Annual Forecast 2014 - The View from Stratfor

Editor’s note: We begin our week-long focus on the year ahead by republishing excerpts from Stratfor’s Annual Forecast 2014. The full report can be accessed external pageherecall_made.

By and large, 2014 will be a year of careful deliberation and preparation by the world’s great powers, in which accommodation will likely prevail over confrontation in their interactions. By contrast, the countries between these great powers will grow restive as they try to adapt to their shifting geopolitical environment, lacking the influence to play a decisive role in the very issues redefining their neighborhoods.

Middle East

The U.S. attempt to resurrect a balance of power in the Middle East through a strategic detente with Iran will be the driving issue for the Middle East in 2014. Between U.S. President Barack Obama's growing struggle with Congress ahead of November midterm elections and Iranian President Hassan Rouhani's ongoing challenge of trying to garner support from hardliners at home, there are sure to be hurdles that could at times make the talks appear to be on the verge of collapse. Despite the unavoidable obstacles, external pagethe U.S.-Iranian detente will endure this yearcall_made. However, a comprehensive settlement between Washington and Tehran -- and thus an end to the Iranian sanctions -- will take more than 12 months to develop.

Publicly, U.S.-Iranian talks will focus on neutralizing Iran's nuclear program in exchange for economic relief for much of the year. However, talks will extend quietly to other areas of mutual interest, including Syria, Iraq, Lebanon and Afghanistan, as the two sides negotiate a balance of power in the region. That said, progress will be uneven in each of these arenas as the United States and Iran struggle to work out their differences and influence a maze of competing ethnic and sectarian forces.

Saudi Arabia, though deeply unnerved at the prospect of its primary patron developing a relationship with its main regional adversary, external pagewill lack the power and influence to derail the negotiationcall_made. The Saudi government will attempt to tighten and strengthen an Arab coalition against Iran, but this effort will be mostly hollow. Despite the obvious strain between Washington and Riyadh, the United States will maintain its relationship with the Saudi royals and other Gulf states through military and energy deals. As the U.S.-Iranian deal progresses, the Saudi government might consider quietly opening up a back channel with Tehran to directly negotiate a truce with its adversary. Most of Saudi Arabia's focus this year, however, will be on trying to maintain influence in still-active sectarian battlegrounds.

Syria will remain the main proxy battlefield between Iran and Saudi Arabia. Despite multilateral efforts to negotiate a political transition in Syria, no negotiation will quell the Syrian civil war this year. Limitations to external aid for the rebels and efforts to neutralize the Syrian chemical weapons program will keep the civil war relatively contained. The loyalist forces will have enough of a military advantage this year to enable Syrian President Bashar al Assad to manipulate elections, scheduled for the spring, in favor of the Alawite minority while playing rival rebel factions against one another.

A large and capable jihadist presence in Syria will encourage external pagethe slow rise of an indigenous jihadist movement in Lebanoncall_made. Hezbollah will have to split its attention between an emerging Sunni militant threat in Lebanon and reinforcing its sectarian allies in Syria. The Lebanese political and militant landscape will become even more fragmented in 2014 as various factions seek accommodation with one another to adapt to Iran's strengthening role in the region.

Like the U.S.-Saudi relationship, the U.S.-Israeli relationship will experience a great deal of strain as the United States absorbs the external pagepolitical cost of distancing itself from Israelcall_made while its policy for the region evolves. Israel will drag its feet in any U.S. effort to reinvigorate the Israeli-Palestinian peace process. The deeply fragmented Palestinian political landscape, along with Egypt's disinterest and preoccupation, will further hamper the peace process.

The Egyptian military will use the spring election cycle to external pagefurther entrench its authoritycall_made and stack the government with political allies. Political unrest will persist -- but not to a paralyzing degree -- as the Muslim Brotherhood struggles to recuperate from its losses and as the military selectively co-opts Salafists into the government. An Egyptian economic collapse is unlikely, though Cairo will remain severely constrained as it tries to manage a burgeoning electricity crisis and unavoidable subsidy cuts amid a protest-prone populace. Egypt will face a persistent jihadist threat in the Sinai Peninsula that will spill increasingly into Egypt's core urban areas. Egypt's preoccupation with these internal challenges will make Cairo unable to play a decisive role in Arab affairs beyond its borders in 2014.

