WikiLeaks



INTRO

Where U.S. distraction and the sense of a closing window of opportunity will clash the most is in Washington’s relations with China. 1 China is often the focus of U.S. domestic politics, particularly during times of economic trouble, and the upcoming election is no different. China’s yuan policy is the most obvious target, but while Washington is unlikely to carry out any action that will fundamentally harm economic ties with Beijing, the political perception of actions could have a more immediate impact.2 As Beijing manages U.S. economic pressures and rhetoric, it also fears that Washington is starting to break free from its conflicts in Iraq and Afghanistan enough to set its sights on the Asia-Pacific region. Like Russia, China is seeking to expand and consolidate its influence globally, especially in its near abroad. In accelerating these actions, it is raising tensions not only with its smaller Southeast Asian neighbors, but also with U.S. allies like Japan and India. Much like the Central Europeans, the Southeast Asian states will be looking to the United States to counterbalance China. 3

At the center remains the United States. Major powers like Russia and China, which have been watching closely the U.S. commitments in Iraq and Afghanistan, once again see their opportunities to expand their influence diminishing — due to not only U.S. actions but also their own domestic political deadlines. In this quarter, Washington will be both preoccupied with the Congressional elections and seeking ways to compromise enough to get out of its long-running wars. The election distraction gives China and Russia a brief opening, and neither is likely to pass up the opportunity to accelerate and consolidate its influence in its near abroad 4

1. “will clash the most is in DC’s relationship with China” implies that tensions/relations will be affected more so this Q with China than any other nation due to the point covered below in #4

Hit.....as of right now. But there is a chance that “Where U.S. distraction and the sense of a closing window of opportunity will clash the most” will actually be Russia as the China relationship has remained manageable and the Russian relationship looks like it might be breaking...and we still have a month left in the quarter.

2. China and its econ policy will be a focus of electioneering US representatives but the WH will do nothing drastic enough to rupture econ ties and the implication is made that rhetoric will be what comes from the WH more than anything else

This is very much a hit, China received the lion's share of attention in  domestic/trade/employment issues in the lead up to the mid-terms. -     There was no rupture, on the contrary, the signs of a continued, slow  thaw were there as well as a few smaller, more isolated trade issues  concerning dumping and unfair industry subsidisation.

3. South East Asian states will look to the US to balance against growing Chinese assertiveness

Hit. Its important to note these South East Asian states dont have to end their relationships with China, they just have to increase their relationships with the US to balance things out, but increase in US presence does need to be compared to any increases in Chinese presence.  Also important to note that this forecast is about South East Asian states reaching out to the US, not the US engaging the South East asian states. Of course it takes two to tango, and so accepting cooperation and other such things are acceptable as balancing behaviour.

We’ve seen countries like RP and Vietnam agreeing with the US on a multilateral  approach in dealing with the SCS dispute. Indonesia accepted US visit (that they wanted for months) and Vietnam accepted a visit by a US carrier. We have insight on the philippines that they are worried about China but keep accepting Chinese money. Malaysia joined discussions on the TPP. We have also seen cooperation between SEAsian states and US allies such as VN and Japan on REE and Vietnam and Aussie land on security

Overall, There is balancing behaviour going on but it is mostly countries  creating a balance to receive investment from China but security  guarantees from the US





Obama made his visit to Indonesia



Insight from confed partners (so, their personal opinions) tell us that  some in the Philippines are looking towards China but that is  individuals looking for commissions and personal gain. The same insight  says that most in the Philippines are pro-US and any drift towards China  is in order to encourage the US to be more generous with the RP.

USD5bn private investment in RP from Japan -  

China donated a batch of heavy construction kit to RP however the deal was made much earlier and delivery only took place now

President Aquino of the RP backs multilateral solutions to the south  china sea dispute saying that multi-lateral discussions should take  place and that the Declaration of Conduct on the SCS is a multilateral  agreement meaning that China’s insistence that the document means that  only conflicting claimants need be concerned is incorrect. This is RP  supporting the US view in how the matter should proceed – BBC Mon Kyodo –  Philippine president backs regional talks on the south China sea

Vietnam and RP agree on a stricter implementation of the Declaration  of  parties on the East Sea towards a future code of conduct on the South  China Seas. These are the two countries that would be expected to work  against China in the region however that it is happening supports the  forecast – BBC -  - Philippines, Vietnam agree on implementation of  Spratley’s code of conduct – Manila Bulletin

Vietnam and RP make continual calls for the release of Ang San Suu Kyi.  I’ve also heard Indo ForMin Marty Natalagawa call for the same at CFR  forum this Q.

Mid Oct Australia and RP agreed to increase defense coop namely in  maritime security and CT – Philippines Australia agree to boost defence  cooperation – Philippine Star

Two Chinese companies expand drilling ops in the Central Luzon Basin –  Two Chinese oil exploration firms expand presence in Philippines –  Philippine Star

Vietnam is building a maritime rescue center on an SCS island – BBC –  Vietnam to build maritime rescue center on South China Sea Island – VNA

As of Nov. 15 Indonesia and Vietnam were considering joint maritime  patrols of their border regions in the SCS along with other countries  that share a border with Indo -  

Vietnam inaugurates wind and solar power project in the spratleys – VNA

Vietnam has been looking to increase relations with ROK as they already  have sizable two way trade. However this is not at all something new in  2010 let alone Q4

Vietnam is opening Cam Ranh bay to navies of the world for refuel, resup  and possibly maintenance and other services and may be having the  Russians assist them in the modernization of the port

Japan has been financing VN energy projects and is looking to work  together for REE supply -  

Russia is working with VN on large nuke and hydro energy products -  

India will assit Vietnam in building up, maintaining and training its  military in an obvious balance against China -  

Malaysia joins talks on the Trans Pacific Partnership -



Malaysian govt encourages private firms in to JVs with China –  

Indonesia offers investment opportunities to China -



4. China will look to increase and consolidate influence in the region whilst the US is in its final throes in the ME/SA

Hit. China’s pace does not has to increase, e.g. it doesnt have to be a change from last quarter. It can be looking to increase its influence in both quarters with the same effort and this would be correct. It just says is trying to increase influence in general, which it was doing last quarter and it is doing this quarter. Just the overall amount of influence has to increase...and we have definitely seend that.

GLOBAL TRENDS

Friction will continue between China and the United States over economic policies, Washington’s strengthening ties with allies and partners in the Asia-Pacific region and Beijing’s increasing assertiveness in its periphery.1 However, the two countries will prevent their relationship from fundamentally breaking down this quarter. Washington will threaten to take actions on the yuan, either with its own tools (such as a U.S. Treasury Department report on currency manipulation) or through international channels (such as the International Monetary Fund or the World Trade Organization), but will refrain from doing anything against the yuan that has a direct, immediate and tangible effect on trade in the fourth quarter. Instead it will reserve concrete retaliatory action for disputes on specific goods on a case-by-case basis.2

1 Friction between the US and  China will continue over the economy, US  relations with nations in East Asia/Pacific and Beijing’s assertiveness  but there will be no break

perfect hit, a lot of this was covered above with Webb’s letter, the  unrest in Congress and the Senate in the lead up to the Mid-Terms and  the smaller trade disputes that resulted in tariffs/duties.  There was  also the US support for Japan regarding the East China Sea saying that  Senkakus falls under the mutual defense treaty being that Japan  currently occupies the island. China has complained about the US mapping  the sea bed in territory that China claims as its EEZ along with the GW  carrier heading to the Yellow Sea for the current exercises. Whilst it  may not be a symptom of the dynamic this quarter but there was also the  US support for India’s permanent seat at the UNSC.

