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Jan 7, 2013 | 13:00 GMT

2012's Forecasting Report Card

Editor's Note: This report card evaluates Stratfor's 2012 forecast and provides concise predictions for 2013.

No U.S./Israeli War with Iran

Prediction

There will be no U.S./Israeli war with Iran in 2012. Iran will continue trying to expand its sphere of influence in the region, but it will be operating under heavy constraints. Iran's Gulf Arab neighbors will band together against Tehran instead of reaching an accommodation. There will be no breakthrough in negotiations with the United States. In the absence of an unlikely foreign intervention in Syria, the al Assad regime will not collapse this year.

[[nid:194689 align=right]]Evaluation 

Although there were periodic upticks in war rhetoric throughout the year, Iran's retaliatory levers in the Strait of Hormuz and Israel's significant military constraints prevented a war. Iran's regional ascent came to an end with the gradual decline of the al Assad regime in Syria. 

2013 Outlook

We maintain that a U.S./Israeli military confrontation with Iran is unlikely this year. Iran's influence in much of the region is largely that of a spoiler as Iran tries to prevent a stable transition in Syria and maintain leverage through chaos in the Levant. The urgency for the United States to negotiate with Iran will decline the more Tehran weakens under the weight of economic sanctions and regional setbacks. Syria and Lebanon will fragment as civil war in the Levant persists.

Islamist Militancy in Nigeria

Prediction

Nigeria will see sustained Islamist militant violence. Boko Haram's jihadist rhetoric will outweigh its capabilities, and the group's attacks will be concentrated on Nigerian government and civilian targets in the country's northeast and northwest regions. The group will face heavy constraints in trying to threaten the commercial capital, Lagos, or the Niger Delta oil-producing region.

[[nid:194689 align=right]]Evaluation

Nigeria in 2012 saw an extensive militancy campaign by Boko Haram. The group's attacks were largely concentrated in northeastern Nigeria and to a lesser extent northwestern Nigeria. Boko Haram threatened attacks in the West but did not conduct any transnational attacks or attacks on foreign facilities in Nigeria.

2013 Outlook

Boko Haram will maintain a steady tempo of attacks, concentrating mostly on Nigerian government and civilian sites in the northern regions. Incumbent President Goodluck Jonathan will avoid controversial reforms, including market reforms for the energy sectors, in order to safeguard political support for his party leadership re-election in 2014. 

Regional Shifts in East Asia

Prediction

East Asia will be shaped by three key processes: China's economic slowdown and potential social unrest ahead of the generational leadership transition, the effect of Europe's debt crisis and falling consumption of East Asian exports, and the regional response to increased U.S. engagement in the Asia-Pacific region.

Evaluation

[[nid:194702 align=right]]Beijing managed economic and social stresses in the run-up to the leadership transition and furthered efforts to counter U.S. involvement in maritime Asia with a more aggressive defense of its own territorial claims. We also correctly noted that as China's domestic social and economic problems grew, Beijing would turn to external disputes to help ease domestic public anger, and that this process -- along with China's military modernization -- would push its neighbors to accelerate their own military purchases and development.

2013 Outlook

China will continue to struggle with slow economic growth and the potential social effects of restructuring toward a more sustainable economic model. China's economic transition and continued efforts to bolster territorial claims and strategic interests in surrounding waters will spur Southeast Asian integration efforts and Japan's military normalization process. The decline of low-end coastal manufacturing in China will present enormous opportunities for Southeast Asian countries like Indonesia, Vietnam, the Philippines and potentially Myanmar.

Venezuela's Economic Dilemma

Prediction

While Venezuelan President Hugo Chavez's health will remain a wild card, his successor will emerge as the country's economic problems deepen. The opposition will unite and make its most credible play for power in a decade.

[[nid:194702 align=right]]Evaluation 

Miranda State Gov. Henrique Capriles Radonski was a strong opposition candidate but was ultimately unsuccessful. Chavez is now experiencing serious health problems and has appointed Vice President Nicolas Maduro as his successor. Venezuela witnessed growing economic uncertainty, infrastructure failure and unprecedentedly high social outlays in the lead-up to the election. 

2013 Outlook

Arrangements are now in place for Chavez to guide a managed transition, though conditions are ripe for a power struggle in Chavez's absence. Regardless of Chavez's immediate health status, Venezuela is likely to hold presidential elections once again in 2013. Although inflation was manageable through 2012, there is growing pressure on the value of the bolivar and the government will have to consider another devaluation of its currency and cutbacks in public spending. Overall, we expect that the government will be able to manage these challenges, but the economic situation will deteriorate.

