2012 was a quiet year, a time of sorting out major changes previously set in motion. If there was a common theme, it is that while change can be breathtakingly swift in this globalized world, resolutions take longer than expected.

Jessica Tuchman Mathews
Mathews is a distinguished fellow at the Carnegie Endowment for International Peace. She served as Carnegie’s president for 18 years.
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Few believed a year ago, myself definitely included, that Bashar al-Assad would see the beginning of 2013 still in office. Yet the killing in Syria continues with an end no more in sight than it was a year ago.

Similarly, after months and months of crises and innumerable all-night meetings, few thought it possible that the euro crisis could drag on for another year without some kind of resolution. Yet twelve months later, Greece is still in the eurozone; Spain, Portugal, Italy, and France under varying degrees of threat; Germany insisting that the euro will survive while resisting bold steps to make it so; and the euro’s future nearly as uncertain as Syria’s.

Russia began the year with an unexpected outbreak of civic protests surrounding its parliamentary elections that seemed to suggest major change in the offing. As the months passed, however, Mr. Putin was quietly reelected, and by the end of the year the surge for change in Russia had slipped underground.

The relative international inactivity in 2012 was partly due to an unusually large number of leadership changes, especially in East Asia, where every major country—Russia, China, North Korea, South Korea, Japan, and, on the periphery, the United States—has faced or will shortly face a change at the helm. Whether in democracies or authoritarian countries, the months before political transitions are times when the leadership keeps its focus on politics at home and generally tries to keep things quiet abroad. For a new head of state, the months afterward are devoted to bringing in a new team, consolidating power (which, for example, Kim Jong Un has spent the year quietly doing in North Korea), or developing new policy directions (as the incoming Chinese president, Xi Jinping, will likely spend most of 2013). Exceptions to this rule occur when governments use foreign conflicts to curry political favor at home or blow up what would otherwise be small irritations into major controversies out of fear of looking weak.

While change can be breathtakingly swift in this globalized world, resolutions take longer than expected.

And so, 2013 begins with a simmering conflict between Japan and China (with the United States unhappily entangled because of its defense alliance with Japan) over a bunch of tiny, largely worthless, uninhabited islands in the East China Sea. With an untested leader in China and elections looming in Japan, neither side feels it can deviate from claims of absolute sovereignty. Both see short-term gain in fanning the flames of nationalism at home. One can only hope that a naval incident will be avoided until a quiet compromise is more possible and the issue can be put back into the large file of international problems labeled “Managed—Not Solved.”

Behind the Headlines in 2013

Three major forces, I believe, will be looming behind the headlines, driving events in 2013: the crisis of the Western order, rising sectarian strife in the Middle East, and worries about American withdrawal from the world.

The most immediate is the crisis of the Western democratic model caused by the inability of the United States and Europe to deal with their respective fiscal and financial issues. The problems are economic, but the weaknesses they reflect are political. The consequences of continued failure to act will be a weakening of the West throughout the rest of the world in every dimension of national strength: its ability to prosper, to lead, to summon and guide international action, and to protect and advance core national interests.

The immediate issue for the United States is to keep from falling off its “fiscal cliff”—the combination of scheduled tax increases and automatic spending cuts designed to be so painful that they would force the U.S. Congress to do what it has otherwise been unable to, namely, to agree on a package of spending cuts, revenue increases, and entitlement reforms. So far, the threat, draconian as it is, has failed to elicit the necessary compromise.

In Europe, the strictly economic issues are far more severe, but there, too, it has been impossible to summon the necessary political will to take the needed steps until the euro economy teeters on the brink of collapse. At each stage, when the markets crack the whip loudly enough, governments respond. But at each stage, the price of the necessary fix rises. Steps that could have resolved the crisis at one point are inadequate months later.

For decades, the United States and Europe have been the two centers of global governance. They have ability, experience in international problem solving, and both the energy and the will to act. All of these assets, however, rest on the success of their own governance. Once their model is no longer a success, the world will look elsewhere for leadership. At least for the foreseeable future, it will not find any substitutes.

The Middle East will continue to be consumed with the political upheavals of the Arab Awakening: Islamists moving from the familiar role of opposition to the far harder job of governing, religious movements being transformed into political parties, the struggle to organize secular parties, the writing of constitutions, and the holding of elections. But in the coming year and beyond, it seems likely that sectarian strife will become the defining thread of events across the region.

The most immediate force driving events in 2013 is the crisis of the Western democratic model caused by the inability of the United States and Europe to deal with their respective fiscal and financial issues.

