but Germany=92s presence in the eurozone is act=
ing
> as a sort of life preserver, limiting how far the common currency can sin=
k.
> The result is a midground currency, prevented from falling to levels that
> would actually stimulate the south while holding at weaker levels that ma=
ke
> the already competitive Germans hypercompetitive. The result will be grow=
th
> bifurcation, with the Germans experiencing their fastest growth in a
> generation, and Southern Europe =97 the region that needs growth the most=
to
> emerge from the debt maelstrom =97 mired in recession.
>
> Consequently, the financial crisis that started sweeping Europe in 2010 is
> far from over, and STRATFOR forecasts that more states will join Greece a=
nd
> Ireland in the bailout line in 2011. In one bit of good news for the
> Europeans, STRATFOR projects that the systems the Europeans built in 2010=
to
> handle the financial crisis will prove sufficient to manage Portugal,
> Belgium, Spain and Austria, the four states facing the highest likelihood=
of
> bailouts, respectively.
>
> In Asia the picture is more familiar. Japan has largely removed itself fr=
om
> the scene. Japan=92s population has aged to such a degree that consumptio=
n is
> expected to shrink every year from now on, while its national budget is n=
ow
> majority funded by deficit spending. Luckily for the rest of the world,
> Japan=92s debt is held almost entirely at home, and its economy is the le=
ast
> exposed to the international system of any advanced nation. Japan will ro=
t,
> but it will rot in seclusion.
>
> In China, nearly every government throughout its history has at some point
> been brought down by social unrest of some kind. Recently, Beijing was
> concerned that rolling back stimulus policies enacted in late 2008 would =
put
> economic growth at risk, and with it employment. STRATFOR has learned tha=
t,
> given these circumstances, Beijing has decided to keep that stimulus inta=
ct.
> This will solve the employment problem, but it comes at the certain price=
of
> higher inflation. China=92s challenge in 2011 will be to maintain suffici=
ent
> services and subsidies to keep social forces in check at a time when the
> country=92s economic model will exacerbate inflationary problems.
>
>
> Annual Forecast 2011Former Soviet Union
>
>
> Russia=92s consolidation of influence in the former Soviet Union is nearly
> complete, and in 2011, Moscow will feel secure enough in its position to
> shift from a policy of confrontation with the West to one characterized, =
at
> least in part, by a more cooperative engagement. Russia will play a double
> game, ensuring it can reap benefits from having warm relations with
> countries =97 such as investment and economic ties =97 while keeping pres=
sure on
> those same countries for political reasons.
>
> The most complex relationship will be with the United States , as many
> outstanding issues remain between the two powers. However, Russia knows t=
hat
> the United States is still bogged down in the Middle East and South Asia,=
so
> there is no need for a unilaterally aggressive push on Washington.
>
> The most productive relationship will be with Germany . Moscow and Berlin
> will strengthen their ties politically, economically and financially in t=
he
> new year. But, as throughout history, their inherent mistrust for one
> another will motivate them to prepare to pressure each other if needed in
> the years beyond 2011.
>
> Moscow=92s strategy shift will also affect how Russia interacts with its
> former Soviet states. In 2010, Russia consolidated its control over Belar=
us
> , Ukraine , Kazakhstan and Kyrgyzstan , while strengthening its influence
> over Armenia and Tajikistan. Russia knows that it broadly dominates the
> countries and can now move more freely in and out of them =97 and allow t=
he
> states more leeway, though within Russia=92s constraints.
>
> There are still three regions in which Russia has not solidified its
> influence and thus will be more assertive: Moldova, the independently min=
ded
> Caucasus states of Georgia and Azerbaijan, and the Baltics. Of these, Rus=
sia
> is furthest along with Moldova , and changing relations with Georgia can
> largely be left for another day. Russia=92s strategy toward the Baltics is
> changing , and Moscow is attempting to work its way into each of the Balt=
ic
> states on multiple levels =97 politically, economically, financially and
> socially. Russia knows that it will not be able to pull these countries a=
way
> from their alliances in NATO or the European Union, but it wants to have
> some influence over their foreign policy. Russia will be more successful =
in
> this new strategy in the Baltic state of Latvia and to a lesser degree in
> Estonia, while Lithuania will be more challenging.