Turkey will use this year to external pagereprioritize its foreign policy objectivescall_made. While Tehran stands to strengthen its regional position through accommodation with Washington, external pageTurkey will look for ways to balance against Irancall_made. These efforts will be most visible in Iraq, where Turkey will try to anchor its influence in the north through energy deals with the Kurdistan Regional Government while Iran maintains a dominant position in Baghdad through the Shiite-led government. Turkey's ruling Justice and Development Party will face great internal stress as a coalition of unlikely allies -- including the Gulen movement, members of the business elite and the main opposition Republican People's Party -- finds common cause to weaken Turkish Prime Minister Recep Tayyip Erdogan's position and external pageundercut the ruling partycall_made in local and presidential elections. The government's ambitious peace process with the Kurdistan Workers' Party will reach an impasse. The Kurdistan Workers' Party's frustration over the negotiations could lead to large public demonstrations and sporadic attacks, but a full resurgence of Turkey's Kurdish insurgency this year is unlikely.

Libyan instability will be at the heart of North African security issues in 2014. Even as Western states push the transitional national authority in Tripoli to move ahead in drafting a constitution and forming a new government, Tripoli will continue to struggle in asserting its authority over a fragmented tribal and militia landscape. Instability in Libya will continue benefiting regional jihadists in search of a haven and staging ground for attacks. Neighboring Algeria and Tunisia in particular will not be immune to such attacks, but Algiers will maintain its security cooperation with Tunis and, to a lesser degree, Tripoli as it tries to insulate itself.

Algeria will try to expand its political, security and economic inroads into Tunisia as the latter continues through its difficult political transition. Algiers will also maintain security coordination with the Sahel states to the south and continue low-level political provocations with Morocco to ensure Rabat remains too distracted by domestic political and economic challenges to interfere with Algeria's regional policies. Algerian President Abdel Aziz Bouteflika and his faction will work toward securing a victory in the upcoming presidential election -- whether Bouteflika or an ally runs for the office -- and overseeing changes to the constitution while balancing competing military, political and economic interests.

Europe

Europe will muddle through another year of stagnant economic growth and high unemployment, but the political and social pressures developing on the Continent will hobble the very structural reforms needed to manage the crisis in the long run. Negligible economic growth and high unemployment rates (in the periphery, as well as core countries like France and the Netherlands) will persist. The most palpable consequence will be the rise of social unrest. Street demonstrations will be the most obvious expression of popular anger at ruling elites. Just as important to watch will be the gradual strengthening of nationalist and anti-establishment parties as well as the external pagemore subtle emergence of grassroots movementscall_made capable of gaining support from various, but equally frustrated, segments of society.

EU institutions largely will be paralyzed for the second half of the year due to European Parliament elections in May and the election of a new European Commission at the end of 2014. Further complicating matters at the EU level in this transition period will be the entry of nationalist parties into the European Parliament, where they will try to block or at least delay EU integration policies put forth by the member states and the European Commission, such as the creation of a eurozone budget. Greater political discord at the EU level will complicate efforts to insulate and repair European banks, but the European Central Bank will retain the tools it needs to prevent a Europe-wide banking and sovereign debt crisis this year. The task of forming a banking union will enter the technical phase as the European Central Bank and national regulators try to implement a relatively diluted political agreement to centralize the oversight of, and decision-making for, eurozone banks. The consolidation process, in which stronger banks absorb the weaker, will continue, and the European Central Bank will be able to provide aid (financial assistance, restructured bailout agreements and relaxed austerity demands) to struggling eurozone countries if the need arises. Greece, Cyprus, Portugal and Slovenia will be the most vulnerable countries that could require such aid in 2014.

The Franco-German relationship, which forms the foundation of the European Union, will undergo strain this year as France's domestic tensions escalate. Paris and Berlin will make the necessary effort to manage their relationship, even as their economic performance continues to diverge.

French President Francois Hollande will try to appease a diverse and growing group of demonstrators and balance between business groups, local protest groups and unions though reforms, such as external pagerevamping the country's taxation systemcall_made, though progress will be slow and uneven. Criticism from Germany and the European Union over France's resistance to cutting back government spending will have little influence on French policy.

