Tag Archives: stratfor

Stratfor: What Kind of Great Power Will China Become?

Summary: How China wields its growing power will help shape the geopolitical world of the 21st century. Here Stratfor looks at China and speculates at what it might become. {1st of 2 posts today.}

Stratfor

What Kind of Power Will China Become?

Stratfor, 3 February 2016

These are grim times for the Chinese economy. In the two years since property markets peaked and subsequently began to slow in most cities across China, it has become abundantly clear that the approach to economic management that sustained double-digit annual growth for two decades has exhausted itself. The unprecedented stock market volatility of the past year, along with signs of spreading unemployment and labor unrest in many regions, are important reminders that the transition to new foundations of national economic growth will in all likelihood be bitter, slow and unnervingly uncertain.

In times like these, it is tempting to embrace visions of irreversible decline — just as it was easy, in the expansive years of consistently high growth, to view China’s rise as straightforward and inevitable. As Stratfor pointed out well before the 2008-09 global financial crisis, which set in motion many of the policies and processes that underlie China’s current woes, the only certainty in the high-growth years was that they would someday end. Their ending, we predicted, would unleash tremendous and potentially destabilizing social pressures long kept at bay by the promise of universal employment and rising material prosperity. At the least, this process would slow China’s political, military and economic rise as the decade ends. At worst, it would send China into a more debilitating and longer-lasting period of crisis and fragmentation.

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Stratfor: Getting to the Root of France’s Muslim Dilemma

Summary:  Generations of immigration gave France cheap docile workers. Now comes the hangover as France struggles to integrate them, amidst concerns about rising Islamic fundamentalism and recruitment by jihadists.

Stratfor

Getting to the Root of France’s Muslim Dilemma

By Joe Parson. Stratfor, 24 January 2016

The jihadist attack on the offices of Charlie Hebdo signified the beginning of a new period of insecurity for France. Since those shots rang out a little over a year ago, France has been beset by threats, false alarms and more successful attacks. The latest of these, of course, took place in Paris itself, triggering the first nationwide state of emergency since 1961. Having been away for most of 2015, when I arrived back for the holidays I found the country had somehow changed. Disembarking at Charles de Gaulle airport’s oldest terminal, whimsically known as le Camembert for its roundness, I found the same futuristic, grimy moving walkways and familiar odor of the Paris metro. Much was the same, but then I noticed that the usual airport security was gone, replaced by military personnel patrolling with automatic rifles.

France’s security alert system, Plan Vigipirate, was developed in the late 1970s, updated once in the mid-1990s and twice more in the early 2000s. It reached its highest level of alert (scarlet) after the March 2012 Toulouse and Montauban attacks. In January 2015, however, authorities created a new, higher level to reflect the perceived current danger.

As I traveled through Paris and the rest of the country I saw these security measures in action on the city’s metro and on the country’s high-speed train, the Train à Grande Vitesse. Security checks have become much more common, and this has led to some delays. False alarms triggered by such things as suspicious packets of cookies on a Nantes tram or forgotten luggage have stopped trains across the country. Over the New Year holiday, the center of Paris was cordoned off and people were individually screened before being allowed to continue on foot. Even the Christmas market in Strasbourg, far from Paris, was blocked off to automobile traffic, and identification checks were mandatory.

Security measures in the wake of attacks have been made more complex — and politically volatile — by France’s sizeable Muslim population. French Muslims themselves, especially immigrants, have become the focus of a great deal of scrutiny over the past year. In 2010, 4.8 million Muslims lived in France, the second-largest population in the European Union and the largest in proportion to population: 7.5 percent. This has led many on the far right to call for policies specifically limiting Muslim immigration. Opinions, however, are mixed — a 2015 Pew Research poll found that only 24 percent of the country held unfavorable views of Muslims. Popular perception of Islam has played a moderating role in the government’s reaction while ensuring safety for all, including the French Muslim population.

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Stratfor: How immigration will change German politics, which will change Europe

Summary: Believing that the European Union made them immune to popular opinion, Europe’s elites acted on their class interests by opening the door to massive immigration, providing cheap workers in their business and homes. Now the resulting popular opposition, still in its early stages of arousal, has forced Germany to take steps to limit the inflow — violating the Schengen Agreement for open borders within Europe but probably insufficient to quiet public protests. They have unleashed the wild forces of populism in Europe. Here Stratfor begins to assess the consequences. Much of Stratfor’s value comes from the window it provides into thinking of Western elites, its most-important customers.

