In previous years, my tradition was to review the previous year before launching into new predictions. I find this boring and will now forego the exercise, though in passing I will note that many of the defining traits in 2010 - the secular rise of China and of “The Rest” more generally; political dysfunction in the US; growing fissures in Europe, in contrast to Eurasian (re)integration; the rising prominence of the Arctic - have remained dominant into this year. The major new development that neither I nor practically anyone else foresaw was the so-called “Arab Spring”, as part of a pattern of increasing political stress in many other states: Occupy Wall Street and its local branches in the West; the Meetings for Fair Elections in Russia; Wukan in China and anti-corruption protests in India. I don’t disagree with TIME’s decision to nominate The Protester as its person of the year. However, as I will argue below, the nature of protest and instability is radically different in all these regions. I will finish up by reviewing the accuracy of my 2011 predictions from last year.

1. There is little doubt that Putin will comfortably win the Presidential elections in the first round. The last December VCIOM poll implies he will get about 60%. So assuming there is no major movement in political tectonics in the last three months – and there’s no evidence for thinking that may be the case, as there are tentative signs that Putin’s popularity has began to recover in the last few weeks from its post-elections nadir. Due to the energized political situation, turnout will probably be higher than than in the 2008 elections – which will benefit Putin because of his greater support among passive voters. I do think efforts will be made to crack down on fraud so as to avoid a PR and legitimacy crisis, so that its extent will fall from perhaps 5%-7% in the 2011 Duma elections to maybe 2%-3% (fraud in places like the ethnic republics are more endemic than in, say, Moscow, and will be difficult to expunge); this will counterbalance the advantage Putin will get from a higher turnout. So that’s my prediction for March: Putin wins in the first round with 60%, followed by perennially second-place Zyuganov at 15%-20%, Zhirinovsky with 10%, and Sergey Mironov, Mikhail Prokhorov and Grigory Yavlinsky with a combined 10% or so. If Prokhorov and Yavlinsky aren’t registered to participate, then Putin’s first round victory will probably be more like 65%.

2. I will also go ahead and say that I do not expect the Meetings For Fair Elections to make headway. Despite the much bigger publicity surrounding the second protest at Prospekt Sakharova, attendance there was only marginally higher than at Bolotnaya (for calculations see here). So the revolutionary momentum was barely maintained in Moscow, but flopped everywhere else in the country – as the Medvedev administration responded with what is, in retrospect, a well balanced set of concessions and subtle ridicule. Navalny, the key person holding together the disparate ideological currents swirling about in these Meetings, is not gaining ground; his potential voters are at most 1% of the Russian electorate. And there is no other person in the “non-systemic opposition” with anywhere near his political appeal. There will be further Meetings, the biggest of which – with perhaps as many as 150,000 people – will be the one immediately after Putin’s first round victory; there will be the usual (implausibly large) claims of 15-20% fraud from the usual suspects in the liberal opposition and Western media. But if the authorities do their homework – i.e. refrain from violence against peaceful protesters, and successfully reduce fraud levels (e.g. with the help of web cameras) – the movement should die away. As I pointed out in my article BRIC’s of Stability, the economic situation in Russia – featuring 4.8% GDP growth in Q3 2011 – is at the moment simply not conductive to an Occupy Wall Street movement, let alone the more violent and desperate revolts wracking parts of the Arab world.

3. Many commentators are beginning to voice the unspeakable: The possible (or inevitable) disintegration of the Eurozone. I disagree. I am almost certain that the Euro will survive as a currency this year and for that matter to 2020 too. But many other things will change. The crisis afflicting Europe is far more cultural-political than it is economic; in aggregate terms, the US, Britain and Japan are ALL fiscally worse off than the Eurozone. The main problem afflicting the latter is that it suffers from a geographic and cultural rift between the North and South that is politically unbridgeable.

The costs of debt service for Greece, Portugal, Italy, and Spain are all quickly becoming unsustainable. They cannot devalue, like they would have done before the Euro; nor is Germany prepared to countenance massive fiscal transfers. The result is the prospect of austerity and recession as far as the eye can see (note that all these countries also have rapidly aging populations that will exert increasing pressure on their finances into the indefinite future). Meanwhile, “core Europe” – above all, Germany – benefits as its superior competitiveness allows it to dominate European markets for manufactured goods and the coffers of its shaky banking system are replenished by Southern payments on their sovereign debt.

The only way to resolve this contradiction is through a full-fledged fiscal union, with big longterm transfers from the North to the South. However, the best the Eurocrats have been able to come up with is a stricter version of Maastricht mandating limited budget deficits and debt reduction that, in practice, translates into unenforceable demands for permanent austerity.  This is not a sustainable arrangement. In Greece, the Far Left is leading the socialists in the run-up to the April elections; should they win, it is hard to see the country continuing on its present course. On the other side of the spectrum, the Fidesz Party under Viktor Orbán in Hungary appears to be mimicking United Russia in building a “managed democracy” that will ensure its dominance for at least the next decade; in the wake of its public divorce with the ECB and the IMF, it is hard to imagine how it will be able to maintain deep integration with Europe for much longer. (In general, I think the events in Hungary are very interesting and probably a harbinger of what is to come in many more European countries in the 2010′s; I am planning to make a post on this soon).

Maybe not in 2012, but in the longer term it is becoming likely that the future Europe will be multi-tier (not multi-speed). The common economic space will probably continue growing, eventually merging with the Eurasian Union now coalescing in the east. However, many countries will drop out of the Eurozone and/or deeper integration for the foreseeable future – the UK is obvious (or at least England, should Scotland separate in the next few years); so too will Italy (again, if it remains united), Greece, the Iberian peninsula, and Hungary. The “core”, that is German industrial muscle married to Benelux and France (with its far healthier demography), may in the long-term start acquiring a truly federal character with a Euro and a single fiscal policy. But specifically for 2012, I expect Greece to drop out of the Eurozone (either voluntarily, or kicked out if it starts printing Euros independently, as the former Soviet republics did with rubles as Moscow’s central control dissipated). The other PIGS may straggle through the year, but they too will follow Greece eventually.

I expect a deep recession at the European level, possibly touching on depression (more than 10% GDP decline) in some countries.

4. How will Russia’s economy fare? A lot will depend on European and global events, but arguably it is better placed than it was in 2008. That said, this time I am far more cautious about my own predictions; back then, I swallowed the rhetoric about it being an “island of stability” and got burned for it (in terms of pride, not money, thankfully). So feel free to adjust this to the downside.

• The major cause of the steep Russian recession of 2008-2009 wasn’t so much the oil price collapse but the sharp withdrawal of cheap Western credit from the Russian market. Russian banks and industrial groups had gotten used to taking out short-term loans to rollover their debts and were paralyzed by their sudden withdrawal. These practices have declined since. Now, short-term debts held by those institutions have halved relative to their peak levels in 2008; and Russia is now a net capital exporter.
• I assume this makes Russia far less dependent on global financial flows. Though some analysts use the loaded term “capital flight” to describe Russia’s capital export, I don’t think it’s fair because the vast bulk of this “flight” actually consists of Russian daughters of Western banking groups recapitalizing their mothers in Western Europe, and Russians banks and industrial groups buying up assets and infrastructure in East-Central Europe.
• The 2008 crisis was a global financial crisis; at least *for now*, it looks like a European sovereign debt crisis (though I don’t deny that it may well translate into a global financial crisis further down the line). There are few safe harbors. Russia may not be one of them but it’s difficult to say what is nowadays. US Treasuries, despite the huge fiscal problems there? Gold?
• Political risks? The Presidential elections are in March, so if a second crisis does come to Russia, it will be too late to really affect the political situation.
• Despite the “imminent” euro-apocalypse, I notice that the oil price has barely budged. This is almost certainly because of severe upwards pressure on the oil price from depletion (i.e. “peak oil”) and long-term commodity investors. I think these factors will prevent oil prices from ever plumbing the depths they briefly reached in early 2009. So despite the increases in social and military spending, I don’t see Russia’s budget going massively into the red.
• What is a problem (as the last crisis showed) is that the collapse in imports following a ruble depreciation can, despite its directly positive effect on GDP, be overwhelmed by knock-on effects on the retail sector. On the other hand, it’s still worth noting that the dollar-ruble ratio is now 32, a far cry from what it reached at the peak of the Russia bubble in 2008 when it was at 23. Will the drop now be anywhere near as steep? Probably not, as there’s less room for it fall.
• A great deal depends on what happens on China. I happen to think that its debt problems are overstated and that it still has the fiscal firepower to power through a second global crisis, which should also help keep Russia and the other commodity BRIC’s like Brazil afloat. But if this impression is wrong, then the consequences will be more serious.

So I think that, despite my bad call last time, Russia’s position really is quite a lot more stable this time round. If the Eurozone starts fraying at the margins and falls into deep recession, as I expect, then Russia will probably go down with them, but this time any collapse is unlikely to be as deep or prolonged as in 2008-2009.

5. Largely unnoticed, as of the beginning of this year, Russia, Belarus, and Kazakhstan became a common economic space with free movement of capital, goods, and labor. Putin has also made Eurasian (re)integration one of the cornerstones of his Presidential campaign. I expect 2012 will be the year in which Ukraine joins the Eurasian common economic space. EU membership is beginning to lose its shine; despite that, Yanukovych was still rebuffed this December on the Association Agreement due to his government’s prosecution of Yulia Tymoshenko. Ukraine can only afford to pay Russia’s steep prices for gas for one year at most without IMF help, and I doubt it will be forthcoming. Russia itself is willing to sit back and play hardball. It is in this atmosphere that Ukraine will hold its parliamentary elections in October. If the Party of Regions does well, by fair means or foul, it is not impossible to imagine a scenario in which accusations of vote rigging and protests force Yanukovych to turn to Eurasia (as did Lukashenko after the 2010 elections).

6. Russia’s demography. I expect births to remain steady or fall slightly (regardless of the secular trend towards an increasing TFR, the aging of the big 1980′s female cohort is finally starting to make itself felt). Deaths will continue to fall quite rapidly, as excise taxes on vodka – the main contributor to Russia’s high mortality rates – are slated to rise sharply after the Presidential elections.

7. Obama will probably lose to the Republican candidate, who will probably be Mitt Romney. (Much as I would prefer Ron Paul over Obama, and Obama over Romney). I have an entire post and real money devoted to this, read here.

The US may well slip back towards recession if Europe tips over in a big way. I stand by my assertion that its fiscal condition is in no way sustainable, but given that the bond vigilantes are preoccupied with Europe it should be able to ride out 2012.

8. There is a 50% (!) chance of a US military confrontation with Iran. If it’s going to be any year, 2012 will be it. And I don’t say this because of the recent headlines about Iranian war games, the downing of the US drone, or the bizarre bomb plot against the Saudi ambassador in the US, but because of structural factors that I have been harping on about for several years (read the “Geopolitical Shocks” section of my Decade Forecast for more details); factors that will make 2012 a “window of opportunity” that will only be fleetingly open.

• Despite the rhetoric, the US does not want to get involved in a showdown with Iran due to the huge disruption to oil shipping routes that will result from even an unsuccessful attempt to block of the Strait of Hormuz. BUT…
• While a nuclear Iran is distasteful to the US, it is still preferable to oil prices spiking up into the high triple digits. But for Israel it is a more existential issue. Netanyahu, in particular, is a hardliner on this issue.
• The US has withdrawn its troops from Iraq. In 2010, there were rumors that the US had made it clear to Israel that if it flew planes over Iraq to bomb Iran they would be fired upon. This threat (if it existed) is no longer actual.
• The US finished the development of a next-generation bunker-busting MOP last year and started taking delivery in November 2011. But the Iranians are simultaneously in a race to harden and deepen their nuclear facilities, but this program will not culminate until next year or so. If there is a time to strike in order to maximize the chances of crippling Iran’s nuclear program, it is now. It is in 2012.
• Additionally, if Europe goes really haywire, oil prices may start dropping as demand is destroyed. In this case, there will be an extra cushion for containing fallout from any Iranian attempt to block off the Strait of Hormuz.
• Critically, the US does not have to want this fight. Israel can easily force its hand by striking first. The US will be forced into following up.