>
> Domestically, Russia is preparing for parliamentary elections at the end =
of
> 2011 and the highly anticipated presidential election in 2012.
> Traditionally, in the lead-up to an election, the Kremlin leader =97 curr=
ently
> Russian Prime Minister Vladimir Putin =97 shakes things up by replacing k=
ey
> powerful figures in the country. This time, Putin has asserted that his
> power over the Kremlin is strong enough that he will not need such a
> reshuffling, but many in the country=92s elite will still scramble to sec=
ure
> their positions or attempt to gain better ones. Should President Dmitri
> Medvedev=92s supporters move to break from Putin=92s grip, it could trigg=
er
> another clampdown on the country politically and socially, similar to the
> one seen in the mid-2000s. But whether Putin decides to run again as
> president or remain prime minister, his control over Russia remains secur=
e.
>
> In four of the Central Asian states, a series of unrelated trends will
> intensify in 2011, creating potential instability that could make the reg=
ion
> vulnerable to one or more crises. In Kazakhstan and Uzbekistan, succession
> crises are looming, and the political elite are struggling to hold or gain
> power. In both Kyrgyzstan and Tajikistan, ethnic, religious and regional
> tensions are turning violent . This has been exacerbated by the return of
> militants who have been fighting in Afghanistan for the past eight years.
> Both countries have called on Russia to stabilize their security situatio=
ns.
> Moscow will use these requests to increase its presence in the region
> militarily, but will hold back from getting directly involved in the
> fighting.
>
> In these four countries, Russia=92s handling of the situation is the impo=
rtant
> factor. In 2011, Moscow will ensure that all its pieces are in place =97
> whether political influence or a military presence =97 in order to keep
> control (and dominance) over the region.
>
>
> Annual Forecast 2011East Asia
>
>
> The most important question for the Asia Pacific region is whether China=
=92s
> economy will slow down abruptly in 2011. Though growth may slow, STRATFOR
> does not anticipate it to collapse beneath the government=92s target leve=
l.
> This will require a tightrope walk between excessive inflation on one side
> and drastic slowing on the other. China=92s leaders want a smooth transit=
ion
> to the next generation of leaders in 2012 , and do not want the economy to
> collapse on their watch. They will err on the side of higher inflation,
> which could exacerbate social troubles, but Beijing is betting this will
> remain manageable.
>
> China=92s exports recovered in 2010 from the lows of 2009, but export gro=
wth
> is expected to slow in 2011. Wages, energy and utilities costs are rising;
> the government is letting the currency slowly appreciate; workers are
> demanding better conditions and more compensation while the demographic
> advantage and the amount of new migrant labor entering markets is slowing=
.
> All of these processes will continue in 2011 to the detriment of export
> sector stability. Already some manufacturers of cheap goods are operating=
at
> a loss. Reports of loss-making enterprises are not yet widespread, but th=
ey
> indicate the real strains from rising costs that will worsen in 2011.
> However, as long as the American recovery continues and there are no other
> big external shocks, the export sector will not collapse.
>
> China=92s primary hope for maintaining targeted growth rates is investmen=
t.
> Since 2008, Beijing has relied on government spending packages and, most
> important, gargantuan helpings of bank loans to drive growth. The central
> government will continue these stimulus policies in 2011. Meanwhile, Beij=
ing
> will allow banks to continue high levels of lending , and the banks appear
> just capable of surging credit for another year. Deposits are still growi=
ng
> and outnumber loans, several major banks raised capital in 2010 , and
> Beijing has toughened regulatory requirements to increase capital adequac=
y,
> reserves and bad loan provisions. Nevertheless the credit boom cannot last
> much longer, and the sector is sitting on a volcano of new non-performing
> loans worth at least $900 billion. Without credible reform in lending
> practices, continued high levels of lending in China will increase system=
ic
> financial risks as companies take out new loans to roll over bad debt and
> invest in inefficient or speculative projects, while adding to inflation =
and
> compounding the sector=92s future burdens. Though a banking crisis may be
> averted in 2011, it cannot be averted for long.
