The meeting of the G7 (now the G8) used to be the major diplomatic event of the year. For the past generation, the major G7 powers met to manage the world. The managers included countries like Japan and Canada — significant economic powers, but not military players. But the world has changed and the G8 meeting has lost its pivotal significance, precisely because many there are only economic powers. U.S. President George W. Bush’s decision to cut his attendance at the G8 meeting short by a day so that he could get on with his more important diplomacy in the Arab world is emblematic of how the world has changed.

As Stratfor predicted, al Qaeda has launched an offensive in the wake of the Iraq war. Thus far, it has fallen far short of the most extreme possibilities — a strike in the United States that is equivalent to or greater than the Sept. 11 attacks. Recent actions have reaffirmed that al Qaeda continues to operate, but have not yet established that the network retains its reach and striking power. We suspect that its striking power has been limited, but its reach still might be substantial. Further operations are likely: We see Latin America in particular and, to a lesser extent, Southeast Asia as ripe for attack.

The end of the campaign in Iraq has moved the United States into a new period, in which its ensuing strategy is not fully defined. The process of definition will entail a period of probing into a series of critical nations, in an attempt both to shape their behavior and evaluate the levels of their compliance. During this time — which will last many months — it will appear that the United States is engaged in a gratuitous irritation of countries in the region. In fact, Washington will be probing these states to shape and understand the dynamics within each country — and then will define its own strategy.

The United States announced this week that it would be redeploying forces from Saudi Arabia to the rest of the region. This announcement should not be viewed in isolation, but in the broader context of the redeployment of U.S. forces throughout the Eastern Hemisphere. The force structure and deployment of the Cold War era no longer has institutional or strategic coherence and will therefore evolve rapidly — not only in Saudi Arabia, but in Germany, South Korea and elsewhere.

The Shiite rising in Iraq has posed a major problem for the United States — not only with the Iraqis, but with Iran. Tehran clearly has a degree of influence and even control over Iraqi Shiites, and it appears to us that the Iranians are using this confrontation to put themselves in a position to negotiate more effectively with the United States over the long-term geopolitical dynamic of the Persian Gulf.

Stratfor has always said that the U.S. military campaign in Iraq would be the preface to other campaigns and the reordering of the Middle East. The war isn’t quite over, but the reordering of the region is already under way, with some remarkable successes for the United States. Even Syria represents a success for the United States, since it allows the Americans to demonstrate that they are not tired after Iraq and are ready for new challenges.

As the war in Iraq moves toward a conclusion, the expectations are that the end of the war will bring at least a pause in international tensions. We do not believe this will be the case. Given U.S. war goals, crises — inside Iraq, with nations along Iraq’s border and between Europe and the United States — can be expected to flow directly from war termination, whenever it comes. As we have said, Iraq is a campaign in a much larger war and not a war in itself. We now will see what that means.

From the beginning of the war-planning process, Baghdad posed the greatest challenge. The United States does not want to fight an urban battle, but the conquest of Iraq cannot be complete without the fall of Baghdad. The initial U.S. action — trying to kill Saddam Hussein — was designed to trigger a political capitulation that would make a battle for Baghdad unnecessary; it didn’t. Iraqi resistance may collapse simply out from attacks and internal weakness. But if this doesn’t happen, three war-fighting models will be available. One is the fall of Paris in 1944 — the favored U.S. strategy. The second is the siege of Budapest in 1944-45 — six weeks of encirclement and bombardment, with civilian casualties. The third is the fall of Berlin in 1945, with the attackers losing almost 80,000 men in three days. Berlin is out of the question. Paris is the model the United States wants, but the danger is that it will slip into a Budapest mode.

A general perception exists that the issue of war against Iraq has opened a massive rift between the United States and Europe. Giant anti-war demonstrations, public opinion polls and the behavior of key powers seem to confirm this view, but the reality is actually much more complicated — and very different. The majority of European governments support the United States on the Iraq issue. Though public opinion certainly opposes war, the European populace also is extremely concerned about Europe’s economy, issues of national sovereignty and the effect of French and German power over both. Governments generally have chosen to side with the United States — not because they are suicidal, but because they understand that on election day, the Iraq war will be a side issue and the power of the Franco-German bloc will be a central issue. The United States is much less isolated in relation to Europe than is generally believed.

The Iraq crisis has redefined relations between the United States and Europe. It also has redefined relations within Europe, where the desire to build a transnational entity has encountered the desire to build a Europe that is a great power. The Franco-German entente driving European unification now has encountered the deep suspicion with which France and Germany are viewed by others. In many ways, it can be said that Iraq has marked the end of European innocence: It is the collision point between a romantic vision of Europe and the hard realities of European life.