The chances of an Azeri-Armenian war rise to 15% from last year’s 10%. If there is any good time for Azerbaijan to strike, it will be in the chaotic aftermath following a US strike on Iran (though the same constraints will apply as before: Aliyev’s fears of Russian retaliation).

From "The Oil Drum"

9. Though I usually predict oil price trends (with great and sustained accuracy, I might add), I will not bother doing so this year. With the global situation as unstable as it is it would be a fool’s errand. Things to consider: (1) Whither Europe? (demand destruction); (2) What effect on China and the US?; (3) the genesis of sustained oil production decline (oil megaprojects are projected to sharply fall off from this year into the indefinite future); (4) The Iranian wildcard: If played, all bets are off. But I will more or less confidently predict that global oil production in 2012 will be a definite decrease on this year.

If investing, I would go into US Treasuries (short-term) and gold to hedge against the catastrophic developments; yuan exposure (longterm secular rise) and and US CDS (potential for astounding returns once SHTF). Property is looking good in Minsk, Bulgaria, and Murmansk. Any exposure to Arctic shipping or oil & gas is great; as the sea ice melts at truly prodigious rates, the returns will be amazing. I do think the Euro will survive and eventually strengthen as the weaker countries go out, but not to the extent that I would put money on it. Otherwise, I highly agree with Eric Kraus’ investment advice.

10. China will not see a hard landing. It has its debt problems, but its momentum is unparalleled. Economists have predicted about ten of its past zero collapses.

11. Solar irradiation was still near its cyclical minimum this year, but it can only rise in the next few years; together with the ever-increasing CO2 load, it will likely make for a very warm 2012. So, more broken records in 2012. Record low sea ice extent and volume. And perhaps 100 vessels will sail the Northern Sea Route this year.

12. Tunisia is the only country of the “Arab Spring” that I expect to form a more or less moderate and secular government. According to polls, 75% of Egyptians support death for apostasy and adultery; this is not an environment in which Western liberal ideas can realistically flourish. Ergo for Libya. I can’t say I have any clue as to how Syria will turn out. Things seem strange there: Russia and Israel are ostensibly unlikely, but actually logical, allies of Assad, while the US, France, the UK, and the Gulf monarchies are trying their best to topple him. These wars are waged in the shadows.

I've got some ways to go before I reach Navalny's demagogic stature.

13. As mentioned in the intro, 2011 has been a year of protest. As I argued in BRIC’s of Stability, in countries like China, Russia, or Brazil they will remain relatively small and ineffectual. Despite greater scales and tensions, likewise in Europe (though Greece may be an exception); these are old societies, and besides they are relatively rich. They won’t have street revolutions. I do not think Occupy Wall Street has good prospects in the US. By acting outside the mainstream (as part of a “non-systemic opposition”, to borrow from Russian political parlance) it remains irrelevant – the weed smoking and poor sartorial choices of its members works against its attaining respectability – and municipalities across the US are moving to break up their camps with only a few squeaks of protest. (This despite the arrests of 36 journalists, a number that had it been associated with Russia would have cries of Stalinism splashed across Western op-ed pages). I say this as someone who is broadly sympathetic with OWS aims and has attended associated events in Berkeley.

The nature of protest in the Arab world is fundamentally different, harkening back to earlier and more dramatic times: Bread riots, not hipsters with iPhones; against cynical and corrupt dictators, not cynical and corrupt pseudo-democrats; featuring fundamental debates about reconciling democracy, liberalism and religion, as opposed to weird slogans like “Occupy first. Demands come later.” Meh.

14. The world will, of course, end on December 21, 2012.

What about the 2011 Predictions?

1) My economic predictions were basically correct: “Today I’d repeat this, but add that the risks have heightened… The obvious loci of the next big crisis are the so-called “PIGS” (Portugal, Italy, Greece, Spain), and Ireland, Belgium and Hungary.”

2) Neither the Iranian war (chance: 40%) or an Azeri-Armenian war (chance: 10%) took place. If they don’t happen in 2012, their chances of happening will begin to rapidly decline.

3) Luzhkov still hasn’t been been hit with corruption charges, but merely called forth as a witness. Wrong.

Prediction of 3.5%-5.5% growth for Russia was exactly correct (estimates now converging to 4.0%-4.5%).

With headlines this December cropping up such as “End is nigh for Russia’s ‘reset’ with US“, my old intuition that US – Russia imperial rivalry couldn’t be set aside with a mere red plastic button may have been prescient: “In foreign policy, expect relations with the US to deteriorate.”

4) Pretty much correct about the US and the UK, though I didn’t predict anything drastic or unconventional for them.

5) “Oil prices should stay at around $80-120 in 2010 and production will remain roughly stable as increased demand (from China mostly) collides with geological depletion.” Totally correct, as usual.

6) China will grow about 9.4% this year, well in line with: “China will continue growing at 8-10% per year. Their housing bubble is a non-issue; with 50% of their population still rural, it isn’t even a proper bubble, since eventually all those new, deserted apartment blocs will be occupied anyway.”

7) 2011 was the warmest La Nina year on record, so in a sense thermometers did break records this year.

“Speaking of the Arctic, as its longterm ice volume continues to plummet and sea ice extent retreats, we can expect more circumpolar shipping. I wouldn’t be surprised to see up to 10 non-stop voyages along the Northern Sea Route from Europe to China, following just one by MV Nordic Barents in 2010.” If anything, I low-balled it. 34 ships made the passage this year! Sea ice cover was the second lowest on record, and sea ice volume was the lowest. So in the broad sense, absolutely correct.

“Likewise, expect the Arctic to become a major locus of investment.” This year, plans were announced to double the capacity of the Port of Murmansk by 2015.

Wrong on the Wikileaks prediction. The insurance file was released by The Guardian’s carelessness (whose journalists, David Leigh and Luke Harding, then proceeded to mendaciously lie about it), not by Assange. And the extradition proceedings are taking far longer than expected, though my suspicions that his case is politically motivated is reinforced by US prosecutors’ apparent pressure on Bradley Manning to implicate Assange in the theft of the State Department cables.

9) On Peter’s enthusiastic reminder, I did get my Russia Presidential predictions for 2012 wrong. Or 75% wrong, to be precise, and 20% right (those were the odds that I gave for Putin’s return back in May). I did however cover it separately on a different post, here. That said, I do not think the logic I used was fundamentally flawed; many other Kremlinologists ended up in the same boat (and most didn’t hedge like I did).

Though I’ve written a lot on technological, energy, and geopolitical futures, this has largely been to the neglect of ideology. Part of the reason is that making accurate predictions on this topic is far harder, because of the inherent intangibility of belief systems. Nonetheless, it is necessary, because of their overwhelming influence on the historical process; for instance, the 20th century would have been totally different had Communism, fascism, and Islamism failed to overtake major states such as Russia, Germany, or Iran.

Furthermore, I do not think it is an impossible endeavor. While forecasting specifics such as Stalinist central planning or the mystical millenarianism of Nazism would have been impossible for an observer in 1911, entertaining the possibility of the emergence of such regimes was entirely possible by drawing on the main strands of contemporary intellectual thought on new types of politics and society, which at the time resolved around Marxism, utopian socialism, Social Darwinism, and futurism.

What trends would a similar exercise reveal for today? I would argue that the equivalent themes, largely marginalized now but with the potential for explosive growth under the right conditions of socio-political stress, include: the Green movement (ranging the gamut from local sustainability activists to authoritarian ecosocialists); the technoutopians (include the open-source movement, Pirates, technological singularitarians, Wikileaks activists); and a revival of fascist, far-right thought in the guise of ethnic chauvinism and various Third Position ideologies. Bearing in mind the profound instability of today’s world order, we may be seeing some of these ideologies coming into political fruition sooner rather than later.

Ecotechnic Dictatorship

The foremost challenge of the 21st century is managing or adapting to the havoc that will be wrecked by accelerating global warming. Drought, heat, and flooding threaten to decimate crop yields in much of the global South (and in the worst case scenario, make them uninhabitable). As their carrying capacity shrinks, their political systems will fray, creating chaos and waves of “climate refugees”.

One ideological product of these development will be many different manifestations of what I termed “Green Communism“. In an age of diminishing resources and climate chaos, the political system with the best promise of offering both stability and fairness is authoritarian ecosocialism (or “ecotechnic dictatorship“). This would involve a ruthless drive towards a sustainable society and radical downsizing of the industrial system, but in such a way as to minimize the impact on human welfare. Popular resentment at the decline in consumer purchasing power will be tempered by greater equality and dedication to meritocracy and transparency. Advances in operations research and computer networks mean that the central planning needed to build ecosocialism can be far more viable and efficient than in the late USSR.

Since there will be enemies, both within and without, intent on sabotaging any embryonic Green Communist state, a certain degree of repression will be an inescapable condition of its early survival. Though the ideological foundations for a degeneration into unbounded chiliasm are admittedly present, the risks of that happening can be controlled by a system of universal two-way “sousveillance“, allowing for the early detection of corruption, free-riding, or tyrannical tendencies on the part of individuals.

Bearing in mind its current political system and ecological fragility, China may adopt something approximating ecotechnic dictatorship in the decades ahead (with a heavy nationalist tinge).

The Green Ideology

Ecotechnic dictatorships are a mere subset of a far larger emerging Green movement, which will have increasingly transformational effects across the entire political spectrum as every political system is forced to confront Limits to Growth. But amongst some countries and peoples, the manifestations of Green ideology will be much stronger than in others.

Consider the plight of climate refugees. Uprooted from their traditional communities, denied access to higher and cooler ground by anti-immigrant sentiment in the developed countries that were largely responsible for their predicament in the first place, and facing a profoundly uncertain future. These people will need a narrative. Hence, the inevitable Greening of anti-imperialism and Third Worldism.

Then there are their compatriots in the developed world. The restrictive practices of the US towards Latin American immigrants arouses resentment among Hispaniacs, both those in the US and in Mexico, Guatemala, etc. There is a similar situation with regards to Europe and Africans. But whereas today the southern peoples are merely denied economic opportunities, in the future it may become a matter of life or death. The collapse of Third World states, coupled with developed countries raising their moats, will enrage immigrant communities; some of their members may try to get back at the rich world-destroyers, e.g. through biological or ecological terrorism, and their sources of inspiration may include thinkers such as Derrick Jensen, the anarcho-primitivist who asks himself whether he should write or blow up a dam on waking up every morning.

There will be few countries where Green ideology is explicitly recognized as the bedrock of the state. One exception is Bolivia, which recently enshrined natural rights on an equal footing with human rights; there are whiffs of similar trends in Ecuador, Venezuela, Costa Rica, and Cuba.

Neo-fascism

In the wake of the economic recession, and the increasing visibility of Islam, there has been a far right resurgence in Europe. But today’s crop of neo-fascists are a different breed from the Brown Shirts and jack-booted militarists of the 1930′s. The far right politicians who actually come to power may be ethnic chauvinists, but they do not favor the military expansionism and slave empires dreamed of by wartime Germany, Italy, and Japan. Instead, they are intent on reasserting the “rights” of the “indigenous” population (read: whites), closing down the borders to poor countries, and deporting as many “unintegrated” immigrants as possible.