Germany will also have a busy domestic agenda, including efforts to pass energy reforms in response to the rising costs that have come with the increased use of renewable energy. Germany's energy reforms will trigger disputes at home and with the European Union, because Berlin will be expected to prioritize domestic demands to avoid raising energy costs for German companies over EU complaints that German state financial support for companies undermines competitiveness on the EU level. Germany's decision to implement a minimum wage in 2015 could dampen criticism of the country's trade surplus.

Germany will engage in a external pagecomplex balancing act with Russiacall_made, particularly regarding energy policy. On the one hand, the completion of liquefied natural gas import terminals in Poland and Lithuania in 2014 will demonstrate a continued commitment from the European Commission to weaken Russia's energy leverage over Europe. Germany can be expected to demonstrate its close relationship with Poland in other aspects as it balances against Moscow. On the other hand, Germany likely will play a critical role in facilitating a compromise between the European Commission and Russian state-owned energy firm Gazprom on the European Union's ongoing antitrust probe.

Hungary and Bulgaria will also push for a compromise between the European Union and Russia on energy policy, since they are among the European countries that hope to profit from Russia's South Stream natural gas pipeline project. Hungary will maintain an antagonistic relationship with Brussels, and Hungarian Prime Minister Viktor Orban's government will run a heavily anti-EU and populist campaign ahead of elections in the first half of the year. Budapest's attempts to expand its control over the Hungarian economy will continue, with utility companies and banks among its main targets.

2014 will be a significant year for European separatist movements. London will campaign against external pageScotland's independence referendumcall_made in September, but the issue is unlikely to generate substantial frictions within the United Kingdom. In Spain, Catalonia's push for a referendum will be considerably more contentious. The Catalan government will try to use its plans to hold a referendum as leverage in its negotiations with Madrid, while the government of Prime Minister Mariano Rajoy will threaten to take the matter to the Constitutional Court, where it would be annulled. Even if the referendum is actually held, the external pagedeep divisions within Catalonia's political establishmentcall_made will prevent a unilateral declaration of independence in 2014.

Former Soviet Union

Russia has a limited amount of time before the United States turns its attention away from the Middle East and toward other areas of the world, including Russia's neighborhood. Though Russia will continue external pagetrying to build leverage in the Middle Eastcall_made to quietly complicate U.S. plans for the region, it will not be able to stand in the way of a deal. Therefore, this year will be a crucial period during which Russia will resolve as many priority issues as it can while Washington remains preoccupied with negotiations with Tehran.

Economic malaise will drive social unrest in Russia at a time when the external pagestate mechanisms traditionally used to manage that unrest are losing influencecall_made. Putin will be able to manage the growing instability within the Kremlin and on the streets, but in the process he will make the state more dependent on him in particular and thus more vulnerable in the long run. Economic stagnation will force Russia to confront vulnerabilities in its energy-based economy. The external pageRussian energy sector will continue evolvingcall_made from a monolithic state-run sector focused almost entirely on Europe to a more competitive, but still heavily state-influenced, sector. The Kremlin will also engage in policy changes in 2014 to bolster non-energy sectors of the economy, including the mining, metals, construction, food and auto industries. This initiative will make limited progress in the short term, but the Kremlin will loosen up restrictive investment policies in an attempt to make these sectors more attractive to potential investors.

Russia is nervous about the prospect of a U.S.-Iranian rapprochement but likely will not be able to stop it. Moscow will try to benefit from the situation by arguing that the U.S.-Iranian negotiation has removed the Iranian military threat and thus has external pagerendered U.S. ballistic missile defense plans for Europe obsoletecall_made. The United States will try to avoid a confrontation with Russia as it focuses on securing a deal with Iran, but Washington is unlikely to compromise substantially on its ballistic missile defense plans, designed in large part to balance against Russia and reinforce a U.S. military commitment to allies in Europe.

Russia will continue its external pagecommercial acquisition strategy in Central Europecall_made, but Berlin will be more assertive on occasion in an effort to set some boundaries with Russia in Central Europe while focusing on the much bigger issue of holding the eurozone together. Berlin and Moscow will take care to maintain their bilateral relationship, but external pagethe two countries will engage in substantial bargainingcall_made over Central Europe, Ukraine and the EU energy strategy.