However the relations have not at all broken. The trip for Hu is still  being planned for January, there are comments for increased military  dialogue and the US has so far refrained from citing China as a currency  manipulator and other actions that may not have immediate consequences  but still signal a more aggressive stance from the US.

2 US will threaten action on the Yuan exchange rate but will refrain  from actually doing real damage and will instead carry out smaller,  itemized actions on trade issues

 Perfect hit, can dig up all the cases that have taken place this Q  along with the comments from Geithner et al (again) if required to  support.

Geithner says that even though China holds its currency down there will  be no currency war in mid Oct -  ;



Geithner says that Yuan undervalued and creates an unlevel playing field  for international trade -  





GLOBAL ECONOMY

Although Washington appears more ready to take measures against China regarding the yuan, in this quarter it will not carry out measures that do anything much more than require additional talks, at least in the near term. Should the White House suddenly feel pressured to take more concrete action that fundamentally affects trade, the system could come unhinged quickly. While that is highly unlikely at the moment, there is growing pressure inside Washington for more substantial action against China.

Hit: There was a good amount of discussion of the yuan currency imbalance at the G20 and between Chinese and US officials, as well as meetings between Chinese and US officials during the quarter. No concrete action (that wouldn't requre additional talks) was decided upon in the quarter.

The US admitted that the yuan issue would not be solved at the G20 summit, saying that unilateral actions could undermine G20 growth.



US steel manufacturers have urged the US Senate to pass a proposed law countering the yuan undervaluation.





The US released a congressional report on China, which was not well-received.



Geithner met with Wang Qishan in Qingdao Oct. 26.



Clinton met with Dai Bingguo during her EastAsia tour.



Obama met with Hu Jintao during the G20 summit and discussed the yuan imbalance



Geithner met with Zhou Xiaochuan during the G20 summit.











Regional Trend: China’s Assertive Foreign Policy

China will continue showing a strong sense of purpose in pursuing its influence in its periphery. These issues include China’s relations with Japan, in which tensions that recently spiked will be containable but not eradicable this quarter, and Beijing’s attempts to tighten bonds and undermine U.S. overtures in Southeast Asia1. China will also continuebuilding its relationship with Pakistan and make inroads into other South Asian states, such as Nepal2. China’s expanding regional influence is generating resistance among China’s neighbors, especially Japan and India. The fourth quarter will see the beginnings of greater coordination between those neighbors, and with the United States, on this issue3.

1 China will continue its assertiveness in the region on issues of sovereignty and undermining US relations in SEA

This is a hit, China allowed the Senkaku island issue to drag on longer  than it needed to with the protests, diplomatic accusations and the  withholding of REEs to Japan that only recommenced last week. There were  also the financing deals and donations of military equipment made to  Indonesia and Philippines as mentioned above along with visits and loans  given to Cambodia, to name only a few instances.

2 China will continue to expand its influence in South Asia

China has continued building of the Karakorum highway in Pakistan and  only until last week continued to staple pages with visas in to China  for people from the disputed region of Indian controlled Kashmir. More  importantly it was announced around the time of Obama’s trip to India  that China has agreed to build a 5th reactor in Pakistan, Wen’s proposed  trip to Pak in Dec. the study for a gas pipeline from gwadar Port to  Xinjinag, the insight we have that says that Gwadar will be taken from  the Singaporeans and given to the Chinese, etc. There is no doubt that  this is a hit -







China has made continual visits and comments regarding the political situation in Nepal over the Q:



Prachanda to China -

Nepal military delegation to China -



China also supported the recent “elections” in Myanmar and (quetley)  continued to expand relations with Sri Lanka with purchases of bonds,  pledges for the funding and construction of infrastructure -   -  China pledges to fund more development projects in Sri Lanka – report –  BBC Monitor

3 China’s assertive behaviour in the region will create balancing responses among its neighbours and the US

Perfect hit, we have two articles on the site about Japan and India  increasing ties (Japanese support for Indian nuke power, the  Comprehensive partnership agreement, etc.    ) and Japan and the US increasing ties -  (Japan and the US plan  meetings over Dec and the new year in order to form a new strategic  concept that will largely focus on China’s assertiveness in East Asia -    ) and of course Obama’s visit to India and the US support for a  permanent Indian seat at the UNSC -  



There are also the current exercises and the deployment of the GW to the  Yellow Sea as the US balances against China to create action on DPRK  and to also display strength in the region for the benefit of those  watching on in Japan, Taiwan, ASEAN, India, Pakistan, etc. -  



Regional Trend: China’s Domestic Economy

China will announce economic plans that target slightly slower growth rates in the coming years, based on its expectations of global conditions and desire to continue with structural reforms (in real estate regulation, energy efficiency, regional development and other areas)1. It will also look to its political future, especially thetransition of power in 2012.2 However, Beijing will continue its active fiscal stimulus and relatively loose monetary policies amid concerns of slowing growth too quickly, with the intention of carrying out those structural reforms in a way that will limit the associated negative effects on growth and social stability.3

1 Beijing will announce plans to slow growth in the coming years and restructure key industries

There was a leak made by a  named ranking party member to the SCMP about the 5 year plan that  repeated this forecast almost word for word -



Overall China has announced a number of things from environmental plans to taxes and monetary policy meant to slow growth over the next 5 years





2 China will look toward the generational change in 2012

I can’t even qualify what that means. Xi Jinping and others have always  been globetrotting and increasing their profile since last year. We’ve  had some very loose insight saying that Li Keqiang and Hu are attacking  Wen, but that was pretty much unsubstantiated from a source who I don’t  give too much credit.

Xi was elected to Dep. Chair. of the CMC and the 5 year plan was put in place, that may qualify, I guess.

3 Beijing will continue its active fiscal stimulus and relatively loose  monetary policies amid concerns of slowing growth too quickly, with the  intention of carrying out those structural reforms in a way that will  limit the associated negative effects on growth and social stability.

Hit. it could have mentioned more about inflation concerns...aka  Overall Beijing has continued its stimulus and loose monetary policy. It has tightened these up a bit b/c of inflation fears, but the overall policy still relies on stimulus and loose monetary policy b/c growth is a bigger concern than inflation.