As mentioned above, global warming will produce failed states and climate refugees, stoking Third World resentment and radicalizing immigrant communities in the developed world. One general consequence is a further strengthening of already latent neo-fascist sentiments in Europe and the US.

However, outcomes will vary greatly country by country. Due to the stability of its two-party system and the very long-term survival of its liberal democracy, the US is unlikely to regress into far-right dictatorship (but a semi-authoritarian corporatocracy is entirely feasible). Prospects for Europe seem much bleaker. The ghettoed Muslim communities of the continent aren’t going away, and as economies falter under the pressure of debts and peak oil, they will make an ever more attractive target for demagogues yammering about imminent Eurabia and welfare state parasites. Even as they mount imperialist wars for resources, as France did in Libya, the Europeans will close off their borders and subject unwelcome minorities to repressions under the convenient guise of anti-terror laws. Deportations will also become prevalent, as with the recent expulsion of the Roma people from France.

Objectively, Russia has most of the prerequisites for neo-fascism: corporatism, ethnic chauvinism, unaccountable power agencies, an overweening executive, and the deference to hierarchy embodied in the power vertical. Almost 50% of Russians support the idea of “Russia for Russians”. For now, the Kremlin explicitly rejects nationalism; however, should its political legitimacy wane, e.g. on the back of economic stagnation or rising dissatisfaction with corruption, then it may bow to nationalist pressures if not lose power to them. And those nationalist revolutionaries aren’t necessarily going to be National Bolshevik brawlers or Young Guard fanatics; more likely, they would wear suits, and speak the language of liberalism, while taking the country into neo-fascism.

As a nation under rising Malthusian stress, any far right upsurge in China would logically hew to more historical lines. Countries like Russia, Germany, or France have more than enough land for all their citizens; they might just not want any more of them. But China will need more land, for food and minerals; a nationalist regime in Beijing would have no problems with traditional methods of territorial expansion.

There will be a strong ecological element to modern neo-fascism. Read most far right thinkers today, and you’ll find that they focus on zero population growth and land conservation; indeed, adoration of pre-industrial mores has always been a staple of the Third Position. Immigrants not only crowd out indigenous peoples, but accelerate environmental degradation; as such, they are not welcome.

The Pirates

The Pirates are the most solidified exemplars of modern anarchism, leading a Romantic resistance against the corporate state for information freedom. Closely aligned strands are the open-source movement, which stresses voluntary and collaborative work to produce free software; and the Wikileaks project, whose guiding philosophy is that authoritarian conspiracies rely on secrecy for their effectiveness and dissipate when revealed to the light of mass scrutiny.

It is hard to imagine a Pirate Party ever forming a hard political force, given their anarchic nature. Nonetheless, their ideology – in both theory and practice – will serve to undermine authoritarianism (be it a mild extension of today’s “anti-terror” climate, or full-blown Green Communist or neo-fascist constructs of a new kind).

In a more general sense, this counter-culture also stands for shortcuts and living smartly. They like concepts such as internationalist geoarbitrage or living off Internet “muses” as opposed to traditional employment and national loyalties, and are interested in things such as virtual reality, life extension, nootropics and psychedelic drugs, and the technological singularity. Obviously, few states like such folks, least of all authoritarian ones.

Myriads of Hybrids

Commenting on 20th century history, many observers have acknowledged that in many cases, it was difficult to tell where fascism ended and socialism began; likewise, the boundaries between authoritarianism and totalitarianism were always blurry. For instance, just what is the Libyan Jamahiriya?

Likewise, real world examples will inevitably diverge from the templates suggested in this post. For instance, take China. Most opponents of the Communist Party’s hegemony aren’t liberals as such, but either ecosocialists or nationalists. Now if the Communists were to falter, or open themselves up to a wider political spectrum, would they sooner embrace the ecosocialists or the nationalists? Or perhaps they’d try to accommodate both?

Perhaps a system of green socialism will develop in Russia (or Canada), but with exclusionary and ethnic chauvinist tinges. Immigrants may be allowed in, but only as long as they agree to be electronically tagged, pay a huge percentage of their incomes in taxes, and to be barred from free or subsidized social services. If this is the form that right-wing sentiment predominantly takes, then we may see the emergence of caste systems throughout the northern hemisphere by 2100.

In any case, one thing seems sure -the coming decades will provide no shortage of new ideological developments and struggles. Those despairing that we are at end of history are unlikely to remain disappointed.

Generally speaking, it is coming to resemble something out of a cyberpunk sci-fi setting, i.e. “low life, high tech”; a world of instant communications, global markets, fewer resources and growing poverty, and intrusive government surveillance.

In fact, it can be reduced to three major trends:

• Informatization:  Everything is becoming more interconnected, from online businesses selling Chinese-manufactured goods or India-outsourced services to African peasants looking up local grain prices on their new cell phones. This empowers the entrepreneurial, the tech-savvy, the globalized, and the surveillant.
• Peak Oil: Is a catch-all term for the growing supply challenges facing the global energy industry – slowing or plateauing extraction; decreasing quality (e.g. heavier, more polluting, less energy-dense); rising geological and political risks. This will be translated into higher fuel and energy prices in the years ahead.
• Global Warming: Many parts of the world are going to become adversely affected by the consequences of AGW: floods, droughts, strong hurricanes, wildfires, desertification, etc. Due to its runaway nature this will become evident at an accelerating pace. Consequences will include high food prices, climate refugees and international tensions.

The general theme we have is of a world that will be more fragile and fluid. Job security, already a thing of the past, will not return. Many of today’s middle-classes will become impoverished, and will be unable to climb back out, as happened after Argentina’s economic collapse in 2002. But for the entrepreneur – the person who “shifts economic resources out of an area of lower and into an area of higher yield,” as defined by French economist J.B. Say in 1800 – the world will be an oyster as never before in history.

Rather than wasting time worrying over which degree or specialization to pursue, and how you’re going to pay back the student loans, consider focusing on the following seven “core skills” of the cyberpunk survivalist.

It’s The E-conomy, Stupid

Knowing the driving rules of the global information highway is indispensable to entrepreneurial success today. Do you want to do targeted advertising for your product? Probably nothing beats Google Adwords. Want to find wholesale manufacturers from China who sell stuff at prices 5x cheaper than what you see on Western markets? Ali Baba is the place. Need to develop an involved community that sticks together? You will need a blog (WordPress is the best), a Facebook page, and a Twitter account. Desire to establish yourself as an expert or market your books? You will need a prominent online presence. Offering a specialized information product? You’ll need to sort out your SEO, webpage and newsletters.

Some people like to sneer at the Internet and blogs and social networks, regarding them as a time sink for people with no lives. Of course they have a point if these things take over your life. However, correctly utilized, the Internet and the global marketplace it offers, with zero taxes on digital products, offers countless opportunities for exploiting price differentials between countries – what is called geoarbitrage – and is probably the most surefire way to creating a “muse” today.

What is a muse? It is a term coined by Tim Ferris to describe a sustainable, location-independent income stream. Most muses are Internet based. The idea is to quit your job, fire your boss and enjoy life while automated systems and Indians work for you. You can’t do much worse than read and internalize his book The 4-Hour Workweek.

Programming To Prosperity

Short of the total breakdown of industrialism, those folks who can fix programs and write code will always be in high demand and well-compensated. After the Soviet Union collapsed, visiting misery on most of the fallen empire’s citizens, programmers never starved.

If you focus, it is possible to become a fair programmer within 6 months to a year. It is recommended that you start with a practical language like Python, Ruby or Java. The “holy book” of programming is The Structure and Interpretation of Computer Programs, but practically speaking it requires too much intellectual investment unless you specialize in this area.

As for that – I’m not saying you should make it your life goal to get employed by Google or Oracle. You’ll get paid a lot, but do note that terms like “code monkey” and “office plankton” didn’t come from thin air. That said, it is extremely useful to know how to understand programs and be able to write simple Apps.

Languages Get You Likes

Languages are very useful and not anywhere near as hard as commonly thought. Know the top 100 most frequent words, and you already know half the language. Learn the most frequent 1,000 words, and you can have a free-flowing conversation on practically any topic.

In short: Organize vocabulary memorization around word frequency lists; Learn basic grammar; Practice with native speakers. And last but not least, learn about an interesting subject or activity through the medium of the language you’re trying to assimilate. If you’re Muslim and want to learn Arabic, your goal is to read the Koran in the original. Russian has an unparalleled literature on chess. You can use Japanese to brush up on kendo or business management. Use your imagination.

Knowing languages is invaluable to making full use of geoarbitrage for both business and pleasure.

Enter The Hulk

The cyberpunk world is one in which life is cheap and death is free. So you have to get big, fit, and kickass.

The cheat guide to the first two (and prerequisite for the third) is Tim Ferris’ Four Hour Body. Read it. I can’t really expand upon it.

To “kick ass”, I recommend Krav Maga. It dispenses with the formalities of traditional Asian martial arts, instead just focusing on what works for the hard men of the Israeli Defense Forces.

In some parts of the world, especially the US and Latin America, it is useful to get a pistol and learn how to shoot it. In other places like Britain you will have to rely on the kindness of criminals and the helpfulness of government.

If you’re elderly, your biggest enemy is old age. Fortunately, longevity research is going strong and making real progress. It is not impossible that within two decades life expectancy is going to radically increase. A good place to start off with to maximize your chances of living “long enough to live forever” is the Kurzweil and Grossman book Fantastic Voyage.

The Network Effect

Having a good network of friends and acquaintances is an effectiveness multiplier. Is your friend a graphic designer? Get her to come up with a logo for your business in return for setting up a website, or a massage.

Some people try to befriend everyone Kumbaya-style, while others get tired of the vanities of the social scene and retreat into their holes and cubicles. The real secret to having an effective network is to *filter* friends. If they’re especially positive, helpful, inspirational, or influential, then by all means stay in close contact with them. If they create too much hassle, pessimism or negativity, it’s better to let them go for the better of everyone’s mental health. Don’t forget that you are the average of the 5 people who are closest to you.

How to identify your best friends? Make a list of all your contacts, then rate each one out of 3 on “usefulness” and “influence”, then write a sentence or two about their specific qualities and skills. Bold the names of the Top 20%. Work from there.

The “Gray Arts”

Burdened by unpayable debts? Though you probably lack the political connections to be “bailed out”, you can consider changing your identity and/or taking a lengthy holiday in another country.

Want to avoid them in the first place? Explore the fascinating world of LLC’s, holding companies and trusts that you don’t even personally own.

Don’t want the greasy paws of government fingering your hard-earned assets (that you accumulated by selling Chinese junk and Indian IT products to Western consumers)? The sunny beaches of the Cayman Islands aren’t only for Western banks and Third World kleptocrats. Neither are multiple citizenships.

Down and out in the gutter? Lock picking, pick pocketing and urban evasion skills are the hallmarks of the streetwise professor.

Not that I’m endorsing any of this, but they’re all useful things to “research”, if you catch my drift. Neil Strauss’ Emergency is a good jumping-off point.

Global Perspective

What’s invaluable for making profitable long-term investments, making astute business decisions and managing your risks?

It is having a global perspective.

While acquiring specialized knowledge on the product you want to sell or the information services you offer is indispensable, being aware of global affairs – be they current events like the Middle East unrest, or longer-term trends like the development of the energy base or global warming – will save you from big mistakes and multiply your long-term wealth.

