Forecasting in the Real World: The Short-Term Outlook
21 Nov 2011
Last week, we looked at the challenges associated with future forecasting, especially within an international system that is undergoing profound change. In particular, we looked at the general benefits and limitations of forecasting; we looked at the toe-stubbing problems of politicized futurology, how to account properly for future risks, and how to ensure methodological effectiveness. We closed the week, and pointed to this week’s focus, by looking at how the U.S.’s 2010 U.S. National Security Strategyillustrates an inescapable fact of life in forecasting – practical, day-in, day-out futurology is not “pure”. It invariably blends on-the-merit analyses with instrumentalized ones.
Having done such “heavy lifting” last week, we’re now going to take a more practical approach. Over the next five days we will consider how practical forecasters from the private sector and academia predict change. This effort will take us beyond the more specific cases we looked at in Week 1 to consider predictions that have been made for the international system in the near, medium and long terms.
So, let us begin by looking at a selection of practitioners’ short-term predictions about some of the key actors and trends shaping the international system. That this particular type of futurology maintains a narrow analytic focus should surprise no one. It concentrates on decisions and events that are likely to shape the geopolitical perspectives of global actors over the next one to two years. Short-term forecasting, in other words, is an immediate form of trend analysis that is more rigid and disciplined than its medium and long-term cousins. It is nothing if not about the ‘here-and-now’.
STRATFOR’s Annual Forecast 2011clearly demonstrates this point. In particular, the forecast highlights 1) the changes in leadership that major global players will experience over the next two years, and 2) the dangers of a full and therefore premature U.S. troop withdrawal from Iraq by the end of 2011, and 3) the unpalatable prospect of allowing Iranian hard power to dominate and perhaps shape the Middle East. Given that the last two trends would leave Iraq open to increased Iranian suzerainty and only aggravate the lingering imbalance of power in the region caused by the 2003 Iraq War, STRATFOR fully expects the United States to maintain a strong military presence in Iraq. Yet this is unlikely to result in a direct military confrontation with Iran. Instead, the U.S. will seek to facilitate an eventual withdrawal from Iraq that accommodates both Washington’s and Tehran’s geopolitical interests.
A fourth area of concern in the STRATFOR forecast is China. The forecast expects Beijing’s export growth to slow throughout 2011 and it also sees worrisome similarities between its ‘miraculous’ economic growth and some of its East Asian predecessors. As STRAFOR sees it, China’s economy is currently driven by significant government investment and high levels of bank lending. It therefore has to walk a fine line between runaway inflation and an economic slowdown. The expectation is that a slowdown will trump inflation, that the Chinese leadership will avoid any risky strategic economic decisions, and that they will focus on the next-generation leadership transition. Ultimately, what this means is that China’s future is fraught with difficulties. The longer that Beijing puts off making necessary economic policy changes, the worse things will be when China’s economic miracle finally unravels.
Finally, STRATFOR notes that Russia is also on the verge of a political transition, but it does not see it imperiling Moscow’s continued attempts to influence the Eurasian heartland by conciliating with near-neighbors like the Baltic States and those in the Caucasus region. Moreover, Russia continues to seek an enhanced relationship with Germany, thereby increasing its influence into Central Europe.
We should, however, not read too much into Russia’s attempts at conciliatory and constructive dialogue with the West. What it is really doing is making a calculated move for influence in regions where the United States has been dominant since the end of the Cold War. Moscow is well aware that America, bogged down in Iraq and Afghanistan as it still is, is in no real position to confront its geopolitical adjustments with the West. Consequently, Russia is trying to make some major geopolitical gains before the United States can divert back its attention to greater Europe.
Just as STRATFOR does, ETH’s Center for Security Studies (CSS) puts out annual, near-term forecasts of international trends. Its Strategic Trends series, however, is more conceptual and meditative than STRATFOR’s “real world” approach. From the outset, in fact, CSS analysts emphasize that their short-term forecasts are modeled around the key theme of ‘divergence’. They believe that a multipolar international system is emerging, but it is one characterized by a lack of leadership and possible friction. Leaderless multipolarity, in turn, will thus make finding solutions to common problems increasingly difficult.
