WorldWatch
Europe
Integration and expansion have been the themes on the Continent.
Borders throughout Europe were thrown open in December as nine countries, most from the former Soviet sphere of Central and Eastern Europe, officially joined Europe’s passport-free, open-border Schengen zone.
The European Union further cemented its control in the south when, on January 1, Malta and Cyprus officially adopted the euro, coming more firmly inside the EU’s sphere of influence. EU leaders are well aware that the two islands are key to the control of the Mediterranean, Southern Europe and Northern Africa.
In the energy sector, Europe and Russia found themselves at odds when a price dispute in Central Asia spilled over into the EU. Turkmenistan cut gas supplies to Iran during one of the Islamic Republic’s most severe winters. Out of self-preservation, Iran then cut its supplies to Turkey, and Turkey cut supplies to Greece. Europe imports gas from these regions to decrease its dependency on Russia, but it is now forced to question how reliable its non-Russian sources are and whether extra intervention will be needed to guarantee a steady supply.
Russia gained another energy advantage over the EU in January as it signed a contract with Turkmenistan to build a pipeline connecting the two nations. The EU had hoped that Turkmenistan would choose Europe as its main partner. Instability in the Caucasus could upset Europe’s energy plans. Currently all gas coming from this area must travel through the small but vital nation of Georgia. Recent controversial elections there have caused unrest. Russia has also threatened to recognize the independence of two Georgian breakaway provinces.
All of these conflicts are driving the EU to consolidate more quickly. In addition, we can expect Europe to seek to temporarily resolve the Russia problem as it has done in the past: with a new treaty—another Molotov-Ribbentrop Pact. Germany’s new vice chancellor, Frank-Walter Steinmeier, is a great Russophile—perhaps just the man for the job. Watch, once this pact is signed, for both blocs to project their power elsewhere, at least until, as in the past, the treaty breaks down and war between the two erupts.
MidEast
Volatility in the Middle East continues to increase despite Western efforts in the region. U.S. President George W. Bush wrapped up an eight-day tour of the region on January 16 (see article, page 20). He had little success in what appeared to be the main two goals of the trip: to create peace between Israelis and Palestinians, and to build an anti-Iran alliance among Gulf states.
In the case of the peace process, the problem is that President Bush is using the same land-for-peace strategy used for the past 14 years—which has only ever made things worse. In the wake of his visit to Israel, Gaza erupted in violence and an Israeli political party resigned from the government. The foreign minister of Slovenia (which took over the EU’s rotating presidency at the beginning of this year) promised on January 9 that the EU would resume a key role in the negotiations if U.S.-sponsored talks failed.
President Bush’s lack of success in convincing Gulf Arab states to take a stronger stance against Iran has more to do with his lack of credibility—and Iran’s heightened standing in the region. Despite Bush’s offering a range of incentives to members of the Gulf Cooperation Council, these states were more worried about not getting on Iran’s bad side. These Arab states aren’t overly fond of Iran—the motivation is more a fear of the Islamic Republic.
President Bush’s rhetoric about Iran during his trip was particularly strong following a January 6 incident in which three U.S. ships passing through the Strait of Hormuz were harassed by five vessels believed to be from Iran’s Revolutionary Guard Corps Navy. Still, while Washington may talk tough, its response to that act of aggression was muted, fitting a pattern of appeasement.
Tehran’s confidence continued to build following the U.S.’s nie capitulation, with Russia delivering its first shipment of nuclear fuel to Iran on December 17. Russia’s assistance is likewise not motivated by love for Iran, but by a desire to undermine U.S. influence in the Middle East.
Meanwhile, a new Pentagon report provides evidence that Iran is still aiding Shiite militias in Iraq, and Canada has charged that Iran is allowing weapons and bomb-making equipment across its border with Afghanistan to the Taliban.
As Iran increases in power, some of its neighbors are becoming keener to cement ties with it. The developing entente between Egypt and Iran progressed with a visit to Egypt by Iranian official Ali Larijani at the beginning of January (see article, page 31). Libya is another nation Iran is getting friendly with. On December 27, the Iranian vice president visited Libya in the first such high-level trip in 25 years. The two countries signed 10 memoranda of understandings on mutual cooperation. The Trumpet has long written that Libya would ally with Iran. Also, Iran and Pakistan are increasing cooperation in the energy sector, with talks occurring in January on a gas pipeline project that will link the two countries.
On January 12, Iraqi lawmakers passed a law that would allow former Baathists, once employed by Saddam Hussein’s government, to be integrated back into the civil service and military. Whether this law will ever be implemented, however, is another matter, with Iran and its Shiite allies doing their best to stop it.