>
> With Beijing willing to use government investment and bank lending to avo=
id
> a deep slowdown, inflation will rise and cause economic and socio-politic=
al
> problems in 2011, generating outbursts of social discontent along the lin=
es
> of previous inflationary periods, such as 2007-2008 , or even, conceivabl=
y,
> 1989. Inflation is hitting all the essential commodities, and STRATFOR
> sources perceive unusually high levels of social frustration from Beijing=
to
> Hong Kong. The government will use social policies, price controls and
> subsidies to alleviate the problem, but will not be able to prevent major
> incidents of unrest. Security forces are capable of dealing with protests
> and riots, but such incidents will reveal the depth of the problems the
> country faces.
>
> Internationally, China will continue playing a more assertive role. Beiji=
ng
> will accelerate its foreign resource acquisition and outward investment
> strategy . It will continue pursuing large infrastructure projects in bor=
der
> areas and in peripheral countries despite resulting tensions with India a=
nd
> Southeast Asian states. It will increase maritime patrols in its neighbor=
ing
> seas and maintain a hard-line position on territorial and sovereignty
> disputes, increasing the risk of clashes with Japan , Vietnam, South Korea
> and others. China=92s military modernization will continue to focus on ar=
eas
> like anti-access and area denial and cyber capabilities , and the lack of
> transparency will continue to feed foreign suspicions. China=92s trade
> disputes with other nations =97 especially the United States =97 will wor=
sen,
> though Beijing will make token policy changes and increase imports to red=
uce
> political friction. The United States will make bigger threats of imposing
> concrete trade measures against China as the year progresses, taking at
> least symbolic action, perhaps toward the end of the year as the 2012
> election campaign starts to warm up.
>
> North Korea=92s behavior in 2010 appeared off the charts =97 Pyongyang was
> accused of sinking a South Korean navy ship and killed South Korean
> civilians during the shelling of a South Korean-controlled island south of
> the Northern Limit Line , a maritime border the North refuses to formally
> recognize. In the past two decades, North Korea has demonstrated a clear
> pattern of escalating tensions with the South, with its neighbors and with
> the United States as a precursor to negotiations for economic benefits.
> These tensions centered on nuclear and missile developments, but not on
> outright aggression against the South =97 until 2010. Pyongyang appears to
> have made several very calculated decisions: First, that nuclear tests and
> missile launches no longer created the sense of uncertainty and crisis
> necessary to force the United States and South Korea into negotiations and
> concessions; second, that it had China=92s cover; and third, that Seoul a=
nd
> Washington would not respond militarily to a more direct form of North
> Korean provocation. All indications suggest that Pyongyang bet correctly,
> and it is looking like 2011 will see a return to the more managed relatio=
ns
> with North Korea seen a decade ago, barring a major domestic disagreement
> among the North Korean elite over Kim Jong Il=92s succession plans.
>
> The United States will continue its slow re-engagement with the region ,
> providing an opportunity for China=92s neighbors to hedge against it.
> Washington will support greater coordination among Japan, South Korea and
> Australia (as well as India) on regional security and economic development
> in Southeast Asia, increasing competition with China. The United States w=
ill
> build or rebuild ties with partners like Indonesia and Vietnam and become
> more active in multilateral groups, including the East Asia Summit and the
> Trans-Pacific Partnership. Members of the Association of Southeast Asian
> Nations will try to balance both China and the United States.
>
>
> Annual Forecast 2011Europe
>
>
> Europe continues to deal with the economic and political ramifications of
> its economic problems. At the center is Germany , the most significant
> European power in 2011. Berlin will continue to press the rest of Europe =
to
> accept its point of view on fiscal matters , using the ongoing economic
> crisis as an opportunity to tighten the eurozone=92s existing economic ru=
les
> and to introduce new ones . Germany is pursuing three key initiatives: the
> development of a permanent bailout and sovereign debt restructuring
> mechanism (largely freeing Germany from having to bail out other eurozone
> members in the future); the acceptance of tougher monitoring, implementat=
ion
> and enforcement of eurozone fiscal rules; and continued adherence to
> German-designed austerity measures among eurozone members.
