2014 could not end quickly enough for many corners of the world. In the waning hours of the year we saw the Greeks fail to elect a president, bringing us into another round of the Euro crisis, and we saw Russia take extraordinary measures to avoid its own financial and economic crisis. Both these episodes set the stage for a tumultuous 2015.
The Europeans risk being rudely awakened that their crisis, far from being over, may enter its most acute stage yet, as low growth collides head on with populist politics on the right and left of the political spectrum. Syriza and Podemos, leftist populist parties, are set to make gains in elections in Greece and Spain respectively in the first half of the year. The UK’s EU membership may be called into question as David Cameron, UK’s Prime Minster, struggles to respond from a right wing euro skeptic rebellion in the form of UKIP. All of this threatens to put a tenuous European recovery at risk (Greece is only months away from exiting its bailout). How Europe and its institutions (national parliaments, the European Commission and the European Central Bank) respond to the threat of fringe politics will dominate headlines in 2015.
Russia’s woes stem partly from Western sanctions over its annexation of Crimea and its support for rebels in Eastern Ukraine, but largely from the dramatic fall in the price of oil in late 2014. We expect other petro-economies to follow suit in varying degrees in 2015. Countries from Nigeria to Colombia to Saudi Arabia will have to adapt to a new reality of lower oil prices and a stronger dollar. How these economies react to the situation determines which regimes survive the storm.
There are, of course, second-degree effects to the lower cost of oil. Iran, which has ridden on the back of high oil prices to enforce an aggressive foreign policy in its neighborhood, may be forced to scale back its ambitions. It may also, finally, seek a rapprochement with the United States, settling its nuclear question and open the Iranian market to global commerce. Although this is seemingly a long shot, the prospect of it is tantalizing enough for all parties to aspire to achieve.
Islamic extremism will also continue to dominate headlines in 2015. Despite months of bombing by a “coalition” of nations ISIS does not seem to be falling. Quite the opposite, it has relinquished little ground, consolidated its hold on areas it holds and even made modest gains in Anbar province in Iraq. ISIS continues to serve as a model for other extremist groups from Boko Haram in Nigeria to Ansar Beit Al Maqdis in Egypt. Established states will wage a pitched battle in the coming year to roll back their momentum.
Despite what promises to be a volatile year as outlined above we also want to highlight some of the bright spots in the world. On the surface the US economy has never looked stronger in our (the editors’) adult life. Shinzo Abe has consolidated political control in Japan and is pushing through a series of reforms and stimuli, possibly putting an end to Japan’s lost decades. The thaw in US-Cuba relations may finally put to bed the embargo, a silly holdover from the cold war, improving the quality of life and trade in the Caribbean.
By all measures 2015 will be an interesting, if not tumultuous, year to live and read about, filled with many familiar threats but also offering us a host of new opportunities, each with their own unique challenges to understand and appreciate. People, nations and corporations that successfully navigate the shifting geo-political landscape will be well poised to reap outsized rewards.