Say you want a house as a long-term investment. Is it a good idea to buy it somewhere in Florida, seeing that prices have come down in the past 2 years? Some would say yes, go for it! But anyone with knowledge of long-term climate models will avoid it like a drowning ship. That’s because when everybody finds out about those climate models, housing prices in Florida will plummet, as nobody will be willing to insure houses built in the path of ever stronger storms and rising waters.

Likewise, long-term bonds offered by the PIGS countries, Japan, the US, and the UK are surely no longer safe havens given the runaway sovereign debt dynamics seen in those countries.

Where should you put your money? That’s for another post, but in short, some reliable *longterm* investments that come to mind are: The ARCS states (Alaska, Russia, Canada, Scandinavia); The BRICs (especially China and Russia); Financial instruments that track commodities under stress from rising wealth and growing populations (e.g. oil; Rare Earth Metals) or the companies producing those commodities; Real estate in select places (e.g. Sochi-Abkhazia; Arctic ports such as Murmansk); Biotech; Nanotech; Pharmaceuticals (global aging).

But make sure you research thoroughly before taking the plunge. Oil might be a good investment, but it’s no use if you buy in at $120 / barrel, only to see it plunge in the wake of a global recession and stay at $50 for a year or two. You might go bankrupt before making a profit. The global economy tends to snap when real oil prices get into the $120-150 range, but a price of $40 is likewise unsustainable due to plateauing (or declining) global production and soaring demand from China. If you see oil prices fall back to less than $70 in the next few years, it would make a lot of sense to buy in big.

Back to houses. Speaking of the US, I think the Great Lakes region is the most prospective region for real estate in the next decade. But its a pretty depressing place to actually live in. One unconventional idea is to take up sailing and become a sea nomad.

Full freedom of movement. Access to the Internet via satellite. Most of the world’s great cities are within your range. And contrary to popular myth, it’s not even that expensive. There are communes offering free or near-free sailing lessons in return for a couple hours of volunteered maintenance work per week. Once you get the hang of things, you can buy a comfortable sailboat for $30,000-$90,000, or rent one for $3,000-$6,000 per year, which is an order of magnitude cheaper than the typical San Francisco or London apartment. And in practice you get the advantages of both!

Obviously, you can ignore this if world travel or boats aren’t your thing. But in any case – Think big, Think global.

1. The USA is still undoubtedly the world’s leading superpower. It has China’s (gross) economic size, matches Russia’s strategic military power, and is as technologically advanced as Japan with 2.5x its population. Meanwhile, its conventional military power, power projection capabilities and cultural influence remain globally hegemonic. But its Number One position isn’t secure. Political capture by special interests at home and “imperial overstretch” abroad has made its fiscal situation patently unsustainable. This in turn threatens its dominant military position, especially coupled with accelerating Chinese military modernization. Finally, the very globalization that underpins Pax America also users in developments that actually undermine it, e.g. the economic rise of the BRICs and the growing influence of non-Western media outlets (e.g. Al-Jazeera, Russia Today). CNP – 100.

2. China is rapidly emerging as the next global superpower, now boasting the world’s largest manufacturing sector and (arguably) the biggest economy in terms of real GDP. Furthermore, they have calculatedly taken a lead in many of the world’s most prospective and hi-tech sectors, e.g. renewable energy, hi-speed railways and supercomputers. China’s rapid military modernization has already yielded it the world’s biggest navy by warship numbers and advanced drones and stealth fighters. This is all founded on a literate, 1.3bn-strong populace driving 10% economic growth rates (and there’s no reason these should fall drastically any time soon, since average Chinese incomes have plenty of space left to catch up with the West). Now assuming unforeseen shocks such as political collapse or an abrupt peaking and decline in coal production don’t derail progress, it’s very likely China will supplant the US as the global hegemon as early as 2020. CNP – 75.

3. Though Russia‘s population and real GDP (c. Germany) are respectable, they are out of the Big Two’s league (in terms of raw power, it was probably overtaken by China in 2008 because of the depth of its recession and Chinese military catch-up). Nonetheless, it may deserve the title of “third superpower” by dint of its nuclear parity with the US, military-industrial strength, and vast resource base. Covering northern Eurasia, and informally dominating Central Asia, Russia is both self-sufficient in energy and minerals, and has the armed strength to defend them. The world’s increasing food and fuel supply challenges place Russia in an enviable position to exploit its strength. Furthermore, global warming is melting the Arctic, opening up shipping routes, energy sources and living space – a development Russia is uniquely positioned to take advantage of. CNP – 60.

4. In terms of power politics, France is a lot like the US, just 5x smaller in scale. It is influential globally and in the EU, has a self-sustained nuclear arsenal and MIC, and its own semi-satrapies in West Africa. It also has the healthiest demographic indicators in ageing Europe; its economy is versatile, productive and robust; and its nuclear power industry and links with the Maghreb nations make for a (relatively) secure energy future. Overall, it is likely that France will be the predominant West European power of the next decades. CNP – 35.

5. Germany has a powerful economy, and its fiscal rectitude and export competitiveness have made it the dominant influence in the Eurozone. In the longterm, however, Germany’s prospects dim: its demographic problems are the most intractable in the European continent (fertility rates fell below 1.5 children per woman back in the 1970′s and remained there since). Hence the reliance on exports to provide savings for its rapidly aging population. What would Germany do if the Mediterranean breaks from the Eurozone and the outside world becomes more protectionist? Its conscript army is obsolete and nuclear weapons non-existent, but these can be quickly fixed. CNP – 30.

6. Japan is similar to Germany, but with 1.5x its population, several times its problems (e.g. even more rapidly aging population; 220%-of-GDP debt) and without Germany’s key advantage (a continental market). It is militarily weak and utterly reliant on food, fuel and mineral imports, many of which pass through waters over which China claims preeminence. Though one of the most technologically advanced nations on Earth, it faces an uncertain future as the US wanes and China’s rise eclipses it. But like Germany, it’s theoretically capable of rapid transformation into a leading military power. CNP – 30.

7. The UK is ostensibly similar to France, but has critical weaknesses that now undermine its Great Power status. It has a fiscal hole little better than that of Ireland or Greece; the current government is disinvesting in the future (university education) and the military; suffers from a smaller version of US “imperial overstretch”; is falling into an energetic black hole; and the City of London, which is a giant source of tax revenue, has poor longterm prospects. CNP – 25.

8. Though at first glance India might appear similar to China, or at least following in its footsteps, the real situation is far gloomier. The (educational) human capital of Chinese youth is now equal to (or above) the OECD rich country average; India still hasn’t finished eradicating illiteracy. This is of great import since educational levels are the single biggest influence on growth prospects. China has 10x more manufacturing output, 6x more Internet users and 3x more infrastructure spending. Though India’s land forces are more than capable of crushing Pakistan, its navy is quantitatively and qualitatively inferior to China’s, a matter of some import given that both countries are dependent on fuel and mineral supplies from the Middle East and Africa. And the precariousness of India’s food situation in a warming world – and its inability to pay for imports or seize them – makes its longterm prospects decidedly glum. CNP – 25.

9. With its ample lands and resources, not to mention its successes with sugar cane-derived ethanol, Brazil is set to enjoy – much like Russia – a comfortable existence as a regional hegemon in a world of rising demand for food, energy and minerals. (Though its military is much weaker than Russia’s, it doesn’t need to be particularly strong given Brazil’s geographical isolation). It is also playing an increasingly visible global role, together with countries like Turkey and South Africa, as a representative of “The Rest” (as distinct from “The West”). But its future prospects for true superpowerdom are constrained by its low educational human capital. CNP – 20.

10. Though Canada or South Korea or even Italy could just as easily take this spot, in the end I decided it should go to Turkey. It’s not just that it has a rapidly developing economy, or that it has the most powerful conventional forces in the Middle East, or that its control of river headwaters gives it leverage over states like Iraq and Lebanon. It is the major Muslim country that is most comfortable with integrating religious tradition with socio-economic modernity. This makes it a role model – and possible future leader – for many Muslims in the Middle East; then it also has ethno-linguistic connections with Turkic peoples to the east, in Azerbaijan, western Iran, and even Central Asia. Its soft power and willingness to exercise sovereignty in the international sphere earns it the tenth place. CNP – 20.

There are other countries with a similar CNP of 20. These include Canada (a potential future superpower as the Arctic opens up – assuming the US doesn’t swallow it first); South Korea (vibrant economic base, but has many of Japan’s strategic problems and is preoccupied with the North); and Italy (a modern France-sized economy but not much else).

Further down the list, with a CNP of 15, we get Saudi Arabia (world’s swing oil producer but backwards, politically fragile and reliant on US support); Iran (most visible challenger to the current international order and has leverage over its capability to shut down the Strait of Hormuz); Mexico; Australia; Spain; Venezuela (soft power through ideas of 21st century socialism); and South Africa (mineral resources and informal spokescountry for sub-Saharan Africa).

Note – So I don’t have to cover this in the comments. Many “analysts” will jump on my back for neglecting to mention the salubrious effects of India’s democracy, or how corruption dooms Russia to eternal slippage. The reason – as I’ve endlessly argued on this blog – is that these kinds of arguments are frequently flawed even where only living standards and civil rights are concerned (e.g. I’m sure the 47% of Indian children who are malnourished have nothing but praise for their glorious democracy, as does the rights activist Binayak Sen given a life sentence for supporting Maoism), not to mention completely nonsensical when comparing and projecting national power (e.g. Russia’s corruption is fairly standard for middle-income countries, and the Chinese authoritarian system of state capitalism has arguably very much helped rather than hindered its development).

(1) Last year, I wrote: “World economy continues an anemic recovery, though there are significant risks to the downside.” Today I’d repeat this, but add that the risks have heightened. Many countries in the developed world, from Spain to the US, now run patently unsustainable fiscal policies. I don’t know when the bond vigilantes would strike (and even if I did I’d rather get rich than tell you), but sooner rather than later they will. The obvious loci of the next big crisis are the so-called “PIGS” (Portugal, Italy, Greece, Spain), and Ireland, Belgium and Hungary.

But obvious isn’t preordained. Iberia, at least, is covered by the EU’s €440bn rescue fund, while Italy’s 120%-of-GDP debt is counterbalanced with a 0.9 ratio of receipts to outlays (i.e. for every €1 it spends it collects €0.9 in tax). The UK has the worst budget deficit amongst the big European countries, but it’s insulated by an average debt maturity of 14 years. Japan has the most apocalyptic sovereign debt figure at 220%-of-GDP, but also has immense foreign savings. Finally, though the US appears to be in one of the worst positions all round, with an debt maturity of just 4 years, a 0.6 receipts to outlays ratio and an ideological rift that precludes a political solution, it is still buffered by the $’s status as the global reserve currency.

Which of these dominoes will fall first, and when, must remain a matter of speculation, and may ultimately be contingent on unforeseeable shocks and triggers. For instance, a damning Wikileaks expose of Bank of America? Iran blocking the Strait of Hormuz in response to an Israeli strike (as I speculated here)? It’s all possible.

[Michael Pollaro's collection of budget and debt metrics. Note that on aggregate, the US is in a worse position than the faltering PIGS.]

(2) Possible wars. My analysis remains the same as last year’s, with two changes: (1) The likelihood of a US/Israeli strike against Iran rises from 25% to 40% because the Stuxnet worm can not longer be relied upon to sabotage Iranian nuclear progress, the US development of the MOP, and Obama’s domestic weakness in light of the GOP’s resurgence; (2) The chance of an Azeri-Armenian war over Nagorno-Karabakh has risen from small to 10% in view of heightened rhetoric, skirmishes and exploding Azeri military spending.

(3) My Russia predictions. Back on October 8th, I predicted: “Within the next 3 months Luzhkov is going to get hit with corruption charges and will either go on trial or seek political asylum in the West.” Still more than three weeks to go!

