Emerging Geopolitical Developments: Key Issues

The issue that will inject the most volatility into geopolitics in the next few years is the integration of emerging powers on to the world stage. In fact, finding China a place in the world economy is the defining issue of the early part of the 21st century. The next few years will be critical given the painful economic and political adjustments China and the industrialized world will have to make. Similarly, the US and Europe are struggling with the re-accommodation of Russia into the world economy, a process that has become inextricably tied to energy security and geopolitics. Working with Russia will be critical for the West because of the country’s ability to be a spoiler in dealing with "rogue" states such as Iran. Against this background of fundamental transformations, a number of new and lingering developments will shape the global geopolitical landscape.

US Elections

US President George W. Bush, who dominated the headlines in the last five years, is now a lame duck almost earlier than any other US president in living memory. There are many candidates running for the US Presidency making the elections interesting, but subject to much uncertainty. Nonetheless, a number of domestic and structural issues—immigration and employment, health care, security—will shape the forthcoming elections. As a result, the next Administration’s focus is likely to turn inward.

Foreign Policy

Given the events of the last seven years, the next US Administration will not be able to disregard foreign policy developments. The key foreign policy issues which will preoccupy US policy makers will be the US withdrawal from Iraq and Iran’s determination to maintain its program of nuclear enrichment. US influence in Iraq will decline after it withdraws some of its troops next year. Relations with Iran will remain a problem for policy makers inside and outside the Washington Beltway. The current Administration is divided: it is trying diplomacy, but there is a powerful faction within the Administration working to subvert these efforts and to compel the President to adopt a policy of force by default. The Democrats oppose a military attack, but are nonetheless extremely hostile towards Iran. Most Europeans strongly support the current path of diplomacy and tightening sanctions, and despite their antipathy towards Iran’s nuclear ambitions, they strongly oppose an attack on Iran. Their relationship with the United States could become more complicated in the next year due to changing politics at home.

European Politics

European politics will change in the next few years with the election of new leaders. Angela Merkel of Germany has recently been joined by Nicholas Sarkozy in France and Gordon Brown in Britain. “Old Europe” will now be led by new leaders who are seeking to institute structural changes at home and are concerned with issues related to the environment. Similarly, Gordon Brown will want to show Britain’s commitment to the Atlantic Alliance, but at the same time reduce its presence in Iraq and move its focus to Africa and to environmental issues. These are not issues the US Administration is particularly interested in pursuing during the last months of its second term.

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Fareed Mohamedi is a Partner and Head of the Markets and Country Strategies practice, which houses PFC Energy's expertise in country risk and petroleum sector policy. For further information on this article contact Enews_fmohamedi@pfcenergy.com.