Beijing raises reserve ratios -

China issues RMB20bn in E-bonds (interest paid direct in to accounts,  individual investor friendly) for sale to individual investors only -  

Sept loans @ ~RMB600bn -

Nine key industries such as steel, Cement  and propertywill need to  apply before they apply for financing -   

China raises interest rates -

Deputy for CBRC calls for a slow down in the widening of bank loans for  profit as to deposit rates -  

Central Committee calls for financial reforms to market interest rate  mechanisms, exchange rates and improve forex fund management -  

China says that it will move from a moderately loose monetary policy to  ‘prudent’ in 2011 -  

China raises reserve ratio requirement for banks in early Nov -  

Oct loans @ RMB587 -

Four strategic banks stop lending money to property developers -  

Rumous in state news paper says that Beijing will limit lending to  RMB7tn in 2011 -  

China raises reserve ratio requirement as of end Nov -  





Regional Trend: North Korea’s Leadership

The Korean Peninsula has calmed some since the ChonAn incident and its aftermath, and Pyongyang has made clear progress in its long-anticipated leadership transition, with Kim Jong Un, the youngest son of North Korean leader Kim Jong Il, moved into top positions and making public appearances. The fourth quarter will see more such appearances by the new heir apparent as he begins to build his public image and the elder Kim manages the various elite interests in North Korea to build support for his son. Pyongyang will push in this quarter for multilateral talks, but in typical North Korean fashion, this could be presaged by provocations. China and Russia will continue pressing for negotiations, and the United States, South Korea and Japan will shift to doing the same, seeking to reduce tensions.

This is a hit. Don’t think we need links to provide evidence here…..

Asia Misses

DPRK’s actions...we said new provocations, which has happened. But if we are seeing a new modus operandi, as wee have suggested then that is a miss.

MIDDLE EAST

Global Trend: The U.S.-Iranian Struggle in Iraq

Washington and Tehran continue to challenge one another over the future of Iraq, and ultimately over the balance of power in the Middle East. This sparring will continue in the fourth quarter, with one rather significant exception: Washington and Tehran are likely to reach a preliminary agreement on the factional balance in Baghdad, with a new power-sharing government for Iraq emerging. Though this sets the stage for a broader understanding between the United States and Iran, significant movement toward a regional balance of power will remain a work in progress. But the U.S.-Iranian competition is also spreading beyond Iraq. Washington is working with Saudi Arabia and other Arab allies to try and wean Syria from Iranian influence and further isolate Tehran regionally. This centers on Lebanon, and thus also requires Israeli cooperation. It has also drawn the United States back into its position as the broker of Middle East peace talks, but substantial progress is unlikely in this quarter.

Competition in the M/E between US and Iran will continue on the basic path

Foundation of an Iraqi govt will be agreed upon between US and Iran but a regional balance end design will not be found

KSA will continue to work with Syria giving them Leboland in order to undermine Iranian influence, no big shifts either way Q4

On track:

The basic outlines of a government seem to have been formed with the positions of President, Speaker and deputies, PM and the new Security council “created”. The functions and responsibilities of the council have not been laid out and that will be one of the biggest areas of contention.

The larger discussion between Iran and US are outsanding,....nuclear discussions are supposed to resume early december and the trial of the hikers has been delayed until February. US declared Jondallah a terrorist group.

KSA has continued to work with Syria on Lebanon...a potential arrestor to this is if King abdullah dies. Insight says he is the one pushing this and the CP is less optimistic about the issue. Syria has shown some unease with Iranian influence there following Adoggs trip, but it looks like Syria, KSA , Iran, and even Turkey are all working together to keep Lebanon from blowing up, which may be more than what was forecast.











Regional Trend: Turkey’s Resurgence

Domestically, the Justice and Development Party government will focus on consolidating the gains it made with the referendum on constitutional changes approved in September. Externally, Ankara will continue working on repairing and improving ties with the United States. The unilateral cease-fire declared by the Kurdistan Workers’ Party (PKK) rebel group will last at least one more month, though minor clashes could occur. Whether this cease-fire will last longer will depend on the government’s talks with Kurdish elements in Turkey and in Iraq (to get their support against the PKK) and intensified back-channel negotiations with PKK leadership. Such talks would deprive the Turkish army and its allies in Turkey’s judiciary of their best tool to undermine the ruling party’s clout: the national security issue. The military has long claimed it is the institution best equipped to deal with the PKK threat, and there is a chance the military will take action to disrupt or complicate the talks between the government and the Kurdish rebels.

AKP will consolidate domestic political gains made in Q3 and will continue work on improving ties with the US

hit, Turkey has signed onto the NATO BMD shield in a move to repair ties with the US though some specifics still need to be figured out. As far as consolidating domestic political gains...its hard to identify specific items that fulfil that, mainly since we dont follow Turkey on that level (partly due to language, partly due to Emre letting us know when it rises above). It has suspended active generals from duty for the first time (ergenekon probe).

PKK will continue their ceasefire with the possibility of minor clashes

AKP will hold talks with Kurds and PKK denying the military the ability to use PKK as a reason to undermine govt legitimacy. PKK cease fire will continue at least one month

Hit, PKK has continued to hold the ceasefire though there was the bombing in Taksim square. But the attack was claimed by a PKK splinter group its unclear what involvement PKK leadership had in the attack. PKK has held talks with Ocalan

Says there is the chance the military will try to disrupt talks, can’t see how we can spin that in to a forecast, though, it's a statement of possibilities

Hit? The military has continued some military operations in Kurdistan even overflying mount Qandil during Eid..does this count as the military trying to disrupt talks between AKP and PKK? I think so









Regional Trend: Egypt in Transition

With the Egyptian parliamentary election nearing, opposition forces will try to challenge Egyptian President Hosni Mubarak’s regime by gaining publicity. But the real political contest in Egypt will not be played out in these parliamentary elections, in which Mubarak’s National Democratic Party will emerge victorious. The bigger competition is playing out between Mubarak and his allies and the army’s top brass over a presidential succession plan. Under Mubarak’s succession plan, the president would run for another term, then hand power to Egyptian intelligence chief Omar Suleiman (who likely would become vice president). At a later point, Suleiman would hand control to Mubarak’s son, Gamal. The preparations toward this end will continue this quarter, and may include quiet and careful attempts by the president to stem army opposition to his succession plans. Nonetheless, the Egyptian army’s growing clout in politics is a trend that will transcend the quarter and is one that the ailing president will unlikely be able to reverse.

Preparations for the Mubarak succession will continue this quarter possibly including efforts to stem opposition from the army whose growing influence in politics that will ‘transcend’ the quarter that Hosni is unlikely to reverse

We wrote our analysis on the change in the succession plan right before the quarterly came out. After there were some comments confirming Mubarak would run, but since then there havent really been too many updates or evidence of fighting within govt. Elections are Nov 28th. We havent seen any evidence that Mubarak is attempting to stem opposition from the Army...doesnt mean its not happening, but we havent seen it. In fact right now this biggest event may be MB boycotting the election runoffs and what happens then

Al-Akbar ran a report on the infighting



The NDP media head has suggested Mubarak's running next year.

Popular campaign backs Mubarak after Gamal says no to presidency







The NDP conference will  now be held Dec. 25-26, remains to be seen what will be said about succesion there.

3 candidates for the parl. elections who had previously organized campaigns for Gamal Mubarak were banned, this could be an attempt to ensure power passes to Suleiman.







SOUTH ASIA

Global Trend: The War in Afghanistan

While anxiety and tensions appear to be mounting within the U.S. administration about the efficacy of the counterinsurgency-focused strategy being pursued in Afghanistan, no major strategic shift is likely to occur before the strategy review being prepared for the end of the year is completed. Tactical evolutions and shifts can be expected as each side adapts to the other, but with the U.S.-led campaign now focusing its efforts in southwest Afghanistan, operations there can be expected to largely continue apace despite the winter months ahead.