Barring another catastrophic heatwave or natural disaster, Russia’s population should resume growth in 2011 (as in 2009, but probably will just miss out in 2010). The life expectancy should approach (or slightly exceed) 70 years; the total fertility rate will approach (or exceed) 1.6 children per woman; the birth rate will be in the 12.5-13.0 / 1000 and the death rate in the 13.5-14.0 / 1000 range. The justifications for these predictions should be well-known to S/O readers but for refreshers see here and here.

Symbol of modernization: Skolkovo

Consensus is that the Russian economy will growth by 3.5-5.5%. This will be lower if there is a second global financial crisis, but the results on growth are almost certain to be far less severe than in 2009 (-7.9% growth) because today’s Russia Inc. is much less dependent on foreign credit inflows. See Russia 2010: Growth but state-led recovery is bad news by Ben Aris.

In foreign policy, expect relations with the US to deteriorate, on account of the rise of hardline Russophobes amongst Republican Representatives. On the other hand, the France-German bloc – increasingly estranged from the Mediterranean South – will be more willing to engage Russia’s non-indebted, growing and expanding (see Kazakhstan & Belarus customs union) markets.

(4) US politics will be mired in domestic issues, with Republicans doing their utmost to hack away at the healthcare legislation, calling for cuts to social (but not security) spending, harassing the EPA, and perhaps even trying to shut down government around March. The joblessness of the recovery and dim economic prospects will dim Obama’s political prospects, but they may be just about rescued if the Republicans overreach themselves.

I think the ConDem coalition in the UK will last the year, albeit with a lot of acrimony and backstabbing. The Lib Dems have lost half their electoral support, the students whom they betrayed, so they’ll want to hang in with the Tories as long as possible.

(5) Oil prices should stay at around $80-120 in 2010 and production will remain roughly stable as increased demand (from China mostly) collides with geological depletion. If there is a second global economic crisis, I doubt we’ll see prices plummeting to $40 as we did in early 2009, when investors abandoned stocks and commodities for the perceived safety of bonds. But since the next big crisis will probably be a bonds crisis, the most attractive safe havens may well become commodities, and the government bonds of emerging markets (where commodity consumption is rising).

(6) China will continue growing at 8-10% per year. Their housing bubble is a non-issue; with 50% of their population still rural, it isn’t even a proper bubble, since eventually all those new, deserted apartment blocs will be occupied anyway. What is of concern is that China’s coal production – now almost 50% of global production - is close to plateauing. This is of some consequence given that coal is China’s primary energy driver.

Solar irradiance.

(7) Despite NASA reporting that 2010 may be the hottest year on record, the thermometers may break limits again in 2011. That is because, despite the unprecedented temperatures – manifesting in a great Russian heatwave that destroyed 40% of its grain crops and flooding in Pakistan that displaced millions – 2010 actually correlated to the end of a minimum in solar irradiance. Solar irradiance has a forcing effect on global temperatures, independent of the secular rise in atmospheric CO2. Based on the graph above, we can expect another peak in the next few years. Since greenhouse emissions continue unabated and are indeed joined by feedback emissions such as methane from melting Arctic permafrost, we can confidently expect several major climate events this year.

Speaking of the Arctic, as its longterm ice volume continues to plummet and sea ice extent retreats, we can expect more circumpolar shipping. I wouldn’t be surprised to see up to 10 non-stop voyages along the Northern Sea Route from Europe to China, following just one by MV Nordic Barents in 2010. Likewise, expect the Arctic to become a major locus of investment – if not in 2011, then in a few more years – as lucrative companies and ports are privatized in Arctic Russia.

(8) Wikileaks will not be “shut down”, as the Internet is too resilient. If Assange is successfully extradited to the US to face espionage or computer misuse charges – I’d give a 50% chance of that happening – then expect fireworks to go off as the “insurance file” is released.

What about the 2010 Predictions?

Consider this post on 2010 predictions and my prediction of the 2010 Ukrainian elections.

(1) “World economy continues an anemic recovery”: mostly true, though I should have clarified that I was referring to the developed countries. Though some, like Germany, did really well.

(2) “Republicans will carry the mid-term elections in 2010, but there is a strong mood of apathy and a sense that what is really needed is a new party, a new politics“: Bingo! Republicans won – check. Social disillusionment – check Gallup. A new party, a new politics – the Tea Party.

“Rising violence in Iraq… a false quiet in Afghanistan”: Got them wrong way round.

“In the UK, Gordon Brown (New Labour) will almost certainly lose to James Cameron (Conservatives) in the mid-2010 elections”: Totally correct.*

(3) None of the wars I mentioned happened, but I didn’t necessarily expect them to, as all of them were given as probabilities.

(4) “[Russia's demography will] continue improving further in 2010 and that the year will see the first year of positive population growth since 1994 (or 2009)… Birth rate = 12.5-13.0 (reasons), Death rate = 13.5-14.0 (a reason), Net Migration = 1.5-2.0, all / 1000.”: The Great Russian Heatwave of 2010, causing 44,000 excess deaths, threw many of my predictions off kilter. For now I’m basing it all on Jan-Nov 2010 stats, as December isn’t in yet. The birth rate during this period rose from 12.4 / 1000 to 12.6 / 1000, so I got that right. Unfortunately, the death rate rose from 14.1 / 1000 to 14.4 / 1000, due to an extra 28,300 deaths; if we exclude the 44,700 excess deaths accruing to the heatwave, the death rate would have been 14.0 / 1000, and so just within predicted range. A substantial falloff in net immigration, which I didn’t expect – surely more people should have left during the recession? – means that Russia’s population growth will almost certainly dip into negative territory this year.

“Economic growth of around 3-5% of GDP sounds reasonable.”: Most estimates are now converging at around 4%, so completely correct.

“Lots of privatizations and corruption investigations as part of the Surkov clan’s struggle against the siloviki and “their” state companies.”: True for the first part; not so much for the second, as most efforts have instead been diverted to ousting the last 1990′s-vintage regional barons.

“Yushenko will almost certainly (95%+) be kicked out of the Presidency in the coming Ukrainian elections… Ukraine under Yanukovych will join Eurasec or the Russia-Belarus-Kazakhstan customs union, but is yet unlikely to join the CSTO or give Russian 2nd language status.”: Correct; wrong & wrong; right & right. I still expect Ukraine to join a Eurasian common economic space. As George Friedman points out in his “geopolitical journey” (see the part “European Dreams”), the Kiev intelligentsia has little sense of national identity, and dream of a Europe whose foundations are in fact crumbling let alone considering further expansion. By far the most logical alternative for Ukraine, in the long-term, is something resembling what it has been since 1654.

In late January, 2010: “Adding up these figures, Yanukovych gets 50% of the votes, whereas Tymoshenko gets 46%… It is safer to say that Yanukovych will win with a gap wide enough that Tymoshenko will not have grounds to make a legal wrangle out of it – though that is just about possible if she’s very lucky and comes within 1-2% points of Yanukovych. But my prediction is a Yanukovych win by 5-10% points over Tymoshenko”: During the second runoffs on February 7th, Yanukovych got 48.95% and Tymoshenko got 45.47%, making a gap of 3.5%. My first, allegiance-tallying method was virtually perfectly correct (50%-46%); the one that involved factoring in opinion polls led me to miss my mark. But nonetheless, I still ended up predicting the correct result.

(5) “Oil production in 2010 will be around the same as 2009 – increased demand will collide with geological depletion to keep output stable. Oil prices in H1 will remain at 70-90$, and will rise to 90-110$ in H2″: More accurate to say $70-90 for the whole year with dips and rises, but you wouldn’t have lost money taking my advice (and that after making big bank in 2009: “…a rebound in oil prices from around 40-50$ per barrel in the first half, to 60-80$ in the second”).

(6) “No major AGW-related physical events (except for a heatwave or two), given that solar irradiation remains at an unusually long trough – expect the fireworks by 2012-15″: Well, and quite a few floods. But dead on about the “heatwave or two.”

“AGW skepticism will become more popular in the wake of Climategate“: Yes – see the Republican Party.

“China and its proxies will prevent any more significant action being taken at the next UN climate change summit in Mexico, than was “achieved” in Copenhagen”: Correct, though actually it was the entire world (save a few countries like Bolivia), not just China, that colluded in making a worthless agreement.

“By year-end the performance of the world’s top supercomputer will exceed 3 petaflop/s (repeat of 2009 prediction)”: Still not there, as the current top supercomputer, the Chinese Tianhe-1A, achieved a performance level of 2.57 petaflop/s. Next year for sure though.

(7) “China’s growth will slow from around 8% in 2009, to perhaps 5% in 2010… expect China to continue keeping a low profile as the US insists on shooting itself in the foot.” So wrong! Ouch.

* EDIT. A reader wrote in to tell me I meant David Cameron is the leader of the Tories, even though James (the film-maker) might be preferable. LOL. For me to get it wrong not once (when writing) but twice (when reading) there must have been some serious Freudian slippage going on!

BTW, the image above is of the Xue Long (雪龙) icebreaker in the Arctic. It represents the intersection of several major current trends: The multifaceted rise of China; the growing importance of the Arctic; climate change.

Year in Review: 2010

As usual, I will begin by reviewing the defining trends of this year (Part 1), before making predictions for the next and finishing up by reviewing the accuracy of my 2010 predictions (Part 2). The main global theme of 2010 is the continuing Rise of the Rest – led by but not limited to the BRICs (Brazil, Russia, India, China) – set against the background of the accelerating political, economic and above all institutional and soft power decline of the old Western order.

(1) China keeps getting stronger, on every facet of national power, at an exhilarating rate. A comprehensive overview is well beyond the scope of this post, but a few examples give an idea of the general picture. A country that first displayed its UAV’s in 2006, has now exhibited more than 25 different models. One of them, the WJ600 – boasting a jet engine, multiple missiles and stealth features – might even be more advanced than any US or Israeli model. Just as the year rolled to an end, leaked photos showed that the Chinese now have their own fifth-generation fighter, the Chengdu J-20. Bearing in mind that Russia also revealed its PAK FA this year (after around 25 years of development), I think it’s safe to say that the Chinese have now fully caught up with Russia in non-strategic military technology*.

However, unlike the USSR, China is not a largely one-dimensional military power. What’s far more significant is that in sector after sector it is investing massive resources into R&D and espionage to achieve qualitative near-parity with Western products (e.g. Japanese trains, German machine tools, etc) then seizing their market shares abroad through its lower labor costs. China now produces half the world’s wind turbines and solar panels, a hugely strategic sector given current energy prospects; it has the world’s most powerful supercomputer (and is now second overall to the US in supercomputing); and finally, PISA international standardized tests have confirmed that Chinese youth are now as skilled in reading, math and science as their (far richer) Western and Japanese counterparts.

One can stretch these examples almost indefinitely, but the main point is that “the rise of China” isn’t just 1980′s Japan-style hype; its tenfold larger population makes it the real deal. If you wish, dismiss it by referring to its aging problems (might be an issue by 2030) or its property bubble (when 50% of its population is still rural). But don’t be surprised by not-so-distant headlines such as “China becomes world’s biggest economy by GDP” or “RAND analysts claim PLAN has achieved military superiority in the West Pacific”.

