International Politics in 2017: Ten Predictions



1. A post-truth world: Democracy in crisis 
The toxic combination of rising inequality, growing polarization, the proliferation of "fake news" and populist candidates will pose a severe challenge to democracies around the world, particularly those in Europe and North America. News organizations will continue to struggle to adapt, already facing a shortage of funds for investigative journalism (particularly on the local level). Social media contributes to a move towards highly compartmentalized, fragmented societies (or "silo societies"), and the number of platforms to promote national debates that reach all domestic groups is shrinking. This growing disconnect will make it ever harder to predict election outcomes. The implications of this new reality will be closely watched during election campaigns in Germany, France, Norway and the Netherlands, but also in Chile and Ecuador in 2017. While Merkel can be expected to get reelected for a historic fourth term, possibly making her the longest-serving leader in German democratic history, François Fillon will struggle to beat Marine Le Pen in the second round. Democracies will — for now — not only lose some of their soft power, but be seen as the sources of elevated political risk, and markets will be more volatile ahead of elections. Also, populists will, in general, spend less money to support human rights and pro-democracy groups around the world, reducing pressure on authoritarian governments.

2. A divided West in a Post-Western World
At a time of multiplying global challenges and a shift of power to the Asia-Pacific region, Brexit, no matter how it plays out, will be harmful to Western strategic interests as it reduces Europe's political weight and its capacity to shape global affairs in a Post-Western World. In addition, the Trump victory in the United States will weaken the stability of trans-Atlantic partnership. Brexit has transformed a win-win relationship between Britain and continental Europe into a zero-sum game. Seeking to set an example and to weaken exit movements in France and elsewhere, the EU is likely to assure Brexit will be as painful as possible for the UK. To save itself, the EU can be expected to push for a harsh settlement to hammer home the price of leaving. Considering that the coming decades will be shaped, above all, by a Washington-Beijing-led bipolar order, with US interests ever more in Asia than in the Atlantic, anything but more integration will further diminish, from a geopolitical perspective, Europe's role in global affairs. All the while, China continues to craft the building blocks of what we may call a “parallel order” that will initially complement and at some point possibly replace today’s international institutions. This order is already in the making; it includes, among others, institutions such as the BRICS-led New Development Bank and the Asian Infrastructure Investment Bank (to complement the World Bank), Universal Credit Rating Group (to complement Moody’s and S&P), China Union Pay (to complement Mastercard and Visa), CIPS (to complement SWIFT), the BRICS (to complement the G7), and many other initiatives. As the West falters, new partnerships will emerge, adapting to the shift of power. For example, as the US and Europe are seen as less influential by Delhi and Tokyo, their ties have prospered. China has the chance to burnish its credentials as a global goods provider and promoter-in-chief of free trade while Europe and the US are engulfed by protectionism . For example, it already provides more UN peacekeepers than all the other P5 combined. We can expect Chinese global leadership in many different areas, such as climate change.

3. A rocky US-China relationship
Even though Donald Trump could still embrace a more conciliatory tone once he moves into the White House, it is unlikely that the world's most important bilateral relationship will be a smooth one, ranging from disagreements on trade and Taiwan to climate change. Trump's ambassador in Beijing is relatively close to Xi Jinping, yet given that the US President will need to keep the China threat alive for domestic reasons, there is a significant risk of unprecedented tension between Washington and Beijing. Even a hint of a trade war or, worse, military confrontation between the two would have an immediate global impact. Donald Trump's decision to challenge the "One-China" policy and Beijing's decision to signal its willingness to retaliate by punishing a US automaker accused of price-fixing and by seizing a US underwater drone in the South China Sea suggest that 2017 will see more, not less trouble between Washington and Beijing.

4. A global debate: How to deal with China's growing economic influence?
Policy makers from Hanoi and Berlin to Addis Abeba and Lima are already debating how to deal with China's growing economic influence in their markets. The attempted Chinese takeover of Aixtron, a German maker of semiconductors, caused unprecedented political resistance and the purchase of the US-American portion of Aixtron’s business was ultimately blocked by the US government because, Obama argued, it posed a national security risk relating to “the military applications of the overall technical body of knowledge and experience of Aixtron.” Similar debates are taking place in Latin America, where China's influence is growing, and particularly Venezuela, where Beijing is now far more powerful than Washington. In all regions of the world, governments will have to learn to coordinate their positions regarding China better to avoid competing for Chinese largesse, which inevitably leads to a race to the bottom. That involves discussing and possibly aligning legislation regarding Chinese investments, transnational environmental rules for Chinese-financed projects that cross borders, and cohesive policies regarding bigger questions such as China’s role in the World Trade Organization.

