EIGHT PREDICTIONS FOR 2010 by Dr. Anton Caragea

EIGHT PREDICTIONS FOR  2010

It is in human nature deeply rooted the desire to see what is the future reserving for us. In the ancient times Sybille’s priestess in a cave near Rome interpreted the sacred Sibylline Book to see what the New Year will bring for Rome. Today the desire to know the future remain as strong as ever but the technique has certainly improved. Today geopolitics is here to help us guide our way in the next year. So what will bring to us 2010?  

The end of economic crisis?

Certainly something that everybody will like to see in 2010 is an end to the powerful economic crisis that is ripping havoc in international economy. Unfortunately 2010 is a decisive year in economy but with a double potential: to show the end of recession or to provoke another catastrophic fall. The economic dates are far away from a promising future. The US economy still has to face with the consequence of a real estate market that is suffocated by offers but also in lingering demand because of the strict policy applied by banks. Also financial sector proved his vulnerability to external pressure when the so called Dubai World bobble burst in November 2009 the New York Stock Exchange suffered a fall of 8 %. This vulnerability to foreign market will still be a major factor in influencing US economy recovery. Crushing stock markets in Asia or Middle East will sure happen in 2010 as the international banking system is slaw in offering collaterals and credit to pharaoh type projects that where starting before crisis and needs financing to be completed. These big projects are a sward with two directions, if they are not completed investor confidence will fall and as a result we will see depreciating values of stacks and bankruptcy if they are completed they will find a market already saturated and they will collapse.

A ghost is troubling the continent: Unemployment.

We all remember K. Marx beginning of Capital: a ghost is wondering the continent: the communism. Well now another ghost is showing here ugly face from New York to London: unemployment. The latest data from United States are crippling any hope of recovery, with 85.000 jobs lost only in December the economy of US is in severe shape and with more than 600.000 people relinquishing any hope for finding a new job the prospects seamed deem. In Europe the situation is even grey, German Federal Government admitted in November that the figures showing the German economy out of recession are exaggerated, Greece, Latvia, Lithuania and Estonia face national bankruptcy and Spain, Italy, Ireland are fallowing closely and with national bankruptcy looming over Romania, Hungary and Bulgaria economy is still clear that Europe economy is continuing his downfall rapidly.

China and India: how long the miracle can last?

This year the only good news from world economy come from India and China that relied on a huge internal market (more than 1 billon each) to continue to grow in a down fall year. But this maneuver could not be sustained for 2010 economist predicts. Two are the main reasons: the grow of internal market demand could only be sustained by increase in wages that will affect both China and India competitiveness on external market. The second reason is that the internal market is not producing hard currency (dollars or Euros) that both India and China need for their developing economy but they only acquired more of their one currency with no value on international market. China and India continuous grow could only be sustained by cutting their economy from international market and this will be another catastrophe for international economy. In conclusion 2010 will be decisive in shaping the way for a recovery or for another crisis.

Democrats lose control.

In United States 2010 is an electoral year in which the democrats and republican will fight for control of Legislative. In this fight democrats enter on the lame duck position, in economy the financial support offered generously by B. Obama did not produced neither the necessary recovery neither the economic climate improvement, on international policy US troops are still embattled in Iraq, in Afghanistan a long war of guerrilla will claim his life toll in 2010 and Obama just make the monumental mistake in involving US military in a new conflict in Yemen. With none of his campaign pledges honored and a dire economic situation B. Obama is having little to show for, a situation that republican will get the best of it.

Israel – a new military adventure.

