Analysis: 2012 Could Prove Even Wilder Ride than 2011

December 22, 2011 by · Leave a Comment 

By Peter Apps, Political Risk Correspondent

LONDON (Reuters) – The ancient Mayans attached special significance to 2012, possibly the end of time. That has spawned a rush of apocalyptic literature for the holiday season.

But you don’t have to believe the world is about to end to realize that next year contains perhaps the widest range of political risks to the global economy in recent history.

With elections and leadership changes in the most powerful countries, Europe in crisis, ferment in the Middle East and worsening economic hardship driving unrest and discontent everywhere, 2012 could be just as volatile as 2011 if not worse.

The current year may yet carry a sting in its tail, with worries over the euro and jitters over a possible Israeli strike on Iran likely to keep financial markets and policymakers on tenterhooks all the way to the New Year.

More than three years after the collapse of Lehman Brothers prompted the worst financial crash since the Great Depression, economic turmoil looks to be driving political upheaval in what could become a particularly disruptive feedback loop.

Economic stresses — from rising food prices to worsening economic hardship in the developed world — were at the heart of many of 2011’s political stories. As they intensify, political volatility, gridlock, confrontation and conflict — whether domestic or international — look set to worsen.

“It’s going to get worse before it gets better,” said Jonathan Wood, global issues analyst at London-based risk consultancy Control Risks. “If you look at what’s been driving events this year, none of the factors has gone away and many of the economic drivers are still growing.”

Presidential elections in the United States, France and Russia and the dual transition of power at the top of China’s Communist Party will add to the uncertainty. They may make it harder for political leaders to find compromises or push through tough policy choices.

GROWING GRIDLOCK?

That, many analysts warn, brings with it a mounting risk of political gridlock coming just as the world needs leadership most. The failure of the U.S. Congressional “super committee” to agree on how to reduce the budget deficit may be a sign of things to come domestically in many countries.

President Barack Obama faces a tough re-election bid, whomever the Republicans choose to challenge him, because of a sluggish economy, 8.6 percent unemployment and a squeeze on the middle classes due to fallen home and stock prices.

A fragile global consensus forged at a 2009 summit of leaders of the Group of 20 major economies may be gone for good, replaced by what Ian Bremmer, president of political risk consultancy Eurasia Group, calls a rudderless “G-zero” world.

Top of the list of 2012 risks for many analysts is the unresolved sovereign debt crisis in the euro zone.

If the 17-nation European single currency is to survive in its current form, its members will have to confront harsh economic adjustments and seismic political reform. Last week’s Brussels summit, the 16th since the start of the two-year-old crisis, was billed by some as the last chance to save the euro.

While euro zone leaders and some non-euro states agreed to forge a closer fiscal union with stricter budget discipline, the outcome fell short of guaranteeing the euro’s ultimate survival.

At worst, 2012 could still see a disorderly breakup bringing with it a chain of defaults, bank runs and civil unrest, not to mention a savage global economic shock worse than that of 2008.

Ultimately, however, many believe the euro will endure — although not without colossal strains as it tries to reconcile very different economies such as Germany and Greece.

“The greatest single risk is obviously the euro zone but it might also be the risk that is sorted out the quickest,” says Alastair Newton, a former British government official who is chief political analyst at Japanese bank Nomura.

“But even if that happens then you’re still going to have very low growth and a rise in social unrest in the southern euro zone in particular and across Europe in general. Even in the best case scenario, 2012 looks pretty rough.”

For others, the Middle East remains the most important area to watch for potential disruption to the global economy.

Almost a year after the beginning of the “Arab Spring” democracy movement, the region remains in political flux with untested Islamist parties winning power across north Africa and Syria’s uprising slowly turning towards outright civil war.

CONFLICT, UNREST

After the fall of several veteran Western-backed Arab rulers, the withdrawal of U.S. forces from Iraq is seen as the latest sign of the diminishing influence of Western powers in a region they dominated for some 200 years.

In the resulting vacuum, regional powers such as Turkey, Saudi Arabia and an isolated and perhaps more erratic Iran appear in increasingly open confrontation.

Western intelligence estimates that Iran is moving closer to a viable nuclear weapon have a shorter timeline, and some analysts say 2012 could be the year when Tehran’s enemies decide to go beyond covert sabotage with a military strike that could spark retaliation against oil supplies in the Gulf.