Russia's moves in the former Soviet periphery this year will mostly involve defending and consolidating the gains it has made thus far. With Western influence in Ukraine neutralized for now, Russia will move forward with plans to strengthen its ties to external pageUkraine's energy and economic sectorscall_made. This will be a politically volatile year for Ukraine in the run-up to the presidential election slated for early 2015, and protests against the president will occur periodically.

Moldova and Georgia, which moved forward with EU agreements in 2013, will become a focal point of the external pagecompetition for influence between the West and Russiacall_made. Russia can be expected to apply economic, security and political pressure on Moldova and Georgia to try to prevent them from following through with the agreements.

The Baltic states will continue to make progress in their energy diversification from Russia, with external pageLithuania's liquefied natural gas import terminalcall_made coming online in late 2014. However, the Baltics will continue to struggle to get the security commitment they seek from NATO and the United States in the face of external pageRussia's more aggressive military posturing in the regioncall_made.

Russia will maintain a external pagestrong position in all three Caucasus statescall_made this year, though the U.S.-Iranian talks will open the door for both Iran and Turkey to gradually become more active in the region. Armenia, Kyrgyzstan and Tajikistan will strengthen economic and security ties with Russia as they progress with plans to join the Customs Union, which is external pageset to become the Eurasian Union by 2015call_made.

As Moscow looks beyond Europe to diversify its energy clientele, Russia will expand and deepen its external pagerelationships in the Asia-Pacific regioncall_made. Russian oil deals with Asian clients have already begun to alleviate pressure in the Russian oil sector, but this year Russia will begin construction on energy infrastructure designed to supply natural gas to Asia. external pageChina's growing interest in Central Asiacall_made will unnerve Moscow, but Russia will avoid confrontation and prioritize securing its own large energy deals with China this year. Russia will gradually develop a counterweight to China through its warming relationships with Japan and South Korea. The Russian-Japanese relationship will be particularly important in 2014 as both states move toward negotiating a peace treaty and easing territorial tensions.

The U.S. drawdown in Afghanistan and the resulting gradual outflow of militants will exacerbate an alreadyexternal pagetense security environment in Central Asiacall_made. external pageBorder tensions and violencecall_made among Uzbekistan, Kyrgyzstan and Tajikistan will continue to pose a threat in the region. external pageKazakhstancall_made and Uzbekistan both face uncertainties regarding presidential successions, but political friction will build in Uzbekistan in particular as external pagethe competing clanscall_made struggle this year in preparation for the eventual transition.

East Asia

Three trends will shape East Asia and the Pacific region in 2014. First, China will struggle to implement reforms amid an economic slowdown, external pageconsolidate the new administration's powercall_made and assert its influence in the region. Second, major powers will respond to China's growing influence, includingexternal pagethe United States updating its engagements in the regioncall_made and external pageJapan reviving its international statuscall_made. Third, a range of Asian states will experience greater volatility as a result of China's slowdown, U.S. monetary policy and internal political dynamics.

The cautious, incremental implementation of reforms in China over the next 12 months is defined by the need to streamline government bureaucracy, address widening regional and rural-urban economic imbalances and external pageallow market forcescall_made to play a more significant role in the allocation of resources. In line with its broader goal to shift toward an economic modelexternal pageless reliant on coastal export manufacturingcall_made, the central government will extend external pagereforms of residential registrationcall_made and rural land sales. Likewise, it will support further inland and western development through new special economic zones and infrastructure investment. However, China's leaders will seek to balance against the need to maintain socio-economic stability, resulting in gradual and partial execution.

Severe risks to social and economic stability will persist, mainly from external pagerecent credit accumulationcall_made, threats to employment from slower growth and rising public anxiety over corruption and external pageenvironmental degradationcall_made. However, despite the risk of systemic financial crisis, the central government has the resources to manage these concerns throughout 2014.

Reforms always come with more intense ideological debate and rising political expectations that go beyond the Party's interests. Hence, the Party will resort to tight control over social media, dissent and the ideological realm in order to ensure that further economic opening will not jeopardize its political authority. Xi and his allies will burnish their public credentials and build confidence in the Party's trustworthiness by continuing an external pageaggressive campaign against corrupt officialscall_made. This will also serve to consolidate power throughout the Party and state bureaucracy. Xi will also try to improve the judicial system gradually. Still, social unrest and alternative political demands will intensify as different groups oppose what they view as either excessive gradualism or radicalism in the central government's reform agenda.