The growing divide between Israel and Egypt was exposed with a spat between the two countries at the end of December over the issue of smuggling across the Egyptian border. Then, at the beginning of January, Egypt allowed 2,000 Palestinian pilgrims back into the Gaza Strip through the Hamas-controlled Rafah border crossing instead of at a crossing controlled by Israelis as previously agreed. The group included more than 20 senior Hamas members carrying money, weapons and terrorist-training material.
Egypt is also indicating its unwillingness to cooperate with the U.S., saying in December that it will reject any conditions set on it as part of the U.S.’s 2008 financial aid package.
The political stalemate in Lebanon continues, with the government having postponed its parliamentary presidential election over a dozen times. Hezbollah leader Sheik Hassan Nasrallah said at the beginning of January that no presidential election would take place unless Hezbollah received veto power in the future government.
In an escalation of the Turkish-Kurd conflict, Turkey conducted several airstrikes against Kurdistan Workers’ Party targets in northern Iraq in December. Apart from the limited value of the strikes in fighting Kurdish separatism, Turkey’s motivation was geopolitical: to complicate U.S.-Kurdish relations.
And throwing Pakistan into political turmoil and a firestorm of violence at the end of December was the assassination of Benazir Bhutto, the country’s primary opposition leader. The murder triggered a wave of nationwide riots, and the Pakistani general election, originally scheduled for January 8, was put off till February 18. Bhutto’s death epitomized the futility of U.S. efforts in the entire region (see article, page 5).
Asia
Asia witnessed a historical surge in friendship between the world’s two most populous nations—India and China. These two Asian giants started their first-ever joint war games on December 19; a second round will be scheduled for later this year.
After these war games broke the ice covering Sino-Indian relations since their 1962 border war, Indian Prime Minister Manmohan Singh met with Chinese Premier Wen Jiabao to sign a friendship treaty outlining India and China’s joint vision for the 21st century. This document, signed January 14, creates a basis for Sino-Indian cooperation on Asian integration, nuclear energy, trade, and military training.
The past 15 years have seen Sino-Indian ties go from cold to hot with trade between the two nations increasing 3,800 percent. “India has been striving to strengthen relations with its Asian partners who are gathered under the umbrella of the East Asian summit,” said Indian External Affairs Minister Pranab Mukherjee. “We believed such cooperation is economically logical and will help make this century, the century of Asia.” Plain Truth editor in chief Herbert W. Armstrong forecast for over 40 years that the nations of Asia, together with Russia, would cooperate to eventually form a gargantuan new superpower.
India is not the only Asian power that wants closer ties with China. On December 27, Yasuo Fukuda made his first visit to China as prime minister of Japan. His goal was to strengthen historically weak Sino-Japanese relations. “I truly feel that the spring of China-Japan relations has arrived,” said Chinese Premier Wen Jiabao.
Yet, as Japan moves closer to China, it will eventually have to face the fact that tensions between China and America are growing. So far, Japan has tried to please both friends. This may change. Fukuda’s Liberal Democratic Party (ldp) is facing massive opposition from its rival Democratic Party of Japan (dpj) in the Japanese parliament. On January 17, following dpj calls for an early general election, Fukuda said his lpd party is facing the biggest crisis in its history. If the dpj triumphs, Japanese-American relations may worsen.
Even Taiwan seems set to start improving ties with China as its relationship with the United States grows more tense. Taiwan underwent a major change as its Kuomintang party gained a 72 percent majority in the legislative Yuan on January 13. Kuomintang is known for its commitment to improving ties with mainland China. In the midst of U.S. opposition to a proposed Taiwanese referendum on UN membership, the Taiwanese are realizing that they cannot rely on the U.S. to protect them. Taiwan will form closer ties with China under its new, pro-Chinese government. Watch as an imperialistic Beijing reaches out to conquer Taiwan.
All these Asian states are increasingly looking to each other as their relationships with the West start to falter.
Latin America
The EU and Mercosur, the South American common market, will resume free-trade negotiations early this year, EU Economic and Monetary Affairs Commissioner Joaquin Almunia announced December 16, just before the 34th Mercosur summit. The EU and Mercosur started free-trade negotiations in 1999, but the talks stalled. To revitalize negotiations, Almunia signed a deal with Uruguayan Foreign Minister Reinaldo Gargano on the sidelines of the summit. In the deal, the EU will donate €50 million to the Latin American trade bloc in order to boost technical standards among Mercosur members and to promote Mercosur to the public. The EU is Mercosur’s largest trade partner, buying €36 billion in Mercosur exports in 2006. The Plain Truth forecasted in 1962, “[T]he United States is going to be left out in the cold as two gigantic trade blocs, Europe and Latin America, mesh together and begin calling the shots in world commerce.” Expect EU-Mercosur relations to continue to improve.