“The bigger wild card out there is an Israeli attack on Iran’s nuclear facilities and elements of regime control,” says Thomas Barnett, chief strategist of political risk consultancy Wikistrat, saying neither the Israeli nor the Iranian leadership looks inclined to back down. “The setting here is scary… something has got to give in this strategic equation.”

Even if the world avoids a devastating shock such as a Middle East war or a European breakdown, many analysts fear the business of politics and policy-making could become increasingly difficult around the world.

With economic growth slowing and unemployment creeping up, most analysts believe the risks of social unrest will continue to rise across much of the developed and developing world.

“We have all the problems you’d expect from economic hardship. At some stage we will have rising food prices which are always destabilizing and we have a question over whether China will overheat,” says Elizabeth Stephens, head of credit and political risk at London insurance brokers Jardine Lloyd Thompson.

“Even a fall of one or two percentage points of GDP (in China) could be enough to really question social stability if they can’t keep job creation going… We (also) have probable ongoing unrest in Europe and the ongoing transition in the Middle East and North Africa could be quite unstable.”

In the dying days of the year, other long held assumptions of stability have be thrown into question — not least by the rising tide of protest against Russia’s Vladimir Putin. The one certainty for 2012, many believe, is more of the unexpected.

“2011 was a nightmarish year to be a policy maker or an investment portfolio manager but it was a great one to be a political analyst,” says Newton. “I’d certainly expect the same for next year.”

(Reporting By Peter Apps)

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The Fatah- Hamas Reconciliation

May 5, 2011 by · Leave a Comment 

By Geoffrey Cook, TMO

Richmond, Va.–May 3rd–I was just informed of the commencement of this project (Saturday, the last day of the previous month) that one of Colonel’s Khadafy’s seven sons was slain– and the Colonel nearly so–at the Libyan government’s Armed Forces Command and Control Center in Tripoli by an Anglo-Franco-American air strike.   Cyrenaica’s civil war is emerging as an extended one.

While from the Maghreb to Far Western Asia, Syria appears to be degenerating into a Civil War of its own.

On the bottom of the Arabian Peninsula agrees to step down immediately as soon as he receives (legally-binding) assurances that neither he nor any of his family is not prosecuted for their decisions in attempting to put down the initial unrest.  As a negotiator himself, your observer does not deem this to be an unacceptable compromise.  Yet, the great hoi-polloi have rejected this compromise, and continuing their rioting for the instant removal of the administration as it is currently constructed without any pre-conditions.

Over the world — and even the larger Islamic world — political unrest has sprouted, but I would like to focus upon the most central point of the Arab “Spring,” and this is Palestine, for their non-Arab, non-Islamic neighbor, Israel, is, as your scribe has repeated in past pieces is the key or failure of the success or failure of a unique Arab democracy (ies).  

Your author shall switch from the third to the first person because what I am to compose is opinion, and based on plan guessing.  It is, also, e  aqua — from the “tope of my head.”

Probably, the most newsworthy incident to come out of the Middle East was the reconciliation between Hamas and Fatah, the two main political parties within Palestine.  Fatah controls the West Bank while Hamas the Gaza Strip. 

After the 2006 Gaza election, which (Former U.S.) President Jimmy Carter declared the polls in that mini-(Palestinian) nation as the most free and fair that his teams had ever observed, Hamas, an Islamist Party won fairly without question.  This lead to a bloody, short civil war between the two Palestinian political parties.  With Hamas driving their “brother” faction from Gaza city.

As so often in the Arab world, the eternal world demands democracy within the Arabic-speaking peoples.  When that very things comes about the bloc that comes to power is declared a “terrorist” organization  — both the United States and Israel refused to recognize the Strip.  (In fact, Israel brought a most vicious to the innocent civilians within that State.)  Because Hamas had been mentored by the second largest party in Cairo, the Muslim Brotherhood, Mubarak, who lately headed, the Nile State, blockaded, their border into the Gazan “nation” at Rafah because the last oppressive government where afraid of Hamas (Gaza is not that far from the oldest continuous nation’s) reforms would have on their mock “Parliament” on the River.  (After disturbances brought down Mubarak’s regime Gaza is finally being supplied from their Western borders!)

Here, at Richmond, I have had several intense talks with (U.S.) Defense Department officials who were quite perturb of the Muslim Brotherhood growth of influence within the largely North African nation.  I assured them that they were politically right-of Center party who wished to put their religious morality within their policies.  The universal reply I received was “I hope you’re right!”