Europe's Continuing Financial Crisis

Prediction

The European Union and eurozone will survive 2012, and Europe's financial crisis will temporarily stabilize. However, Europe will continue its long, painful slide into deepening recession. Germany, seeing an opportunity in the ongoing financial crisis, will use its superior financial and economic position to attempt to alter the eurozone's structure to its advantage.

Evaluation

[[nid:194703 align=right]]The European Union took steps to keep the system alive and prevent a major crisis. As a result, the eurozone remained afloat in 2012, and countries such as Spain and Greece were given the financial assistance they needed. However, we exaggerated Germany's ability to reshape the eurozone for its own benefit. While Berlin managed to get the Fiscal Compact Treaty (an agreement for countries to reform their constitutions and include deficit caps), the pressures stemming from Germany's underlying need to preserve the eurozone forced Berlin to concede to softer targets for most of the bailout countries.

2013 Outlook

The eurozone will survive another year as the tools that kept it afloat in 2012 will remain effective in 2013. The crisis will increasingly affect northern Europe, and the two largest economies of the eurozone (Germany and France) will face low growth or even stagnation. In the periphery, social unrest will grow while divisions across the Continent continue to deepen.

Russia's Influence in Former Soviet States

Prediction

Russia will continue building influence in its former Soviet periphery in 2012, particularly by institutionalizing its relationships with many former Soviet states. Russia will be able to take advantage of Ukraine's inability to maneuver and will gain access to strategic Ukrainian assets, possibly including minority control in its natural gas transit system, but Ukraine will continue to resist the institutionalization of Russia's influence. 

Evaluation

[[nid:194704 align=right]]Russia was able to increase its influence in countries like Belarus and Kyrgyzstan, with the latter formally applying to join Russia's Customs Union. Russia was also able to quietly strengthen its influence in Georgia with the election of Prime Minister Bidzina Ivanishvili. Negotiations continued throughout the year, but Russia was not able to take control of Ukraine's natural gas transit system in 2012.

2013 Outlook

Russia will have uneven success in trying to consolidate influence in its periphery in 2013. An energy compromise will likely be struck with Ukraine, while Russia will build on its political momentum in Georgia and continue to face energy-related challenges in the Baltics.

Egypt's Islamist Leadership

Prediction

Egypt will elect an Islamist-heavy parliament, but the military will remain the ultimate arbiter of the state.

[[nid:194705 align=right]]Evaluation

The military demonstrated its indispensability in maintaining the stability of the state when the Islamist leadership overreached in its attempts to consolidate power, but we underestimated the willingness of the military to work with the Muslim Brotherhood.

2013 Outlook

The military will rely on numerous tools to keep Egypt's Islamists in check but will adapt to the emerging Islamist political order by creating a working relationship with the Muslim Brotherhood. Heavy economic pressures on Egypt will start to undermine the Brotherhood's popularity as the government is forced to implement unpopular austerity measures.

The Russia-Germany Dynamic

Prediction

Moscow and Berlin will continue their close relationship, especially in economic matters and security, but Russia will focus more on Central Europe in areas of security and energy in trying to pick up assets. 

[[nid:194706 align=right]]Evaluation

Russia and Germany maintained close ties, building on their energy relationship with the expansion of Nord Stream. However, Russia did not make as much progress as we expected in picking up assets in Central Europe and instead faced assertive challenges on the energy front, especially from Poland and the Baltics. 

2013 Outlook

Russia will try to maintain its energy leverage on the European continent through a more pragmatic approach to natural gas pricing negotiations and the construction of alternative pipeline systems, most notably South Stream.

A Coup in Mali

Prediction

We did not forecast the coup in Mali that occurred as a result of disagreements within the Malian army over how to counter a Tuareg insurgency empowered by the collapse of the Gadhafi regime in Libya.

[[nid:194707 align=right]]Evaluation

We forecast the spread of the Tuareg insurgency but failed to anticipate the Mali coup. When the coup took place, we said that the Malian army would be unable to recover territorial control in northern Mali and that external military intervention activity would build.

2013 Outlook

In the interest of denying sanctuary to al Qaeda in the Islamic Maghreb, the Malian army and neighboring African governments will receive Western backing for a military intervention in Mali. The heavily constrained military intervention will roll out gradually and will expose conflicting interests with emerging regional power Algeria.

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