'Tis the season to make lists, and a list shall be made. We tend to see each
year as extraordinary, and in some senses, each year is. But in a broader sense,
2014 was merely another year in a long chain of human triumph and misery. Wars
have been waged, marvelous things have been invented, disease has broken out,
and people have fallen in love. Nonetheless, lists are called for, and this is
my list of the five most important events of 2014.
The single most important event in 2014 was one that did not occur: Europe did
not solve its longstanding economic, political and social problems. I place this
as number one because regardless of its decline, Europe remains a central figure
in the global system. The European Union's economy is the largest in the world,
taken collectively, and the Continent remains a center of global commerce,
science and culture. Europe's inability to solve its problems, or really to make
any significant progress, may not involve armies and explosions, but it can
disrupt the global system more than any other factor present in 2014.
The vast divergence of the European experience is as troubling as the general economic
malaise. Experience is affected by many things, but certainly the inability
to find gainful employment is a central feature of it. The huge unemployment
rates in Spain, Greece and southern Europe in general profoundly affect large
numbers of people. The relative prosperity of Germany and Austria diverges
vastly from that of southern Europe, so much so that it calls into question the
European Union's viability.
Indeed, we have seen a rise of anti-EU
parties not only in southern
Europe but also in the rest of Europe as well. None have crossed the threshold
to power, but many are strengthening along with the idea that the benefits of
membership in a united Europe, constituted as it is, are outweighed by the
costs. Greece will have an
election in the coming months,
and it is possible that a party favoring withdrawal from the eurozone will
become a leading power. The United Kingdom's UKIP favors withdrawal from the
European Union altogether.
There is significant and growing risk that either the European Union will have
to be revised dramatically to survive or it will simply fragment. The
fragmentation of the European Union would shift authority formally back to
myriad nation states. Europe's experience with nationalism has been troubling,
to say the least — certainly in the first part of the 20th century. And when a
region as important as Europe redefines itself, the entire world will be
Therefore, Europe's failure to make meaningful progress in finding a definitive
solution to a problem that began to emerge six years ago has overwhelming global
significance. It also raises serious questions about whether the problem is
soluble. It seems to me that if it were, it would have been solved, given the
threat it poses. With each year that passes, we must be open to the possibility
that this is no longer a crisis that will pass, but a new, permanent European
reality. This is something we have been pointing to for years, and we see the
situation as increasingly ominous because it shows no signs of improving.
Historically, tensions between Russia and the European Peninsula and the United
States have generated both wars and near wars and the redrawing of the
borders of both the peninsula and
Russia. The Napoleonic Wars, World War I, World War II and the Cold War all
ended in dramatic redefinitions of Europe's balance of power and its map.
Following from our first major event of the year, the events in Ukraine and the
Russian economic crisis must rank as the second most important event.
Stratfor forecast several years ago that there would be a defining crisis in
Ukraine that would be the opening to a new and extended confrontation between
the European Peninsula and the United States on one side and Russia on the
other. We have also forecast that while Russia has regional power, its long-term
sustainability is dubious. The same internal factors that brought the Soviet
Union crashing down haunt the Russian Federation. We assumed that the "little
Cold War" would begin in the mid-2010s, but that Russian decline would not begin
until about 2020.
We have seen the first act, and we continue to believe that the final act isn't
imminent, but it is noteworthy that Russia is reeling
internally at the same time that
it is trying to cope with events in Ukraine. We do not expect Russia to
collapse, nor do we expect the Ukrainian crisis to evolve into a broader war.
Nevertheless, it seems to me that with this crisis we have entered into a new
historical phase in which a confrontation with significant historical precedents
is re-emerging. The possibility of conflict is not insignificant; the
possibility that the pressures on Russia, internally and externally, might not
speed up the country's own crisis cannot be discounted. Certainly the
consequences of oil prices, internal economic dislocation, the volatility of the
ruble and sanctions all must give us pause.
The Russians think of this as an event triggered by the United States. In the
newspaper Kommersant, I was quoted as saying that the American coup in Ukraine
was the most blatant in history. What I actually said was that if this was a
coup, it was the most blatant in history, since the United States openly
supported the demonstrators and provided aid for the various groups, and it was
quite open in supporting a change in government. The fact that what I said was
carefully edited is of no importance, as I am not important in this equation. It
is important in that it reveals a Russian mindset that assumes that covert
forces are operating against Russia. There are forces operating against it, but
there is nothing particularly covert about them.
