June 2021: ten predictions for the coming decade

1.     Italy, the euro, and the US dollar

On November 24, 2010, I published (in Global Politician and elsewhere) an article titled “Italy will Kill the Euro”. Six months later, credit rating agencies have downgraded Italy’s outlook from “stable” to “negative”. Italy is in worse shape than most members of the European Union (EU): at 6% of GDP, it has an ostensibly sustainable budget deficit, but its external debt (now close to 120% of GDP) is higher than that of the most egregious wastrels in the bloc, Greece and Ireland included. Italy's banking sector is over-exposed to borrowers in Central and Eastern Europe, a region habitually pendulating between recovery and economic calamity. If Italy goes Greece's and Ireland's way, the EU and the International Monetary Fund (IMF) - already over-extended by serial bailouts - will be unable to stem the red tide. Italy may actually effectively default and, in the process, ruin the euro and restore the US dollar to its erstwhile glory.

2.     Korean Unification

By late 2010, a succession war was simmering in North Korea. His panoply of suddenly-bestowed senior political and military posts notwithstanding, the generals and military establishment are less than happy and impressed with Kim Jong-un, the younger son of the Dear Leader, Kim Jong-il. Each side flexes muscles in an attempt to burnish their nationalist and martial credentials. The outcomes of this internecine conflict are ominous: a series of ever-escalating military skirmishes with South Korea and the ramping up of North Korea’s already burgeoning nuclear weapons program.

North Korea’s leaders are likely to try to reform their country’s economy and introduce capitalism, but this will fail. The regime in North Korea is all but dead on its feet. These are its last days. China is facing the terrifying spectacle of a crony failed state with tens of millions of starved and destitute potential refugees swarming across its porous and indefensible borders. There is only one solution to all the problems of the Korean Peninsula: unification. The parties came close to discussing it in secret talks in 2002 and then again in 2009.

3.     China’s Economy and the Second Great Depression

As I predicted in an article published on February 22, 2009 and titled “The Next 18 Months: Recession, False Recovery, Depression”, the years 2010-2011 saw a false recovery from the Great Recession of 2008-2009. Mounting sovereign debts crises in Europe and an anemic rebound in America’s economy were more than outweighed by the emergence of Asia as a global powerhouse. Yet, the warning signs were there: China’s economic “miracle” was based on unsustainable dollops of government largesse and monetary quantitative easing. This led to the formation of asset bubbles (mainly in real-estate) and to pernicious inflation. The Chinese authorities’ attempts to clamp down on rampant speculation and price gouging are too little, too late. The economy will slow down considerably and the Chinese house of cards will collapse ominously and swiftly. This will bring the entire global economic edifice into disarray with mounting imbalances and increased risk-aversion among investors. The second phase of the global crisis will resemble closely the Great Depression with massive write-offs in the values of equities and mounting, two-digit, unemployment rates everywhere.

4.     Israeli-Arab War

The Arab Spring of 2011 empowered Islamist and other anti-Israeli elements in Arab society. Israel and its allies, the reactionary Arab regimes, were long and justly perceived by the oppressed average Arab as outposts of American (and, previously, British) mercantilist neo-imperialism. The popular uprisings unseated these entrenched dictatorial elites and replaced them with military and Muslim ruling classes bent on restoring the anti-Israeli hostility and enmity that characterized the Middle-East before 1979. In time, this – and heavy Iranian meddling - will lead to an all out war between Israel and its neighbours, the outcome of which cannot be predicted with any certainty.

5.     Russian Liberalism

On June 2, 2010, I published an article titled “Putin’s Last Days”. Putin is on his way out. With this clownish “strong man” gone, Russia is bound to become a far more liberal and democratic place. Whether Medvedev wins the next presidential elections or not, Russia’s oligarchs are a dying breed; the rule of law is asserting itself; property rights will be restored; a new cadre of politicians – young, educated, self-confident, and cosmopolitan (though not necessarily pro-Western) – will take Russia forward and free it from its pecuniary dependence on oil.

6.     First Cyberwar

The Stuxnet worm delivered a paralyzing payload via cyberspace, thus heralding the first salvo in the gathering storm of cyberwars. Prior to Stuxnet, hacker networks – both government-mandated and self-assembling – attacked the Internet infrastructure of perceived enemies (the prime examples being Russian attacks on the Baltic States and on Georgia and Chinese attacks on dissidents’ accounts with Google). The resulting disruption was minimal and transient. Not so with Stuxnet which ruined the Iranian uranium enrichment infrastructure single-handedly and remotely and without a single casualty among the Israelis who launched it. Similar offensives will become common in the near future.

7.     Change of Guard in International Institutions

The composition of and voting rights within the United Nations and its organs (including the World Bank) as well as other multilateral institutions (such as the IMF – International Monetary Fund) reflect the world as it was in 1946, after the Second World War. A lot has changed since then, most notably the emergence of Asia as the fastest-growing region, both economically and militarily and the relative decline of an insular Europe and depleted USA. Within the next few years, the upper echelons of the IMF and the UN will be revamped to reflect these gargantuan historic shifts: we will see Asians and Africans running the world.

8.     A Dictatorship in Turkey

Snubbed by the EU (European Union) and the USA alike, Turkey is re-orienting itself. Once again, it is playing the role of a regional potentate, with ties to regimes of all sorts: veteran and unsavoury; emerging and fundamentalist; terrorism-prone and peace-seeking. Turkey’s military and its secular political establishment have lost their decades-old grip on power. Moderate Islam, reified by Turkey’s Prime Minister Erdogan, is slowly being transformed into an authoritarian, fundamentalist, anti-Western pale imitation of Pakistan and Iran. Its erstwhile warm relationship with Israel is frayed. Media freedoms and online access are curtailed and censored. Human rights are again breached and violated blatantly (especially where Kurds are concerned). Turkey’s role in NATO, its special relationship with the USA, and its EU accession are all in doubt.

9.     War in Pakistan

The second war between the USA and China – directly and via proxies – will be fought on Pakistani, Indian, and Afghani soil. As an increasingly-Islamized Pakistan veers away from its frenemy, the United States, and towards its new-found ally, China, America’s vital interests in Afghanistan, India, Japan, and South Korea are at stake. Skirmishes will evolve into a full-fledged conflict, with a slate of nuclear powers as adversaries: Pakistan, India, China, and the USA/NATO .

10.  Dissipated Cloud Computing

As the inherent instability, unreliability, and unsafety of cloud computing are demonstrated time and again, businesses and, later, users will shy away from it and return to the safe havens of their servers, laptops, tablets, notebooks, netbooks, and PCs. Hyped today, cloud computing and its derivatives (Chrome Operating System, for instance) is a fad and will become the exclusive reserve of giant consumers of storage such as Google and Amazon. Other predictions: Bing will triumph over Google as it gains access to Facebook’s and Skype’s vast treasure troves of user-generated information; the PC will make a comeback (of course, transformed beyond recognition); Windows Mobile (Nokia) and Android will overtake Apple’s iOS.