(2) While China is its main champion, many other countries traditionally considered to be economically stagnant, politically unstable and socially backward are emerging as major regional Powers in their own right, and beginning to project global cultural influence. In its adroit PR handling of the flotilla incident, Turkey has staked out its claim to regional prominence by challenging Israel and appealing to global Muslim sentiment. Brazil and Turkey enjoyed blistering growth rates. Russia has resolved its differences with Belarus in recent weeks, and together with Kazakhstan has finalized the timetable for a customs union; with the election of Yanukovych to the Ukrainian Presidency and Ukraine’s (partial) reorientation towards Eurasia, it too may join in the next year or two. Non-Western outlets such as Russia Today and Al Jazeera are now major participants in the global media discourse along with the likes of CNN and the BBC.

(3) The ideological rift between pro-stimulus Democrats and pro-scrouging Republicans – and their mutual capture by special interests (the financial sector, the military-industrial complex, etc) – has become increasingly evident this past year. This now puts the probability of the US ever resolving its budget problems by choice, slim to begin with, at next to zero. At this point, the only realistic chance of returning to fiscal sustainability without unleashing massive social disarray is to increase taxes on the rich, cut security spending, reign in the financial and “homeland security” mafias and rule out future stimuluses (whose effects tend to be crude and non-lasting) in favor of targeted social spending. However, ideological factors preclude this (The Tragedy of Obama: “a corporatist centrist giving endless concessions to Republicans who (successfully) portray him as a radical leftist”).

(4) How not to close awning budget deficits: the UK (I regret to say that I blogged in support of the ConDem coalition). While any idiot can see that the UK is on a fiscally unsustainable path, the ways in which cuts are being made, with a sneering classism that hits the poorest and least-privileged; commercialization of state social functions; and dumping of state assets, is incredibly shorttermist, foments social disarray and undermines longterm prospects. From 2011, the UK will implement the highest university tuition fees in the world. The headlines say it all: “McDonald’s and PepsiCo to help write UK health policy”, “Students could boost marks by showing ‘corporate skills’”, etc.

(5) In Europe, the German corporatist model, the Swedish welfare state, and to a lesser extent French dirigisme, have acquired ideological supremacy over the UK and Irish neoliberal models and the bureaucratized Mediterranean states. In a low-key meeting at Deauville in October, Sarkozy appeared to agree with Merkel’s proposals that would penalize countries that require bailouts by denying them votes in EU councils and placing them under Brussels supervision. Will the Mediterranean accept these Diktats or will it fracture the EU? Is even Germany, with its own high debts and demographic problems, capable of guaranteeing them? In any case, one thing we can say for sure is that this development reinforces the trends towards a multi-speed Europe, with the power of the traditional Franco-German core reinforced further by their (relative) economic resilience.

(6) The posturing by North Korea is, as usual, a show meant to extract concessions. Not worthy of the alarmist headlines.

It appears that the main reason Israel has so far restrained itself from striking Iran – as I still think will happen, eventually – is the remarkable success of the Stuxnet worm at sabotaging its uranium enrichment processes. But in all likelihood – I give it 75% – this strike will come sometime in the next few years.

Afghanistan is as unwinnable as always, but ideological inertia and the “psychology of previous investments” conspire to keep the US there.

(7) If you want the single best example of declining US soft power, consider this: even as prominent US politicians called for the assassination of a controversial foreign journalist for “espionage” or “information terrorism” – and even better, while touting its plans for World Press Freedom Day in May 2011 (presumably Assange isn’t on the invite list) - and Britain imprisoned him on what are almost certainly politically-motivated rape charges from Sweden, the President of Ecuador offered him asylum and the Russians mooted giving him a Nobel Peace Prize. Now I certainly don’t mean this portrayal of Assange’s travails to demonstrate that countries like Russia are altruistic crusaders for transparency and journalistic freedom; to the contrary, its safeguards for leakers are not so much abysmal as non-existent. However, Wikileaks illustrates that when the Western power elite is challenged so openly, forced to go through the political version of the airport body scanners it foists on its own citizenry, all pretensions to lofty ideals such as “rule of law” are tossed out of the window**.

But Wikileaks is more than just a collection of political gossip, or revelations such as that the British train Bangladeshi death squads and US contractors traffic in children for Afghan warlords, or inspiration for national and regional leaker websites such as Indoleaks (Indonesia), Rospil (Russia) or Euroleaks (EU), or even confirmation of “radical” viewpoints such as that the political elites of most European countries take their marching orders from the State Department.

The Wikileaks Saga is a historical crossroads that will determine the future balance between privacy, freedom and security in the West. Down one road, the powers that be will clamp down on journalistic freedoms and the unrestricted Internet, and so confirm the dominance of the one-way “surveillance state”; down the other, the transparency virus unleashed by Wikileaks will destroy the effectiveness of state ”authoritarian conspiracies”, leading to citizen empowerment and “universal sousveillance“ (two-way surveillance). Since technological development makes increasing surveillance inevitable, and consequently serves to concentrate power in the hands of materially and legally privileged actors such as states and corporations, I think the kind of citizen sousveillance represented by Wikileaks is indispensable for preserving personal freedoms and people power in our cyberpunk future.

(8) In the hottest year on record globally, which saw a devastating heatwave in Russia and unprecedented flooding in Pakistan and Australia, AGW denialism claimed victories in the US Congressional elections and the inconsequential summit in Cancún (without verification or penalties, any targets or commitments aren’t worth the paper they’re on). The climate crisis is now so self-evident and imminently devastating that the only psychological option is to draw in the runaway train curtains and prosecute anyone who peeks out and points out the broken bridge ahead. Geoengineering it will be (attempted).

(9) On Russia, Nikitin has summarized the year with a report card. Swell job. (Apart from the bizarre Khodorkovsky apologetics – talk of teachers’ pets!).

In short. The economy is so-so: though 4% growth is respectable, it should be seen in the context of an 8% GDP decline in 2009. (On the other hand, updated Real GDP per capita calculations by the World Bank and OECD/Eurostat have indicated that Russia’s is around $20,000, higher than the previous estimate of c.$15,000. This makes it similar to Poland, Croatia or Estonia; and in overall size comparable to Germany, and far above France or the UK). Its demographic situation has remained mostly unchanged from 2009, a small rise in births being more than canceled out by a rise in death rates caused by the 44,000 excess deaths due to the heatwave. In the political realm, the biggest developments were: (1) the uneasy survival of the Reset with the US, in which Russia cooperates with the West in return for more technological access; (2) the huge $700bn rearmament program announced for the next decade; and (3) the increasing drive towards recentralization and technocratic management encapsulated by the ouster of Mintimer Shaimiev (Tatarstan) and Yuri Luzhkov (Moscow).

(10) The melting of Arctic sea ice and local warming is creating the foundations for a sustained economic boom. This year the MV Nordic Barents steamed into the record books as the first foreign flagged vessel to sail from Europe to China through the entire Northern Sea Route without stopping at any Russian harbor. With traffic through the North Sea Route expected to increase tenfold over the next decade, ports being expanded, and power and transport infrastructure built up at a furious pace, the Arctic represents the next investment El Dorado after the BRICs. Follow S/O’s sister blog Arctic Progress to stay on top of things at the top of the world!

* Of course, this isn’t to say that all Chinese military tech is now up to Russian standards. E.g. Russia is well ahead in air defense. On the other hand, China’s naval technology is now arguably better. On average, I’d say the qualitative level of conventional arms is now roughly equal.

** Just as they are with the Third World victims of Western imperialism, or its own repressed minorities in urban ghettoes, or Muslims, but when it happens to English-speaking white guys it’s far more serious.

Stay tuned for Part 2 in which I make predictions for 2011 and review those from last year. Meanwhile, please feel free to point out any major events or trends I missed out.

That said, it’s not of course the case that the US is uniquely responsible for climate fiasco after fiasco. Obviously, these cables don’t paint the US in a good light, what with its underhanded tactics to force countries into signing up to the Copenhagen Accords (a grossly inadequate treaty because of its soft targets and lack of enforcement mechanisms). But thanks to China’s sabotage** in the closed-door negotiations in Copenhagen – even cajoling developed countries against setting their own targets, while manipulating them into taking the fall in public – this is what we got. And while I understand the position of poor countries like the Maldives or Bolivia that it’s nowhere near enough to prevent devastating AGW, or Addis Ababa’s complaints about the absence of formal US guarantees of financial aid in exchange for their support (Cable 2), nonetheless there is a logic to the US strong-arming poor countries into the Accords since this at least gets “the international community moving in the right direction.” (A bonus in that cable is seeing Ethiopians arguing, just like Russians, for restricting foreign funding of NGO’s on the grounds that it undermines indigenous civil society).

* It likely is true, as the author explicitly warns the reader to protect Pachauri’s name.

** This is also the root reason why the ongoing Cancun summit will fail, as everyoneseems to recognize. China’s position remains unchanged, sacrificing the global climate for a little greater period of fast economic growth. The US won’t do anything given the political ascendancy of the Republican climate dinosaurs. While hammering out an effective climate policy between 180 growth-centered countries and a dozen major emitters is hard enough, without China and the US it is completely impossible.

Cable 1

Tuesday, 02 September 2008, 23:30
C O N F I D E N T I A L STATE 093970
SIPDIS
EO 12958 DECL: 09/02/2018
TAGS SENV, PREL, UNEP, WMO, KGHG, IR, ML, AR, MA, MO
SUBJECT: LIFELINES FOR IPCC WORKING GROUP ELECTION
Classified By: Classified by IO“>IO“>IO/DAS Gerald Anderson for reasons 1.4(b) and (d)

1. (U) This is an action message. Please see paragraph 3.

2. (C) Summary. Missions should be prepared to assist the U.S. Delegation to the Intergovernmental Panel on Climate Change (IPCC) in its efforts to secure a positive outcome to elections for working group co-chair positions at the IPCC Plenary being held in Geneva, August 31-September 4. USDEL is working actively to prevent the election of an Iranian scientist to the developing-nation co-chairmanship of Working Group Two, a position which would pair him with a U.S. scientist running unopposed for developed-nation co-chair of the same group. The focus of USG efforts is to support an alternate candidacy for the position, although the full slate of active candidates and their potential for election will not be known until the later stages of the plenary sessions. Curricula vitae of some of the leading candidates are at paras 6-10. End Summary.

3. (C) Action Request. Missions should assign a Point-of-Contact for this issue and provide phone and e-mail information to the US Mission to the UN in Geneva. USUN should appoint its own POC and relay contact information for all POCs to USDEL IPCC. In the event that USDEL requires assistance in working with counterpart delegations (e.g., coming to a consensus on a single strong alternate candidate to support), USDEL may contact Mission POCs directly, or via US Mission Geneva, to ask that Missions apprise host governments of the situation, with a view to arranging for instructions from capitals. Missions should do everything possible to assist USDEL if they receive such a request. Until such a call is received, however, Missions should take no action on this issue; USDEL will be interacting directly with host-country expert delegations in Geneva, and premature contacts/demarches with host country government officials in capitals, even to preview the background of the situation, could be highly counter-productive. Point of Contact for USDEL is OES/EGC,s Donna Lee XXXXXXXXXXXX.

4. (C) Background. The Intergovernmental Panel on Climate Change (IPCC) (http://www.ipcc.ch) is a highly influential body established by the World Meteological Organization (WMO) and the United Nations Environment Program (UNEP) to assess scientific issues related to climate change. This year, the U.S. has nominated Stanford Professor Christopher Field to the developed-country chair of IPCC Working Group Two, which assesses the vulnerability of socio-economic and natural systems to climate change and the options for adaptation. His nomination is unopposed. Iran, however, has nominated Dr. Mostafa Jafari to be the developing-country co-chair of the same working group. Jafari is a highly-qualified scientist with research ties to the UK and Japan, but he is also a senior Iranian government employee who has represented Iran in international negotiations. Co-chair appointments are for a minimum of four years, and require close collaboration and often travel to or extended residencies in each others, countries. Having U.S. and Iranian co-chairs would be problematic and potentially at odds with overall U.S. policy towards Iran, and would significantly complicate the U.S. commitment to funding the Working Group Two secretariat. U.S. withdrawal of its nominee, however, would effectively give Iran a veto over future U.S. nominees in UN bodies. Moreover, having a U.S. co-chair at the IPCC significantly bolsters U.S. interests on climate change, a key foreign policy issue.