Through decades of otherwise ineffective rule, the Middle East’s dictators did manage to keep divisions between Sunnis and Shia under control. The enforced peace came apart first in Iraq, where the American invasion triggered a sectarian civil war. The political agreements imposed under the U.S. occupation began to unravel after the departure of American forces, and Iraq today looks like a country about to splinter into Kurdish and perhaps later into separate Shia and Sunni pieces, partly due to Iranian Shia influence. Iran’s mullahs are also playing a major role in Syria, where minority Shia rulers are fighting for what they fear may be their very existence in a largely Sunni country. Christians, Kurds, and others are also fighting together and pulling apart from their countrymen. Sunni and Shia governments across the region ship arms and money to like-minded groups, choosing sides in this second sectarian civil war. Only miles from Damascus, Lebanon—always a sectarian tinderbox—tries desperately to hold on to its uneasy peace. In Bahrain, uprisings, brutally repressed by a Sunni government in a Shia-majority country, are also along sectarian lines.

It is much easier to see this trend spreading even further across the region than to imagine events that would reverse it. Real and imagined wrongs not only provoke interventions on behalf of co-religionists abroad, but they can quickly turn peaceful countries into new arenas of conflict.

Worries about American withdrawal from the world will also have a growing influence on global affairs in 2013 and beyond. The fears are triggered in part by the scheduled pullout of most American forces from Afghanistan at the end of 2014. Already, the policies of Afghanistan’s neighbors, including Pakistan, Iran, India, and the Central Asian “stans,” are being reshaped to preserve their influence in the aftermath. At the same time, the explosive growth in production of American unconventional gas and oil resources has raised the specter of drastically reduced American dependence on, and therefore interest in, the oil-exporting countries of the Middle East. Finally, America’s budget deficits and the need for spending cuts even in the defense budget suggest to some that the United States will play a smaller role abroad in the years ahead.

Whether this expectation is welcomed or feared, and whether or not it actually comes to pass, it will likely trigger actions and adjustments in anticipation. How these might influence global events or American interests is by no means clear.

Defining Events of the Year Ahead

A Critical Time in Asia

Both China and the United States, protagonists in the most important bilateral relationship in the world, have just passed through prolonged, often tense leadership changes, but there the similarity ends. Some key players in President Obama’s team will change, but his policy directions are largely set, and he can move promptly to address the many issues that were put on hold during the overly long U.S. political season. While he will become a lame duck toward the end of his term, in the early years, freed from a constant focus on reelection, Mr. Obama will have greater leeway in foreign policy.

President Xi, on the other hand, faces an array of immediate challenges. He must build a consensus around a new set of policies among the new generation of leaders. China’s outgoing leadership, after years of stellar economic growth, could afford to allow growth to slow and politico-economic problems to accumulate. Xi cannot. He will have to accelerate the rebalancing of the Chinese economy and at the same time address the growing restiveness of a new, 300-million-strong middle class. The needed policy shifts will often be in tension.

Nor can the new Chinese government afford to look weak abroad. An increasingly informed populace, angry over widespread corruption and personal enrichment by an elite few, is easily susceptible to nationalist appeals and has been fed a bill of goods about the facts behind the conflict with Japan in the East China Sea. The majority is expecting a more assertive, higher-profile foreign policy. The public, and many in ruling circles, believes a number of conspiracy theories about U.S. intentions—that it is trying to encircle China, that it pushed Japan to act, that it is trying to make trouble over Taiwan.

Washington and Beijing will have to separate rhetoric and fear of the other from actual changes in policy.

The coming year, then, will call for great care on both sides. Washington and Beijing will have to separate rhetoric and fear of the other from actual changes in policy. A simmering conflict in the East China Sea will have to be managed through and beyond Japan’s elections. The United States will have to undo the damage wrought by its announced “pivot” to Asia. The message received was that Washington is planning to increase its military presence in the region for the purpose of containing China and forcing Asian countries to choose between allying themselves with one or the other great power. It will take a long time to convince China that Washington’s actual intent was and is to rebalance its attention from the Middle East toward East Asia, given that the United States has always been an Asian power with diverse economic, political, and security interests there.

Finally, and above all, both will have to take the first difficult steps toward defining a new kind of great-power relationship in which China is less subordinate and more of a responsible, burden-carrying international leader.

