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Transatlantic Take

What to Watch in 2016: GMF Experts Look at the Year Ahead

January 04, 2016
by
Alexandra de Hoop Scheffer Joerg Forbrig Ian Lesser Andrew Small
Hans Kundnani
Michael Leigh
Daniela Schwarzer
Daniel Twining
9 min read

2015 was a tumultuous year for the transatlantic partners. The refugee crisis, terrorist attacks, Russian aggression, and economic issues dominated discussions on both sides of the Atlantic in ways that would have been difficult to predict at the start of the year. What will 2016 bring? More of the same? Or are new issues lurking in the wings, waiting to make an appearance on the transatlantic stage?


United States and Allies Will Have to Step Up Action in the Middle East and Northern Africa

The self-proclaimed Islamic State group (ISIS) will prove resilient and continue to spread throughout the Middle East and North Africa, while Western powers pursue a light footprint approach in the region and continue to face terrorist threat at home and refugee flows. Nevertheless, the price of military intervention will remain higher than non-intervention. The deterioration of security in Syria, Iraq, Libya, and also in Yemen and Egypt, will put pressure on the United States and its allies (France, U.K., and Germany) to step up their action and try to persuade regional powers like Turkey, Iran, and Gulf states, to take on more security responsibilities. With the spill-over effects of the Syrian and Iraqi crises, France will be pressed to act more forcefully both in Libya, where it played a leading role in 2011, and in the Sahel. The main question remains to what extent will cooperation with the United States and European partners be sufficient to contain these simultaneous threats.

Alexandra de Hoop Scheffer is a Senior Transatlantic Fellow and the Director of the Paris office of The German Marshall Fund of the United States.


Russia’s Aggression May Widen

Aggressive Russian revisionism will continue to leave a strong imprint on world politics in 2016. The Kremlin’s quest to assert Russia’s status as a global power, to challenge the Western community of democracies, and to question the international order that emerged after the Cold War has become the primary generator of legitimacy for the regime of Vladimir Putin. With parliamentary elections scheduled for fall 2016, the Russian economy in shambles, and social discontent on the rise, the Kremlin will need ever-more patriotic mobilization by way of external confrontation. Its two current theaters of conflict — in Ukraine, which Russia demands to remain in its sphere of influence, and in Syria where Moscow intervened to regain a say in conflict resolution — are losing their power of mobilization among Russians. Russia will have to seek out a next area or issue on which to confront the West, to demonstrate its ambitions and, crucially, to score a quick win. It may do so in its immediate neighborhood, where post-Soviet fragility provides an open flank to Russian manipulation. Or it may also do so further afield by injecting itself into an ongoing conflict, such as Libya, so as to impose itself as an indispensable party to resolving conflicts worldwide. It is close scrutiny of potential targets for Russia’s next intervention, rather than futile attempts at accommodation, to which Western policy should devote itself.

Joerg Forbrig is Transatlantic Fellow, Central and Eastern Europe, and Director, Fund for Belarus Democracy, at GMF in Berlin. @JoergForbrig 


Foreign Policy Arguments Between the Eurozone “Core” and “Periphery”

In 2016, the arguments between the eurozone “core” and “periphery” are likely to re-emerge — as they have periodically for the last five years — but will be increasingly linked to external questions. When a few days after the terrorist attacks in Paris on November 13, President François Hollande declared that “the security pact is more important than the stability pact,” he sent a clear signal that for him the imperative of protecting French citizens, including through military operations in Syria, took precedence over the need to restrain spending and thus remain within EU budget rules. While Germany focuses on solving the refugee crisis and puts other EU member states under increasing pressure to agree to fair burden sharing, they are likely to try to make linkages to other issues — leading to even more complex arguments between Europeans than they have had for the last five years.

Hans Kundnani is a Senior Transatlantic Fellow with GMF’s Europe program, based in Berlin. @hanskundnani


Realpolitik Rapprochement Between Israel and Turkey, and the British Referendum

In 2016, Israel and Turkey may complete their rapprochement, in a classic triumph of realpolitik over sentiment. Turkish President Recep Tayyip Erdoğan has finally realized that his country needs allies, and Israel has much to offer in technology, trade, energy, and intelligence sharing. There could be an agreement to export offshore Israeli and Cypriot gas to Turkey, and with it a political realignment in the Eastern Mediterranean.

And a second thing to watch in 2016 is no surprise, but no small matter, either. In the late spring or summer, the British are likely to vote in a referendum on whether to remain in the European Union or to leave, following negotiations between Prime Minister David Cameron and other heads of government in February. The outcome of the referendum will affect the survival of the United Kingdom itself, as Scotland may well choose to secede from the U.K. and to remain within the EU if Britain as a whole leaves. A British exit might also set off similar demands in Poland, Sweden, Denmark, and even France, if the National Front becomes the dominant political force in that country. Even a decision of the British people to stay on the basis of new special conditions could lead other member states to push for changes in their own terms of membership. While the “Brexit” issue has specific British features, it is part of the current wave of populism in Europe and will affect the EU’s capacity to tackle the other crises it is facing. Chinese President Xi Jinping and U.S. President Barack Obama have made clear their preference for Britain to remain in the EU; this message should continue to be delivered unambiguously in the months ahead as it might tilt the balance with hesitant voters.