US/NATO strategy in Astan is to continue in Q4

Tactical evolutions in the field to be expected

No game changers on the tac level and ops will continue at pace as far as environment will allow

Strategy has continued more or less the same...with tactical shift like reports the marines will be using tanks in Helmand, and slightly relaxed protocols for calling in death from above. We seem to either have seen a very successful uptick in intel and ops by ISAF or we are seeing a psyops campaign. On the Tban side it looks like they may be staying around a bit different than they have before

[CF] The addition of tanks, increased psyops and the Tban gaining in confidence and fighting here and there are tactical evolutions rather than game changers. I think this is a full hit

Regional Trend: A Destabilizing Pakistan

Islamabad will continue working with Washington in the counterinsurgency offensive against Taliban and al Qaeda-led transnational jihadists, but tensions have become evident (for example, in the temporary disruption of U.S. supply lines through Pakistan to Afghanistan). Recovery from the massive floods that took place in the third quarter will consume most of the Pakistani state’s focus in the fourth quarter. The aftermath of the flooding and U.S. military activity in Pakistani territory are bringing tensions between Pakistan’s civilian and military leadership to a head. The Pakistani military will face a major test as it attempts to manage militants, deflect public displeasure at U.S. cross-border operations and avoid becoming the scapegoat for the slow or failing relief efforts in flood-stricken areas.

Poostan and the US will continue to work together the flood reparations will take most of Ibad’s attention in Q4

Ibad will be challenged by domestic opinion due to dissatisfaction over X-border raids, flood relief whilst under pressure from the insurgency

Mostly a hit: the US and Pakistan appear to be cooperating on flood relief and counterinsurgency, the strategic dialogue was held. There were at least 2 border violations, but it doesn't seem that these elicited the same response as before. However, it's difficult to measure the tensions between the civilian gov't and military. The forecast may have overstated these (ex. at the time there were the rumors of a possible coup and of building up tensions. It seems these didn't quite play out as originally thought.) The flood relief hasn’t obviously taken most of Ibad’s attention and the public dissatisfaction whilst there hasn’t been a central trend in the quarter so far. There have been a few minor border incursions reported but the level of dissatisfaction has been minor especially when compared with the original breach that caused deaths for the FC

There has been pressure from the insurgency as there have been bombings outside of the FATA and Khyber Paktunkhua area as well as serious unrest and violence in Karachi.

US has continued to deliver tons of food aid. On Nov 23 CentCom said US has reached a milestone delivering 25 mn tons of food aid. There has been negative domestic opinion.







The US has acepted that Pakistan's military does not presently have the capacity to attack N. Waziristan, but it has said that it could reduce aid if expectations are not met.

There was one NATO helicopter border violation Nov. 2 and possibly another Nov. 23.









Pakistani relations with India are unlikely to improve and could worsen in the fourth quarter. Pakistan-based transnational Islamist militants have several opportunities for attacks; for example, they could exploit the unrest in Kashmir to fuel anger against India and make the environment more amenable to attacks. This threat shapes India’s behavior. New Delhi is also raising concerns about increased Chinese military cooperation with Pakistan, and will use the perception of a Chinese threat to work more closely with the United States in hopes of influencing Washington’s policy on issues like Pakistan and its militant links. Such dialogue will be highlighted during U.S. President Barack Obama’s planned November visit to India. It is unlikely that Beijing will expand its footprint in Pakistan so significantly that India feels sufficiently threatened to take action, but India’s awareness of the Chinese moves could further complicate Washington’s already difficult task of balancing between the two competing South Asian states.

Pakistan India relations unlikely to improve and will deteriorate if there is a militant attack on India…, that may be a result of exploitation of the Kashmir unrest

India will use the Sino-Pak cooperation in order to move closer to the US and influence US policy on Pakistan and this will be prevalent during the Obama visit to India

China will not increase activity inside Pakistan enough to force India in to taking action (well we just said above that India will work through the US to influence policy, is that not taking action? What is action, trade sanctions, expelling workers, launching

There has not been an attack on India (yet) but Pakistani-India relations seem to have detoriated, and have definitely not improved. ...they are not even really talking right now. India got US to support India getting a UNSC seat at some future date which made Pakistan mad. China and Pakistan confirmed Pakistan buying about 1.5Bn in fighter jetsT. he US supports India’s ‘Go East’ policy and the support for the UNSC seat is directly linked to China, not sure if that is only about Pakistan and China getting together though. I can’t see anything on the site or recall anything that indicates that India actively used the Pak-China coop for US relations. I’d suggest that it was more a China concern altoegther that India could/would rely on for US friendliness









Fighter jets -



SOUTH ASIA MISSES

Possible miss: No real discussion of the recurring peace talks. Even if we only said that these were ineffectual or largely symbolic, it should probably have been something to address.

yep agree that this has been a trend that has not defined the Q but has sure been a major influence on their grand strategy in the region and much has happened on that front





EUROPE

Europe is shifting its attention from Greece and Spain to Ireland and Portugal, countries that will prove less cantankerous politically and thus easier for Germany and the Europeans to manage. If the regional management falls short, however, there is a small chance that Europe could fall back into financial crisis — something that would ripple outward. We do not foresee this happening, however, and expect the combined effects of European Central Bank operations and the reassurance of the 440 billion euro ($615 billion) European Financial Stability Fund to make the fourth quarter far less dramatic than the second quarter.

Ireland and Portugal will prove less cantankerous politically and thus easier to manage

Unclear. Ireland has asked for a bailout... What does cantakerous mean? there have been strikes, the government is poised to fall soon and Ireland refused to budge on its corporate tax rate. Yet, Ireland did pass a new austerity measure very quickly and one can argue that was the not being cantakerous that allowed the crisis management, but we are not convinced. What does manage mean...domestically in Germany? in Ireland....does it count as managing for Germany if Ireland got a bailout quickly and on its terms...and Germany seems to have backed off some its demands for future bailout mechanis,? Overall the tone was correct....shit happened easier and faster...though whether thats cause Ireland was less cantakerous, or b/c the EFSF was already set up this time and Germany just wanted to get it over with is hard to say .

If regional management is unsuccessful there is a slight chance that Europe will move back in to a financial crisis

Do not expect to see another crisis, Central Bank Operations and the EFSF will contain the instability

Europe

Hit. The EU and the IMF (with Germany behind them) have been quick to provide support within the context of the EFSF.. As of know it seems they are acting quickly enough and confidently enough that investors have not panicked cause an "outward ripple.” So far shit is less dramatic by far.

Germany will continue using the economic crisis to impose its vision for more stringent European economic requirements on its neighbors. This will manifest in ongoing efforts to reform enforcement mechanisms for eurozone rules on budget deficits and government debt.

Berlin will continue to dictate EU econ policy to be more stringent on regulations in form of reforming enforcement mechs on budget deficits and state debt (this is already happening, we have a piece on site on the matter)

Hit As part of the Irish bailout Germany attempted to use it to change Irish policies including its corporate taxes. There have been a number of statements and evidence from this, including Irish pushback, and even rumors that Germany was the origin of the rumors which triggered the panic. Germany has also used to the crisis to push for its vision of a stability fund though were they are on this currently is not exactly clear













The Irish have unveiled an austerity plan for the next 4 years to meet the terms of an EU/IMF bailout.