The Long Arab Awakening

Poorly chosen words can do lasting damage. The pivot to Asia was one. The “Arab Spring,” which led many to expect that the upheavals in the Middle East would lead to swift change and resolution, is another. Unlike the end of Soviet rule in Eastern Europe, these are genuine internal revolutions that will take decades to play out. The challenge for outsiders, especially the United States, is to develop the necessary strategic patience to distinguish between inevitable ups and downs and long-term trends while helping new governments deliver the economic progress they will need for political survival.

Egypt’s unbelievably complex political evolution will continue to play out in 2013. On balance, events there have been encouraging—the discipline of governing has exerted a moderating influence on the Muslim Brotherhood, the military has relinquished a desire to rule, the country has stuck by its agreement with Israel, and political violence is the exception, not the rule. In Libya, the government will continue to struggle to take back a government’s rightful monopoly on the use of force for internal security from well-armed militias, helped by its oil revenues but terribly hampered by the country’s complete lack of functioning institutions after forty years of Qaddafi’s personal rule. Governments in countries where unrest is still below the surface—Jordan, Kuwait, the Gulf emirates, and Morocco—will continue to stall, hoping that the greater legitimacy they enjoy as monarchies will enable them to avoid major protests and hold on to power. Syria, Iraq, and Iran are where major change is most likely in the year ahead.

The Syrian Stalemate

After more than a year of fighting, the conflict in Syria has become a military stalemate. Neither side can make decisive gains. Sending more arms to the opposition cannot offset the regime’s tanks and fighter jets. Assad remains president but no longer rules the country. Notwithstanding the severe impact of international sanctions, he can survive indefinitely on little money by suspending the government’s normal services and encouraging his military and militia to supplement their salaries by looting.

The somewhat encouraging news is that an international consensus is emerging around the need for a political compromise between elements of the regime—excluding Assad—and a coalesced opposition encompassing those outside the country and those still inside fighting, from all sectarian groups. In November, a start was made in this direction. Whether the newly formed coalition can stay together and whether it will accept less than a complete end to the present regime is uncertain at best, but at least there is the suggestion of a pathway toward a resolution.

If it can, and if outside powers (minus Russia and China) can also stay unified, 2013 could well see an end to the killing and the beginning of what will be a long, difficult political transition in Syria.

Nuclear Showdown in Iran

2012 saw conflicting trends in Iran. There was an important international success in the severest sanctions ever imposed on Iran with the value of the rial (Iran’s currency) plummeting, inflation and unemployment spiraling, and the economy in tatters. For the first time in the long nuclear standoff, Iran is paying a price for its pursuit of nuclear weapons. With its standing in the region weakened by the Arab uprisings, and with less to spend on supporting its ally in Syria, Tehran nevertheless expanded its enrichment of uranium above the level needed for civilian reactors. Israel continued to push for a war it could begin alone but could not finish while the politics of the U.S. election season made serious negotiations impossible.

Moreover, without ever explaining why, both American presidential candidates flatly insisted that containment of a nuclear Iran was impossible and unacceptable. An important area of ambiguity, where an agreement might be found, has been preserved around the difference between actual weaponization by Iran and an undefined “nuclear capability.” Iran delayed a showdown during the summer by diverting some of its growing stockpile of enriched uranium to civilian purposes, easing Israel’s insistence on the need for an early attack.

The question is what will happen now. In Israel, much is in flux. Prime Minister Benjamin Netanyahu will have to reevaluate his options in light of the outcome of the U.S. election and the public expression of opposition to a war by many of his country’s top military and intelligence leaders. Though his political opposition is weak, elections scheduled for January could also force adjustments in Israeli policy. Iran will be feeling the full, painful brunt of sanctions, and the United States is now able—if it chooses—to attempt serious negotiations. If it does, this will be the critical test of Iran’s intentions.

For the first time in the long nuclear standoff, Iran is paying a price for its pursuit of nuclear weapons.

In Tehran the choice will be largely up to Supreme Leader Ayatollah Ali Khamenei, who has made no secret of his disbelief in compromise. Outside, the single most important determinant will be whether the U.S. and European governments will accept Iran’s right to enrich uranium up to the low level needed for civilian purposes. If so, it may be possible to negotiate sufficiently tough safeguards, inspections, and limits on the size of a low-enriched-uranium stockpile to ensure that Tehran does not cheat. If not, any form of agreement is likely impossible.

Even if negotiations fail in 2013, Iran still has ways to make a military strike unlikely by choosing to mark time in its weapons program—limiting the size of its enriched-uranium stockpile and avoiding steps toward weaponization.

