Political and Economic Processes That Could Shape the Year Ahead

Written by: Armin Sijamić

The year ahead could be more turbulent than 2023. The world's largest powers will continue with their policies, while regional powers could continue to shake the current order, seeking better positions for themselves and their allies.

The US presidential elections are in November and, as things stand, it will be a rematch of the previous ones. Joseph Biden versus Donald Trump, two completely different approaches to policy-making and two policies that are in many ways different. A Trump victory could shake the West, but until then, the United States will focus on the processes in which it is deeply involved. Meanwhile, Trump will fear whether he will appear on the ballot, due to the legal proceedings against him.

From Washington to China via Ukraine and the Middle East

The Russian aggression against Ukraine prevented Washington from focusing on China, in line with a decade-long strategy that Trump did not abandon during his time in the White House. Now, the Israel-Hamas war is also on the US list of priorities, threatening American positions worldwide.

While in Ukraine the question is whether the West will send enough weapons and money to Kyiv, in the Middle East crisis the question is whether the United States has enough soldiers to fight across the region against Iranian allies. As Benjamin Netanyahu announces that the war in the Gaza Strip will "last months," Tehran's and its allies' plan to turn this war into just another episode in the Middle East conflict is becoming increasingly visible.

In recent weeks, pro-Iranian forces have been attacking US troops in Iraq and Syria, in the Red Sea the Houthis are intercepting ships, and Lebanese Hezbollah is inflicting huge losses on Israel. In addition to the suffering of Israeli soldiers, tens of thousands of Israelis from the north of the country have left their homes, tourism has been shut down, the economy is operating slowly, and hundreds of thousands of mobilized reservists are costing money. As there are not many other countries willing to enter endless conflicts with pro-Iranian forces in the region, the entire burden falls on the United States, which must protect Israel and prevent Tehran from consolidating control over four major Arab cities – Beirut, Damascus, Baghdad, and Sanaa.

This conflict in the Middle East could cost the United States and the West dearly, and Russia and China want it to last. It is clear that Washington needs all its resources for pressure on China's borders, because containing China is the most difficult possible task. With the continuation of the exhausting war in Ukraine and Gaza, the West has no strength for greater influence in the Caucasus and Central Asia, which pleases the Kremlin.

On the other hand, Russia and China will try to continue with their policies, which have not changed significantly for decades. The announced presidential elections in the spring in Russia and the likely victory of Vladimir Putin confirm that Moscow will not change its policy much from previous years. The war in Ukraine is turning into an all-or-nothing game, and the Kremlin will try to break Kyiv as soon as possible. At the same time, the issue of Russia's diplomatic isolation in the West remains a priority for Washington, as Moscow turns to other parts of the world.

Increasingly independent voices from New Delhi, Ankara, Riyadh, Brasília, Cairo, Abu Dhabi, and all those who have been part of Western policy for decades, directly or indirectly, please Moscow and Beijing in the short term. However, in the long term, Moscow and Beijing count on a much smaller number of countries. One of them is Iran. Tehran and Moscow agreed at the end of 2023 to remove the US dollar from their trade and trade in rubles and rials without using the Western-controlled SWIFT. The alliance of Russia, Iran, and China will continue to be the West's biggest concern.

One of the countries that Russia and China particularly count on is North Korea, which, strengthened by Russian weapons and the de facto violation of sanctions by a number of countries, could be more active than usual, seeking a way to break out of isolation and weakening Washington's power in the region. Part of this regional clash could also be the South China Sea, where several countries dispute with Beijing over the right of access, while Washington supports them. The Taiwan issue can always escalate.

Economy and Politics

Those who call for the end of Western dominance believe that the main task is to carry out the "de-dollarization" of the world economy, so it should be expected that some countries close to Russia and China will continue along this path. But there are also opposite announcements. Newly elected Argentine President Javier Milei has announced that he will introduce the US dollar as part of an economic experiment that could change that country. If the experiment succeeds, Milei could disrupt the plans of Moscow and Beijing in Latin America. Milei has already rejected membership in BRICS, for which his predecessor had applied.

The world should also witness the economic development of India, for whose favor the United States and Russia are vying. The world's most populous country expects investments and aid to match China, especially in the development of the military industry and modern technologies whose core is artificial intelligence (AI). India also faces elections in the spring, in which about a billion people have the right to vote, and according to estimates, Narendra Modi will remain in power.

Apart from India, countries that sell oil and natural gas could continue with strong economic growth if Western sanctions against Russia persist and energy prices rise.

In the European Union, plans for digitalization and energy transition will continue in line with adopted documents. European countries have been changing their policies since the beginning of the Russian aggression against Ukraine, so it is now completely clear that economic and energy independence will be a priority for Brussels and many governments. This especially applies to Germany, which is starting a military strengthening plan, whose ultimate political direction will be determined by the US elections, the situation in Ukraine, the work of the new pro-Brussels Polish government, and Emmanuel Macron's France, whose policy is increasingly difficult to define precisely.

In addition, the EU will likely witness the strengthening of the far-right, and estimates suggest this will be seen in this year's elections for the European Parliament. On the other side of the English Channel, the British will likely go to the polls by the end of the year and, after fourteen years, return Labour to power.

Artificial intelligence could reach its full affirmation this year and become more than ever a part of our everyday lives, taking another step in its development and ever-wider application.

Global Trends

Climate change is happening around the world and is becoming a common concern for all countries. This year too, due to climate change, primarily drought, millions of people in Africa and Asia will head north. However, major polluters and great powers do not have a common response.

What the great powers agree on worries the rest of the world. Record military budgets of the great powers and countries in their camp are certainly not good news. A surplus of weapons could end up in smaller local wars around the world. The recent operation by Azerbaijan in Nagorno-Karabakh shows that such short and limited wars are possible and can yield results.

Finally, although the world has long had fewer great philosophers and great ideas on how to make the world a better place, let us remember one of the greatest in history – Georg Wilhelm Friedrich Hegel, that is, his theory of constant changes that often cannot be predicted, and in this specific case conclude that even the plans of the greatest powers can collapse overnight and that other actors and events can shape the world stage.