>
> Berlin=92s assertiveness will continue to breed resentment within other
> eurozone states. Those states will feel the pinch of austerity measures, =
but
> the segments of the population being affected the most across the board a=
re
> the youth, foreigners and the construction sector. These are segments tha=
t,
> despite growing violence on the streets of Europe , have been and will
> continue to be ignored. Barring an unprecedented outbreak of violence, the
> lack of acceptable political =97 and economic =97 alternatives to the Eur=
opean
> Union and the shadow of economic crisis will keep Europe=92s capitals fro=
m any
> fundamental break with Germany in 2011.
>
> If anyone breaks the line on austerity, it will be the Irish and the Gree=
ks
> . In Ireland, elections in the first quarter could bring anti-bailout or
> anti-austerity forces into power. Ireland has said =93no=94 to Europe twi=
ce
> before on EU treaties, and it could be a wrench in Berlin=92s plans again=
. In
> Greece, Athens is dealing with historically high unemployment (unlike the
> Spanish and Irish, who have seen much worse as recently as 15 years ago) =
and
> another year of recession. Prime Minister George Papandreou is holding on=
to
> an ever-smaller majority in the parliament as his party=92s lawmakers jump
> ship. However, Greece and Ireland are both already under EU bailout
> mechanisms. Other states may see changes in government (Spain, Portugal a=
nd
> Italy being prime candidates), but leadership change will not mean policy
> change. Germany would only be truly challenged if one of the large states=
=97
> France, Spain or Italy =97 broke with it on austerity and new rules, and =
there
> is no indication that such a development will happen in 2011.
>
> Ultimately, Germany will find resistance in Europe. This will first manif=
est
> in the loss of legitimacy for European political elites, both center-left
> and center-right. The year 2011 will bring greater electoral success to
> nontraditional and nationalist parties in both local and national electio=
ns,
> as well as an increase in protests and street violence among the most
> disaffected segment of society, the youth. Elites in power will seek to
> counter this trend by drawing attention away from economic issues and to
> issues such as crime, security from terrorism and anti-immigrant rhetoric
> and policy .
>
> The country where elites are in most trouble is in fact Germany. Berlin h=
as
> not yet made the case to its own population for Germany=92s central role =
in
> Europe, and why Germany needs to bail out its neighbors when it has its o=
wn
> economic troubles. In large part this is because if Berlin were to make t=
his
> case domestically, laying out the advantages Germany gains from the
> eurozone, it would further breed resentment abroad. With seven state
> elections in 2011 =97 four in a short period in February and March =97 th=
e first
> evidence of nontraditional political forces=92 coming to the forefront co=
uld
> be in Germany. This could accelerate if Berlin is also called upon to res=
cue
> one of the other troubled economies within this intense electoral period =
in
> the first quarter.
>
> Central Europe will have its own issues to deal with in 2011. With the
> United States preoccupied in the Middle East, Russia making a push into t=
he
> Baltic states and consolidating its periphery, and Berlin and Moscow furt=
her
> entrenching their relationship , Central Europe will continue to see its
> current security arrangements =97 via NATO and Europe =97 as insufficient.
> STRATFOR expects the Central European states to look to alternatives in
> terms of security, whether with the Nordic countries, specifically Sweden=
,
> or the United Kingdom, or with each other via forums such as the Visegrad
> Group. But with Washington distracted and unprepared to re-engage in the
> region, the Central Europeans might not have a choice in making their own
> arrangements with Russia, which could mean concessions and a more
> accommodating attitude, at least for the next 12 months.
>
>
> Annual Forecast 2011Latin America
>
>
> Economic decay, runaway corruption and political uncertainty will define
> Venezuela in the year ahead. Venezuelan President Hugo Chavez will resort=
to
> more creative and forceful means to expand his executive authority and
> muzzle dissent, but managing threats to his hold on power will become more
> difficult and more complex, especially considering Venezuela=92s growing
> struggle to maintain steady oil production and the country=92s prolonged
> electricity crisis .
>
> The Venezuelan government will thus become increasingly reliant on its
> allies =97 namely China, Cuba and, to a lesser extent, Iran and Russia =
=97 to
> stave off a collapse. However, Chavez is facing the developing challenge =
of
> a potential clash of interests among those allies. China, Cuba and Russia,
> for example, will attempt to place limits on Venezuela=92s relationship w=
ith
> Iran in the interest of managing their own affairs with the United States.
