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European Geostrategy’s geopolitical forecast for 2014

© European Geostrategy

© European Geostrategy

2014 is now firmly with us. What will happen for the rest of the year? At European Geostrategy, our aim is to think about the future and its implications for Europeans’ place in the world. While the future is unknowable – and full of surprises – even a flawed forecast can help us to think about future events and trends, enabling us to better prepare for them. So in the spirit of geopolitical adventure our Senior Editors have come together to give their take on the major geostrategic trends and events that will likely shape 2014:

Global trends

China’s ‘unstable’ rise

China’s new leaders are starting to slowly, however tentatively, open up the country: in 2014 private banks, foreign ownership of telecom services and ownership of video game consoles will be allowed. The one-child policy and the household registration scheme will be relaxed. Economic growth will slow by most economic forecasts, yet the Chinese leadership will have its work cut out with social issues. Expect difficulties and civil unrest resulting from corruption, social welfare and minorities. These internal problems could lead the Chinese government to instrumentalise external factors as a rallying cry against protests in a bid to instill national stability: bearing in mind the extant tensions in the region, Japan is the most obvious factor. Japan’s geopolitical position will intensify its investment in relations with Europe’s maritime powers such as the United Kingdom (UK) and France. The United States (US), Japan and the UK will form the backbone of Western strategy towards China in the coming years. The position of Germany – keen to deepen relations with China – is less clear and this could lead to tensions in the EU regarding the nature of any European response to East Asian geopolitics.

‘Crunch time’ for Afghanistan

Afghanistan’s Hamid Karzai will put off taking a decision on the Bilateral Security Agreement (BSA), which will allow US troops – at a reduced number – to stay on in the country after 2014, until the April elections. Karzai will use the refusal to sign the BSA to help his favoured successor; to appear stronger at home; and to carve-out a legacy for himself after he leaves office by extracting US commitments to ban counterterrorism raids and to halt any behind-the-scenes negotiations with the Taliban. It will fall to Abdullah Abdullah – Karzai’s likely successor – to pave the way for a BSA with the US. This should ease US-Afghanistan relations – President Obama and Karzai never got on with each other – and fend off any ambitions China may have to increase its influence in the country. With the exception of a few countries, which will keep small contingents and Special Forces in Afghanistan, most Europeans will likely see the BSA as an opportunity to pull-out of the country. The level of European ambition in Afghanistan will be a major political point raised at the 2014 NATO Summit in the UK.

Mesopotamia stirs

2014 will witness growing instability in Iraq and Syria, which will manifest itself in the consolidation of Al Qaeda’s position in both countries; ongoing penetration by external actors through proxy; the weakening of governmental authority – especially in Syria; and the strengthening of separatism – particularly in Iraq’s Kurdistan. The factors animating this process are systemic in nature: the (re-)emergence of a multipolar regional balance as a consequence of America’s ‘lowering of the guard’ in the Middle East and Europeans’ inability to fill in the resulting gap. After years of direct and sizable US military engagement in Iraq, Washington’s retreat into a ‘hands off’ strategic approach towards the Middle East is resulting in a ‘reshuffling of the cards’ in regional geopolitics.

One of the most visible consequences of the West’s ‘strategic idleness’ will continue to be the growing prominence of indigenous actors in Middle Eastern geopolitics. And Mesopotamia conforms the area where the geostrategic directions of Iran, Turkey and Saudi Arabia (the region’s main indigenous powers) meet. The current wave of instability and uncertainty that assails Mesopotamia is thus largely a manifestation of its ‘geopolitical contestation’ – often ‘expressed’ through proxy competition. The ripple effects of such instability will continue to be felt throughout the region, particularly in places like Jordan, Lebanon or Turkey. Given their economic and geostrategic exposure to Middle Eastern dynamics, Europeans would do well to step up their strategic coordination and engagement in the area.

Europe and the ‘Arab Spring’

As Syria sinks further into chaos, the Egyptian military regime will continue to sway from repression to accommodation without the country’s economic and demographic challenges being addressed. In Turkey, the Turkish government – while remaining in power – will see its legitimacy decline. This will provide the foundations for the EU’s High Representative to take the initiative to re-think European strategy for its southern periphery from the bottom up. While an EU grand strategy will remain elusive for the time being, the Member States will agree that their relations with their southern neighbours must be put on a new – more robust – footing.

European developments

Russia’s resurgence

2013 was a good year for autocratic Russia. Due to Mr. Putin’s geostrategically-informed foreign policy the country – lacking power in several sectors – actively consolidated its position in the new Eastern Europe and the Middle East and continued to ramp-up and modernise its armed forces. For Moscow, will 2014 be even better? Quite possibly. Why? Here are three reasons:

  1. Due to its near-unbreakable (but now largely laughable) self-belief in its own magnetism, the European Union (EU) remains a strategic worm, unwilling to adopt the same robust tactics used by the Kremlin in the European Neighbourhood;
  2. The United Kingdom (UK) has largely disengaged from the European mainland, even if it remains highly cautious of – and combative towards – Moscow’s designs, while Germany, under a new ‘grand coalition’, is unlikely to favour a more assertive European policy in relation to Russia;
  3. The United States (US) is switching its focus towards the Far East as China’s national expansion accelerates, meaning it is no longer as tuned-in to Europeans requirements.

