Hello and thank you for joining me for a preview of Stratfor's 2014 Annual Forecast.
The most important trend that we'll be following in 2014 is the developing rapprochement between Iran and the United States. Now this is something we actually forecast more than a decade ago when the U.S. first made the decision to invade Iraq and topple Saddam Hussein, effectively holding the door to Baghdad open for Tehran. From the Iraqi civil war to the Syrian civil war, the U.S. has been grappling with a major power imbalance in the region while trying earnestly to free itself up from such entanglements in the Islamic world. This year, the U.S. will work toward resurrecting that balance of power by developing a relationship with Iran. It will be a bumpy process, and at times it will look like the entire negotiation is about to fall apart. Whereas cynicism usually prevails at Stratfor, this is one area where we're reasonably optimistic that the U.S.-Iranian detente will endure.
Saudi Arabia, Israel and Iran's own Islamic Revolutionary Guard Corps will make known their displeasure with these talks in a variety of ways, yet none will have the weight to derail the negotiation. And while Turkey will develop as Iran's geopolitical counterweight with time, it will have to play nice with Baghdad and Tehran for now while trying to manage political convulsions at home.
Russia knows that a developing U.S.-Iranian relationship will eventually bring the U.S. back to its doorstep. So with the clock ticking, Russia will focus this year on consolidating the gains it has already made in the former Soviet periphery, from the Caucasus to Central and Eastern Europe. Moldova and Georgia will likely meet the same fate as Ukraine as they struggle to inch closer toward Europe against Moscow's wishes.
Germany will try to set some boundaries with Moscow in Central Europe, but Russian President Vladimir Putin also knows that Berlin has much bigger worries in trying to hold the eurozone together. The door will be open to compromise between Berlin and Moscow on a number of issues, ranging from Ukraine to Europe's energy standoff with Russia.
In Europe, the European Central Bank will have the means to prevent a banking and sovereign debt crisis this year, but unemployment will remain critically high in many countries, and credit will remain tight as corporations and consumers try to defer action on a growing pile of nonperforming loans. The underlying stresses of the economic crisis will be made visible in the gradual rise of nationalist and Euroskeptic parties. As these groups rise in Europe, the deeper structural reforms that the European bureaucracy is attempting, to manage this and future crises, will hit walls.
This is a familiar story for China, which this year enters the very difficult stage of implementing a plan to restructure the Chinese economy away from the coastal export-oriented model toward a more balanced structure that encourages inland development. Progress in reforms will necessarily be slow and incremental as the Party weighs each move against building social and political risks. As China sees a growing need to consolidate politically under these economic stresses, the Party will also struggle with the need to sacrifice collective decision-making for more of a return to a strongman model under President Xi Jinping.
Libya, Nigeria and Colombia will hold compelling news for commodity investors this year. Nigeria faces an especially violent year ahead of elections while Colombia will likely reach a peace settlement with the FARC. Despite market anticipation for a meaningful resumption of Libyan oil production, expect big swings in production and exports. Tripoli will struggle to co-opt militias, tribal groups and fragmented regional power centers to rein in renegade armed groups, all of which will use threats against the country's energy infrastructure as leverage to hold their ground.
Discover in detail what the world holds in store for 2014 on Jan. 6, when you can access the forecast in full. Thank you for tuning in.
