09 January 2011

Looking ahead at 2011

In the countdown to the new year our media are full of retrospectives looking back at what happened in the year that is coming to a close.

Last year in Looking ahead at 2010 I commented that the start of a bright and shiny new year is perhaps a good time for those who are presumptuous enough to think that they know a few things to put their money where their mouth is and attempt some forecasts of what the year ahead will bring.

Forecasting remains a hazardous business, but I think I should repeat the exercise.  Reviewing Looking ahead at 2010 I think I had a reasonable hit-rate on my forecasts, to the extent that for the year ahead I think I should just record last year’s (in italics) and provide some updated commentary:

(1) There will be no progress towards an Israeli-Palestinian settlement. Settlement building on the West Bank will resume, the slow ethnic cleansing of East Jerusalem will continue, and Gaza will remain strangled by Israeli sanctions. There will be hand-wringing in Washington, but not much else.

Not much new to be said there: at the present time no-one even pretends that there is a peace process in prospect.  The Netanyahu Government has made plain that settlement building is more important to it than either peace or its relationship with the Obama Administration, Netanyahu is engaged in a contest with Avigdor Lieberman for leadership of the Israeli right, and the Israeli left has all but ceased to exist.

The two-state solution is dead, with no possibility of resurrection, so by year’s end things will be much the same as now only somewhat worse.

(2) The “surge” in Iraq will by year’s end be a proven failure.

Iraqi politics will continue to fragment.  The return to Iraq from Iran of militant Shi’a cleric Muqtadar al-Sadr testifies to that. He has not returned to Iraq to facilitate the process of bedding down either its internal politics or its relationship with the US.

(3) It will be even clearer than it is now that there is no possibility of “victory” or “success” in Afghanistan, and the US Administration will be busy positioning Hamid Karzai and everyone around him to take the blame for the failure of what was a doomed enterprise from the start.

An old colleague of mine used to say that the opportunity of a lifetime had to be grasped within the lifetime of the opportunity.  If the invasion of Afghanistan in 2001 presented us with the opportunity of a lifetime to do something or other, the lifetime of the opportunity certainly did not last through eight years of neglect. If there was ever a chance, it is now far too late. The failure to establish any clear objective for the invasion did not help.

Enough said.

(4) There will be modest efforts to salvage something from the wreckage of the Copenhagen conference on climate change, but we can be sure that whatever action is agreed will be far too little, far too late. For a long-term hold, buy shares in engineering companies that are very good at sea walls.

The Cancun outcome marked a step forward, but one which sits firmly within the established framework of far too little, far too late. Engineering companies that are very good at sea walls remain a sound investment.

(5) Spin doctors will find creative ways to present all of the above as success, or at least as meaningful progress. Modern governments never do anything that is unsuccessful.

No change likely here.

(6) Pakistan will look more like Afghanistan than it does today. The US Administration will continue to pressure the Pakistanis to take actions in the Federally Administered Tribal Areas which will prove disastrous sooner rather than later. There are good reasons why those areas were directly administered by Delhi during the Raj, and why the tailor made administrative regimes were continued from 1947 in the successor state, Pakistan.

At the outset of the invasion of Afghanistan in 2001 a lot of people would probably have agreed that if Afghanistan ended up looking a bit like Pakistan in 2001, that would be success. The net effect of our efforts will in fact be to make Pakistan look a lot more like Afghanistan.

The recent assassination of Punjab Governor Salman Taseer by a member of his own bodyguard, without any other member of his bodyguard attempting to prevent the murder or apprehend the assailant, serves to illustrate just how powerful the forces of Islamic conservatism are in Pakistan, and how deeply they are embedded in the armed forces.

(7) Nothwithstanding Pakistan’s travails, the Directorate for Inter-Services Intelligence will continue to intervene unhelpfully in Afghanistan, with a view to Pakistan establishing itself as the dominant power in Central Asia. Much of the money to fund this will be diverted military assistance funding from the United States.

No further comment needed.

(8) There will be a very significant evolution of the Iranian political system. It is hard to see this happening without a lot of blood being shed, because neither side can afford to give up.  In the next few months there will be increasingly heavy handed efforts to suppress the reform movement, but the reform movement has such momentum, and so many members of the urban classes are so sick of the current regime, that it is hard to see the current leadership being successful in reimposing order. There are grounds for cautious optimism, but don’t mortgage your house to bet on it.