Beijing will accelerate economic cooperation with its neighbors to external pagespeed up development in its border regionscall_made and improve its strategic standing among its immediate neighbors. In particular, China will refocus on development in the south and west, looking to open up land corridors to reach Central Asia, Eastern Europe and the Middle East. At the same time, China will bolster its traditional foothold in Southeast Asia, seeking greater connectivity and market share in the face of growing competition.

The U.S. challenge of external pageresurrecting a balance of power in the Middle Eastcall_made will limit Washington's focus on the Asia-Pacific region in 2014, but the United States will gradually gain more flexibility to pursue engagements there. It will work with allies and partners to increase military drills, visits and dialogues while pressing forward with economic cooperation, including but not limited to the Trans-Pacific Partnership.

Japan will continue to act with a renewed sense of international purpose, aiming to revive its international image as a great power. It will continue normalizing its military, paying particular attention to expanding capabilities in the southwestern islands, facilitating arms exports and changing policies to allow collective self-defense. Tokyo will maintain the recently increased tempo of economic diplomacy, focusing especially on infrastructure exports and emerging markets. It will court states that offer both economic and strategic benefits especially -- including external pageRussia, India and members of the Association of Southeast Asian Nationscall_made. Domestically, economic stimulus will mitigate the impact of a higher consumption tax, but the attempt to contain large deficits and debt while speeding up growth and inflation will reveal constraints on the government's economic policies. The very slow restart of nuclear power will be politically controversial, external pageand energy import costs will remain highcall_made, contributing to trade deficits. In addition, the need to raise wages will remain a major obstacle to broader economic revival. For these reasons, political opposition will grow even as the ruling party remains broadly popular and firmly in control of policy.

Across Southeast Asia, a range of economic and socio-political challenges will become more prominent in 2014. The region's emerging economies will capitalize on the gradual shift of manufacturing investment away from China and the rising competition among developed countries for market share in this economically ascendant region. However, they will face immediate challenges as China's slowdown, Europe's weakness and expectations of tighter U.S. monetary policy external pageforce them into a riskier environmentcall_made. In addition to economic volatility, several Southeast Asian countries face the prospect of political instability and social discontent. Indonesia's new government will face the test of whether it can maintain the past decade's relative stability despite budgetary, trade and inflation troubles. Thailand will enter into the next episode of its external pageongoing political and constitutional crisiscall_made, since the royalist establishment and regional populist movement probably will not be able to forge a broad compromise in 2014. Myanmar will continue its economic opening and political reform, but the election in 2015 will lend momentum to political maneuvering and external pagefurther ethnic and religious instabilitycall_made. Vietnam will strive to contain rising public grievances as it external pagerestructures its economycall_made.

In external pageNorth Koreacall_made, 2014 brings even greater uncertainties than usual. The ousting and unexpected execution of North Korean leader Kim Jong Un's uncle, Jang Song Thaek, raises questions about Kim's consolidation of power -- namely, whether the purge of Kim's rivals is unfinished. Moreover, the struggle for consolidation will continue since Kim remains a new leader surrounded by older generals and party leaders. Pyongyang may reach out, but it will not go so far as to make major concessions on its nuclear or missile programs in the next year.

South Asia

Domestically, India's external pagenational elections in May 2014call_made will consume New Delhi's attention. The incumbent Congress/United Progressive Alliance government will be in a lame-duck position for the first half of the year as the domestic economy struggles with an overall slowdown. The opposition Bharatiya Janata Party will position itself as the force capable of lifting the Indian economy out of the doldrums facing many emerging economies. The large numbers of people mobilized as part of the political process will create several avenues for conflict: local communities pushing back against state and national authority, competing ethnic and sectarian interests, and the ever-present jihadist and militant threat.

external pageNew Delhi will attempt to pursue its strategic interestscall_made in the broader Indo-Pacific basin, including Nepal, Sri Lanka and Myanmar, as well as other Association of Southeast Asian Nations, while trying to limit the risks of instability in Pakistan and Bangladesh and of an Afghan state preparing for the 2014 NATO withdrawal. As New Delhi continues moving toward a more stable working accord with Beijing, it will also try to leverage its traditional relationships with the United States, Australia and Japan into increasing foreign investment and infrastructure development. The U.S.-Iranian negotiations will create opportunities for India to expand its ties with Iran and potentially cooperate in areas like Afghanistan. However, a slow removal of sanctions will threaten India's favorable payment arrangements for Iranian oil.