Life or Death for a Two-State Solution

Perhaps a two-state solution to the Israeli-Palestinian conflict is already dead. Many believe so. If not, its hold on life will not survive much longer, certainly not long enough for an indefinitely protracted peace process. Moreover, with the changes the Arab Awakening has brought about, an Israeli-Palestinian accord is no longer enough: a regional, Arab-Israeli agreement is clearly needed.

Such an agreement would require a monumental effort on the part of the United States. The question only President Obama will be able to answer is whether he will choose to devote so much of his second term’s precious political capital to this potentially historic but so elusive goal. After November’s hostilities in Gaza, the odds of him making such a choice seem very long indeed.

Can Iraq Hang Together?

Within hours of the departure of the last U.S. troops a year ago, Iraq’s Shia president, Nouri al-Maliki, accused his Sunni vice president of treason, an early indicator of the deepening sectarian fissures in the country. Since then, the political fabric holding Iraq together has become steadily more threadbare. In the north, an unexpected—some call it nearly miraculous—rapprochement between Kurdistan and Turkey has transformed the relationship from active conflict to Turkey’s growing economic investment in Kurdistan and political warmth. That, in turn, has pulled in investment by major foreign oil companies, ignoring Baghdad’s rights. Today, Kurdistan gets twenty-two hours per day of electricity from its grid while Baghdad struggles with only four.

With the changes the Arab Awakening has brought about, an Israeli-Palestinian accord is no longer enough: a regional, Arab- Israeli agreement is clearly needed.

What is very good news for Kurdistan, however, only emphasizes the stagnation in the rest of the country. Shia get most of the few services Baghdad’s divided and feckless government is able to provide, leaving the country’s Sunni population increasingly angry and resorting to violence.

Elections in the early months of 2013 may indicate whether Iraq will be able to hold itself together. What unfolds in Syria will heavily influence Iraqi Sunnis’ decisions about how far to push their dissatisfaction. The outlook for a stable, unified country ten years after the U.S. invasion, and with more than a trillion dollars spent, cannot be said to be encouraging.

Developments in South Asia and Ending America’s Longest War

In 2011, President Obama announced that most U.S. troops would leave Afghanistan at the close of 2014. By then, the plan anticipated, Afghan security forces would be strong enough to secure the country and a political agreement involving the Taliban would have been reached to avoid further fighting. Even when the plan was announced the security situation was discouraging. International casualties had reached their highest point in nine years of war in 2010. They climbed higher in 2011 and higher still in 2012 as shootings of U.S. and NATO troops by individual Afghan police and army members became a grim, new feature of the war. After several false starts, a successful negotiation with the Taliban seems remote. Afghanistan’s neighbors are positioning themselves for what seems increasingly likely to be a period of even greater instability after American and international forces depart.

Trends strongly suggest that the United States and its international partners will have to broaden their efforts to build political reconciliation to encompass Afghan groups far beyond the Taliban. Whether they will choose to do so is not yet clear. Even less clear is whether, with declining leverage as their troops leave the country, they will be able to push for a fair presidential election as President Hamid Karzai’s term ends in 2014. An obviously corrupt outcome in that election could prove a devastating setback.

Afghanistan’s neighbors are positioning themselves for what seems increasingly likely to be a period of even greater instability after American and international forces depart.

A surprising bright spot over the past year has been developments in Pakistan. It now seems likely that Pakistani elections next year will see the first peaceful end to a period of civilian rule in Pakistan’s history—a notable milestone. Violence or a military coup looks increasingly unlikely. At the same time, Pakistan’s obsession with its adversary, India, has significantly lessened. Trade across the border has increased markedly, visa restrictions have been loosened, and there is talk of renewed efforts to settle long-standing Indo-Pakistani territorial disputes. A sickening attack by Taliban militants in October on a fourteen-year-old schoolgirl who campaigned for women’s education brought the country together as never before. It is impossible to say whether this unity will last, but the attack has dramatically reinforced the reality that the country’s internal problems mean more to Pakistan’s security than does the threat from India.

If these trends endure, real change could follow in one of the world’s most dangerous countries. In the best case, they could ease Islamabad’s fear of being caught between unfriendly governments in New Delhi and Kabul enough to allow Pakistan to play a more constructive—or at least a less destructive—role in shaping Afghanistan’s future.

Strange Interlude in Russia

Large street protests at the close of 2011, inspired by the Arab Awakening, suggested a political turning point in Russia. But the movement weakened rather than spread, and only three months later Prime Minister Vladimir Putin was overwhelmingly reelected to the top post of president, though with badly damaged legitimacy. Since then, he has gathered greater power into his own hands, labeled those who did not support him as “decadent” and unpatriotic, and branded Russian nongovernmental organizations that receive financial support from abroad as “foreign agents.” Internationally, he has huffily turned away from the West, executing his own pivot toward Asia.