Strategic Trends 2011 specifically argues that ‘divergence’ has had the most profound impact upon three features of the international environment. First, the economic performance of emerging and Western markets has been markedly different. While both have been affected by the global financial crisis, the emerging markets have recovered faster from the initial financial shocks. What this signals, of course, is that the dynamics of global power are rapidly shifting towards Asia. The case for making China a bona fide rather than an emerging economic power is increasingly compelling. Indeed, emerging markets are no longer reliant upon Western demand. Instead, China is leading the way in forging economic links with non-Western countries, thereby helping to ensure that emerging markets have economic options beyond the West. As a result, the economic outlook and policies of the Asian-driven emerging world are having a profound impact on the geoeconomic shape of the international system.
In stark contrast, the United States and European Union (EU) are still grappling with economic problems. While the United States has not lapsed back into a recession, Washington has to confront a massive national debt and budget deficit alongside a period of limited economic growth. In Europe, the economic situation is equally grave. Cuts in public expenditure and debt restructuring are likely to remain integral to many EU countries’ attempts to deal with their sovereign debt. Indeed, the economic plight of the EU demonstrates that the theme of ‘divergence’ not only applies to the international system itself, but also at the regional level. Germany now holds the reins of power regarding monetary union in Europe, but the terms and conditions it seeks to impose have many enemies. As a result, Europe’s preoccupation with its financial problems means that it is unlikely to play a major global role within the international system for the foreseeable future.
Indeed, Europe’s large scale withdrawal from the weft and warp of the international system counterpoints a third “divergence” – the changing power dynamics throughout the Middle East. Strategic Trends 2011 predicts that the main beneficiaries of the decline of traditional Middle Eastern ruling elites will be the new regional powers of Iran and Turkey. At the same time, the oil-rich Gulf States may look to improve their ties with the rising powers of Asia while the North African states intensify their cooperation with Europe. Finally, while the U.S.’s long-standing influence in the Middle East may wane, its presence is assured. It will continue to safeguard its energy interests, protect Israel and attempt to manage what appears to be a growing list of other security challenges.
Interestingly, while Strategic Trends 2011 makes a number of predictions that reflect STRATFOR’s short term forecasts, they come with a number of caveats which also intersect with the volume’s key theme of ‘divergence’. For example, while the geoeconomic balance of power is seemingly moving towards emerging post-Western markets, there is little evidence to suggest that China is keen to replace the United States as the guarantor of global stability. Alongside STRATFOR, Strategic Trends 2011 is adamant that China’s main priorities remain domestic social and economic development. This, in turn, partially explains why it is highly unlikely that China will become a more influential actor on macro-level issues such as climate change and non-proliferation.
CSS’s Strategic Trends 2011 also adds a gloomy caveat to its near-term predictions about Europe. While it acknowledges that EU member states have shown some degree of unity with their debt-ridden colleagues, the decisive actions needed to stabilize Europe’s economy have yet to appear. As a result of such events, the text makes no near-term predictions on the future shape of the EU. Regional fragmentation, deeper political integration and enhanced fiscal cooperation all remain viable possibilities.
Neither does the CSS place any cast-iron certainty that the United States will indefinitely maintain a robust presence in the Middle East. Both STRATFOR and Strategic Trends 2011 are convinced that the U.S. should maintain its regional influence in the short term, but the continued diversification of its energy supplies beyond the Middle East, coupled with a general decline in the threat of jihadist terrorism, might increasingly permit Washington to divert its attention to Asia Pacific, where it will confront the growing influence of China. Indeed, the United States may even divert attention to issues that are closer to home. In the case of Mexico, the United States has a near-neighbor that is, in the opinion of many, rapidly becoming a narco-state. But, as Strategic Trends 2011 points outs, ‘divergence’ throughout the international system may complicate the United States’ attempts to lead a coalition to break the narcotics-insecurity cycle.