Bangladesh will attempt to hold elections without a military-backed neutral caretaker government in place for the first time since the country's return to civilian rule in 1990. While the outgoing Awami League-led coalition will attempt to bring the opposition Bangladesh Nationalist Party, its Islamist allies and the military into negotiations on its own terms ahead of any election, the party's attempts to retain power will face significant resistance. Violence, public unrest and protests will take their toll on overall security and stability. external pageThe country's critical textiles and clothing manufacturing sectorcall_made will suffer from continued, disruptive strikes for higher wages. The government will grant concessions to labor, but strikers' awareness of the government's weak position will spur further demands.

Sri Lanka will be caught in a competition between New Delhi and Beijing as both try to bring the island nation into their spheres of influence. Colombo will focus on consolidating its position in the Tamil-dominated northern and eastern parts of the country external pagefollowing the provincial council votes in September 2013call_made. President Mahinda Rajapaksa's administration will try to revitalize provincial economies through outside investment and infrastructure development. Colombo will also seek greater foreign capital inflows into the country's ambitious infrastructure, energy and mineral extraction sectors. Agriculture and manufacturing, specifically textiles production, will continue to be a focus of growth.

Afghanistan faces two primary challenges in 2014: the drawdown of NATO forces and the decision on the status of forces agreement with the United States. Stratfor believes that Kabul will eventually agree to a continued U.S. military presence, despite elaborate outward waffling on behalf of external pagePresident Hamid Karzai's outgoing governmentcall_made aimed at limiting negative blowback from announcing a decision publicly. This military presence will be too small to meaningfully affect Washington's fitful negotiations with the Taliban, but the drawdown will also effectively remove Afghanistan as a strategic priority for the United States.

The growing uncertainty in Afghanistan will have the most direct impact on its eastern neighbor, which already faces a strategic dilemma on how to manage its own domestic jihadist insurgency. external pagePakistani Talibancall_made rebels under a new leader based in eastern Afghanistan will try to take advantage of the vacuum created by departing Western forces and the Afghan Taliban insurgency to launch a new offensive east of the Durand Line. Islamabad thus will have its hands full dealing with the new Afghan leadership as well as the insurgencies next door and at home.

Latin America

Having passed a raft of deep external pagepoliticalcall_made, external pageeconomiccall_made and external pagesocial reformscall_made in 2013, Mexico will now be faced with perhaps an even harder task: implementation. With no constitutional reforms on the agenda, alliances among the country's three major parties will be less imperative, and interparty cooperation will likely stagnate. Implementation of the aforementioned reforms will be replete with bureaucratic and political hurdles. On the security front, Mexican President Enrique Pena Nieto will struggle throughout 2014 to implement his external pagelong-term strategycall_made -- namely, creating a new national gendarmerie and consolidating public security under a single, centralized command structure in each state. With few alternatives, he will continue his predecessor's approach of using the military to target the leadership of organized crime groups and to maintain order where needed. High levels of violence and insecurity will continue in most of the country -- particularly the northeast and southwest.

Colombia likely will reach a deal with the Revolutionary Armed Forces of Colombia, or FARC, in 2014, thereby ending external pagethe Western Hemisphere's longest insurgencycall_made. President Juan Manuel Santos will push hard to have these negotiations wrapped up by election day in May and will hold a national popular referendum coinciding with the elections in order to seal the deal. But even if negotiators do not reach a deal by this deadline, Santos likely will be able to keep negotiations alive if he is re-elected. Even if the FARC reaches a peace agreement with the government in 2014, the deal's implementation will be complicated, and any agreement likely will take months or years to fully enact. With legislative elections in March and a presidential election in May, the Santos administration will work to external pageappease disgruntled farmers and struggling manufacturerscall_made by crafting new economic policy that is more supportive of local production. The government will also auction off external pageoverdue transportation infrastructure projectscall_made in 2014.