1BHNlYwN5bl90b3Bfc3RvcnkEc2xrA2lyaXNoZ292ZXJubQ

Berlin wants to make enforcement of the rules automatic, thus forcing essentially all members of the European Union to adopt constitutional “debt breaks” akin to what Berlin passed in 2009. Paris is opposed to the automatic mechanisms, as it wants the process to require more political input from national legislatures. This division will continue to strain the Franco-German relationship, though we do not foresee a serious break in fourth quarter.

Berlin's financial regulations will create tension between Paris and Berlin but nothing will break

Hit and a Miss. We have actually already seen Berlin "give in" [they might have been overnegotiating on purpose] on this and France and Berlin now have a unified poisition that Rompouy will now make acceptable to the rest of EU states...and not just on the automatic mechanism but other issues as well. The forecast says this specific division (over whether the mechanism is automatic or not) will cause strains in the relationship. That specific cause is now moot, but the overall relationship still contains competition and strains, specifically France needing to prove that it is a partner not subserviant to Germany....and using its military power to do it. The next discussion that Germany has initiated is on the EU crisis plan - not necessarily talked over with France yet.













A key issue that the two are already cooperating on is the debate on the European Union’s next budget period (2014-2020), which is set to intensify in the fourth quarter. The budget debate will pit Central and Eastern European member states against the Berlin-Paris axis.

The EU budget debate will intensify in Q4 with Central and Eastern states aligning against the Paris-Berlin agenda

Hit. Budget talks broke down Nov 16th, though Barroso says a budget will be submitted by Dec1

Austria backs france and Germany on CAP. Britain poland urge shifts away from farms subsidies

The Central and Eastern states are highly influenced by the duration of talks - the longer those take, the funding capabilities will diminish as while they talk over the budget the structural funds are freezed...and the CEE states need those funds more than the others.













This is just one in a long list of disputes between the EU periphery (essentially Central and Eastern Europe, the United Kingdom, Denmark, Ireland and Sweden) and core (France, Germany and Belgium) — a dynamic that is expected to grow in the fourth quarter.

The dynamic of the central, eastern, UK, Ireland and nordic V. Berlin, Paris and Brussels within the EU will increase

This looks like a hit. There were many disputes between core and periphery EU states, with some of these disagreements eventually derailing the EU budget talks.

Periphery states managed to block the Franco-German attempt to impose sanctions on states with runaway budget deficits, but eventually backed the proposed treaty changes for setting up a permanent EU rescue fund.

EU states' FinMins fought over member states' budget rules on Oct. 18. Germans, Finns and Dutch backed automatic sanctions for budget deficits, France adn Italy didn't. Not so sure this is a sign of periphery against core as much as various states differing on a central budgetary issue.

UK and Sweden sparred w/Germany and France over the budget rules.

The Czechs and the Hungarians also spoke out against core states trying to dictate their budgets.

Poles and Czechs have said they won't accept cuts to regional spending to C. and Eastern Europe.

EU budget talks collapsed due to disagreements between the core states and some of the beneficiary states.





Central Europeans, including the Baltic States, will continue attempting to re-engage the United States in the region, particularly via ballistic missile defense and military cooperation. They will also push for the November NATO summit in Lisbon to reaffirm the collective security component of the NATO pact. This will annoy France and Germany, which want Russia to be included as a partner. However, the Central Europeans will also be making contingency plans, looking to use new forums — such as the Visegrad Four alliance of Poland, Hungary, Slovakia and the Czech Republic, which traditionally has been a political grouping — for security matters. There are many obstacles to greater Central European unity, starting with the countries’ historical lack of cooperation and Poland’s desire for a seat at the table with Germany and France, which limits Warsaw’s ability to lead Central Europe.

Central Europe and the Baltics will try to draw the US in to the region especially via BMD and military cooperation.

Cent. Europe and Baltics will push for a reaffirmation of article 5 of the NATO charter, which will frustrate/annoy the French/German agenda of including Russia as a partner

Cent. Europe will be looking to use new alignments and measures such as the Visegrad Four for security matters

Polands desire to be at france german table will make it CE leadership (the V4) less obtenable

Hit (and small miss). At Nato summit Central Europe talked about article 5 and poland agreed to host US jets. The czechs told the truth about what a Russia NATO missile defense would look like and poland said Russia could only be included if it didnt hurt the security interests of Central/Eastern Europe



Poland hosting US F-16

Not sure weve actually seen Poland’s desire to be at french and german table hinder its ability to lead CE states yet., we actually had Warsaw reach out to a different Western European heavyweight (Sweden) for help with Central/Eastern European states.

EUROPE MISSES

sorry to say,,,,cant think of any

FSU

Global Trend: The Russian Resurgence

Russia will continue in the fourth quarter to consolidate gains made in Kazakhstan, Ukraine, Belarus and Kyrgyzstan. Russian actions in the Central Asian states, and the deployment of additional Russian troops to the region, will be complicated by elections in Kyrgyzstan, security crackdowns and the potential return of Islamist militancy in Tajikistan, and U.S. maneuvering related to the war in Afghanistan.

Russian consolidation in Kazak, Ukraine Bela and Kyrg will continue.

Hit (though with Belarus its an ill-fitting forecast). A pro-russian (russian acceptable) govt is on its way to be formed in Kyrgyzstan.

In Ukraine, Russia and Ukraine signed an agreement on lowering transit tariffs for Russian oil transiting Ukraine territory Nov. 26. The same day Medvedev praised Ukraine's non-aligned status, commenting that European security would be 'destroyed' if Ukraine joined NATO. Plus we have the "membership criteria" clause in NATO's strategic concept document that would pretty much rule out Ukraine if adhered to.Ukraine agreed to pay RosUkrenergo, and has begun talking up joining the customs union.

Belarus had some meetings on the customs union. But it has also been attempting to achieve energy independence by shipping oil in through other countries, and has consistently talked trash about Russia. Energy transit charges and purchase price agreements are being negotiated and Lukashenko has accused Russia of funding his opposition so those can be evidence that Russian consolidation is continuing (especially since Belarus is fundamentally tied to Russia, but that little forecase, while prob accurate, barely seems to cover the actual relationship, really not sure what is happening there underneath it all

Kazakhstan continues to do Russia’s bidding.

Russian actions in CA and their troop deployments in the region will be complicated by Kyrg elections, security crack downs and militant Islam in Tajikistan, along with US-Afghan actions

Unclear. Hard to say, presumably nothing in Kyrgyzstan can happen until there is a government, In Tajikistan there are a number of explanations, from Tajikistan wanting to have its security situation under control before pissing off Uzbekistan with troops, to getting Russian backing on Roghun before pissing Uzbekistan off on implementing the dam, to just not wanting to be too far under Russia’s thumb...though when does instability in Tajikistan actually help bring in Russians cause Tajiks cant do it themselves

Not really sure how US maneuvering in Afghanistan has hurt Russia in CA, unless its a subset of Tajikistan instability...in fact Russia signed more deals helping US in Afghanistan both on the ground (drug raids, military hardware, and shipping) that should give russia more influence, not less.





