Geopolitical Analysis & Forecasting

Forecast 2014: North America

Zachary Fillingham

Geographic map of North America

Geopoliticalmonitor.com

Economics

Mexico to Turn on the Pumps

After years of declining output, Mexico’s energy industry looks like it will be turning a corner in 2014. Legislation was passed in December to end the monopoly long enjoyed by Petroleos Mexicanos (Pemex) and open the industry up to much-needed foreign investment.  After the energy bill is ratified by a majority of Mexico’s states (it is expected to pass without a problem), the first licenses for foreign energy companies will be issued in late 2014.

The end of Mexico’s 75-year oil monopoly is a watershed event, albeit a somewhat predictable one given the pressures of an increasingly supply-glutted international energy market. The capital-starved Mexican industry was beginning to look like an anachronism next to its competitors north of the border, and it will need outside technology and investment in order to exploit the country’s full potential (which in terms of shale gas and deep-water reserves is thought to be quite lucrative). Thus, as foreign investment starts to flow into the country’s energy sector (to the tune of $20 billion a year according to some analysts), Mexican output will to ramp up. Expect this to have a meaningful impact on global supply beginning in late 2014, because even with the myriad of inefficiencies that dogged the soon-to-be-defunct Pemex monopoly, Mexico is still the 10th largest oil producer in the world between Venezuela and Kuwait. That means there’s plenty of room for improvement.

2014: Year of the Keystone XL?

Canadian Prime Minister Stephen Harper kicked off 2014 with a televised interview in which he lamented President Obama’s “punting” of the Keystone XL decision before strongly implying that, in a sense, it didn’t even matter because the controversial pipeline would be built eventually regardless. Then, in keeping with the incendiary nature of the pipeline debate, two climate change protestors stormed onto the stage behind the prime minister before being dragged off by security.

With several conflicting signs indicating the decision will come down on one side or the other – such as the North Dakota train fire (approval); State Department reports indicating a negligible impact on climate change (approval); an easing US energy security outlook (rejection); and a well-organized opposition movement (rejection) – the more cynical among us might conclude that President Obama is just waiting to see which voting bloc will be more decisive in this year’s midterm elections. But regardless of what form it eventually takes, it seems likely that the Keystone XL decision will come in 2014.

For more information on the debate surrounding Keystone XL, click here.

Political

US Midterm Elections: A Six-Year Curse Broken or Vindicated?

Voters in the United States will head to polling stations in November of this year for midterm elections. At stake is the Democrat majority in the Senate, and midterm elections have historically been punishing for the ruling party in the sixth year of a two-term presidency.

These midterm elections are particularly crucial for the Republican Party. After years of bitter partisan debate, government shutdowns, and a few spectacular electoral failures in 2012, it looks like the GOP leadership will be able to restrain the Tea Party camp (anathema to critical centrist voters) enough to benefit from widespread popular disillusionment with the Obama administration and “Obamacare.” Glimpses of this new pragmatist view from the GOP are increasingly evident of late, such as in the unusually quiet passage of a comprehensive spending bill in Congress late last year.

Barring any dramatic political surprises between now and November, expect the Democrats to lose their Senate majority, effectively neutering the Obama administration from a domestic policy standpoint for its final two years. This will result in a more fluid policymaking process overall as Republican control of both houses serves to depoliticize some aspects of governing that, until the past few years, had never been subject to the kind of deadlock we have seen on Capitol Hill of late.

Military

The NATO Pullout from Afghanistan

Now that President Obama’s December 31st deadline for an Afghan security agreement has come and gone without putting pen to paper, it’s safe to say that Afghan President Karzai has called the US’ bluff. What exactly it is that President Karzai is holding out for remains unclear, but at this point it looks like a security agreement will not be signed before Afghan presidential elections are held in April.

The number of US troops that will remain in Afghanistan in a ‘support’ role beyond this year’s pullout is currently unknown, but broadly speaking it will be influenced by two factors: war wariness at home (a CNN poll recently dubbed it the most unpopular war in US history) and the grim tactical realities of an entrenched Taliban insurgency and an untested Afghan military.

That a total and abrupt NATO pullout from Afghanistan would result in a Taliban takeover of large swathes of the country, and eventually Kabul, is an opinion shared by many foreign policy experts and doubtlessly many US policy planners as well. But even so, come April 2014 President Obama might have been willing to pull out all US troops and shovel blame for the disaster that follows on the figure of an irresponsibly stubborn President Karzai. However, recent developments in Iraq are changing the political dynamics of a NATO pullout from Afghanistan. We are now seeing in the Sunni militant takeover of Fallujah and Anbar province what many would deem a major foreign policy failure of the Obama administration: it did not secure a permanent US military presence in Iraq, and now the black flag of the ISIL flies over Fallujah.

It follows that the Obama administration will be under increased pressure to leave a meaningful troop presence in Afghanistan beyond 2014. As a result, expect the US administration to cave to Karzai’s demands (whatever they are) in an effort to establish a long-term ‘support’ capacity in Afghanistan.