> Though doubts will rise over the sustainability of the Venezuelan governm=
ent
> and economy , the Chavez government likely will not be toppled as long as
> oil prices allow Caracas to maintain a high rate of public spending.
>
> Cuba, meanwhile, intends to lay off or reshuffle more than half a million
> state workers (10 percent of the island=92s work force) by March 2011 whi=
le
> attempting to build up a fledgling private sector to absorb the labor. Th=
ere
> are signs that Fidel and Raul Castro have reached a political consensus o=
ver
> the reforms and are serious about easing the heavy burden on the state out
> of sheer economic desperation. However, this will be a year of immense
> struggle for Cuba , especially as many of the new privately owned or
> cooperative businesses are expected to fail due to their lack of resources
> and experience and because of a shortage of foreign capital.
>
> Cuba will continue to send positive, albeit measured, political signals in
> an attempt to make investment in the island more politically palatable to
> foreigners, but no drastic political reforms are expected. Cuba is headed
> for a major political change, but STRATFOR does not see that happening in
> 2011. Such a change will take time to develop and will entail a great deal
> of pain inflicted on the Cuban economy. We suspect that those eyeing a
> change in the Cuban leadership would rather the Castros take the fall for
> the economic hardships to be endured during this slow process. Meanwhile,
> relations between Cuba and Venezuela are likely to become more strained.
> With Cuba exerting significant influence over Venezuela=92s security appa=
ratus
> and Havana needing capital that Venezuela may not be able to provide in
> Cuba=92s time of need, the potential for quiet tension between the two
> remains.
>
> The year 2011 will be one mostly of continuity for an emergent Brazil as =
the
> country devotes much of its attention to internal development. Specifical=
ly,
> Brazil=92s focus will be absorbed by problematic currency gains, developi=
ng
> its pre-salt oil fields and internal security. The real gained 108 percent
> during President Luiz Inacio Lula da Silva=92s time in office, hitting
> domestic industry. The country is also facing investment needs of around
> $220 billion over the next five years for the offshore pre-salt oil field=
s,
> on which the country=92s geopolitical ambitions have been hinged. Crackdo=
wns
> on select favelas in Rio de Janeiro are likely to continue this year, but
> constraints on resources and time (with the 2014 World Cup approaching) w=
ill
> hamper this initiative.
>
> In the foreign policy sphere, Brazil will keep a measured distance from t=
he
> United States as a means of asserting its own authority in the region whi=
le
> gradually building up primarily economic influence in the South American
> states, particularly Paraguay. Brazil is still in the very early stages of
> achieving regional prominence and will feel more comfortable making mostly
> superficial moves on issues far removed from the South American continent
> than appearing to intrude in its neighbors=92 affairs.
>
> In Mexico, the next year will be critical for the ruling National Action
> Party (PAN) and its prospects for the 2012 elections. Logic dictates that
> for the PAN to have a reasonable chance at staving off an Institutional
> Revolutionary Party (PRI) comeback, the level of cartel violence must come
> down to politically acceptable levels. Though serious attempts will be ma=
de,
> STRATFOR does not see Mexican President Felipe Calderon and the PAN making
> meaningful progress toward this end. If there is a measurable reduction in
> overall cartel violence , it will be the result of inter-cartel rivalries
> playing out between the two current dominant cartels =97 the Sinaloa
> Federation and Los Zetas =97 and their regional rivals, mostly independen=
tly
> from the Mexican government=92s operations.
>
> Mexican authorities will devote considerable resources to the Tamaulipas =
and
> Nuevo Leon regions, and these operations are more likely to escalate
> tensions between the Gulf cartel and Los Zetas than to reduce violence in
> these areas. Political stagnation will meanwhile become more severe as
> Mexico=92s election draws closer, with parties forming alliances and the =
PRI
> taking more interest in making the PAN look as ineffectual as possible on
> most issues.
>
>
> Annual Forecast 2011Sub-Saharan Africa
>
>
> Sub-Saharan Africa=92s year begins with important votes in Sudan and Nige=
ria.
>
> A referendum on Southern Sudanese independence takes place in January.