From august  -

Moscow will also assert itself in Moldova and the Baltics to prepare the ground for the future expansion of Russian influence there. The elections in Latvia in October, in which a pro-Russian party gained the second-highest number of parliamentary seats, and Moldova in November represent opportunities for Russian influence to increase. Russia’s resurgence in Moldova and the Baltics will begin rippling through the rest of Eastern and Central Europe, leading those states to reach out to the United States or European heavyweights for support.

Russia will assert itslef in Moldova and Baltics. The Russian resurgence will evolve in the forth quarter with Moscow making decisive—though not conclusive moves – in Moldova and the Baltics, preparing the countries for consolidation attempt in the future.

Other Central and Eastern European states will look to US and Euro-powers for support

Moldova

Hit. Moldovan elections happened and AEI once again was not able to get a president w/o the communists. And Russia has ensured the links with them - signed an agreement with the Liberal Dems and is most probably to have dealt with Filat (the latest PM of Moldova) - INSIGHT, ,

Russians will remain in Transdnistria

Russia renewed aid for Transdnistria.

Ghimpu has called on NATO for help, because the Russians are not meeting withdrawal obligations, so at least he's still concerned about that.





The Baltics:

Hit/Miss - Russia rejects discussion of border with Latvia; elections follow-up not as expected: Unity alliance formed coalition with the Union of Greens and Farmers while the Harmony Center alliance, which draws a great deal of support from Latvia’s Russian minority and whose victory would have been a welcome sight for Moscow, remained in opposition..

Lithuania is concerned with NATO-Russia relations evolving plus it also has unsolved energy disagrements (refinery, though this has just as much to do with poland) with Russia./

Estonia is also discussing the NATO-Russia relations but is happy to have good econ relations with Russia.

Overall havent seen any “decisive moves though they have definitely been laying the groundwork for potential levers - energy deals, security relations with NATO and EU, meddling in domestic politics - even if those levers haven’t matured into anything yet. Of course when does this lay the ground and when does it go too far and get the countries to really work with each and US to become confrontational (think Estonia in US, Intermarium, and Kubilius talking about Russian tactical nukes). We’ve seen Central and Eastern Europeans looking increasingly towards bilateral security guarantees and arrangements - US, Poland and F-16s, Romania and BMD.

Is this because they were holding back to make Germany happy....?

Russia’s maneuverings will also test the limits of the Berlin-Moscow axis as Russia looks for a way to balance its resurgence plans with its need to maintain its relationship with Germany. Moscow’s long history with Berlin gives it a firm understanding of what Germany needs as well as how to leverage the European power for its own purposes, and although some strains will show, neither country is willing to abandon their association.

The Russian resurgence into Moldova and the Baltics will test the limits of the Berlin-Moscow axis, forcing Russia to find a way to balance its plans for resurgence with its need to hold onto the German relationship.

Unclear: The only hit we could think of is Russia “agreeing” to conside NATO BMD when its clear it wont have any effects. Germany has been a pretty willing partner...but maybe thats because Russia has held of on things that we dont know about b/c they never happened.. Inf fact we wrote about Gemany having to balance

The Central Europeans definitely weren’t thrilled about the outcome of the US-NATO/NATO Lisbon Summit, but neither were the Russians.

strains will show in the Germany-Russia relations but nothing will break

Miss/Hit - Just about the only strain I can think of is Russia warning Germany that Belarus’ energy playtime could fuck with its energy security. We have also seen Germany want to increase influence in C.Asia though taht seemed more about dealing with China...other than they’ve done pretty fine. Russia seemed ok with Germany playing in Belarus with Sweden.

Germany wants to show Russia that it is a reliable security partner so that it can tell its fellow members of the European Union that it can control, or at least manage, Moscow — and Berlin has chosen the Moldovan breakaway republic of Transdniestria as the testing ground for potential cooperation. The question is how much cooperation Berlin wants or even really expects from Moscow. With its sights on reinforcing its leadership in Europe, Berlin will not look for a break in its ties with Russia, but it will back off from pitching the Russian-proposed European Security Treaty to its fellow EU member states if Moscow does not give it something it can claim as a success on Transdniestria.

If Russia doesn't give on Tdneistra Berlin will ease off on promoting Russia's Euro Security Treaty The first sentence is confusing, I almost think maybe its supposed to read Germany wants Russia to show that Russia is a reliable security partner...I sent an email to Eurasia checking on this, they agreed it should have been written that way.

So far Russia has not really given anything on Moldova but the 5+2 talks have been ongoing and Germany has kept up being really friendly with Russia.

Regional Trend: The Kremlin Wars

The battle inside the Kremlin will intensify in the fourth quarter as the tandem of Russian President Dmitri Medvedev and Prime Minister Vladimir Putin begins to purge high-level Russian figures and the campaign season leading up to the 2011 legislative and 2012 presidential elections starts. Such political reorganizations tend to become dangerous for those in charge, but Putin and Medvedev know it is the only way to make the government more secure and effective as the country modernizes at home and resurges abroad.

The battle inside the Kremlin will intensify in the forth quarter as the tandem of Medvedev and Putin begins to purge high-level Russian figures and the start of the 2012 Presidential election season starts.

Hit: We have seen military figures get ousted, open disputes over privatization policy and future tax policy and even insight that Putin may not want Medvedev and himself running again. After Luzkhov was ousted in Sept his succesor was elevated to United Russias senior command in Nov. We have also seen statements about CT policy in Caucuses (related) not working and evidence of more infighting between SVR/GRU/FSB.

FSU MISSES

Breakdown in US-Russian reset?

LATAM

Regional Trend: Venezuela’s Growing Vulnerabilities

Venezuela’s economic troubles will grow more severe, threatening key elements of the state. Though the government lacks any good options to reverse this trend, it will be able to exploit these troubles to tighten its grip over the country through the empowerment of local communal councils and the increased deployment of militia forces. After losing its two-thirds legislative majority, the ruling party now has an imperative to push through as much legislation as it can to expand the executive branch’s powers before the legislative session concludes at the end of the year and more opposition lawmakers are seated in January.

• Econ issues will continue to deteriorate threatening key elements of state

• The govt will use local communal councils to exploit the issue as well as the militia

• Govt will push legislation through while it can

Mostly hit: The gov't is trying to pass the popular power legislation to empower communal councils, but it doesn't seem like militia deployments have been major or widespread. Economic troubles are definitely continuing.

There hasnt been too much about the communal councils but pushing legislation through has been something hes been working on

The deployment of militias may have been overstated at this point because they may be mostly for show at this point (they’re not even allowed to carry weapons permanently at this point).

The Federal Gov't Council was officially created and it will be the gov't body through which payments are made to communal councils. It may give the gov't more power over finances and where funding goes down the road.







The gov't will discuss a universities law before the end of the year and will try to finalize the popular power law package by the end of the session as well.

But Venezuela’s problems are not only internal. In the coming quarter, Venezuela will become more concerned about what appears to be a gradual shift in Cuba’s orientation toward the United States. No definitive moves in the U.S.-Cuban relationship should be expected in the next quarter, but Cuba may attempt to leverage its heavy influence in Venezuela to attract Washington’s interest.