Back to last weeks rejoining of Hamas with Fatah to form a united political over all the Palestinian nation as it now exists.

As I have said before I am in dialogue with many progressive Jewish-Americans and even a  few Israelis.  For the most part, these groups are for settlement of the Israeli-Palestinian, and I fully support most but not all of their proposals.  What concerns me, though, is that even the liberal organization stand in opposition to the unification of the Palestinian political parties because Hamas does not recognize Tel Aviv’ right to exist.

In the next ballot, provided it is free and fair, Hamas would not only prevail in the Mediterranean, but the West Bank as well.

Although Hamas refuses as yet to recognize a Zionist State, it is better that all parties are discussion amongst themselves than not.  The object of negotiation is not that they agree with each other, but that they can find a middle ground from which a compromise; otherwise, the end object will be War, and with Israel being a nuclear State (from the Negev) mega-tragedy can develop.  I would call upon Jews in the United States to call upon your State to react diplomatically rather than militarily.  I would urge American Muslims to pressure Washington to be even-handed!

Finally, Israel has made a veiled threat to Egypt (and, thus, to other nations in the region) that, if the Brotherhood should dominate, the forthcoming vote, Israeli Jerusalem would take it as a hostile act.  Both Hamas and the Brotherhood are fully democratic organizations.

The Arab “Spring” must succeed!  An Islamic democracy must be based upon the religion’s principles and culture must be allowed to developed.  Israel must not allowed to be the spoiler.  Besides, strong regional sponsors may allow for a resolution for the dilemma of the Occupied Territories to be solved, and, incidentally, for the survival of the State of Israel’s within the Middle East in accepted secure borders alongside a viable Palestinian State.  For the present actions of that nation can only guarantee its worst fear — that will be driven into the Sea within a hundred years or less!

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China Accuses US of Online Warfare in Iran

March 4, 2010 by · Leave a Comment 

Iran election unrest an example of US ‘naked political scheming’ behind free speech facade, says Communist party editorial

A protest over the Iranian election in Washington last June. Photograph: Molly Riley/Reuters

The United States used “online warfare” to stir up unrest in Iran after last year’s elections, the Chinese Communist party newspaper claimed today, hitting back at Hillary Clinton’s speech last week about internet freedom.

An editorial in the People’s Daily accused the US of launching a “hacker brigade” and said it had used social media such as Twitter to spread rumours and create trouble.

“Behind what America calls free speech is naked political scheming. How did the unrest after the Iranian election come about?” said the editorial, signed by Wang Xiaoyang. “It was because online warfare launched by America, via YouTube video and Twitter microblogging, spread rumours, created splits, stirred up and sowed discord between the followers of conservative reformist factions.”

Washington said at the time of the unrest that it had asked Twitter, which was embraced by Iranian anti-government protesters, to remain open. Several social media sites, including YouTube, Facebook and Twitter, have been blocked in China in the last year.

The editorial asked rhetorically whether obscenity or activities promoting terrorism would be allowed on the net in the US. “We’re afraid that in the eyes of American politicians, only information controlled by America is free information, only news acknowledged by America is free news, only speech approved by America is free speech, and only information flow that suits American interests is free information flow,” it added.

It attacked the decision to cut off of Microsoft’s instant messaging services to nations covered by US sanctions, including Cuba, Iran, Syria, Sudan and North Korea, as violating America’s stated desire for free information flow. Washington later said that such services fostered democracy and encouraged their restoration.

China initially gave a low-key response to Google’s announcement that it was no longer willing to censor google.cn. The internet giant said it had reached its decision following a Chinese-originated cyber attack targeting the email accounts of human rights activists, and in light of increasing online censorship.

Clinton’s direct challenge to China, in a speech that had echoes of the cold war with its references to the Berlin wall and an “information curtain”, led Beijing to warn that US criticism could damage bilateral relations. Clinton called on China to hold a full and open investigation into the December attack on Google.

In an interview carried by several Chinese newspapers today, Zhou Yonglin, deputy operations director of the national computer network emergency response technical team, said: “Everyone with technical knowledge of computers knows that just because a hacker used an IP address in China, the attack was not necessarily launched by a Chinese hacker.”

US diplomats sought to reach out to the Chinese public by briefing bloggers in China on Friday. They held a similar meeting during Barack Obama’s visit in November.

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