Stratfor

How German Politics Will Change Europe

Stratfor, 22 January 2016

Forecast

  • Conservative voters and politicians, increasingly fearful of the economic, social and political repercussions of the refugee crisis, will continue to pressure the German government.
  • German Chancellor Angela Merkel will survive the political impasse, but her policies will change in the coming months as she toughens Germany’s asylum policies and remains reluctant to support Greek debt relief.
  • Germany, the largest EU economy, will increasingly question fundamental aspects of Continental integration, including the composition of the eurozone and the free movement of people.

Analysis

As the European Union continues to fracture, debates in Germany could change Berlin’s domestic and foreign policies, reshaping the entire Continent in the process. A group of conservative politicians is questioning German Chancellor Angela Merkel’s ability to address the immigration crisis, with some even threatening to launch a no-confidence vote against her. Merkel will probably survive these attacks, but this is the second rebellion against her leadership in less than a year.

Regardless of whether Merkel keeps her job, German conservatives are, and will continue to be, concerned about the rise of anti-establishment and anti-immigration groups in the country. Even if these emerging forces are still far from accessing power, they will influence mainstream parties. In addition, future challenges such as the integration of asylum seekers into the labor force and the economic impact of the downturn in emerging markets will create fertile ground for anti-establishment sentiments to prevail. If Germany takes a more isolationist stance on EU issues, Europe will only further fragment.

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Stratfor: France’s State of Fear and Its Swing to the Right

Summary: The shift to the right is happening across the West. Here Stratfor looks at France, whose leaders have learned from America’s elites to exploit their people’s fears after a crisis to push through security laws and shift the political spectrum to the right. They compare its current political turmoil with France’s troubled relations with its Right.

Stratfor

France’s State of Fear and Swing to the Right

Stratfor, 15 January 2016

Forecast

  • France in 2016 will be characterized by President Francois Hollande’s attempts to cope with a country that is shifting politically to the right while leading a leftist administration.
  • In pursuit of the right-wing vote, Hollande will take a hard line on the Middle East and restrict civil liberties at home. However, he will also increase government spending in an attempt to reduce unemployment levels before the 2017 election.
  • This will ultimately be an uphill struggle, and the 2017 election will most likely come down to the center-right Republicans and the far-right National Front.

Analysis

Two months after the Paris terrorist attacks, French President Francois Hollande is seeking to expand the emergency powers he invoked in November 2015. France’s state of emergency gave the government the authority to search houses without a warrant and restrict the right to peaceful assembly, all without judicial oversight. Hollande is now looking to change the French Constitution to extend the scope of these emergency powers.

However, his proposed changes also contain a more controversial alteration: They would permit France to strip French nationality from citizens who are found guilty of terrorist offenses. In its earlier forms, this law would have applied only to offenders with dual nationality status, but more recent statements from French ministers imply that it could also apply to French citizens who have just one passport, leaving them stateless. Such a shift would represent a sharp change in direction for France, bringing up painful memories of the denaturalization of Jews in Vichy France during World War II. The proposed change also reflects a major political shift to the right as the country’s 2017 election looms ever closer.

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Stratfor: Who Wins and Who Loses in a World of Cheap Oil

Summary: Stratfor looks at one of the big questions for 2016. Low oil prices will devastate those nations dependent on oil revenue and provide small benefits to those that consume oil. The destabilizing effect of the former will affect everybody, to vary degrees. Ten years ago people worried about running out of oil (see the comments to Peak Oil Doomsters debunked, end of civilization called off). Now they worry about too much oil. The Saudis have decided to financially destroy much of their competition (the first financial world war). When this is over Texas will beg to join OPEC. I predict that in ten years people will again worry about running out of oil. See the links at the end for more information.

Stratfor

Who Wins and Who Loses in a World of Cheap Oil

Stratfor, 8 January 2016

Oil prices hit their lowest level since summer 2004 this week, continuing the rapid tumble that began in June 2014. The global benchmark, Brent crude oil, closed trading Jan. 8 at $33.37 per barrel, closing out the lowest week of prices in more than a decade. A number of factors contributed to the drop. The Chinese economy and financial markets performed poorly this week, sparking fears that a slowdown will dampen demand. In the major markets of Europe and North America, a mild winter has lowered seasonal consumption of natural gas and heating oil. On the supply side, Iranian oil will soon be back on the global market, and OPEC signaled that it would continue to supply high volumes of oil. The United States, too, has managed to produce a significant amount of oil, despite increased financial pressure on many U.S. producers. All of this may well push prices into the $20 to $30 per barrel range.

