There isn’t likely to be a good outcome for the U.S., the global strategist says
George Friedman sees the global political map unfolding in 2018 with the United States less powerful and very much alone in dealing with North Korea, while Asia and Europe are ground-zero for forceful economic and social challenges and their consequences.
“We have Trump. They have real problems,” Friedman, founder of Geopolitical Futures LLC, a forecasting group focused on the potential implications of major global events, said in a recent telephone interview.
Investors in the U.S. would do well to look closer at Friedman’s worldview, given that U.S. companies with major overseas operations are hardly immune to heightened geopolitical unrest, while the relatively stable U.S. economy and dollar is a magnet for flight capital from less-secure nations.
Friedman’s latest annual forecast sheds light on the world in 2018. Friedman expects dysfunction in Europe, the Middle East, China, and Russia to sow conditions for social and political disruption.
Those places are going to move “radically, in different directions,” Friedman says, “because they can’t stay where they are.”
The U.S., in contrast, isn’t facing such a fundamental crisis, according to Friedman. “If we got rid of every headline that [President Donald] Trump tweeted, leaving that aside, as a country we’re in a relatively stable condition.”
This year, “the most important action the United States will undertake will be to define what its international interests are and to develop strategies to pursue them,” Friedman writes in the forecast. “America is powerful, but it can’t be everywhere all the time. Given the paralysis in Washington, policy makers won’t get far.”
The wild card in this deck: North Korea. America’s North Korean problem grew during the Obama administration and is coming to a reckoning, Friedman says. North Korea, he adds, is “the most important question” U.S. foreign-policy makers must answer now.
North Korea, Friedman writes in the forecast, “has backed Washington into a corner. The U.S. does not want North Korea to have nuclear weapons, but neither does it want to launch the full-scale invasion that would be required to disarm it.”
For the moment, North Korea and the U.S. are at a stalemate, Friedman says. “Everybody is hoping that somebody else will break first.”
That’s unlikely, he adds. “The North Koreans have built their entire political structure” on developing nuclear weapons, so “it’s very hard to see how they back off in the way we want.”
South Korea, meanwhile, doesn’t have much will to confront the North militarily, Friedman says. Recently rekindled diplomatic talks between the South and North underscore Seoul’s position, and could even lead to a confederation between the two adversaries, where both agree to keep their respective systems, Friedman speculates.
If such an accord weakens the U.S.’s role in South Korea, then China will be able to flex its muscles and “poach U.S. allies” in Asia. Accordingly, Friedman observes, the Chinese “don’t have a bunch to lose by playing the game they’re playing.”
The most likely outcome for the U.S. and North Korea therefore, Friedman says, is a continuation of their uneasy status quo for this year at least.
But the longer-term consequences are clear: America’s status as a global power is eroding, and traditional military partners in the Asia-Pacific region — namely Japan and South Korea — may question Washington’s defense commitment and so feel compelled to fortify their own military capabilities. For example, Japan and South Korea are considering buying U.S.-made F-35B “jump jets,” which can operate from warships and be used offensively — a move China opposes.
“The last thing [the Chinese] want to do is rein in the North Koreans.”
Importantly, China won’t help the U.S. much on North Korea, Friedman insists. As long as the U.S. is bound up with North Korea, China can extend political and economic influence across Asia.
“The last thing they want to do is rein in the North Koreans,” Friedman says. “If the U.S. attacks North Korea,” he adds, “the Chinese can say the Americans are a reckless monster. If the North Koreans get nuclear weapons, the Chinese can say the Americans are weak. There’s no incentive to solve the problem. The best strategy is to simply fail to achieve the goals they promised and let the U.S. squirm. Either way, they’re ahead of the game.”
Turning attention to Europe, Friedman sees the European Union that has held the continent together for decades coming unglued. “We’re looking at a post-EU Europe,” he says. “Everywhere the established parties are losing power. You’re seeing the fragmentation of countries. Everywhere you’re getting breakups of nation-states or movements in that direction.
“Europe’s problem is no longer primarily its economy,” Friedman says. “It is a crisis of trust.”
Cracks are evident not only due to Brexit — Great Britain’s 2016 vote to leave the EU — but also in the Union’s recent attack on EU-member Poland over internal Polish political affairs.
“The European Union is a pseudo-government,” Friedman says, which is a mandate far beyond its economic, free-trade origins. Britain and Poland, most notably, bristle at EU upbraiding. Says Friedman: “On the one hand they’re fighting Britain about leaving; on the other they’re ready to throw the Poles out.” So the British and the Poles took symbolic revenge: The two nations recently drafted a joint-defense agreement.
“National and regional movements will continue to erode the social, political and economic systems in Europe.”
Poland and Great Britain aren’t the only protestors. The EU’s heavy-handedness, Friedman says, strengthens anti-EU groups in other member-countries including Spain, Italy and even in Germany, where Chancellor Angela Merkel hopes to form a coalition government to counter the newfound strength of the far-right, nationalist Alternative for Germany (AfD) party.
“National and regional movements will continue to erode the social, political and economic systems in Europe,” Friedman writes.
Ominously for Germany, the next U.S. recession will hit the country hard, Friedman says. “We have never gone more than 10 years without a recession,” he says. “Sometime in the next year or two, statistically, we’ll have a recession.”
Germany is the world’s fourth-largest exporter and counts heavily on the U.S. for sales. Says Friedman: “Exporters are hostage to their customers. If you’re a great exporter and your customer hits hard times, you’re the first to be cut.”
In turn, the fallout from a crippled Germany would negatively impact European countries that rely on German imports, Friedman says, “setting off a chain reaction, resulting in rising unemployment and fueling the forces that are already corroding Europe.”
If a crisis in 2018 hastens the total dissolution of the EU or simply a return to the coalition’s free-trade-zone roots, Friedman sees a silver lining: “The European Union was a bad idea from the get-go. Europe is an enormously prosperous place with a great future. Europe will probably be better off without the European Union.”
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