FORECAST

Economy

Despite the US Federal Reserve’s further rate cuts, the threat of American economic decline continues. Iran and Russia’s switch towards selling oil in USD coupled with continued discussion amongst middle eastern oil exporters to decouple their peg to the USD threatens to further erode the foundation of American economic supremacy – the military-enforced sale of oil in USD.

The American economy can be expected to continue to decline, although a crash is unlikely due to domestic interest rate cuts and foreign reluctance to sell off USD reserves too quickly, lest they devalue their own investments and damage their major export market.

Iran-US Relations

US plans to weaken or attack Iran have been dealt another blow as the National Intelligence Estimate (NIE) came out asserting that Iran ended its nuclear weapons program in 2003. The change in position by the NIE suggests internal disagreement over the appropriate policy towards Iran. While the NIE has not stopped the Bush administration from continuing their hard-line publicly, American inability to proceed against Iran is becoming increasingly apparent.

Russian and Chinese support for Iran, a lack of US military capacity and a strong Iranian military have limited American action to rhetorical statements, propaganda and minor covert operations within the country. Russia’s announcement that it will provide fuel for Iran’s nuclear power plants and China’s plan to sell Iran fighter jets are clear indications that a US attack on Iran is off the table in the short term. Further political maneuverings between the US, Russia and China be expected to continue. Kosovo, the US anti-missile shield and Taiwan will be used as bargaining chips.

Russian Reassertion

Finally, Russia has continued to reassert itself militarily. Not only has it recently overtaken the US to become the world’s number 1 weapons exporter, but naval deployments and ‘routine’ flights in the arctic near Finnish and Canadian airspace represent a new approach by Russia. Further military posturing and attempts to influence international affairs can be expected.

 

SUMMARY OF EVENTS: December 9 – 16, 2007

NORTH AMERICA

United States

The Federal Reserve dropped interest rates another 0.25% to expand the money supply and stimulate economic growth in an attempt to stave off recession.

Iran stopped selling its oil in USD, threatening the faltering currency further.

Russian oil firm Rosneft announced that it will follow Gazprom and Lukoil by selling its oil in Roubles rather than USD.

Plans were announced to sell $10.4B of weapons to Saudi Arabia and Kuwait, largely for advanced missile systems.

Bush Administration rhetoric over Iran has resumed despite the recent National Intelligence Estimate (NIE) released stating that Iran ceased its nuclear weapons program in 2003. The Administration is depending on a ‘dissident’ claim that the program was resumed in 2004.

SOUTH AMERICA

Bolivia

After a successful referendum changing the constitution to give the poor indigenous majority greater control over their traditional lands and to redistribute oil and gas wealth, the wealthier Eastern Provinces of Santa Cruz, Tarija, Beni and Pando have declared autonomy. It is uncertain how President Morales will respond but there is speculation that Hugo Chavez will provide military assistance if requested to do so.

EASTERN EUROPE

Russia

In an attempt to reassert its world naval presence Russia conducted naval operations in the Mediterranean (docking in Syria) and the North Sea.

Outgoing President Vladimir Putin endorsed Dmitry Medvedev as his successor.

Russia warned that the launch of US missile shield intercept missiles could lead to retaliatory missile attacks if the missile is misidentified as a first strike.

Kosovo

It is widely thought that Kosovo will declare independence in the new-year. The EU has announced that it will maintain troop levels and has sent non-military administrative and police assistance to prevent potential destabilization. Russia backs Serbia in opposition to separation.

Belarus

Belarus has joined Russia in opposition to the proposed US anti-missile shield. Russia has promised not to increase natural gas prices in the coming year for Belarus.

MIDDLE EAST

Turkey / Iraq

Turkish warplanes invaded the North of Iraq, bombing Kurdish villages where rebels are thought to reside.

Iran

The United Nations has announced that it will not take up the issue of sanctions against Iran in the near future due to opposition from Russia and China.

It is widely believed by military analysts that China has agreed to sell Iran 24 J-10A fighters between 2008 and 2010, at a price of US $1B. It is further speculated that the leak of the agreement is a warning by China over US weapon sales to Taiwan.

ASIA

Pakistan

Pakistan test-fired a new nuclear capable missile with a 700km range.

President Pervez Musharraf has announced an end to emergency rule. He declared martial law prior to purging the Supreme Court when it appeared that it would find his move from the military to president unconstitutional.

India

India announced plans to work towards doubling its nuclear delivery range capacity to 6,000km (3,800 miles).

Korea

Regular train service between North and South Korea has resumed for the first time in over 50 years.

AFRICA

Democratic Republic of Congo

Intense fighting engulfed North Kivu Province in the Far East between government forces (FARDC) and troops loyal to renegade General Laurent Nkunda.