Michael Shifter, vice president of policy at the Inter-American Dialogue in Washington, has warned that recent military spending and purchases in Latin America could lead to an arms race: “There is a real risk of it escalating and it could become very dangerous.” Countries topping the list include Venezuela, Colombia, Chile, Ecuador and Brazil.
Venezuelan President Hugo Chavez arranged to retrieve two hostages from Colombia, a move that Associated Press said demonstrates “the guerrillas’ affinity for the socialist leader.” The hostage situation has been a point of contention between President Chavez and the U.S.-allied Colombian President Alvaro Uribe. Now, after having told Chavez to back off, Uribe finds himself saying the mission was authorized and thanking President Chavez for his efforts. The rebels hold several hundred hostages; Colombia will find itself looking to Venezuela for direction rather than its own president.
Africa
Former President of Liberia Charles Taylor once again found himself in a war crimes trial on January 7. Taylor, who brokered an exile deal in 2003, will likely spend a long time in prison. However, as Stratfor observed, his trial also sends a strong message to other African leaders “that their only true security guarantee is to remain in absolute power.”
Militants killed 12 people in Nigeria on January 8, causing the price of oil to spike to $99 a barrel; Nigeria produces the most oil of any African country, and experts fear that oil supplies to the U.S. will decline as a result of the instability.
On January 9, EU Development Commissioner Louis Michel said the European Union would form a partnership with China regarding Africa. European concerns about growing Chinese influence in Africa will be alleviated if China’s investment benefits Europe. Michel said he has “the impression that [the] idyllic relation between Africa and China is inevitably going to end.” It appears Europe intends to be there to break the fall—and to gather any resources that may be left lying around.
The EU is expected to send equipment and 3,500-plus troops to Chad in February to protect 400,000 refugees from Darfur. This continues the trend of increased military involvement from Europe as the world looks there for guidance rather than to the United States.
Kenya erupted with ethnic violence that has killed more than 700 people and displaced 250,000 others after the results of the disputed Dec. 27, 2007, presidential election were tallied. The incumbent president, Mwai Kibaki, is suspected of rigging the election—the most hotly contested in Kenyan history—in order to stay in power for a second five-year term and defeat Raila Odinga, his chief opponent. Kibaki has largely fallen into the same patterns of corruption practiced by his predecessor, despite being voted in as a reformer. After being in power just five years, he is seen as just another Big Man of Africa—another chapter in a litany of failures on the continent, which democracy has proven unable to reverse.
Anglo-America
Financial news dominated American airwaves in late 2007 and early 2008. For the fourth quarter, America’s largest bank and its largest brokerage house, Citigroup and Merril Lynch & Co., combined for $25 billion in losses. For the first time in its 84-year history, storied investment bank Bear Stearns reported a quarterly loss: a $1.9 billion battering. Investors stuck with Bear overall, however, since it did not seek a foreign-financed bailout like Citigroup, Morgan Stanley, and Merrill Lynch have. One wonders how bad it is when not only do the nation’s biggest banks have to be bailed out, but few U.S. companies are willing or able to do the bailing.
Many analysts think 2008 will be the year America’s gigantic economy succumbs to its many symptoms, including soaring energy and food prices, the home price index at a six-year low, and corporate profits already in recession due to slower sales and higher costs. Federal Census Bureau statistics say new home sales fell 9 points from October to November, down a huge 34.4 percent from a year earlier. Building permits and housing starts are both down approximately 25 percent.
Americans are becoming consumed by their own credit card debt. The value of credit card accounts that were at least 30 days overdue jumped 26 percent to more than $17 billion in October 2007 from a year earlier at the nation’s biggest card issuers. Defaults surged 18 percent and are approaching $1 billion. Ninety-day delinquencies increased by 50 percent or more.
In Britain, conservative members of the Anglican Communion who oppose its more liberal elements have organized a competing summit to the Lambeth Conference, saying the 80-million-strong Anglican Communion is divided and ready to split. More than 30 million Anglicans support the new conservative movement. The trend could lead to a closer alignment of millions of Anglicans with the Catholic Church.
En route to Britain, an estimated 1,000,000 sub-Saharan migrants have massed in Libya to smuggle themselves into Europe, particularly England.
In January, Australia was barraged by torrential rains and floods, along with massive fires that shut down the main road connecting the east coast to Western Australia. The storms unleashed the worst floods in 20 years, cutting off access to entire communities. Officials declared multiple areas natural disaster zones. Cyclone Helen ravaged the Northern Territory with flooding and widespread damage. More than two thirds of Queensland has been declared flooded, causing an estimated $1 billion worth of losses state-wide.
Meanwhile, in the global importing/exporting market, grain inventories are hitting record lows, wheat, soybean and corn prices are setting record highs, and export sales of U.S. wheat are “beginning to look like panic buying,” according to some analysts.