Cuba will not make definitive moves towards the states, may attempt to use venezuela as leverage with the US

This relationship will make Caracas nervous

Partial hit: There haven't been any huge moves. Cuba is holding a congress next year to discuss and unveil more economic measures. However, there isn't any definitive opening up toward the US, so it's not clear what effect this is having on Venezuela.

Cuba has yet to make any definitive moves but we also have yet to see Cuba leverage its influence in Venezuela. Instead it seems Cuba is fulling focused on implementing its reforms while maintaining control of the state.

Chavez has visited Cuba this quarter and met with both Raul and Fidel, but the content of their meetings was not discussed.

If Venezuela is nervous at Cuban rapprochement with the US then it’s probably mostly visible through insight and careful interpretation of OS items. I would say it’s not very clear (in public) whether or not Chavez really is concerned at this point that Cuba could drift away from Venezuela.

Venezuela’s vulnerabilities have led to increased cooperation with Colombia in the political, economic and even security realms. Unwilling to risk Colombia pursuing Revolutionary Armed Forces of Colombia (FARC) and National Liberation Army (ELN) rebels on Venezuelan soil, Venezuela appears to have taken steps to flush a number of these rebels across the border into Colombia, contributing in part to Colombia’s latest military successes against the FARC. Tepid cooperation between Bogota and Caracas may continue through much of the quarter, but this developing rapprochement is on shaky ground. Venezuela will cooperate enough to keep the Colombian military at bay, but will also need to be cautious in trying to avoid a FARC backlash, even if the group’s power appears to be waning.

Venezuela will cooperate with bogota enough to keep from having the Colombian military come across the border risking farc blowback, even if Farc gets weak

This is a hit. With the capture of Venezuelan drug trafficker Walid Makled by Colombia and the potential promise of his extradition to Venezuela, Chavez has become quite amenable to the Colombians in order to keep Makled from going to the US....that said, and in line with the forecast, so far cooperation (at least what has made it to the OS) has been limited with promised to pay back debt to Colombian firms and the extradition to Colombia of a few, probably midlevel, FARC members. Venezuela also deployed more troops to the border.























The more vulnerable Venezuela becomes, the harder-pressed it will be to find an external ally willing to provide the economic and political capital needed to sustain the regime. Venezuela will look primarily to China for this lifeline. China is growing more assertive in pursuing its commercial interests abroad and will entrench itself more deeply in the Venezuelan oil sector, but Beijing remains cautious against presenting too strong a challenge to U.S. interests in the Western Hemisphere.

Ven will have a hard time attracting international support due to it's weakness....if it gets weaker this will get harder. It will look to china primarily but china will go no deeper than energy cooperation

Hit: Investments announced in Venezuela have mostly come from nations visited during Chavez's world tour, but it seems that it is mostly limited to Orinoco belt investment. It is unclear how much of the investment promised during Chavez's trip will be carried out.

China has reportedly replaced Colombia as VZ's second imports source

Venezuela signed an Orinoco Belt deal with CNPC for the Junin 4 block



Venezuela signed a deal with Italy, 17 agreements with Belarus, Syria and Libya, some with  Iran, Ukraine,

















Regional Trend: Brazil’s Rise

Brazil will have a presidential runoff election Oct. 31, but the country’s attention is primarily occupied with its currency crisis. The real’s steady appreciation is exacerbated by Brazil’s increasingly competitive relationship with China and by short-term injections of capital from Petroleo Brasileiro’s capitalization plan for developing the offshore pre-salt oil deposits. There are no easy solutions to Brazil’s currency problems, and even short-term interventions will be made with extreme caution for fear of reviving Brazil’s past chronic inflation issues. Brazil’s currency crisis will remain the new government’s largest concern far beyond this quarter.

Is there anything else here other than "Econ issues will continue"? focused on appreciation though interventions will be short term and cautiously

Hit

Brazil kept an important minister from going to G20 b/c of domestic econ issues

Dilma says prepared to apply drastic measures to currency issues





The Brazilian finance minister said that currency measures would be cautious and would have to be carefully analyzed.

Lula has said that all necessary measures to halt real valuation will be taken.

Dilma announced her new econ gov't posts, but kept the FinMin.

The Brazilian gov't has said no new forex measures are imminent (early in the quarter, statement was said by Meirelles, before he got replaced as CB gov) and that the gov't will take a "wait and see" approach.





Externally, Brazil will continue its military modernization plan and will play a more proactive role, albeit primarily rhetorical, in regional issues, such as Colombian-Venezuelan relations and Argentina’s ongoing dispute with the United Kingdom over the Falkland Islands (Malvinas). Brazil can use these issues to assert its own authority in the South Atlantic. Brazil will maintain a close relationship with Iran and Turkey to build a stake in more distant foreign policy issues, but will not play a decisive role in Middle Eastern matters.

Brazil will continue its military modernisation

Brazil will continue to become more vocal concerning its immediate regional matters, asserting authority in South Atlantic

Brasilia will keep it's thumb in the middle east with turkey and Iran but not to the point that it will set any of the regional agendas

Details on Brazilian naval moderernization plan

A decision on the purchase of 36 fighter jets is expected in weeks

Brazil recognized Argentine authority over UK's South Georgia and Sandwich islandsLula and Rouseffs advisor says the next government will have to strengthen LatAms institutions; Brazil southern port to be "Mercosur Hub";

Brazil has made some vague statements about iran, but has pretty much avoided the issues, in fact this forecast probably overestimated their involvement

owered









LATAM MISSES

Possible miss: The Colombians and Ecuadorians have accelerated their rapprochement and could now reestablish relations by the end of the year. Seems like something we should have addressed, seeing as a.) Correa is an ally of Venezuela and b.) They pretty much broke off relations completely in 2008.





Regional Trend: Growing Divisions in Mexico’s Cartel Wars

Cartel violence will persist across Mexico and cartel activity will continue spreading farther south into Central America, but the coming quarter will see a more defined balance of power emerge among the drug-trafficking organizations within Mexico. Under this balance, the Sinaloa Federation and its allies will benefit from the high-profile arrests and operational losses of its rivals (Los Zetas, the Beltran Leyva Organization, and others). Though the Mexican government remains gridlocked on most issues, Mexican President Felipe Calderon also understands the limits of the state’s war against the cartels and faces a pressing need to stem the record levels of violence before the 2012 national elections. A political exit strategy from the war will begin to take shape. The strategy is likely to favor dominant cartels and potential negotiating partners like Sinaloa. As Sinaloa’s rivals continue to lose key leaders and operational capability, these groups will rely more on improvised explosive devices, kidnappings for ransom and extortion tactics and will diversify their criminal activities in an attempt to remain relevant on the Mexican drug trafficking scene.

The cartels will continue to push south

A more defined balance will emerge between the cartels (doesn't that then imply that violence will recede?)

Is the forecast saying that sinoloa will benefit from coming arrests or those that have already occurred?