5. The end of cheap money; bad news for emerging markets
Even though Donald Trump is famously mercurial and contradictory, there is growing evidence that large-scale tax cuts and an increase in public spending will lead to greater inflation and, as a consequence, higher US interest rates. That, in turn, will lead to capital outflows from emerging markets to the United States. The effects will be felt across the Global South. Beijing will have a harder time stemming the yuan's fall against the dollar without negatively affecting growth or increasing Chinese companies' debt. In Brazil, it will complicate efforts by the fragile Temer administration to reanimate Brazil's economy. All of Latin America will face a tough year ahead. To provide an extreme example: we cannot explain the "lost decade" of the 1980s and the political crises across Latin America without taking the US interest rate hike at the beginning of the decade into account. What does this mean for Latin America in 2017? Low growth, low approval ratings of incumbents and lots of anti-corruption protests.  

6. Middle East remains in chaos, Western influence dwindles
The recent fall of Aleppo signals, above all, Western powers' failure to influence events in what has become the bloodiest conflict in the 21st century. Russia and Iran, by contrast, have achieved what a few years ago looked highly unlikely: maintain their ally Assad in power. Yet Syria can be expected to remain a battlefield in 2017, and the indiscriminate killing of civilians by the Russian airforce and the Assad regime will maintain the capacity of the Islamic State to gain supporters. In addition, the conflicts in Iraq, Libya and Yemen are set to continue, prolonging the worst refugee crisis since World War II. Western influence will also decline in Turkey as an increasingly authoritarian President Erdogan carries out his purge. 2017 may see the intensification of violence between Turkey and various Kurdish armed groups within Turkey and all over the region. Trump's choice of David Friedman as US Ambassador to Israel virtually eliminates any probability of a constructive US role in the Israel-Palestine conflict.

7. The global crackdown on human rights accelerates
The year 2016 saw series of sad records — regarding the number of journalists and bloggers detained and attacked, the number of NGOs harassed and the number of opposition politicians and activists killed. More governments than ever, many of them democratic ones, passed restrictive laws that stifle and threaten civil society. Almost half the world’s countries have implemented controls that affect tens of thousands of organizations across the globe, and others are likely to follow suit. They are by no means concentrated in one region of the world. Rather, speaking truth to power is dangerous in many places, like Cuba (where the governments routinely detains activists), Brazil (where more environmental activists are killed than anywhere else in the world), Egypt, Hungary, Israel, Russia, China, Thailand and several African countries, where gay rights activists are often killed with impunity. With several countries that traditionally gave a lot of money to support rights groups, such as the United States, ruled by populists, the crackdown will accelerate further. With Beijing's economic influence felt across the world, speaking out against human rights violations in China is becoming prohibitively costly for most countries.

8. Cyber attacks go global
It is not just since Russia's attempts influence the 2016 US presidential election that cyber attacks are increasingly becoming the weapon of choice to destabilize enemies. China has attempted to steal data and cause disruption in the United States for years, and the United States and Israel have used cyber attacks against Iran in the past. Since there are virtually no globally agreed upon rules of the game (e.g., what constitutes an act of war and what does not), states have an incentive to opt for cyber attacks rather than conventional warfare whenever they can. At the same time, the lack of rules also means that there is a significant risk of escalation, a reason why President Obama has not yet decided how to respond to Russian interference in the US election. 2017 may see disruptive cyberattack on critical infrastructure of large economies, even though targeted attacks against politicians to influence electoral outcomes (as seen in the US) is more likely. Many countries around the world — such as Brazil, Indonesia and South Africa — will have to invest considerable sums to catch up in the cyber realm to adequately protect themselves.

9. Afghanistan: Eternal nightmare
Few countries have suffered as much as Afghanistan over the past centuries, yet little indicates that the worst will be over anytime soon. Quite to the contrary: fifteen years after the US-led invasion, 2017 is likely to see increased violence and instability in Afghanistan resulting from a continued strengthening of the Taliban insurgency and possible government collapse. Aside from the Afghans themselves, several other countries will be affected: Chinese plans to integrate the country into its much-vaunted One Belt-One Road (OBOR) initiative will be made more difficult, Pakistan can continue to influence affairs in Kabul, and countries like Germany will see a growing stream of Afghans seeking asylum.

10. Black swans (Low-probability, high-impact events)
Most forecasts in international politics fail to take into account the possibility of wild cards. When we think back to the most momentous events during the past decades, many of them – including Japan’s attack on Pearl Harbor, decolonization in Africa, the Iranian Revolution, the collapse of the Soviet Union, the terrorist attacks on September 11th or Donald Trump's election victory– were fairly unpredictable. For 2017, the most plausible unlikely high-impact events are political instability in China (which would send economic shock waves around the world), the fall of the House of Saud and the rise of hardline Islamists in Saudi Arabia (shifting dynamics in the Middle East as dramatically as in 1979), an Italian default that would lead to the end of the euro, and an impeachment trial against Donald Trump.

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