2013: the year ahead
The situation in the eurozone will continue to dominate the world’s headlines in 2013 but the euro is likely to survive. It is possible that the eurozone crisis will finally see light at the end of the tunnel although problems will remain. A lot will depend, however, on the performance of the French and Spanish economies and on the result of the Italian election. After five years of recession, Greece might possibly, possibly, have reasons for cautious optimism in 2013.
Germany goes to the polls in September in an election in which Chancellor Angela Merkel is likely to be re-elected – on the basis of her sound management of the German economy and the eurozone crisis. However, Merkel’s fate will depend on the performance of her Liberal coalition partners (FDP) who in the polls are struggling at below the five per cent threshold required for parliamentary representation.
Malta’s election will be held in March, and the result will probably be closer than we think. The Nationalists will be running on their economic (and European and foreign policy) record, while Labour will be emphasising the political instability of the past year and a half, the need for a change in direction and a promise to reduce utility rates. We can expect PN deputy leader Simon Busuttil to play a major role in the campaign.
Italians vote next month in a national election which will likely see the emergence of four political blocs: the centre-left Democratic Party led by Pier Luigi Bersani, the centre-right People of Freedom party led by Silvio Berlusconi, the Five Star Movement led by comedian Beppe Grillo and the new centrist bloc led by Prime Minister Mario Monti. I don’t believe there will be a clear winner, and a possible scenario is a coalition between Monti and the centre-left. Whether the two are really compatible is another matter.
French President François Hollande faces a difficult year in which he will have to make some hard choices in order to restore the country’s competitiveness.
Spain will continue to grapple with the Catalonia question and perhaps its recently enacted labour reforms will bear fruit. But the International Monetary Fund believes the Spanish economy will continue to contract in 2013. Hopefully, Madrid will not ask for a bailout.
In the UK, the Conservative-Liberal Democrat coalition will survive another year but quarrels will persist, especially over Europe, where Conservative backbenchers will increase their hostility towards the EU.
Outside the UK, however, the EU will continue to appeal to millions of people and Croatia will become the 28th member state in July. We can expect other candidate and would-be candidate countries to continue knocking on Brussels’ door.
Ireland has just taken over the EU presidency which will be followed by Lithuania in July. The Irish EU presidency will focus on economic stability, growth, jobs and on reaching an agreement over the next (2014-2020) EU budget. The EU presidency would be well advised to give a fresh impetus to the stalled accession negotiations between Brussels and Turkey and for the bloc to take more of a direct role in the Syrian crisis.
As Barack Obama starts his second term as US President he faces a number of domestic and foreign policy challenges. He will have to continue dealing with a Republican-controlled House of Representatives, and although an agreement was recently reached to avoid the ‘fiscal cliff’, in two months’ time Congress will have to agree to a long-term deficit reduction plan. We can expect plenty of behind-the-scenes negotiations between the White House and the Republicans. Some sort of gun control legislation will probably be passed by Congress.
Obama will dedicate more time to foreign policy during his second term in office (with John Kerry as his new Secretary of State). The Middle East peace process, which is frozen if not dead, needs to be revived and is in great need of direct American involvement once again. Ideally, Obama should appoint a high-profile personality such as Bill Clinton as his special envoy to the Middle East.
Iran will move closer to the ability to make a nuclear weapon in 2013 and this will be a huge challenge for the Obama administration. The US will, sooner or later, have to take a decision about what to do about Iran. Obama will be under pressure from Israeli Prime Minister Benjamin Netanyahu – who faces re-election this month – to take action against Teheran.
North Korea will continue to defy the international community with its missile and nuclear programmes, and how to deal with Pyongyang will continue to be a foreign policy challenge for Obama.
It is quite likely that the Syrian regime of Bashar al-Assad will collapse this year but sadly, this will be a very bloody affair. The UN now estimates that 60,000 people have died in this conflict and many more will die before Assad goes.
Obama will have to take tough decisions over Syria, including the possibility of a no-fly zone, and one hopes that the people at the CIA and the State Department are working overtime to prevent Syria becoming a failed state in the event of Assad’s departure. Turkey will likely play a major role in any ‘transition’ in Syria.
One issue the whole international community must focus on is the need to protect the Christians of Syria, who make up 10 per cent of the population and who could easily end up as targets of the jihadi elements within the rebel movement.
We can expect al-Qaeda to continue spreading its influence in the Sahara region; it already controls a large chunk of territory in Mali and the world will ignore this problem at its peril.
We can expect the divide between Islamists and secularists in the Arab spring countries to continue to worsen while other Arab countries such as Jordan, Morocco, Qatar and Kuwait will hope that gradual political reform will prevent revolutions taking place.
Iran’s presidential election will be closely watched by the world. The incumbent, Mahmoud Ahmadinejad, cannot stand for re-election. It will be interesting to see who the country’s spiritual leader, Ali Khamenei, endorses for President, and whether the establishment will rig the election as it did in 2009. It will also be interesting to see whether the election of a new President will have a bearing on Iran’s nuclear programme.
In China the country’s new Communist Party secretary general, Xi Jinping, who will be appointed President in March, together with a new Prime Minister, will spend most of the year asserting his authority in the country. He will be under pressure to stamp out corruption and to keep the economy of this country, with a population of 1.4 billion, growing at a fast pace. Few expect any genuine political changes.
Other emerging markets are expected to continue fuelling global economic growth, such as Indonesia, the Philippines and India, although the latter’s economy grew at a rate of ‘only’ 5.7 per cent in 2012. The World Bank, however, expects it to grow by six per cent this year.
Brazil’s economy grew at a disappointing 1.3 per cent in 2012, according to the country’s central bank, but the Brazilian government is confident the economy will grow by four per cent in 2013.
In Russia the drop in energy prices could have a negative effect on the economy. The rise of a more vocal – and dissident – middle class in Russia should be closely monitored.
Conflicts to watch in 2013 include those in Sudan, the Congo, and of course, Afghanistan, where President Hamid Karzai will be under pressure to restore stability as the country goes to the polls and faces a Nato troop withdrawal in 2014. We can expect secret negotiations to take place with the Taleban.
In Iraq, sectarian violence will likely increase and the Sunni-Shi’ite divide worsen.
There will be presidential and parliamentary elections in Kenya in March, parliamentary elections in Austria and Norway in September and parliamentary elections in Pakistan in May.
In the latter we can expect the war on terrorism and the US drone strikes to be major issues. It will be interesting to see if Imran Khan, the popular cricket hero, emerges as a kingmaker after the vote.