Tuesday, October 20, 2015

STRATFOR's Predictions For the Fourth Quarter of 2015

From Business Insider:
As we move into the final months of the year, credibility is on the line in many parts of the globe. 
The United States knew its credibility with Middle Eastern allies would be at stake as Washington tried to distance itself from the region's most consuming conflicts, but it also had to do so in order to regain credibility with its allies in other sensitive areas, such the Russian and Chinese peripheries.  
Russia, not happy with the United States creeping too close in its backyard, is now escalating its presence in Syria and potentially Iraq, attacking the credibility of the United States in leading the fight against the Islamic State while using that obtrusiveness to draw Washington into a serious dialogue. 
Simultaneously, Moscow will keep the calm in eastern Ukraine, restoring its credibility among major European powers who would much rather negotiate with than confront the Russian bear.  
Russia is playing a complex game with the United States this quarter, but Washington will not be coerced to the negotiating table. And as the United States reinforces its allies, the standoff with Russia will only deepen. 
The credibility of the Chinese Communist Party is also at stake as the economic slowdown persists and as the limitations of Beijing's interventions become more apparent. Commodity prices will remain depressed as China contends with tremendous oversupply in the housing market, making a major boost in new construction unlikely before the end of the year.  
Caught between an irresolvable migrant dilemma and a Greek bailout program that is sure to get snagged again when the reforms fall short, German Chancellor Angela Merkel will meanwhile fight to maintain her credibility at home. When the European Commission gives breaks to Spain, Italy and France for missing their budget deficit targets, the reform mandate from Brussels will be further compromised. 
The credibility of two very troubled governments going into elections this quarter is already at an all-time low, but that does not mean either will concede power easily. 
In Turkey, the ruling Justice and Development Party will be stuck with another hung parliament, prolonging the political limbo at the same time Russia is mucking up Ankara's plans for northern Syria. In Venezuela, the ruling United Socialist Party of Venezuela will do what it can to undermine the opposition vote at a time when the opposition still sorely lacks the energy to take to the streets. 
This will also be the quarter when the biggest global climate change deal since the 1997 Kyoto Protocol will be signed, though its credibility will still be questioned. While the United States and Europe push for more aggressive emissions targets, developing countries will resist targets on overall emission levels, opting instead for targets on emissions intensity tied to GDP to avoid stymieing their economic development. A lack of enforcement, however, will reduce the deal's impact.
Read the region by region forecasts below:
The main theme for Europe in the fourth quarter will be a recurring one: fragmentation. Indeed, the next three months will bring political and even territorial fragmentation to the Continent. The European Union will be dealing with three main issues, the migration crisis and political developments in Spain and Greece. 
Germany will be increasingly hemmed in by domestic factors. Pressure from conservative forces within her government will force Chancellor Angela Merkel to continually seek accommodation. This will be the case, for example, with the migration crisis. On the one hand, Germany will introduce reforms to make it easier for refugees to join the workforce. On the other hand, it will toughen its asylum policies to slow the flow of refugees into Germany. 
Conservative pressure will also be felt in Merkel's handling of the Greek bailout. Berlin will give Greece's new administration enough time to come up with a governing plan. However, Berlin will also push Athens to honor its bailout commitments and will be willing to delay the disbursement of money in the likely case the reforms calendar is not respected. 
Merkel's position as chancellor is not under threat, but dissidents within her party will remain very vocal, forcing Merkel to seek the middle ground....MORE