Oil is the most geopolitically important commodity, and the ongoing structural shift in oil markets has produced clear-cut winners and losers. Between 2011 and 2014, major oil producers became accustomed to prices above $100 per barrel and set their budgets accordingly. For many of them, the past 18 months have been a period of slow attrition. And with no end in sight for low oil prices, their problems are going to only multiply. Each nation, though, has its own particular level of tolerance, and the following guidance highlights the key break points to monitor.

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Stratfor looks at the Caucasus: A Crucible for Conflict

Summary: Stratfor looks at the Caucasus, where some of Europe’s fault lines cross. These border regions are often unstable, and have birthed many of Europe’s wars. The Caucasus nations are heating up, with no signs of resolution in sight.

Stratfor

The Caucasus: A Crucible for Eurasian Powers

Stratfor, 31 December 2015

Summary

Where the boundaries of Europe and Asia meet, a relatively new arena has emerged in the competition between Russia and the West: the Caucasus. The region, which comprises Georgia, Azerbaijan and Armenia, rests outside mainland Europe and is surrounded by regional powers. A wave of separatist movements since the fall of the Soviet Union has played an influential role in how the Caucasus countries view Russia, which has consistently lent its support to disputed territories.

In the coming decades, the Caucasus will continue to be an important battleground for Russia and the West as other regional powers like Turkey and Iran are drawn into the competition for influence. And as Georgia, Armenia and Azerbaijan align more closely with their chosen sides, all signs point to a Western-backed alliance gaining ground.

Analysis

Where the boundaries of Europe and Asia meet, a relatively new arena has emerged in the competition between Russia and the West: the Caucasus. The region, which comprises Georgia, Azerbaijan and Armenia, rests outside mainland Europe and is surrounded by regional powers. A wave of separatist movements since the fall of the Soviet Union has played an influential role in how the Caucasus countries view Russia, which has consistently lent its support to disputed territories.

In the coming decades, the Caucasus will continue to be an important battleground for Russia and the West as other regional powers like Turkey and Iran are drawn into the competition for influence. And as Georgia, Armenia and Azerbaijan align more closely with their chosen sides, all signs point to a Western-backed alliance gaining ground.

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Stratfor: Italy’s Shaky Financial Future

Summary: The debt supercycle is a global phenomenon, with Italy one of the most afflicted nations. High levels of debt plus slow growth makes a toxic combination. Here Stratfor examines the numbers and their implications.

“If something cannot go on forever, it will stop.”
— Herbert Stein’s Law (US economist, 1916-1999).

Stratfor

Italy’s Shaky Financial Future

Stratfor, 18 December 2015

Summary

As with many aspects of modern banking, the word “bankrupt” has its roots in Renaissance Italy. The original banks were Florentine merchants who would sit in the open street behind benches (bancas in Italian) upon which their money would be stacked. If trading went against them and their capital was reduced to nothing, their bench would be said to be broken, or banca rotta. It is fitting then that, 500 years later, the European country with the most worrying debt problem is Italy.

Analysis

This may be surprising to some, since Italy does not top the tables as worst offender by any of the usual metrics. It does not have the highest levels of debt to gross domestic product in Europe: That dubious honor belongs to Greece, whose debt to GDP ratio rests more than 40 points higher than Italy’s 132%. Nor are Italian banks afflicted with the highest quantities of nonperforming loans as a percentage of GDP. Cyprus wins that contest easily; at a staggering 137%, it relegates Ireland (23%) to a distant second place and far exceeds Italy at 17%.

But though Italy is not the worst offender, its size still makes it the most potentially problematic. Italy has the third largest economy in the eurozone after Germany and France, and it is 1.5 times bigger than fourth-ranked Spain. So even without having the highest ratios, in actual numbers Italy has the biggest debt mountain: 2.3 trillion euros (roughly $2.4 trillion) of government debt compared with Greece’s 392 billion euros. Thus the three recent Greek bailouts, though giant in relation to the Greek economy, were just a sliver of the European economy as a whole, and in their wake the eurozone carried on more or less unaffected. The same would not be true of Italy. A bailout would be a massive undertaking that would greatly stretch the union’s finances.

Of course, this is not an altogether new phenomenon. Italy’s debt to GDP ratio has been over 100% since the early 1990s, and GDP growth since then has been fairly stagnant. But the fact that Italy’s debt has been large for a long time does not mean it is not dangerous. It was the threat of Italy defaulting that drove much of the market panic during the sovereign debt crisis in 2011 and 2012, when weakness in Europe’s banks had prompted bailouts from their national governments, calling into question the solvency of the governments themselves.

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