So will Russia prevail? Will a new Russian sphere of influence be carved into the east? Yes. But only if Europeans (and London and Berlin in particular) fail to get their act together – and soon – and push back.

Monetary politics and European integration

The fragility of the European banking system will become the subject of scrutiny as the bear market in sovereign bonds threatens to resume. The loose monetary policies pursued by the Bank of Japan, the Bank of England and the Federal Reserve will invite calls for more robust action by the European Central Bank (ECB). German opposition against quantitative easing will mean that ECB action will only materialise at the eleventh hour. Meanwhile the People’s Bank of China will quietly continue to accumulate more gold reserves. International currency management will therefore become an ever more direct expression of geostrategic influence, both in Europe and beyond.

Germany’s economy gains attention

Germany’s trade surplus (at a mammoth €17.8 billion (November 2013)) will continue to grow, much to the chagrin of the US which wants Germany to import more of its products and services. Germany will refuse to drive up domestic demand for the time being, and will be vindicated in its decision so long as growth forecasts in the US, China, Japan and the UK hold up. Germany will also argue that a change in its economic policy will not result in more people buying Chevrolets than Volkswagens. The key problem for Germany is that many of the routes to greater domestic demand – lower taxes and greater public investment in infrastructure – are hot political topics for the newly formed ‘grand coalition’ between the Christian Democrats and the Social Democrats. Nevertheless, without structural changes in all Eurozone countries, the risk of deflation and sluggish growth in the peripheral countries will remain throughout 2014, further increasing German power within the Eurozone and stoking further British fears.

As Scottish separatism wanes…

In the upcoming referendum, the Scottish people will vote in favour of remaining within the UK. This will give Cameron’s Conservative government political momentum ahead of the next general election. It is also likely to boost the dynamism of British foreign policy. For one thing, the affirmation of unionism will inculcate a new sense of direction into British geostrategy, as the country adopts a more global posture in line with its national interests and instruments of power. For another, a positive outcome in the Scottish referendum may invigorate Cameron’s confidence vis-à-vis ongoing discussions about the UK-EU relationship. Having strengthened his own hand in Britain’s political scene and proven his ability to navigate ‘referendum politics’, Cameron will be in a stronger position to demand concessions from the UK’s European partners, many of whom see London’s permanence within the EU as a source of balance and stability.

Military focus

The Generals revolt

The growing financial constraints under which European defence establishments are required to operate will trigger increasingly frequent public criticism from the highest military ranks. This inchoate revolt of the generals is not so much aimed at disputing the principle of civilian control, but at securing the minimum means required for their organisational survival. Not only will the debate on budgetary policy feature more ‘guns versus butter’-type arguments, but it will also become increasingly polarised as different services vie for influence. Meanwhile, the drawdown of European forces in Afghanistan will force defence planners to reconceptualise the contemporary relevance of land power.

The Admirals’ moment

Meanwhile, as the generals howl, the admirals will have a fleeting moment to push forward a new naval agenda. Firstly, the EU will reveal its first ever maritime strategy, as piracy continues to fester along its main maritime communication lines. Second, if they are clever, the admirals will steal the show in the UK: the Type 45 and Astute classes will be worked-up and the Royal Navy’s naval modernisation programme will accelerate with the finalisation of planning for the new Global Combat Ships and the completion of the first superstructure of the Queen Elizabeth class supercarriers. The 2015 Strategic Defence Review will begin, informed by European interests in the Middle East; the rise of the Indo-Pacific zone; and the US pivot towards the Far East. These developments will provide British admirals with the footing needed in 2014 to reaffirm the Royal Navy’s national utility and secure a greater share of military resources during the second half of the decade, in turn securing the UK a leading place in the looming maritime arms race of the twenty-first century.

Europeans look to the skies

Urged on by their own big industrial actors involved and tempted by the technological advances and likely benefits, several European Union (EU) Member States will engage in major programmes to develop a European remotely-piloted air system; a European military satellite; and a European tanker aircraft. While the platforms will of course only come into being well into the future, this successful start will boost confidence in Europe’s military-industrial potential, and convince the more reluctant capitals to put more faith in the European Defence Agency, which will increasingly act as the central hub. The new systems will also enhance – albeit slowly – European geostrategic reach, if not globally, then certainly into into their volatile and unpredictable neighbourhood.

Vol. 6, No. 4 (2014)

© It is not possible to republish this article without the express permission of European Geostrategy.

Our thanks go to our discussions with Benoit Gomis and Jean-Loup Samaan for developing our thinking in relation to these proposals. Of course, they hold no responsibility for our final projections.