The failures of Russian intelligence services to manage the Ukrainian crisis and
the weakening of the
Russian economy raise serious
questions about the future of Russia, since the Russian Federal Security Service
is a foundation of the Russian state. And if Russia destabilizes, it is the
destabilization of a nation with a massive nuclear capability. Thus, this is our
second most important event.
Europe is predicted to see little to no
growth in 2015, with some areas in recession or even depression already. China has not been able to recover its
growth rate since 2008 and is moving sideways at best. The United States
announced a revision indicating that it grew at a rate of 5 percent in the third
quarter of 2014. Japan is in deep
recession. That the major economic centers of the world are completely out
of synch with each other, not only statistically but also structurally,
indicates that a major shift in how the world works may be underway.
The dire predictions for the U.S. economy that were floated in the wake of the
2008 crisis have not materialized. There has been neither hyperinflation nor
deflation. The economy did not collapse. Rather, it has slowly but
systematically climbed out of its hole in terms of both growth and unemployment.
The forecast that China would shortly overtake the United States as the world's
leading economy has been delayed at least. The forecast that Europe would
demonstrate that the "Anglo-Saxon" economic model is inferior to Europe's more
statist and socially sensitive approach has been disproven. And the assumption
that Japan's dysfunction would lead to massive defaults also has not happened.
The desynchronization of the international system raises questions about what
globalization means, and whether it has any meaning at all. But a major crisis
is occurring in economic theory. The forecasts made by many leading economists
in the wake of 2008 have not come to pass. Just as Milton Friedman replaced John
Maynard Keynes as the defining theorist, we are awaiting a new comprehensive
explanation for how the economic world is working today, since neither Keynes
nor Friedman seem sufficient any longer. A crisis in economic theory is not
merely an academic affair. Investment decisions, career choices and savings
plans all pivot on how we understand the economic world. At the moment, the only
thing that can be said is that the world is filled with things that need
Sir Mark Sykes and Francois Georges-Picot were British and French diplomats who
redrew the map of the region between the Mediterranean Sea and Persia after
World War I. They invented countries like Lebanon, Jordan, Syria and Iraq. Some
of these nation-states are in turmoil. The events in Syria and Iraq resemble the
events in Lebanon a generation ago: The central government collapses, and
warlords representing various groups take control of fragments of the countries,
with conflicts flowing across international boundaries. Thus the Iraqi crisis
and the Syrian crisis have become hard to distinguish, and
all of this is affecting internal Lebanese factions.
This is important in itself. The question is how far the collapse of the
post-World War I system will go. Will the national governments reassert
themselves in a decisive way, or will the fragmentation
continue? Will this process of disintegration spread to other heirs of Sykes
and Picot? This question is more important than the emergence of the Islamic State.
Radical Islamism is a factor in the region, and it will assert itself in various
organizational forms. What is significant is that while a force, the Islamic
State is in no position to overwhelm other factions, just as they cannot
overwhelm it. Thus it is not the Islamic State, but the fragmentation and the
crippling of national governments, that matters. Syrian President Bashar al
Assad is just a warlord now, and the government in Baghdad is struggling to be
more than just another faction.
Were the dynamics of the oil markets today the same as they were in 1973, this
would rank higher. But the decline in consumption by China and the rise of
massive new sources of oil reduce the importance of what happens in this region.
It still matters, but not nearly as much as it did. What is perhaps the most
important question is whether this presages the rise of Turkey, which is the
only force historically capable of stabilizing the region. I expect that to
happen in due course. But it is not clear that Turkey can take this role yet,
even if it wished to.
I was given two new grandchildren this year. For me, this must be listed as one
of the five major events of 2014. I am aware that it is less significant to
others, but I not only want to announce them, I also want to point out an
important truth. The tree of life continues to grow new branches inexorably,
even in the face of history, adversity and suffering. The broad forces of
history and geopolitics shape our lives, but we live our lives in the small
things. As much as I care about the other four matters — and I do — I care much
more for the birth and lives of Asher and Mira and my other grandchild, Ari.
Life is experience in the context of history. It is lived in intimate contact
with things that history would not notice and that geopolitics would not see as
significant. "There are more things ... than are dreamt of in your philosophy,"
Hamlet said to his friend Horatio. Indeed, and their names are Asher, Mira and
Ari. This must not be forgotten.
Have a happy New Year's, and may God grant you peace and joy in your lives, in
spite of the hand of history and geopolitics