ISA Global Update #310 23 rd of December 2009 ISA (International Strategic Analysis) 1 Key Political Issue Key Economic Issue North American Review South.

ISA Global Update #310 23rd of December 2009 ISA (International Strategic Analysis)

1

• Key Political Issue

• Key Economic Issue

• North American Review

• South American Review

• West European Review

• Central and East European Review

• Middle East and North African Review

• Sub-Saharan African Review

• Central and South Asian Review

• East Asia and Pacific Review

• Statistics in Focus

The ISA Global Update

Issue #310

23rd of December 2009

Published by ISA (International Strategic Analysis)

www.isa-world.com

Contents:


2

Key Political Issue: The US and China Dominate the Copenhagen Summit

Summary – The summit on climate change in Copenhagen led to an agreement on the need to limit rising global temperatures, but did not lead to a legally-binding agreement on greenhouse gas emission reductions. This was due to the fact that the summit was completely dominated by the world’s two leading powers, the United States and China, who for political and economic reasons were opposed to a new set of legally binding agreements. While climate change negotiations will now carry on into 2010, this summit highlighted the dominant position of the world’s two leading powers when it comes to setting the international agenda.

US and China Make a Deal:• While Europe and Japan had taken the lead in earlier climate change negotiations, they were pushed to the side by the US and China at the Copenhagen climate summit. • The United States, which drafted the final agreement, was keen to reach a deal that could make its way through the US Congress. • They appear to have done so by convincing China to agree to some international monitoring of their efforts to reduce emission levels. • Once the US and China were in agreement, other key powers such as India, Brazil and South Africa were brought on board. • With such a line-up of countries in agreement, most other countries agreed to support the deal, even if they were not happy with final product.Eyes on Mexico City:• Critics of the deal reached in Copenhagen point to the fact that no legally binding greenhouse gas emission reductions were included in the agreement. • However, these were opposed by the US and China, so no meaningful deal including such reductions was ever going to be reached in Copenhagen. • This means that more difficult negotiations will take place in 2010 as the world’s leading powers attempt to create a successor to the expiring Kyoto Protocol that did not include the US, China, India and a host of major developing economies. • World leaders hope to reach a deal by next year’s climate summit that will take place in December 2010 in Mexico City, although major changes for the Copenhagen deal appear unlikely.

What to Watch For:• The weather in Mexico City for 2010’s climate change summit is likely to be much warmer and drier than the snow and cold of Copenhagen.


3

Key Economic Issue: The Economic Outlook for 2010

Summary - 2010 will be a year of recovery for much of the global economy, following the severe economic shocks of the second half of 2008 and the first half of 2009. However, there is a significant risk of a second, albeit less severe, downturn in 2010 due to the fact that consumer and business spending levels in many of the world’s leading economies remains dangerously weak. Moreover, the threat of more economic shocks, including rising inflationary pressures and precariously-high government debt levels, will keep economic risk levels high throughout 2010.

Growth for Many in 2010:• The outlook for 2010 varies greatly among the world’s leading economies. • The world’s leading developed economies, North America and Europe, will experience positive growth in 2010, but weak consumer and business spending levels, and the withdrawal of government stimulus packages, will prevent economic growth from reaching pre-crisis levels. • Emerging markets such as China and India will fare better, as domestic markets will continue to grow, buffering these economies from the threat of weak export markets. • However, some of the countries hit hardest by the recent crisis, including Russia, Ukraine, Spain and a host of others are likely to remain in a recession well into 2010, while other economies will struggle with massive government debt levels.

Economic Risk Levels Will Remain High:• After such as a volatile 2009, it is to be expected that economic risk levels will remain very high in 2010. • One significant risk is the threat of inflation as natural resource and food prices could rise sharply in the months ahead. • Another major risk stems from the withdrawal of government stimulus packages in 2010, as most of the growth recorded in the second of half of 2009 has been the result of major increases in government spending. • These high levels of government spending have raised debt levels to record highs in many economies and this too will raise economic risk levels as many countries will face a potential default on their debts in the year ahead.

What to Watch For:• Financial markets remain susceptible to potential debt defaults by a number of highly-indebted economies.


4

Regional Overview: North America

Regional Summary:• The United States Senate passed a major health care reform bill.• The United States economy did not grow as much as had been expected in the third quarter of 2009.

Health Care Bill Moves Through the US Senate:• The United States Senate passed a major healthcare reform bill last weekend, moving the eventual passage of a healthcare reform package one step closer to reality.• The health care reform bill passed through the US Senate by a margin of 60 votes to 40, with the vote proceeding entirely along party lines, as no Republicans backed the bill.• Now, the Senate’s bill will be reconciled with a larger bill from the House of Representatives, with a final bill likely to be passed sometime in early 2010.

US GDP Growth Revised Downwards:• GDP growth in the United States in the third quarter of 2009 was revised downwards from previous estimates, with growth reaching only 2.2% on an annualized basis between July and September.• GDP growth had originally been estimated to have been 3.5%, with a later revision estimating growth to have been 2.8%.• This lower level of growth was largely the result of lower-than-forecast consumer demand in the US.• Meanwhile, the US housing market showed some signs of growth in recent months as consumers moved to take advantage of government tax credits for homebuyers.

