1) The war in Ukraine, the dominant issue of 2022, will continue, albeit at a less intense level. Neither Russia nor Ukraine can achieve a complete military victory if victory is defined as defeating the other side and dictating the terms of a post-war territorial or political settlement.
Diplomats will also not achieve victory if victory is defined as reaching an agreement that both governments are willing to sign and abide by. The world requires leaders who are willing and able to compromise, two elements that are conspicuously missing (albeit for very different reasons) on both sides.
2) Although many politicians are focused on a possible war over Taiwan, in 2023 this seems unlikely. Chinese leader Xi Jinping is fully occupied with dealing with a surge in COVID-19 cases that is overwhelming his country's health care system, raising questions about the competence of the ruling Communist Party and further weakening a slowing economy. China has by no means abandoned its goal of establishing control over Taiwan, by force if necessary; but while he will continue to increase pressure on Taiwan, extremely aggressive action will not occur for at least a few years.
3) The main theme of the year will be the transformation of Japan into a major geopolitical player. Economic growth in the world's third largest economy has been revised upward to 1.5%, and defense spending is now set to double to 2% of GDP. Japan, which has one of the most capable armies in the region, will also work more closely with the US to deter or, if necessary, defend against Chinese aggression against Taiwan.
4) North Korea will almost certainly conduct a seventh nuclear test in addition to frequent missile tests. Neither South Korea nor the United States will be able to prevent such actions, and China, the only country in a position to do so, will use its considerable leverage to deter in order not to weaken its neighbor and set off a dynamic that could cause instability on its periphery.
5) The transatlantic relationship, now stronger due to a shared willingness to resist Russian invasion and help Ukraine, will suffer from increased friction due to European dissatisfaction with US economic protectionism and American dissatisfaction with the continent's continued economic dependence on China. Ties could also suffer from emerging disagreements over the extent of Ukraine's military, economic and diplomatic support and the level of defense spending.
6) The global economy is likely to grow more slowly than most observers predict. The International Monetary Fund forecasts overall growth at 2.7%, but the reality may well be lower due to the side effects of the COVID-19 epidemic in China and the actions of the US Federal Reserve, which seems determined to keep raising the rate in an attempt to reduce inflation . Political instability in parts of Africa and Latin America, extreme weather events and supply chain disruptions will also prove to be a drag on global economic performance.
7) The annual United Nations Conference on Climate Change (COP28, due to be held in Dubai) will continue to be disappointing. Since short-term economic concerns are more important than medium- and long-term climate considerations, the effects of global warming are likely to worsen.
8) Israeli-Palestinian relations will become more violent as Israeli settlement activity expands, and diplomacy shows no prospect of establishing a Palestinian state on terms that both Israelis and Palestinians could accept.
9) India will continue to disappoint those who predict a great future for her. India will continue to buy arms and oil from Russia and stick to a non-aligned stance even as it seeks more help from the West against China. And the inherent danger is that India will continue to become more illiberal and less secular.
10) Iran is likely to be the dominant issue in 2023. Protests against the regime will gain momentum amid a deteriorating economic situation and emerging divisions within the leadership over whether to compromise with the protesters or arrest them. The 2015 nuclear deal will not be renewed given Iran's military aid to Russia and the US's desire not to throw an economic lifeline to the struggling regime.
Iran's leaders may choose to continue developing their nuclear weapons program in the hope of either achieving a breakthrough or an Israeli strike that will allow them to call for national unity in the face of outside attack. Another possibility is that the cohesion of the security forces will give way to something resembling civil conflict. For the first time since the fall of the Shah in 1979, the future of the Islamic Republic is in grave danger.
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