With no major elections in 2014, the Venezuelan government will focus on stabilizingexternal pageits deteriorating economycall_made. Caracas will try to external pagerein in high inflationcall_made and address scarcities of food and consumer goods, with limited success. The widening gap between Venezuela's official exchange rate and the black market rate makes devaluation in 2014 likely, which in turn makes a external pagesubstantial decrease in inflation unlikelycall_made. Venezuela will continue relying on already overburdened state-owned oil company Petroleos de Venezuela to fund national social spending and provide foreign currency to the central bank. Despite the increasingly unstable economic situation, Venezuelan President Nicolas Maduro will not face a direct threat to his rule this year.

Three major dynamics will define Brazil in 2014: global macroeconomic instability, the World Cup and the presidential election. Of paramount importance for Brazil is maintaining domestic economic stability as external pagethe global economy experiences a structural shiftcall_made. Although major economic crises are not likely to develop, 2014 will be a year of higher-than-desired inflation and slower-than-desired growth. In June and July, the world's attention will be on Brazil as it hosts the 2014 World Cup. The government will be wholly focused during the first half of the year on preparing for the games. In October, Brazilians will elect a new president. Incumbent President Dilma Rousseff and the leftist Workers' Party comfortably lead in the polls and stand a good chance of winning four more years in the executive branch.

external pageArgentine President Cristina Fernandez de Kirchnercall_made will be in crisis-prevention mode in 2014 while continuing to prepare a succession scheme. A debt, inflation or current accounts crisis does not appear to be on the one-year horizon, but the economic situation will nevertheless continue deteriorating throughout 2014. On the whole, the government will be constrained from deviating from the protectionist, interventionist economic policies it has systematically implemented over the past decade. external pageFarmerscall_made, the middle class, labor and other disaffected sectors of society will take to the streets in 2014, but broad-based mobilizations against Fernandez's government may prove elusive as each group tries to position itself behind potential competitors in the 2015 election.

Sub-Saharan Africa

This will be an especially violent year in Nigeria ahead of political party leadership elections in December and national elections in April 2015. The biggest issue at stake this year is external pagewhether the southern Niger Delta region upholds a political arrangementcall_made to rotate the presidency back to the north. external pageNigerian President Goodluck Jonathan will face significant pressurecall_made to decline nomination for re-election, but he will likely wait to decline nomination so that his support base can reap the financial benefits of his position. The uncertainty over Jonathan's ultimate decision will facilitate militant activity against civilians and government officials in the north by external pageBoko Haramcall_made. Niger Delta militants will also be active, but their attacks will not disrupt energy production substantially.

The economic and transportation supply chain external pageinfrastructure in southern and eastern Africacall_made will become more deeply integrated. external pageAngolacall_made and South Africa as well as Kenya and Uganda will take major steps in 2014 to deepen their supply chain connectivity, including pipelines, roads, rail and energy infrastructure. Tanzania for the most part will be sidelined from major infrastructure projects in the Great Lakes region, both due to its physical underdevelopment and Kenya's interest in preventing Tanzania from external pageundermining its role as the primary transit hubcall_made for the region.

South Africa will hold national elections in April. Opposition parties will not attract meaningful numbers of voters beyond narrow factional supporters, resulting in a comfortable win for the ruling African National Congress and its president, Jacob Zuma. Collective bargaining over wage agreements in the mining sector will reopen midyear. The bargaining process is already underway in the platinum sector, as wage agreements reached in 2012 come up for renewal in 2014. The resolution of external pagewage disputescall_made will largely be informed by market conditions for commodities.

While the capabilities of al Shabaab and al Qaeda in the Islamic Maghreb have been degraded in the groups' main areas of operation, the militants will remain capable of conducting guerrilla attacks, thereby justifying a sustained presence of international and regional counterterrorism forces in the Sahel and the Horn of Africa. Mali and its Sahel neighbors -- notably Mauritania, Niger, Chad and Burkina Faso -- will receive continued extensive counterterrorism cooperation from countries including France and the United States. external pageFrance will draw down its forcescall_made to approximately 1,000 troops in Mali and shift more security responsibility to the several thousand U.N. troops in the country, but Paris will retain the capability to disrupt any lingering al Qaeda in the Islamic Maghreb cells trying to remobilize.

For additional reading on this topic please see:
Strategic Options for Europe's Future
Creating Korea's Future Economy
American Leadership and the Future of the Transatlantic Alliance
After the Awakening: Future Security Trends in the Middle East
Africa – The Looming Yet Preventable Crisis