In all likelihood, decisive change in Russia will be a long, slow evolution, not to be expected in 2013 or perhaps for years thereafter. Yet Russia is not the same. An urban elite and a well-informed middle class that is freer and more prosperous than ever before are too aware of the regime’s failings. A more assertive policy abroad appears to be part of Mr. Putin’s answer to his domestic problems—even when it works against Russia’s own interests, as stubborn support for the regime in Syria does.

Decisive change in Russia will be a long, slow evolution, not to be expected in 2013 or perhaps for years thereafter.

The most critical near-term decision will be whether the United States and Russia can find a way to cooperate on the missile defense systems each is planning to build. Missile defense cooperation is a game changer for the Russian relationship with the West and for the future of nuclear arms control: for good if it happens, for ill if it does not.

A Superstorm Reminder

Will Sandy, an immense hybrid of winter storm and tropical hurricane, at last allow all Americans to see climate change as a threat that must be urgently addressed rather than a conspiracy driven by deluded scientists for undefined reasons and a political litmus test? While climatologists do not know whether this unusual type of storm is caused by a warming climate, its high death toll and economic damage that may top $50 billion could be enough to convince more Americans to take a clear-eyed look at the accelerating record of extreme weather events of recent years.

The only economically sensible, fair, and effective way to address this enormous global challenge is by putting a price on carbon and then freeing markets—rather than government—to innovate and choose among fuels and technologies. Sandy will not, in itself, make a big enough difference. But, together with the weather disasters that will certainly follow, it may provide a significant push. U.S. recognition that climate change is a real and urgent threat to the nation’s and the planet’s well-being is the key to some form of effective international accord. While neither that recognition nor a global agreement will happen in 2013, both will come eventually as the threat becomes overwhelmingly obvious. The longer the wait, unfortunately, the higher the cost will be.

The only economically sensible, fair, and effective way to address the enormous global challenge of climate change is by putting a price on carbon and then freeing markets— rather than government—to innovate and choose among fuels and technologies.

The need to price carbon becomes all the more compelling as the United States embarks on an enormous boom in the production of unconventional oil and gas resources that have vastly differing climate impacts. In addition to sparking a U.S. economic recovery, these new resources could lower the price of gas and perhaps later of oil—aiding a eurozone recovery, roiling the fossil fuel markets, introducing great price volatility, and, over time, dramatically shifting global geopolitical alignments as newly oil-rich North America becomes a significant exporter and far less dependent on Middle Eastern sources.

Last Word

This brief survey deserves to end where it began. No “foreign policy” issue in 2013 will matter as much to global economic, political, and ultimately security conditions as whether the United States and Europe are able to deal with their economic crises.

If America’s political parties can agree on a way to climb down from the fiscal cliff, the resolution of the acute economic uncertainty that has gripped the country for the past eighteen months would unleash private sector investment, spark an economic recovery, and give new capacity and weight to the country’s international role. Such a compromise might also open the wider road back from the United States’ present, crippling political polarization.

In purely economic terms, an agreement is certainly achievable. Whether political conditions will allow it depends on whether the Republican Party, having failed to make Mr. Obama a one-term president, now judges either that an agreement is in its interest or that the country’s economic need is paramount. If so, and if the Democratic Party can match it in compromise, the economic benefits will be very great.

For Europe, the world’s largest economic entity and a critical leader of a liberal and peaceful world order, the challenge is still to summon sustained economic discipline and political will. Progress has been made. Governments have firmly convinced themselves, if not the markets, that they will do whatever it takes to save the euro. Thanks largely to the efforts of two Italians—Mario Monti, the economist appointed interim prime minister to put Italy’s house in order, and Mario Draghi, the new head of the European Central Bank—concrete steps have been taken that show a rescue is possible. But painful structural reforms will have to be endured for many years—a tall order for any one democracy, let alone for many sharing each other’s pain.

In effect, the euro crisis morphed in 2012 from a life-threatening emergency to a chronic disease that will be with us for years to come. The challenge for 2013 is to maintain the harsh treatment, avoid setbacks (in France, especially), and continue to inch toward restored growth.

Between a half dozen unfolding and potential crises in the Middle East—in Syria, Iran, Iraq, at least—the no-longer-avoidable economic and political challenge confronting the United States and Europe, and a shaky U.S.-China relationship to be navigated past fresh shoals, 2013 looks to be a year of defining importance in international affairs.