5. (C) Background continued. Prior to arrival in Geneva, USDEL contacted IPCC Chairman Dr. Rajendra Pachauri (please protect), who agreed to work on this issue to avoid the potential for disruption to one the organization’s three core working groups XXXXXXXXXXXXXXXX. Next, USDEL contacted the Austrian delegate serving as EU representative on the nominating committee that manages the election process, who showed an understanding of U.S. equities. USDEL contacted the Malian and Argentinean delegations, who have nominated highly-qualified co-chair candidates (see below), and the German delegation, who have been interested in advancing the Malian for co-chair of Working Group Three, for which Germany has nominated an unopposed candidate as developed-country co-chair. The Malians subsequently told USDEL that their candidate, Dr. Yauba Sokona, prefers Working Group Two to Working Group Three. Also prior to arrival in Geneva, USDEL contacted the UK and Netherlands delegations, both of which we have worked closely with in the past. Based on experience at prior IPCC plenaries, events related to the Working Group elections will likely unfold unpredictably and rapidly, necessitating a rapid and flexible USG response.

[AK: There follow lengthy biographies of Iranian candidate Mostafa Jafari, Malian candidate Youba Sokona, Argentinean candidate Vicente Ricardo Barros, Moroccan candidate Abdalah Mokssit and Maldivan candidate Amjad Abdulla. Jafari is not any less qualified than the rest in this group.]

RICE

Cable 2

Tuesday, 02 February 2010, 05:38
C O N F I D E N T I A L SECTION 01 OF 03 ADDIS ABABA 000163
SIPDIS
EO 12958 DECL: 02/01/2020
TAGS PREL, PGOV, KDEM, MOPS, ECON, KE, ET
SUBJECT: UNDER SECRETARY OTERO’S MEETING WITH ETHIOPIAN
PRIME MINISTER MELES ZENAWI – JANUARY 31, 2010
Classified By: Under Secretary Maria Otero for reasons 1.4 (B) and (D).

1. (SBU) January 31, 2010; 4:15 p.m.; Addis Ababa, Ethiopia

2. (SBU) Participants:

U.S. Under Secretary Otero Assistant Secretary Carson NSC Senior Director for African Affairs Michelle Gavin PolOff Skye Justice (notetaker)

Ethiopia Prime Minister Meles Zenawi Special Assistant Gebretensae Gebremichael

[AK: Cut.]

4. (C) Meles said the GoE is not enthusiastic about Kenya’s Jubaland initiative, but is sharing intelligence with Kenya and hoping for success. In the event the initiative is not successful, the GoE has plans in place to limit the destabilizing impacts on Ethiopia. On climate change, Meles said the GoE fully supports the Copenhagen accord, but is disappointed with signs the U.S. may not support his proposed panel to monitor international financial contributions under the accord. Meles made no substantive comment on inquiries regarding the liberalization of banking and telecommunications in Ethiopia. End summary.

Foreign Funding of CSOs Antithetical to Democratization

5. (C) Prime Minister Meles Zenawi told U/S Otero the development of a strong democracy and civil society is the only way Ethiopia can ensure peace and unity among an ethnically and religiously divided population. He noted that the Government of Ethiopia’s (GoE) commitment to democracy is directly related to stability, adding that for Ethiopia, “democratization is a matter of survival.” Responding to U/S Otero’s concern that Ethiopia’s recently-enacted CSO law threatened the role of civil society, Meles said while the GoE welcomes foreign funding of charities, those Ethiopians who want to engage in political activity should organize and fund themselves. The leaders of CSOs that receive foreign funding are not accountable to their organizations, he said, but rather to the sources of their funding, turning the concept of democratic accountability on its head. Meles asserted that Ethiopians were not too poor to organize themselves and establish their own democratic traditions, recalling that within his lifetime illiterate peasants and poor students had overthrown an ancient imperial dynasty.

6. (C) Meles said his country’s inability to develop a strong democracy was not due to insufficient understanding of democratic principles, but rather because Ethiopians had not internalized those principles. Ethiopia should follow the example of the U.S. and European countries, he said, where democracy developed organically and citizens had a stake in its establishment. When people are committed to democracy and forced to make sacrifices for it, Meles said, “they won’t let any leader take it away from them.” But “when they are spoon-fed democracy, they will give it up when their source of funding and encouragement is removed.” Referencing his own struggle against the Derg regime, Meles said he and his compatriots received no foreign funding, but were willing to sacrifice and die for their cause, and Ethiopians today must take ownership of their democratic development, be willing to sacrifice for it, and defend their own rights.

7. (C) Meles drew a clear distinction between Ethiopians’ democratic and civil rights on the one hand, and the right of foreign entities to fund those rights on the other. There is no restriction on Ethiopians’ rights, he asserted, merely on foreign funding, adding that the U.S. has similar laws. U/S Otero countered that while the U.S. does not allow foreign funding of political campaigns, there is no restriction on foreign funding of NGOs. Ms. Gavin noted the examples of foreign support for the abolitionist movement in the U.S. and for the anti-apartheid movement in South Africa as positive examples of foreign engagement of civil society, and expressed that aside from the issue of foreign funding, the ability of local organizations to legally register, operate, and contribute to democratic discourse was of tantamount importance.

[AK: Cut.]

GoE Prepared to Move Forward from Copenhagen

13. (C) U/S Otero urged Meles to sign the Copenhagen accord on climate change and explained that it is a point of departure for further discussion and movement forward on the topic. She noted that while the agreement has its limitations, it has the international community moving in the right direction. Meles responded that the GoE supported the accord in Copenhagen and would support it at the AU Summit. However, he expressed his disappointment that despite President Obama’s personal assurance to him that finances committed in Copenhagen would be made available, he had received word from contacts at the UN that the U.S. was not supportive of Ethiopia’s proposal for a panel to monitor financial pledges regarding climate change. Ms. Gavin assured the Prime Minister that she would look into his concerns.

[AK: Cut.]

YATES

The immediate inspiration was Dmitry Orlov’s essay The Collapse Party platform, which argued for setting up a mechanism to clean up the mess left behind industrialism and preparing society for the collapse. Orlov was personally pessimistic about the chances of political organizations achieving this, since to some extent the very notion of a “collapse party” is a contradiction in terms. After a year, it turns out that he was right – at least in the short term. I have neither the time nor the means to push this project, nor have I been able to do anything substantial about it apart from the (soon to disappear) site and a Facebook group. Furthermore, on further examination it never would have any good prospects anyway – even apart from the fact that few comprehend the sheer scope of our predicament, such a ”pessimistic” view is politically unappealing to the vast majority of people.

This post will archive the Party’s Manifesto, which I do think contains some useful pointers to future action. The longer its recommendations remain the laughing stock of “polite society”, the more violent will be the long-term outcomes as the industrial engine splutters and screeches to a stop – and the more brutal and dictatorial the means that will be required to mitigate and adopt to the new conditions. But as a political project the Collapse Party is quixotic, and in any case there’s no point worrying about things you can’t change. Instead, I would recommend focusing on the great new opportunities of an opening Arctic: getting in early on its coming investment boom, snapping up prime Far North real estate and establishing your family as the future landed aristocracy. For true prophets are despised, but Tsars are feared and respected!

The Collapse Party Manifesto

Anatoly Karlin

The world is finite, and so the resource stocks and pollution sinks that sustain industrial civilization (“the System”) are limited. We have been in a state of “overshoot”, beyond the “carrying capacity” of the Earth, since the 1980′s (The Limits to Growth, 2004). Limited resources have been drawn down much faster than they could be replenished, and the Earth’s pollution sinks have been overfilled much faster than they could be regenerated.

Elements of this overshoot can already be seen in phenomena as diverse as plateauing crop yields, topsoil loss, accelerating climate change, peak oil, collapsing fisheries, the depletion of higher-EROEI energy sources, dying rivers, global dimming, the proliferation of “failed states”, neo-colonial exploitation, and rising antibiotic resistance. But things are yet going to get much worse…

Based on paleoclimate reconstructions of CO2 levels, an eventual global warming of above 2C is already inevitable. This will set off a cascade of climatic disasters that will speed up the rate of warming, leading to the desertification of much of the world’s land and oceans, the drying of the great Asian rivers, and massive inundations of the low-lying coasts and deltas that harbor humanity’s heartlands. States will collapse into anarchy, spawning Biblical-scale famines and floods of climate refugees.

Meanwhile, the energetic resources that power the System will be coming under severe strain. Oil production has already peaked, and natural gas and coal will follow in a few more decades. The remaining resources are much harder to extract, since the easiest pickings have already been exploited. We will have to divert ever more energy, labor, and capital towards mitigating the effects of both energy depletion (renewables, remote hydrocarbons) and runaway climate change (adaptation, geoengineering).

This will starve agriculture and the consumer sector, ushering in disillusionment, social discontent, and a longing for a strong hand at the helm of power. This will undermine liberal democracy’s political legitimacy, leading either to anarchy (“failed states”) or increasing coercion (authoritarianism). Geopolitical rivalries over the remaining energy resources will intensify, extinguishing the already dim prospects for international cooperation. Long-term thinking will recede into irrelevance, for political leaders will have their hands full with much more pressing issues – building sea walls, feeding the military, and placating (or dispersing) angry mobs.

Our only way to escape this trap is to rapidly effect a global transition towards “sustainable development”. The imperative of such a transition was recognized as early as the 1970′s, but we have yet to see any truly meaningful action. Nor are we likely to, since the defining feature of industrial-capitalist civilization is indefinite growth, based around the taking of loans against (higher) future returns. There’s a reason why Malthusian societies suppressed usury – and should we continue business-as-usual, we will soon rediscover why.

Though the System is very effective in some ways, it cannot foresee its own demise; nor can its servants even ask questions that hint at the unpalatable answer. However, the casual, detached, and informed observer can. Yes, in a purely technical sense, disaster can still be averted if one could convince people to make, or more likely force through, drastic reductions in First World overconsumption, a full-scale retooling of the industrial system towards renewables and recycling, and a global system of “contraction and convergence” on CO2 emissions.

Achieving this, however, is unlikely in the extreme; any transition to sustainability is going to be stymied by social myopia and geopolitical anarchy, as well as innate human psychological features such as the conservative bias, the denial complex, hedonism, and susceptibility to “creeping normalcy” and “landscape amnesia”. Unless we overcome these failings, or discover a technological silver bullet, we will collide with planetary limits to growth sometime around 2030 to 2050.

In that scenario, the System as a whole will become increasingly fragile, such that a large enough perturbation – say, a major war or global climatic disaster – will send it into a self-reinforcing spiral down into chaos. The electrical-industrial infrastructure supporting modern technology, especially the massive repositories of information entombed within cyberspace, will crumble away into oblivion.
After a short period of unprecedented violence, famine, pestilence, and death known as “the Collapse”, the world will get larger once more, and society will retreat back into the comforting blackness of a new Dark Age.

Faced with these grim prospects, we see it fitting to launch a multi-pronged initiative to if not avert a Collapse (as is the purpose of the global Green movement), then at least to attempt to mitigate, as best we can, its catastrophic humanitarian consequences. We do not wish on the demise of technological civilization, for we recognize that for all its ecological obliviousness and social injustices, it has enabled tremendous progress in science and many aspects of culture and human welfare. That said, we recognize that sometimes, the Second Law of Thermodynamics – the tendency for all closed, complex systems to decay – cannot be sidestepped.

