Presentation on theme: "Stratfor’s Big Seven (aka Stratfor 201) The Preponderance of American Power Seeking a Balance in the Persian Gulf Russia’s Resurgence and Fall –now with."— Presentation transcript:
Stratfor’s Big Seven (aka Stratfor 201) The Preponderance of American Power Seeking a Balance in the Persian Gulf Russia’s Resurgence and Fall –now with more Georgia! Asian Financial Instability Germany’s Reemergence Brazil’s Rise Tomorrow’s Depression
Successful Countries Have... Ample sheltered sea access Large plain/prairie regions cut by useful, interconnected rivers Minimal internal buffers Large external buffers (mountains good, oceans better) Limited to no sea access Flat regions connecting them to those of other states Lack of internal natural waterways Internal mountain chains or impenetrable forests Unsuccessful Countries Have...
Preponderance of American Power: Land, Labor, Capital and Global Power
The United States The result is manic depression –Sputnik –Vietnam –Oil shocks, Japanphobia and the 1980s recessions –September 11, 2001
Preponderance of American Power No challenger state boasts the geographic capability of challenging North America’s advantages Their only option for resisting American power is to form coalitions with states that they see as rivals and create a single Eurasian superpower
Preponderance of American Power The U.S. is only losing ground by one measure – relative total economic size Power projection is about relative economies of scale and absolute levels of disposable income (how much can you build? how much wiggle room do you have?) The United States leads in both categories – and has since roughly 1870
Result: No matter how badly managed, the US (under current technology) is immune to the cycles that rule the ebb and flow of the major powers – and has the freedom to intervene in Eurasia when and where it chooses
Geopolitics 101: A Survival Guide to Dealing with the United States Don’t get in the way of the five precepts: –Secure control over North America –Secure strategic depth –Control sea approaches –Dominate the oceans –Keep Eurasia divided
How We Got Here 9/11: Al Qaeda’s strength Nukes: The limits of hegemony War: Ditching the dirty work Aftermath: Iraq is no Wisconsin Buyer’s Remorse: dealing w/Iran The Crux: striking a deal
Iraq: From Beginning to End The Battle of Nightmares The American Fear Iraq is 60 percent Shia Mesopotamia has never been so weak The western coast of the Arabian Peninsula is similarly Shia That coast houses the bulk of the region’s oil production and export capacity One country controlling 25 percent of global oil production The Iranian Fear Every time “Iraq” has ever been united, it has invaded Iran/Persia The last invasion cost one million casualties and set the country back a generation The Shia have never ruled Iraq The Gulf Arabs – and their pocketbooks – would rather see a new Saddam than a resurgent Iran
Seeking a Balance in the Gulf Man of the Hour: Gen David Petraeus Forget healing Iraq: shatter the bitch (especially the Shia) From surge to symmetry Bye-bye Sadr The Great Satan and the Axis of Evil do lunch Target: Pakistan
Seeking a Balance in the Gulf: Aftermath The United States –Large transfer of forces to Afghanistan –Free hand to deal with the rest of the world (The Great Rotation) Iran –Become an energy superpower –Explore options Russia –Begin panic mode Saudi Arabia –Begin panic mode Israel –Begin panic mode
Jan-July 2008: Besiegement Kosovo’s independence made a mockery of Russian power The U.S. followed Kosovo up with battalion level exercises in Georgia -- the latest challenge that cannot go unanswered The EU is implementing an energy policy that could eliminate Russian dependence NATO more coherent than ever Shrinking strategic and demographic window China’s Central Asian land grab One bright spot: the U.S. is distracted
This Year: What’s Needed Rejection of erosion and demonstration of power where the West cannot respond: Georgia –Token NATO protection –Strong Western energy interests –Russian forces pre-positioned –Pro-Russia regions –Core to Russian identity –Core to Russian security The Problem –Putin’s fear of losing control has led him to install a patsy as president –Medvedev has earned neither experience nor respect –The shift from indirect to direct power –Personalization of leadership = failure to institutionalize stability –Can real authority be transferred?
One Last Burn Within three years Russian “stability” will be exposed for what it is (and that assumes the internal power struggles end) –Energy/financial crunch now inevitable –Demographics bite hard –EU/NATO expansion fills the horizon Everything must be put into place now – Russia will never be stronger, and the U.S. will never be more distracted 2008 is Russia’s last chance to shift momentum
Russia: Resurgence and Fall The Window of Opportunity
Jumping Through the Window of Opportunity RussiaIran
Asian Finance: The Japanese System Key goal of the Japanese economic model: restore faith, profitability and return on capital are secondary concerns Maximize employment, firm size, market share, activity and throughput Government cannot greatly assist firms save in one field: easy, cheap credit for all lendees/projects Capital pooled into a the states hands, funneling it to achieve national goals; interest and payments negotiable Debt levels, profitability and return on capital irrelevant
The Japanese Model’s Outcomes Disinterest in efficiency/profit leads to debt Loan portfolios become non-performing Banks invest in clients’ stock for profit Interlocking directorates prevent change Starves the ‘healthy’ economy for credit despite ZIRP Forces government to prime pump: Budget deficit of 8%, debt of 175% of GDP Private financial system locked into JGBs Deflation, distortion and Botswana Upside: has pumped at least $2 trillion in capital abroad
What does the total financial collapse of a first world country look like?
Japan is the Best Case Scenario China’s banks are far worse off than Japan’s (minimal international exposure) China is the most financially penetrated state in Asia (save Taiwan) China has (so far) burned over $600 billion in attempting bank bail outs China lacks Japan’s wealth and social cohesion but superior social control is so far holding a disaster off (Olympics help)
China’s 2008 Fears and Plans Financial collapse –Inject FDI and expertise into the banks –Launch IPOs –Dispose of NPLs via AMCs Avoid inflation panic –Develop the interior –Seal agreements to produce food abroad Salvage the Olympics –Massive internal crackdown –Use overseas Chinese to lobby for the homeland Avoid post-Olympic fallout –Find some way to then turn off the overseas Chinese
Brazil’s Opportunity Petrobras already is a supermajor in terms of technology and output – new discoveries will only entrench that position Political advantage over Western supermajors will lead to a deep absorption of many Western economic energy positions throughout Latin America Petrobras: the new PDVSA -- and Citgo, and YPBF, and Repsol, and PetroEcuador, and...
Window of Opportunity US power truncated Iran is being thoughtful Russia is going for the gold China just wants to be left alone Germany has some uncomfortable decisions to make Brazil is oblivious Recession will come anyway