A Look Ahead:

Key Issues or Events:• The massive snowstorms that hit the eastern United States in recent days may have a major impact on pre-Christmas retail sales in the US.


5

Regional Overview: South America

Regional Summary:• Colombia’s two largest left-wing rebel groups announced plans to unite.• Argentina’s economy continued to shrink in the third quarter of 2009.

Left-Wing Rebels Unite in Colombia:• Colombia’s two main left-wing rebel groups, the FARC and the smaller ELN, announced last week that they were in the process of uniting to fight against the Colombian government.• In the past, the FARC and the ELN had fought against one another, with the ELN resisting previous attempts by the FARC to swallow the smaller group.• The FARC is believed to have nearly 10,000 fighters (down from a peak of 16,000), while the ELN has shrunk to only around 1,500 fighters.• In recent years, Colombia’s armed forces have dealt a series of major blows to both rebel groups, weakening them significantly in the progress.

Economic Woes in Argentina:• Argentina’s GDP declined by 0.3% on an annualized basis in the third quarter of 2009, the second consecutive quarter in which Argentine GDP contracted when compared to the previous year.• Meanwhile, there were continued worries that the Argentine government was providing misleading economic figures, despite the fact that the government had reformed the country’s economic statistical agencies earlier this year.• Nevertheless, Argentina’s industrial sectors began to grow in recent months, raising hopes for a solid recovery for the country’s economy in the fourth quarter of 2009 and in early 2010.

A Look Ahead:

Rising Risk Factor:• Tensions between Colombia and Venezuela remain dangerously high, with many in Colombia suspecting the Venezuelan government of continuing their support for left-wing rebels in Colombia.


6

Regional Overview: West Europe

Regional Summary:• European leaders were disappointed with the outcome of the climate change summit in Denmark.• Ireland’s economy continued to struggle, but did manage to pull out of its recent recession.

Europe’s Disappointing Copenhagen Summit:• While many European leaders had complained that they were struggling to make their voices heard in world affairs, they had expected to take the lead at this month’s Copenhagen summit on climate change, as Europe has played a leading role in international climate change negotiations in previous years.• However, European leaders were dismayed to discover that the United States and China, together with a number of other emerging markets, had reached an agreement without consulting them, leaving them with little option but to agree to the deal.• This led to more criticism of the European Union’s inability to overtake national leaders from many European countries when it comes to dealing with global issues.

Ireland’s Troubled Economy:• Ireland’s GDP shrank by 7.4% on an annualized basis in the third quarter of 2009, although GDP did manage to grow by 0.3% when compared with the previous quarter, allowing Ireland to officially pull out of its recent recession.• The Irish economy has suffered the deepest recession in West Europe over the past year, in large part due to the collapse of the Irish construction and housing industries since the outbreak of the global financial crisis.• Meanwhile, the Irish government recently introduced a series of severe austerity packages in order to reduce the country’s huge budget deficit that has arisen as a result of the economic crisis.

A Look Ahead:

Rising Risk Factor:• Spain’s economy is unlikely to return to pre-crisis levels of economic growth at any time in the coming years, with the country’s economic situation likely to mirror that of Italy’s over the past decade.


7

Regional Overview: Central and East Europe

Regional Summary:• Serbia applied to join the European Union.• Ukraine’s presidential election is just one month away.

Serbia Applies to Join the EU:• This week, Serbia formally applied to join the European Union, although that country will need to make a number of key reforms to actually join the EU.• In addition, the European Union is continuing to demand that Serbia apprehend two remaining suspected war criminals from the wars in Croatia and Bosnia, General Ratko Mladic and Goran Hadzic.• Recently, the EU signed a free trade agreement with Serbia after the Netherlands ended its objection to this deal.

Ukraine’s Upcoming Presidential Election:• Polls taken this week showed that pro-Western Prime Minister Yulia Tymoshenko and pro-Russian former Prime Minister Viktor Yanukovych remained the clear favorites to emerge from the first round of voting in Ukraine’s presidential election that will take place next month.• These polls also indicate that a run-off election between these two candidates is likely to be a very close-run affair, potentially leading to yet another disputed election in Ukraine.• There are fears that a disputed election could widen the already considerable divisions between the pro-West and pro-Russian halves of the country.

A Look Ahead:

lections This Week:• Croatia will hold presidential elections this week to replace outgoing President Stipe Mesic.


8

Regional Overview: Middle East and North Africa

Regional Summary:• More clashes involving the political opposition took place in Iran.• The leaders of Syria and Lebanon met last weekend in Damascus.

More Clashes in Iran:• There was a new round of clashes between Iranian security forces and supporters of that country’s political opposition this week.• These latest clashes erupted during commemorations for Iran’s leading dissident cleric, Grand Ayatollah Hossein Ali Montazeri, who died last week at the age of 87.• Clashes were reported to have taken place in a number of Iranian cities, with the largest clashes taking place in the holy city of Qom, where the ayatollah’s funeral took place.• A number of the leaders of Iran’s political opposition, including Mir Hossein Mousavi, attended the funeral.

