By William Tucker
Contributor, In Homeland Security
As 2016 comes to an end, many pundits have spelled out the challenges that the next president of the United States will face in 2017 and beyond. Though the U.S. remains the center of the world politically, economically and militarily, there are many long-term shifts that will fundamentally challenge Washington’s ability to influence events globally.
While the U.S. remains the most powerful nation on the planet, its ability to influence global events will wane next year, as political and economic discord beyond North America consume governments in nationalist fury. This change has long been coming as the post-Cold War era began unraveling in the 2008 economic crisis, although it is often chalked up to the current rising tide of populism.
The changes taking place around the globe are not confined to any single cause. Instead, there are a number of influences at work.
Population Changes Will Impact Global Infrastructure and Resources
Globally speaking, population growth is slowing. In many nations, the average age is increasing. If you look at global population trends, it is apparent that the U.S. is the only western nation with a healthy, sustainable growth, while Europe and Russia are undergoing a noticeable decline.
In China, the population is expected to contract significantly during the next century. Conversely, other highly populous nations such as India and Pakistan are expected to grow substantially and strain each nation’s infrastructure and natural resources.
Disruptions from Global Economic and Technological Changes
Though these population changes are long-term estimates, economic weakness from 2008 hasn’t yet been corrected. Economic problems, coupled with population changes and technological innovations, will be profoundly disruptive to governments. In 2017, this global equation will become more visible as export-reliant economies come to grips with shrinking market space, due to population decline in the most developed economies.
Population by itself is only one part of the global equation. We often take technological innovation for granted, but it can be equally disruptive. In the past few years, low-wage workers have petitioned the U.S. government to increase the minimum wage. Although the minimum wage has moved up marginally, it hasn’t effectively improved the living conditions of workers at the lower end of the income spectrum.
In some states where the minimum wage was increased beyond that of the federal requirement, many companies responded by downsizing their workforce or leaving the state entirely. Furthermore, technology is allowing companies to replace workers with automated machines and robots. This trend will continue to accelerate in 2017 as the world moves closer to recession.
Global Developments Will Also Influence Politics in 2017
We’ll see the most profound changes in politics. There is a growing movement in many western nations toward nationalism and populism. Though these social movements are symptoms of a larger malaise, governments long run by entrenched parties are being challenged by groups once viewed as outliers.
These political changes are well underway in Europe, but they have been increasingly moving westward, as exemplified by the U.K.’s decision to leave the floundering European Union. Similarly, France and Italy are suffering economically. The voting populations in those countries will place immense pressure on their governments to either renegotiate the terms of EU membership or abandon the EU completely.
Germany, once the economic engine of the EU, will face a significant challenge as it competes for market share. Germany’s economy is approximately 50% exports and import markets are drying up. Currently, Germany exports a significant amount of its products to the U.S., but in the past, buyers of those products were much more diverse. If the U.S. market sours on German goods, then Germany and the rest of the EU will suffer, too.
China also will experience problems in 2017. Beijing has grappled with the nation’s economic slowdown that began in 2008 and hasn’t come close to economic recovery.
Further compounding China’s economic situation is the political intrigue led by the seemingly indomitable Xi Jinping. President Xi is well known for his “anti-corruption” campaign that has removed challengers to his rule, but he isn’t yet safe. Social unrest stemming from unemployment might well be the one challenge Xi can’t overcome, but he can’t afford to quit trying.
Xi has also announced efforts to prevent losses from capital flight and has even taken on the military penchant for profiting from state-run companies. Such measures are unlikely to win Xi any new friends and he will become even more dependent on the people closest to him.
By trying to strengthen the grip of the party under his rule on a China in economic decline, Xi might well become his own undoing. In 2017, we can expect China to become more aggressive. China’s aggressive actions in the South China Sea remain an issue on the global stage.
Middle East, Russia Will Experience Challenges
The Middle East has its own share of challenges, but nothing will be resolved in the coming year. All eyes, of course, will be on Syria and the battle against the Islamic State. But taking Aleppo and losing Palmyra shows just how difficult the situation is for the Assad regime.
Even with Russian help, the loss of Palmyra will be problematic and delay any future assault on the IS stronghold of Raqqa. Russia and Assad’s conflicting interests with Turkey will also play a significant role in Syria, leading to yet another year in which we can expect more of the same in this conflict.
Saudi Arabia and Iran will face new economic challenges as they continue to exercise austerity in the face of low oil prices. Cutting production might help some, but other oil-producing nations will increase their market share. The U.S. will get in this game and take action to improve domestic oil production, but that issue will extend beyond the next year.
Russia will also have difficulties in the coming year as popular unrest due to falling wages and unemployment continues to rise. Even with Russian forces engaged in Ukraine and Syria, Moscow is looking to nearly halve its defense spending during the next two years. Low oil prices are playing an overarching role in this economic spiral; so too are declining defense sales.
Sanctions have brought another aspect of pain to Russia, but some European nations could be willing to lift the punitive measures as they look for economic cooperation from Moscow. Unfortunately, neither those European nations nor Russia will find relief.
In addition, further U.S. sanctions could be on the way before this year is over. President Obama is expected to include new sanctions against Moscow when he responds to Russia’s reported computer hacking interference in this past November’s presidential election.
As a result of this impossible situation, Russia’s involvement in Ukraine will remain a frozen conflict. Russia will also find itself a more active target of international terrorism. The Islamic State has been steadily trying to target Russian interests lately, with two terrorist attacks this week in Dagestan. All told, 2017 will be a difficult year for Russia.
Global Shifts Similar to Aftereffects of Industrial Revolution
What we have witnessed over the past decade is the beginning of a disruption, both political and economic, akin to what the world experienced with the 19th-century Industrial Revolution. The addition of steam engines and electricity to the global economy transformed millions of lives for the better in the long term. But there was much short-term suffering as a significant portion of humanity was forced to seek new professions.
In the 21st century, governments in the U.S. and Europe are increasingly studying the effects of robotics to replace human workers and have crafted policy responses to cope with the inevitable workplace shift.
In 2017, we’ll see more companies using proven technologies to replace human workers in an attempt to maximize profits in the midst of an expected recession.
However, there are two sides to this situation. Some workers will not have the purchasing power necessary to sustain high levels of consumption. While companies can cut costs and produce more goods, they will still need markets somewhere to consume those goods.
During this disparity, governments will step in while their economies continue to rebalance. Infrastructure spending will be a stopgap measure to stabilize employment and we’ll see this move, especially in the U.S., in 2017.
The coming year will, unfortunately, fail to provide relief from the economic, technological and political trials of the past few years. Perhaps these trials can be mitigated if government leaders are wise enough to foresee future problems and take preventative measures.
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