An exit strategy from the internicine conflict will emerge that will probably suit dominant cartels and involve negotiations with them

The weakening cartels will resort to IEDs, kidnapping and extortion to diversify their ops and stay relevant

Mostly a hit except for the claims of a political exit strategy taking shape. The possibility of a political strategy coming this soon could be overplayed in this forecast. There isn't apparently a well-defined balance yet, except for Sinaloa being strong as ever. LFM appears to be on the decline so far and the CPS is being hit by the arrest of El Charro and persistent weakening. Gulf and Zetas are hitting each other like always, but Gulf chief Tony Tormenta is now dead. A political strategy is in the works, partly through the legislation planned in congress, but there's no signs of negotiations to end the war with the cartels.

There have definitely been high profile arrests

LFM seems to have been weakened with one member saying so and the cartel posting banners saying they will negotiate with the government...though the government says they wont negotiate. MSM





2 Zeta leaders for Tabasco state have been arrested since around when the last forecast came out.

LFM burned gas stations and attacked police in retaliation for several arrests (perhaps an attempt to project strength despite weakening?)

There is pending legislation before the end of the year to both target money laundering and to rein in the army's abuses. This could be approved my mid-December.

No IEDs have been set off as in other quarters, except for occasional bomb threats.

Kidnappings and extortion appear to be continuing every day, although it's difficult to determine who's behind these actions some of the time.

No visible signs of negotiations yet, doesn't seem yet like the gov't is at the point where it will need to find a political exit strategy.

AFRICA

Regional Trend: Nigerian Politics

The quarter will be dominated by the political wrangling that typically accompanies the competition for the ruling People’s Democratic Party (PDP) nominations, which are tantamount to winning the general elections. Dates for the PDP primaries have yet to be set (after being delayed from October), but that fact will have no bearing on the intensity of the fight to come, particularly over the presidential nomination. There will be a struggle within the PDP over support from the delegates as President Goodluck Jonathan battles against the northern candidates that pose the biggest challenge to his election. One of these northern opponents will rise to the forefront by the end of the quarter and turn the competition into a two-man race. The internal party struggle, however, will be complemented by negotiations beyond the PDP’s official structure, as militant forces such as the Movement for the Emancipation of the Niger Delta (MEND) will enter the picture. The faction led by Henry Okah, members of which carried out the Oct. 1 bombings in Abuja, will require particular attention, though the MEND commanders who bought into the federal government amnesty program will also have to be appeased. Nigeria will not see a sustained militant campaign this quarter, but there will still be an increased level of unrest in the Niger Delta, as well as in other parts of the country, as militants’ political patrons use their proxies to intimidate and undermine their political opponents.

- One northern candidate will emerge as main challenger to goodluck

- internal party struggle complemented by MEND (both Okah and Amnesty branches)

- increase in unrest in Niger Delta and other parts of country, though not sustained militant campaign

This is a hit. The election has turned into a two-man race at this point, with Abubakar and Jonathan as the two contenders. MEND has re-entred the picture, somewhat, through heightened attacks and threats. The gov't has held Okah responsible for the March 15 explosions and has engaged in several actions against MEND, including the hostage liberations.

Political unrest has increased across the country as well, both in the Delta and in the Boko Haram regions.

Northerners agreed on Atiku Abubakar

The INEC will hold the election on April 9.

The internal party has been visible in daily reports but violently in the Niger Delta with the Delta state governor being removed and the home of Jonathans top delta advisor being attacked

A gov't guest house in Asaba was damaged in an attack nobody seems to have taken credit for.

MEND has carried out a number of oil rig attacks and hostage takings. Nigeria has sent JTF after them even capturing some camps with the help of former MEND commanders, though MEND says this wasnt done military but that they were bought off











There has been an increase in Boko Haram violence in the north, with attacks on police becoming pretty common.

Regional Trend: Sudan’s Referendum

Preparations for the referendum on Southern Sudanese independence will be the primary focus for both the north and the south this quarter. Khartoum does not want the vote to be held and will seek ways to either postpone the referendum or discredit the eventual outcome before it occurs, while also preparing for a military confrontation by stationing troops in the border regions and supporting proxies opposed to the Southern Sudanese government. This does not mean Khartoum wants a war to break out; rather, it will use its military as a reminder that it is ready for such a scenario. The south, meanwhile, will show that it is prepared to go back to war, but will also seek to develop economic ties with other countries to somewhat diversify its economy away from oil. Meanwhile, both sides will simultaneously lay the groundwork for new negotiations on a revenue-sharing agreement for crude oil pumped in Southern Sudan, as the south has no other option but to use northern pipelines to export it.

- Khartoum will seek ways to postpone referendum or discredit outcome before it happens

- Will station troops to prepare for military option and support proxies

- South will also show ready for war, but will seek econ ties with other countries to diversify from oil

- both will "lay ground" for negotiations on future revenue agreement

Mostly hit: The NSudanese don't want the referendum to happen and have called for a delay various times. Both sides have raised calls for military option and several incidents have threatened stability (apparently mostly from the NSudanese). Salva Kiir & company have also prepared themselves for possible war, but do not really appear to be willing to follow through on threats. SSudan does not appear to be seeking ties with other countries, apart from possibly during meetings with US representatives.

There doesn't appear to be an overt effort toward laying a groundwork for any revenue agreement on the oil. So far, it seems that there could be an agreement being worked out because both sides keep stressing the need for cooperation in oil exports in case of secession.



Khartoum has tried to postpone the referendum and even said they wont recognize it if they think it was carried out with fraud

There are reports of Khartoum station troops in SSudan and SSudan putting troops on border

- Egypt has also reportedly been backing a delay for the referendum.



NSudan has announced a mass privatization of state-owned firms, possibly a way to diversify from oil or reduce costs after the referendum.

- The South has threatened to hold its own referendum if the north won't let it.



- A JEM spokesperson said that the Sudanese intelligence chief is attempting to blackmail SSudan over the referendum by claiming SSudan backs JEM.



-SSudan has said that north and south must continue working together on oil exports even if the south secedes.







Regional Trend: The Conflict in Somalia

High levels of violence between Islamist insurgents and African Union (AU) Mission in Somalia/Transitional Federal Government forces will continue, but neither side will be able to tip the scales enough to achieve a strategic victory. The number of AU peacekeepers sent to Somalia will also increase, but the deployment will not be as large as seen during the Ethiopian occupation from 2006-2009. Anything more substantial than a few thousand extra troops, such as the 20,000 total that the Ugandan government has been pushing for in the months following the al Shabaab suicide blasts in Kampala, will have to wait until the following quarter, if it is to ever come to fruition.

- high violence between Shabab and TFG continue

- no strategic victory

- AU troops will increase, but will not reach Ethiopia 2006-2209 level

- no more than a few thousand extra troops

Mostly hit: Except for the increase in AU troops. So far, the AU does not seem able to decide whether it will increase troops in Somalia.

Uganda keeps calling for them, but they haven't been sent.

Violence has continued

There has been no victory

AU approved 20K troops but they still have to be found. Reports that troops will increase to about 13000, not sure there have been any actual increases since Q4 came out





The Hizbul Islam faction that was in peace talks with the gov't has said that talks with the gov't have collapsed, so no developments on this front.

AFRICA POSSIBLE MISSES

Possible miss: The US role in trying to push through the Sudanese and Abyei referendums in the months ahead of the vote. There’s no mention of the carrot-and-stick program being implemented through the promise of removing sanctions.





................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download