We are “kollapsniks”, and our initiative is the Collapse Party.

We are an individual state of mind, for being mentally prepared for collapse is of the utmost importance. We are profoundly local, for each community will have to weather collapse on its own. We are a global project, for our predicament is global. We welcome everyone regardless of race, sex, creed, or political affiliation.

We propose a program of “sustainable retreat”, emphasizing the following three main principles:

• Reinforce resilience in the face of collapse.
• Inform the people that business-as-usual will lead to collapse.
• Prepare for collapse by focusing on “sustainable retreat” and targeted technological development mitigate the severity of any ultimate collapse.

The Collapse Party Platform

These principles are to be pursued through and beyond the following set of policies.

• Use the remaining high-EROEI fossil fuel stocks in a crash program to build as large a nuclear and renewable energy infrastructure as possible.
• Clean up radioactive and toxic installations while we still have the technologies and resources to do so.
• Work on fostering global unity and a common human identity to encourage cooperation and discourage competition and resource wars.
• Preserve as much as possible of the world’s stock of technologies, bioresources, and knowledge in dispersed repositories (“lifeboats”) in durable, physical format.
• Retool the education system to disseminate practical skills and democratize it using the power of the Internet (as long as it continues to exist).
• Liberalize copyright laws.
• Promote communal-agrarian values (“green communism”), while ditching the individualist and accumulative mentality that is spelling our doom.
• Unite all social groups under different wings of the Party – conventional Greens, as well as socialists, feminists, right-wing survivalists, etc – that are amenable to the kollapsnik message.
• Eschew militarism, dismantle overseas military bases, and repatriate the troops; but maintain a minimal nuclear deterrent.
• Nationalization and / or regulation of the commanding heights of the economy to optimize resource conservation and pollution control.
• Establish a network of self-contained “resiliencies” across the nation and the world, modeled on the Kibbutzim, that will provide physical, mental, and spiritual nourishment to those who need it.
• Allow mostly-unimpeded free enterprise for small, non-strategic, and low-material throughput businesses, for it will still be necessary to keep the consumerist urgings satiated.
• The Party is to be aim to operate on a horizontal and democratic basis, in which promotion and honors are to be based on the judgments of peers on one’s competence and commitment to the cause.
• The winding-down of the prison-industrial complex in a controlled manner; the nature of law and order to be determined in further internal debate.
• General debt amnesty to wipe the slate clean and start from Year Zero in our quest for sustainability.
• Expand resources into research on areas such as sustainable energy, geoengineering, and artificial intelligence to increase the chances of achieving a technological “silver bullet”.

Recommended LINKS from the site: The Archdruid Report; Arctic Progress; The Cost of Energy; Dmitry Orlov; Energy Bulletin; Energy Watch Group; George Monbiot; Green Party USA; Grist Environment; James Kunstler; Jay Hanson; Kurzweil AI; Mark Lynas; Matt Savinar; The Oil Drum; Paul Chefurka; Peak Oil News; Real Climate; Sharon Astyk; Stratfor; Sublime Oblivion; World Changing.

1. Sayonara, Luzhkov. Props to Jesse Heath for predicting it, Patrick Armstrong for IMO the best summary, and STRATFOR for the most bizarre interpretation (they think Luzhkov was dismissed because the Kremlin no longer needs him to control the Moscow Mob). The best way of viewing this is not as a struggle between the tandem, or even Medvedev asserting himself, but as the latest stage in the campaign to replace entrenched regional barons with civiliki that are closer to the Kremlin. This appears to be part of the overall Kremlin drive towards greater centralization and technocratic management.

2. Structural Remilitarization? Of far greater long term import than the political scuffles around the Moscow mayoralty is the gigantic, even prodigal, plans and figures are being bandied around by senior members of the Russian leadership for the 2011-2020 rearmament program (1, 2, 3). The main points of the program are to spend 22 trillion rubles (c. $700bn) over the next decade to modernize Russia’s increasingly obsolete military hardware, complementing domestic items with imports from foreign countries like Israel, France and the US*.

These are huge sums for an economy with a nominal GDP of $1230bn in 2009 (the US has $14.3tn). To put this into perspective, taking into account changes in relative prices, $700bn of dollar spending in Russia would translate into about $1200-1500bn in the USA (e.g. just compare the unit costs of equivalent fighters, the higher salaries of researchers, etc). That’s $120-150bn in procurement and R&D per year. For comparison, in 2009 the US spent $219bn, and this figure is likely to decrease in the years ahead due to fiscal constraints and withdrawal from Iraq and Afghanistan. As Steven Rosefielde speculated back in 2004, we may see the start of a “full-spectrum, fifth-generation rearmament” next year. If so, the wisdom of this course must be questioned:

• Thanks to peak oil and growing demand for natural resources, this is now fiscally feasible (unlike in 2000, or even 1990 for that matter). But Medvedev’s absurd claims that military modernization is going to be “a generator of innovation” to the contrary, these investments are more likely to distortive and misallocative.
• The move towards professionalization has been a flop and it is now evident that the conscription system will be retained for the foreseeable future (with minor adjustments, such as stricter controls on waivers, to make up for the coming 40% reduction in the pool of conscript-aged men due to the fertility collapse of the 1990′s). This is unfortunate, not only becausededovschina remains as prevalent as ever (the cutdown in military service to one year has altered the pattern of hazing, from age-based hierarchy to alpha/beta-male in/out-group dynamics), but because Russia has no discernible need for a million-strong military.
• What exactly is the use of so many soldiers with 5th-gen hardware? Countries like Georgia, Azerbaijan or Uzbekistan are already walkovers. In the South Ossetia War of 2008, the main problem wasn’t with the weaponry, but with “softer” factors such as unit coordination. There is a vast range of non-military levers that can be used against Belarus or Ukraine. War with NATO is almost entirely theoretical, and as with China, will probably have a nuclear endgame.
• Another factor that is often overlooked is the danger of over-investing into the 5-th gen paradigm, and in doing so becoming locked into it (e.g. much like the USSR build thousands of tanks in the early 1930′s that were obsolete by the time 1941 rolled by). In reality, it is just a transitional step towards the real face of future war: drone fighters; all-electric ships with railguns and laser weapons; massively networked forces with a plethora of robotic platforms, etc.

* I suspect that the reason why Russia finally disallowed weapons sales to Iran, including of the S-300, was because of an informal deal with the US allowing it market access to some of its military technologies.

3. Heatwave Toll. The demographic stats are showing a big mortality spike in July-August 2010 due to the Great Russian Heatwave, especially in the central and Volga regions. The overall excess mortality during the period is now at around 55,000 – almost twice as much per capita as during the 2003 European heatwave in France. Detailed info on Rosstat’s demography page.

4. Russia’s GDP up 30% this year!!! That is, unless (1) the World Bank made a clerical error or (2) the IMF and CIA are more reliable.

I was looking through Wikipedia’s latest GDP lists and observed that the World Bank’s estimate for Russia’s real GDP in 2009 was $2.7tn, which is $18,900 per capita. (The IMF and CIA estimates are unchanged at the usual $2.1tn.)

IF accurate, the World Bank revision would indicate Russia is the world’s sixth largest economy and within spitting distance of Germany’s $3tn economy. In per capita terms, it would put it in the same league as Poland, Estonia and Hungary or nearly 60% of the EU average.

So what gives? In your opinion, are the newer estimates more accurate? Were there any political motivations behind it, e.g. the reset?*

* The IMF and WB are not unknown to sometimes make drastic changes in
GDP estimates. For instance, two years back China’s real GDP suffered
a 40% cut. Perhaps not entirely coincidentally, China was within spitting distance of overtaking the US at the time of the revision!

5. Is Russia really more corrupt than Greece, let alone Pakistan? Stay tuned for the Karlin Corruption Index, a sequel to the Karlin Freedom Index.

Don’t worry – I’ll continue posting at S/O on “Eurasia, geopolitics and peak oil” (if not as frequently as before). Furthermore, most of the Russian translations and analytical ”core articles” on Arctic Progress will be reprinted here, the first one of which follows below.

Introduction – Why Arctic Progress?

1. The Arctic will become much more important in the near future as the melting of Arctic ice opens up circumpolar shipping routes. They are shorter than the constricted passages through Suez, Panama and Malacca, and far less vulnerable to bottlenecks, piracy and terrorism.

2. The Arctic is a once in a century investment opportunity. As the ice and permafrost retreat, the physical infrastructure of industrial civilization will begin to overspread the region: ports, roads, railways, pipelines, mines, oil rigs, housing, farms, schools, shops and military bases. The four major populated regions encircling the Arctic Ocean – Alaska, Russia, Canada, Scandinavia (ARCS) – are all set for massive economic expansion in the decades ahead.

3. Nowhere else is global warming so intrinsically tied to the prospects of a region as the Arctic; it is the force awakening it from its long, cold hibernation into the strange lights and thrumming noises of the modern world. But the Arctic is not passive – how it reacts to higher temperatures will drastically affect the future course and magnitude of further global warming. Global ocean and air currents will be interrupted as the temperature differential between the Arctic and the tropics shrinks. One disturbing possibility is that the melting of the Siberian permafrost will release vast amounts of methane, a greenhouse gas that is far more potent than CO2, into the atmosphere, and tip the world into runaway climate change.

4. Many regions of the world are overpopulated and facing resource depletion (e.g. “peak oil”) and rising pollution. The Arctic defies these general trends. As good hydrocarbon and mineral sources deplete, the economics of Arctic resource extraction will become more and more attractive. As the global south sinks deeper into water crises, heat stress and energy shortages, the polar regions will be changing into habitable and rather agreeable places. Exploitation of the region’s plentiful resources – coal in Alaska; minerals in the Russian Far East; hydrocarbons in the oceanic basin off Siberia; etc. – can sustain billions of people for at least a few more decades. That’s enough time to make use of the Arctic region’s plentiful wind and water fluxes to rebuild industrialism on a sustainable basis.

5. The Arctic melt is the kick-start to its own history. Both Russia and Canada are are accelerating their Arctic military buildups. NATO has held yearly military exercises in northern Norway from 2006, in which the (“fictional”) enemy team has a rather uncanny resemblance to Russia. No doubt China and European coalitions will soon take an interest too. The father of geopolitics, Halford Mackiner, claimed that control of Eastern Europe was the key to world power. In the 21st century, the prime strategic asset will become the Arctic Ocean.

6. James Lovelock, the inventor of the Gaia theory, believes that “before this century is over billions of us will die and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable”. If you think climate-pessimists and doomers like him are correct, more or less, then it might do you good to start planning a “doomstead” in the Far North. The Norwegians already made a start with the Svalbard Global Seed Vault, and one day perhaps cities will follow.

7. That few blogs (yet) exist on the Arctic is a good enough reason to start one, no? Besides, I think I can do a decent job of it. First, I know Russian – the other main language of the Arctic apart from English. This blog is about the Arctic, as opposed to just the North American Arctic. Second, my areas of blogging interest, centered around Russia, geopolitics, energy, and futurism,  are well suited for an Arctic theme. One can even say that the Arctic brings them all together. …

* Why am I writing about the Arctic on another site? (1) I reckon this blog is crowded and chaotic enough as it is, mixing Russia, geopolitics, futurism, and heck knows what else, (2) I don’t want to drown this blog with short postings about specific Arctic developments which will not be of major interest to many S/O readers, and (3) I want Arctic Progress to develop as a stand-alone hub for Arctic commentary on the interwebs.