> However, if the referendum passes, the south cannot declare independence
> until July. Thus, Southern Sudan will be in a period of legal limbo for t=
he
> first half of the year. These months will be defined by extremely
> contentious negotiations between north and south, centered primarily on o=
il
> revenue sharing. Khartoum will grudgingly accept the results of the
> referendum, and both sides will criticize each other for improprieties
> during the voter registration period and polling.
>
> The south knows it must placate Khartoum in the short term, and it will be
> forced to make concessions on its share of oil revenues during the
> negotiations. Juba will also seek to discuss other options for oil exports
> in the future during the year, with Uganda and Kenya playing a significant
> role in those talks. However, any new pipeline is at least a decade away.
> This will reinforce Khartoum and Juba=92s mutual dependency in 2011.
>
> The northern and southern Sudanese governments will maintain a heightened
> military alert on the border, and small clashes are not unexpected. Minor
> provocations on either side could spark a larger conflict, and while neit=
her
> side=92s leadership wants this to happen, Sudan will be an especially ten=
se
> place all year.
>
> Nigeria will hold national elections during the first half of the year, w=
ith
> a new government inaugurated about a month after elections are held.
> Candidates for the presidency and other political offices will be determi=
ned
> around mid-January, when party primaries are to be held. Within the ruling
> People=92s Democratic Party (PDP), it is a race between President Goodluck
> Jonathan, who hails from the oil-rich Niger Delta in the south, and the m=
an
> northern politicians are calling the consensus northerner candidate, form=
er
> Vice President Atiku Abubakar, for the party=92s nomination. Both candida=
tes
> are wooing PDP politicians throughout the country.
>
> Extensive intra-party negotiations and backroom deals will occupy the
> Nigerian government during primary season, the election campaign and after
> the inauguration, all as a matter of managing power-sharing expectations
> that could lead to violence. But the cash disbursed and the patronage
> deployed as part of the campaign will keep most stakeholders subdued even=
if
> their preferred candidate does not win. This means the event will not turn
> into a national crisis, and the Niger Delta region is likely to remain
> relatively calm this year.
>
> The African Union Mission in Somalia (AMISOM) will see a few thousand new
> peacekeepers added in 2011, continuing its slow buildup (the contingent is
> currently 8,000 strong). Somali Transitional Federal Government (TFG) tro=
ops
> will receive incremental training to increase their capabilities.
>
> This year will see attention focused on securing Mogadishu as well as
> increased political recognition of Somaliland and Puntland, two
> semi-autonomous regions in northern Somalia. But AMISOM and the TFG will
> still not be equipped or mandated to launch a definitive offensive against
> al Shabaab. Al Shabaab will not be defeated or even fully ejected from
> Mogadishu, let alone attacked meaningfully in its core area of operations=
in
> southern Somalia.
>
> The TFG=92s mandate might not be renewed after it expires in August, if t=
he
> government fails to achieve gains in socio-economic governance in Mogadis=
hu
> amid an improved security environment. Even if there is no TFG in Mogadis=
hu,
> though, there will still be a governmental presence of some sort to deliv=
er
> technical and administrative services and to operate public infrastructure
> (such as the international airport and seaport).
>
> South Africa will carry into 2011 a predominantly cooperative relationship
> with countries in the southern African region, notably Angola. Pretoria w=
ill
> use that cooperation to gain regional influence. Negotiations with Angola
> over energy and investment deals agreed to in principle during Angolan
> President Eduardo dos Santos=92 visit to South Africa at the end of 2010 =
will
> continue during the first half of 2011, with both governments sorting
> through the details of =97 and inserting controls over =97 this cooperati=
on.
> Relations between the two governments will be superficially friendly, but
> privately guarded and dealt with largely through the presidents=92 person=
al
> envoys. Beyond the commercial and regional influence interests Pretoria
> holds in Angola , the South African government will push for infrastructu=
re
> development initiatives with other southern and central African countries=
to
> emerge as the dominant power in the southern half of Africa.
>
>
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>
> --
>
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>
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Sent from my mobile device
Liz Alderman
Chief Business Correspondent
International Herald Tribune, Global Edition of The New York Times
alderman@nytimes.com
office: +331 4143 9716
mobile: +336 7915 7459