The Pentagon Budget Rescued from Sequestration

With former defense secretary Robert Gates’ one-man crusade to reform Pentagon procurement, a round of deep sequester cuts, the Tea Party’s apparent antipathy towards military spending, and two major wars fought in the last decade – it was beginning to look like the US defense budget might see substantial cuts in the near future. However, the abovementioned Congressional deal came together on a bipartisan commitment to prop up defense spending.

This is important, especially since many were predicting defense spending would be sacrificed in the name of fiscal responsibility. If the sequester cuts were kept in place, it would have forced a discussion on the future capabilities and role of the US military in the world. Now that discussion won’t take place… yet.

The immediate geopolitical impact of business-as-usual at the Pentagon will be felt most in Asia, a region that is set to become the US’ preeminent strategic focus once the war in Afghanistan winds down. In a sense, firewalled defense funding will allow for a more thorough implementation of the Asia Pivot (a policy that will doubtlessly outlive the Obama administration). Before 2014 even began we saw a long-awaited agreement on the Futenma base relocation in Okinawa. Expect the US military to continue to make its presence felt in Asia through 2014, and a new base in the Philippines is always possible as long as Manila and Beijing are at loggerheads over the Scarborough Shoal.

Zachary Fillingham is a contributor to Geopoliticalmonitor.com

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  • sunil kumar dogra

    It is very difficult for Obama to pull out NATO forces from Afghanistan. There are reasons behind it.

    1. First of all US must stop giving additional aids to PAKISTAN (a Terrorist Country) . US must take INDIA in confidence rather maintaining distance from India.

  • George Wee

    Well many may say that this is a lazy answer, or one hiding behind religious ideal.

    But NO I am glad to have a faith in God and the scriptures prophesize much of what is happening and I don’t believe it is all coincidence.

    I am appalled over the fact that the world is in such a poor condition and truth is not recognized, greed so rampant for power and authority. No system can stand against such abuse and survive.

    The rise of Islam is just the crown of all that is corrupt and greed, political correctness is also part of the problem where truth can not be told.

    The Earth will be replaced and righteous will reign.

    Scriptures says the righteousness exults the nation.

    George Wee

  • Friedrich Bier

    Economy and the geostrategic situation in Asia has a very important role to secure peace in the world and will have and the energy sector is a factor which stabilize our countries.
    What I miss is any environmental issue which will be both, a stabilization factor and a geostrategic role for peace in the future.

    What about CO² in the air, which could diminish the PH, so that plankton could die? 50% of the oxygen we use is out of the ocean. If this oxygen is missing the quality of the air will be poor the air we breath too.

    Commodities, which we have nearly consumed like Aluminum and other metals, but we can haul from the bottom of the sea could be a national threat and lead to war. Also the exploitation of the arctic, which is also a topic of today.

    The El Nijo effect, the expansion of the deserts induced of climate change, all that didn’t find any place in the report. Are there no midterm and long-term plannings? Is there nothing to do in 2014 for a nation like the USA, which has a significant role in the world?

  • Theedrich Yeat

    Although I am normally very leery of any entanglements with South Asia at all, reality forces me to agree with sunil kumar dogra. We cannot possibly rein in the devious Pakistani military or its utterly dysfunctional country alone. India is the only possible decent option there, and we should stop trying to play the "even-handed" "balance of power" game. The nuke problem is frightening, but will only grow worse if we keep shoveling $billions to the Paks.

  • Alan Williams

    "This will result in a more fluid policymaking process overall as Republican control of both houses serves to depoliticize some aspects of governing that, until the past few years, had never been subject to the kind of deadlock we have seen on Capitol Hill of late."

    WHAT?!?!?

    Give your head a shake… or at least pull it out of… the sand! How in heck will "some aspects" of governing be DE-POLITICIZED when/if the Repubs take control of both houses?!?!?! That would simply give the Repubs free reign to (legislatively) RAM DOWN YOUR throats everything that they’ve been praying to do since the electorate had the audacity to vote a black person into the "WHITE" house! In January 2015, their first order of business — as controlled by the Tea Baggers — will be to pass a bill requiring each household in America to kill at least one puppy per month.

  • http://an80sreaganite.blogspot.com An80sreaganite

    XL Pipeline: As long as John Podesta as a close adviser to the president the XL Pipeline will languish in purgatory. This president does not want this pipeline, is in the process of forcing the U.S. to export it’s coal reserves, rather than use it to power our homes, and put 4 out of every 10 rows of corn into your gas tank rather than on your supper table. All in spite of oil & natural gas reserves greater than that of Saudi Arabia.
    Political
    We can only hope the GOP gains control of the Senate and the only way it’ll happen WITH the Tea Party, not in spite of the Tea Party.
    NATO Pullout of Afghanistan
    It is sad that Obama’s foreign is in such a state of disarray that we cannot get country whose president depends on us to prop him up to acquiesce to our demands. It only proves once again that liberal should NEVER be entrusted with foreign policy and diplomacy, much less use of the military.
    Pentagon
    Sequestration was the last best hope of constraining the runaway government spending of this regime. Even after sequestration, the U.S. would have spent more on defense than the next 11 countries COMBINED.

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