In Middle East the clouds of a new war are rapidly getting strength. In Israel an embattled Prime Minister Benyamin Netanyahu is seeing his cabinet position weaker and weaker by days go done. Israel Foreign Minister, Avigdor Lieberman has found himself excluded for Mediterranean Union projects talks as a result of Turkey veto and Arab country refusal to talk with him for his extremist views (the most inflammatory remark being the possibility of an attack on Aswan Dam in Egypt to disrupt Egypt economy). Inside Israel the dispute surrounding construction in occupied West Bank and East Jerusalem is further weakening his cabinet. In this case as Ehud Olmert has done in 2008 attacking Gaza or Menahem Begin invading Lebanon in 1982 is clear that the cabinet will try to avoid collapse by launching a new attach in the region. The best target is Gaza already weakened by the 2008 war and by 3 years of total blockade. An operation in Gaza could dismantle Hamas and provide a strategic victory with little human life cost so probably this will be the next target. But also there are voice that suggest that an attack on Lebanon infrastructure will be more beneficial for Israel that economically bothered by Lebanon tourism and investment opportunity competition in the region. But is probably that Israel will restrain his goal at more achievable level and a strike on Gaza seems the most likely scenario for 2010.                 

Pakistan: between civilian rule and military intervention.

Pakistan situation is dire: economy fall by 20% percent, unemployment is huge (more then 18%) and banking system is showing sign of collapse. With the army engaged in frontier battles at border with Afghanistan and with a continuous line of interior attacks the last things Pakistan needs is a political crisis. But exactly this is what 2010 will bring.  The embattled president Ali Zardari was forced to relinquish nuclear arms control to his prime minister and also to face a corruption charges that could lead to his downfall. The only civilian personality that could take his place is former Prime Minister Nawaz Sharif. But we must not forget that Mr. Sharif was deposed in a bloodless coup d’état in 1996 by the military and replaced with General Perwez Musharaf. Bringing him back to power will just mean that the history will be re-write. In any case if there will not be a political solution to Pakistan economic and political crisis the military will step in and this time with the accord of Washington that is eager to see stability at the front door of Pakistan at any cost in order to defeat the insurgency in Afghanistan. A general that will promise Washington tranquility at the southern border of Afghanistan will be acclaimed just as Perwez Musharaf was in 2001 after September attacks.

Latin America.

2010 also witness another tension fleering up: in Honduras a coup d’état mounted by military in convergence with right wing politicians toppled the legitimate president: Manuel Zelaya, crush any civilian resistance and despite international condemnation consolidated there regime in illegal elections. This became now a study case in United States and the region where many want to see left wing politicians as Evo Morales, Hugo Chavez and Rafael Correa overthrown. The Honduras success receipt will be surely repeated in another Latin America country this year. The question is where?

In Bolivia where a so called independent state in the center of the country has elected a parliament and a government and tries to overthrown Evo Morales in a civilian and military coup ? Or in Venezuela where Hugo Chavez is now under Columbian army pressure, irregular militia that crossed the border from Columbia to attack Venezuelan objectives on daily bases and where United States just opened up military bases?

Finally Rafael Correa of Ecuador is also on the black list; Ecuadorian military trained and grown by United States is also shooing sign that could change lines. Where will be CIA next revolution in Latin America?   Newsweek citing informed sources from CIA announced that Venezuela is the prime candidate for a „freedom” operation in Caribbean.  

China`s decision.

2010 will also be a decisive year for China that will be presented in the Security Council with sanctions proposal for Iran and Sudan. Both countries are strong allies of China, suppliers with gas and oil for increasing Chinese demands and both countries have a tension relationship with United States. China will have to decide; to give a go ahead to future sanctions could spell clearing the road for war. Everybody remembers in Security Council the 2002 resolution against Iraq that threatened the Baghdad regime with serious consequences if they don’t comply. United States decided that serious consequences could mean war and launch the attack on Iraq. A similar resolution today imposed on Teheran will be just a final step to war. China seemed to be aware of this and will have to choose between open opposition to United States agenda or temporary acceptance of US demands. The present strategy of China of temporization could no longer work in 2010.

This are just of the few decision that international policy and market decision makers will be confronted in this decisive year between peace and war, crisis or recovery , coup d’état or liberty. The answer will be decided in the next 12 month. We will live with the consequence.

Professor Anton Caragea PhD, MA, FINS