This is the main item on which I was too optimistic.  My view is that Ahmadinejad has such control over the apparatus of repression that things will deteriorate for the reform movement for the foreseeable future.  Nevertheless, Iran has had over a century of elected representation in a national parliamentary body, it has an educated middle class in the major cities, and I do not believe that the regime can maintain itself in power in the long run simply by means of repression.

(9) Whoever is running Iran will remain firmly committed to the development of an independent nuclear energy program, and in so doing will reduce the lead time for Iran to develop and deploy a nuclear weapons capability.  Nevertheless, the Iranian regime will refrain from committing to a nuclear weapons capability.

I remain of this view.

(10) The United States will not succeed in establishing any sort of effective sanctions regime against Iran (for which we can all be thankful).

Such sanctions as are established will cause hardship to ordinary Iranians without having much impact on the regime, and no impact on its policies.  As I have remarked in previous posts, the Iranians will not accept any settlement which they regard as humiliating, and they will not accept a position of second class international citizenship regarding the independence of their nuclear energy program. They will not accept what the United States wants, and the international community would not be prepared to impose upon Iran such draconian hardships that the regime – any Iranian regime – would  be likely to change its mind.

(11) As we emerge from the depths of the Global Financial Crisis, the full meaning of the crisis will become clearer, as we begin to appreciate the consequences for the United States and the United Kingdom in particular of the massive sovereign debt they have incurred. It will become evident that there can be no return to “normal”, that a new “normal”, meaning a substantial realignment of economic power and political influence, is in the process of being established.

The state of affairs in Europe speaks for itself.

Far from believing in signs of recovery in the United States, I think the consequences of US debt and deficit are still playing themselves out. US politics are in such a toxic state that I do not foresee any effective action to repair the nation’s public finances.  Meanwhile, it is trying to shrink its defence budget to help meet its rising interest bill, but that shrinking of the US defence budget is contingent upon greater success in its military adventures than I can foresee.

(12) Some of the above predictions will turn out to be profoundly wrong (I just don’t know which ones). Actually, not too many of them turned out to be profoundly wrong, but it is always a danger to be acknowledged.

Last year I did not venture any predictions about domestic politics, mainly I think because up to that point my primary focus had been international.  So much happened on the domestic front during the course of 2010 that there was much to write about, and this year I will venture some observations about the outlook within the national polity:

(1)  As discussed in Can Gillard last?, I think that it will be established fairly early in the year that Julia Gillard does not have what it takes to be a successful Prime Minister, and on the balance of probabilities I think that there will be a change of Labor leadership before the end of the year.

(2)  A change of Labor leadership will not necessarily lead to the Government falling – the independents and Greens have a strong interest in seeing the Government go its full term.  Some deft footwork on the part of a new Labor leader should enable Labor to continue as a minority government.

(3)  The Government will fail to break out of its current obsession with the 24-hour media cycle, and its thinking will continue to be dominated by focus-group think. It will try to give the public what it thinks it wants, not what it needs.

(4)  As a result, the Government will botch the following major policy issues during the course of the year:

- Putting a price on carbon, and indeed the establishment of any effective climate change action
- Establishing a Minerals Resource Rent Tax regime
- Design and implementation of a Murray Darling Basin Plan
- Tax reform  

(5)  The Government should undertake a thorough review of the Defence White Paper and its defence policy settings, but will not.

(6)  Kevin Rudd will continue to be driven more by his overwhelming need for publicity and his desire to upstage Julia Gillard than by any concern to pursue Australia’s foreign policy interests. He will continue to display pedestrian thinking, poor management of his agenda, and poor judgement.  In sum, he will continue to demonstrate that he is a disastrous appointment as Foreign Minister.

1 comment:

Andrew Elder said...

I agree with your final two points.

I think Wayne Swan will be shown up over the coming year. Hockey will get his measure and Shorten will increasingly show him up. Gillard only has to have the transactional stuff together and she'll survive. Getting rid of her would be too much: Rudd had no base of loyalty and getting rid of him was not the painless operation the protagonists initially thought. The failures of the government in the areas you describe (resources tax, some sort of fiscal imposition against carbon, any other tax reform) will be pinned on Swan.

The "24 hour news cycle" idea is flawed because of the idea that any news occurring after 3pm, especially on a Friday, doesn't get reported. There will be issues that take both parties in the politico-media complex by surprise, which makes contemporary politics more interesting than that of a more controlled age.

I make no comment on the foreign policy predictions of 2010, except to say that the Iranian regime surely cannot survive. Its political economy seems similar to that of the Soviet Union (everything channelled toward a nuclear program) and is doomed for many of the same reasons.