Syrian and Lebanese Leaders Meet:• Lebanon’s Prime Minister Saad Hariri travelled to Syria last weekend where he met with Syrian Prime Minister Bashar Assad in a bid to diffuse the high level of tensions between the two countries.• This was Prime Minister Hariri’s first trip to Syria since the assassination of his father, Prime Minister Rafik Hariri, in 2005.• Prime Minister Hariri had publically blamed Syria for his father’s assassination, but called on the two countries to move beyond their past disputes.• Meanwhile, there are fears that with the Syrian-backed Hezbollah in Lebanon’s coalition government, Syria will gain more influence in Lebanon.

A Look Ahead:

Key Issues or Events:• There are deep divisions with the countries of the GCC about how to deal with the rising threat of Iran.


9

Regional Overview: Sub-Saharan Africa

Regional Summary:• East Africa’s devastating drought continued.• Madagascar’s president abandoned that country’s power-sharing deal.

No Rains in East Africa:• Despite predictions that the rains would return to East Africa, no rains have arrived during the latest rainy season, making its six consecutive years in that region in which the rains have failed.• Some areas of Ethiopia and Kenya received just five percent of their normal rainfall levels this year, while Somalia was reported to be suffering from its worst drought in the last two decades.• As a result, it is all but certain that East Africa will receive no rain before April 2010, making an already severe food crisis even worse in the months ahead.

Betrayal in Madagascar:• Madagascar’s Prime Minister Andry Rajoelina pulled out of a power-sharing agreement with that country’s political opposition this week and appointed a new prime minister from Madagascar’s armed forces.• First, President Rajoelina sacked Prime Minister Eugene Mangalaza last week and scrapped the position of co-president.• Afterwards, the president, who took power in a military-backed coup earlier this year, named Colonel Vital Albert Camille as the country’s new prime minister.• New parliamentary elections are scheduled to take place in March 2010, but this collapse of the power-sharing deal could jeopardize these elections.

A Look Ahead:

Rising Risk Factor:• There are concerns that Burkina Faso is again supplying weapons to the former rebels of northern Cote d’Ivoire.


10

Regional Overview: Central and South Asia

Regional Summary:• Afghan President Hamid Karzai unveiled his nominees for his new government.• Food prices in India soared in recent months.

Karzai Presents His New Government:• Last weekend, Afghanistan’s President Hamid Karzai presented his new cabinet choices to that country’s parliament, with many of the country’s most important ministers keeping their positions in the new government.• However, amid increasing pressure from international governments to crackdown on corruption, President Karzai removed two ministers accused of corruption from the government.• Meanwhile, in a surprise move, President Karzai removed Foreign Minister Rangin Spanta from his position, although he has yet to nominate a successor.

Soaring Food Prices in India:• India’s food prices rose to their highest level in the past ten years, raising fears that rampant inflation could derail India’s recovery from its recent economic downturn.• Food prices in India have risen by 20% over the past year due to the recent drought that impacted many areas of India, as well as the floods that hit southern India in recent months.• The Indian government has responded to these rising food prices by announcing plans to import more food to India in the coming months.• Nevertheless, poorer areas of the country are already experiencing severe food shortages.

A Look Ahead:

Elections This Week:• Uzbekistan will hold parliamentary and local elections this weekend.


11

Regional Overview: East Asia and the Pacific

Regional Summary:• Mount Mayon in the Philippines appeared to be on the brink of a massive eruption.• China was criticized for its role in the Copenhagen climate change summit.

Mayon Volcano Threatens to Erupt:• Mount Mayon, one of the most volatile volcanoes in the Philippines, began spewing ash and lava in recent days, raising fears that the volcano was on the brink of a massive eruption.• In addition, the number of earthquakes in the areas around Mount Mayon rose sharply in recent days, signaling an imminent eruption.• More than 40,000 people have been evacuated from their homes and farms around the volcano, with the Philippine army maintaining an exclusion zone in a wide area around Mount Mayon.

China Criticized:• A number of countries criticized China for its role in preventing a more comprehensive climate change deal to be reached at the recent climate change summit in Denmark.• China was accused of blocking a number of efforts to enact legally binding agreements on the reduction of greenhouse gas emissions and of encouraging other emerging markets to do the same.• In the end, China backed a United States-drafted agreement that did not include any of these emission reduction requirements.

A Look Ahead:

Key Issues or Events:• Japanese exports are beginning to recover thanks to rising demand from China and other key Asian export markets.


12

While Turkey’s demographic future remains brighter than that of nearly all major European countries, it too faces the prospect of a rapidly aging population as the

country’s birth rate falls sharply.

Statistics in Focus: Turkey’s Aging Population

ISA Global Update #310 23 rd of December 2009 ISA (International Strategic Analysis) 1 Key Political Issue Key Economic Issue North American Review South.

Documents

copenhagen deal

copenhagen climate summit

isa global update issue

copenhagen summit summary

years climate summit

key powers

s climate change summit

convincing china