In closing, it is only appropriate to ask what near-term predictions can tell us about the practice of future forecasting. First, since short-term forecasts are informed by contemporary developments, they are basically “boxed in”. They are true extrapolations of imminent trends. The bold and brash need not apply. Thinking the unthinkable is not only incredible here, but also moot. Short-term forecasting is the domain of practical, largely predictable and generally unremarkable assumptions. If anything, it provides the building blocks for making effective medium and long-term predictions possible.
Having said all the above, how one presents short-term predictions remains a highly creative act. While STRATFOR and Strategic Trends 2011 make very similar forecasts regarding the near-term future of the international system, they make their cases in very different ways. STRATFOR gets straight to the point; it tells its readers its primary short-term forecasts without imposing additional conditions or deviating from its script. Strategic Trends 2011, in contrast, takes a much more subtle approach. Yes, it identifies a number of key developments that are influencing the international system, but its predictions are modeled around more conceptual themes and remain subject to conditions. This does not mean that CSS analysts lack confidence in their short-term forecasts. Instead, it means that their short-term forecasting is directed to and utilized by a potentially more diverse audience than others. Whether these differences apply to medium and long-term forecasts is something we will look at as this week unfurls.
ISN Partner content
[Image:134237]Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture
This paper examines key issues surrounding 'next-generation' bio-fuels, asking whether production will rise enough to reach current legislative mandates and how costly such production will be. It further examines how investment in the field will be financed, what prospects investors see for cost reduction, and the role of agriculture in supplying feedstock for production of next-generation bio-fuels.
India's Pakistan Talks: Engagement Without Expectation?
Delhi's recent decision to renew the dialogue with Islamabad, despite the lack of progress on the question of cross border terrorism, underlines the unenviable situation that India finds itself in. Few in India expect that the resumption of the engagement will produce substantive results in the near term.
Central Asia’s Security: Issues and Implications for US Interests
The Central Asian states (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) face common security challenges from crime, corruption, terrorism, and faltering commitments to economic and democratic reforms. However, cooperation among them remains halting, so security in the region is likely in the near term to vary by country.
Crisis in the Congo
This Memo describes the Democratic Republic of the Congo's near-term vulnerability to convulsive electoral violence and renewed rebellion on its periphery. The author argues that the most prudent steps the US can take to reduce the likelihood of these contingencies are to increase coordinated international pressure on President Joseph Kabila not to compromise the legitimacy of the electoral process and to support a more robust UN presence during the electoral period.
Can Greece 'Grow Solvent'?
With the completion of the latest rescue package for Greece – which relieved the country of short-term liquidity problems and eased the borrowing terms, but which made only a small dent in the overall debt burden – the question now is whether Greece can ’grow solvent’.
Middle East and North Africa Unrest Implications for Oil and Natural Gas Markets
Recent unrest in the Middle East and North Africa (MENA) region has affected international energy markets and put upward pressure on oil prices. MENA is home to some of the world's largest oil and natural gas producers and exporters. This paper examines the consequences of the recent unrest on oil and natural gas markets, both in the short term and longer term.
Turkey's 2011 Elections and Beyond
At Turkey’s general elections of June 2011, the governing Justice and Development Party (AKP) won 50% of the overall vote and was the first time that a ruling party in Turkey has increased its vote in a third term. In the medium-term its biggest challenges will be drafting a new constitution, stabilizing the economy, and negotiating changing regional relationships, but in the short-term it needs to diffuse a crisis over MPs boycotting parliament.
Towards a Post-2015 Development Paradigm
The principal purpose of the meeting was to develop options for what could succeed the Millennium Development Goals (MDGs). This report provides some background information, proposes a future set of development goals and summarizes issues that had a strong degree of consensus among participants and those that were more controversial.
Recommended Reading
external pageJames Auger IHS Global Insight's Top-10 Current Political and Security Risks
external pageForeign Policy’s Special Report ‘The Future is Now’
external pageThe International Labour Organization’s World of Work Report 2011
In case you have missed any of our previous content on Future Forecasting and its Challenges, you can catch up here on: The Political Problems of Forecasting Structural Change, Changing International Structures, Threats and Risks in International Security, The Methodology of Forecasting the Futureand The Case of the US National Security Strategy