Sir Michael Leigh is a Senior Fellow at GMF.


A Cyprus Settlement is Within Reach

Over the coming months, the parties in the long-running Cyprus dispute are likely to finalize the terms of reference for a referendum on reunification to be held on the Greek and Turkish sides of the island, possibly as soon as the late spring of 2016. Although it is too soon to predict success in a process that has seen many past disappointments, the prospects are now about as good as they can get. The leaders of the Republic of Cyprus and the Turkish community are genuinely committed to a deal. Economic travails on both sides have increased the incentives for a settlement. A Cyprus settlement would be a transforming development in a chaotic and insecure region. It would open the way for formal NATO-EU cooperation on everything from Ukraine to the Middle East — a key transatlantic interest — and would give Turkish-EU relations a huge boost. One wild card: the role of Moscow in the context of Turkish-Russian friction. A Cyprus settlement would threaten Russian interests, and Moscow could use its influence on the island and in the UN Security Council to impede a settlement.

Ian Lesser is Executive Director of GMF’s Transatlantic Center in Brussels and Senior Director for Foreign and Security Policy at GMF.


More Instability in Greece

The thing to watch in the euro area is — once again — Greece. The deal with Greece in July 2015, which allowed the country to stay in the euro area and receive a third rescue package, was a reasonable measure to buy time, but not a solution to the problems in the country. Firstly, in contrast to prior predictions, 2016 may yet be another recession year for Greece. As tax evasion and corruption remain major issues, the banking sector continues to be dire straits. The risk of recession and little improvement in the capacity to raise tax revenue will continue to cause budgetary problems. Public support for the government, which has agreed to implement ambitious reforms, is already plummeting. A recent poll showed that 70 percent of respondents are unsatisfied with the government (Kappa Research, Nov 2015). The current Tsipras government can expect to face protests and strikes in 2016, and it will struggle to gain enough support in Parliament to implement the necessary reforms (including the reorganization of the tax system, a reform of the pension system, and an ambitious privatization program). At the end of 2015, the coalition had already lost two MPs over a law regulating the protection of property in the case on unpaid loans. In 2016, Greece should remain on the watch list for economic, financial, and political developments.

Daniela Schwarzer is GMF’s Senior Director for Research and Director of the Europe Program. @D_Schwarzer 


Transatlantic Divisions over China

In 2015, the transatlantic split over the Asia Infrastructure Investment Bank demonstrated the continued potential for China’s rise to divide Europe and the United States. In 2016, another cluster of issues risks exposing these differences. China’s “One Belt, One Road” (OBOR) Silk Road investment initiative will start moving from grand pronouncements to practical projects — Europe is largely going to be an enthusiastic participant, the United States an ambivalent bystander. 2016 is also supposed to see China granted “market economy status” (MES) under the terms of its WTO accession, inhibiting countries’ ability to impose anti-dumping duties on — for instance — China’s surging industrial exports. The issue is highly contentious in Europe, but there is a good chance that Brussels will ultimately confer the status, while Washington resists. In the cases of both OBOR and the MES deadline, there are legitimate debates over how to respond. But they will reinforce the narrative in the United States that Europe is becoming increasingly “soft” in its China policy, and the narrative in Europe that the United States is resisting some of China’s legitimate aspirations as a global power rather than just the problematic ones.

Andrew Small is a Transatlantic Fellow with GMF’s Asia program. @ajwsmall 


China Leads Toward a Less-Free Internet

Fueled by China’s demand for “cyber-sovereignty” and the failure or fragility of democratic institutions in Eurasia and the Middle East, the Balkanization of the internet could gather pace, signaling the close of an era that promised a truly “world-wide web” of free information flows. China has more internet users than any country, so the online norms it advocates have potency, not least among the Chinese and international technology firms providing internet platforms for China’s netizens. Beijing’s illiberal alliance with Moscow in favor of state control over its virtual territory, echoing state control over its geographic domain, could find additional support from conservative, undemocratic regimes in the Middle East, including Iran and Saudi Arabia, as well as from strongmen in democracies like Turkey who seek to tilt the political playing field in their favor and shrink the space for political and media criticism of their regimes. These pressures on the liberal international order in cyberspace increase the stakes for transatlantic leadership on this issue, and for new alliances to protect the open internet between the West and democracies like India.

Daniel Twining is Senior Fellow for Asia at GMF in Washington, DC.