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In advance of President Obama's State of the Union address next week, RCP is rolling out daily "state of" reports to better frame the issues Obama will likely address.

As the United States heads into a crucial presidential election in November, it must keep a wary eye beyond its borders. Will there be a conflagration - of either an economic or military kind - that might consume the world?

China, the United States’ chief rival as a superpower in the coming decades, is also facing a potential leadership change this year. Though the U.S. has pulled out of Iraq, embers of conflict continue to burn brightly in Afghanistan and Pakistan. And the Middle East, with Iran’s unceasing bellicose posturing and the Arab Spring’s unsettled affairs, will continue to be a flashpoint.

But the world might be plunged into more disorder by not just guns and missiles. The Eurozone crisis could cause the disintegration of the common currency - if not the European dream itself - before infecting the rest of the global economy.

With so much troubling news abounding, we now offer a sweeping look at looms ahead in 2012:


There is one bit of genuine good news: Incumbent Ma Ying-jeou just won re-election as Taiwan’s president, thus likely ensuring peace and stability in the Strait for the next few years. It was an election that was nervously observed in both the U.S. and China, and its result was greeted with a collective sigh of relief.

But later this year the People’s Republic of China will have its own leadership contest, with Xi Jinping widely expected to succeed Hu Jintao as the nation’s next president. While not a great deal is known about Xi, there’s genuine concern that the leadership of the People’s Liberation Army has been gaining clout within the political apparatus of the ruling Communist Party. Xi’s ability to handle the PLA would have a profound impact on how China deals with its neighbors in the coming years.

As an emerging superpower, China also has growing troubles and responsibilities. While its economy is expected to pass that of the U.S. this decade, there are systemic pressures that may cause it to unravel. For one, there is mounting unrest among the nation’s poor and in the minority-inhabited hinterlands. And North Korea, with its own recent leadership change, will continue to test China’s diplomatic acumen.


Looming large over a Middle East in flux is the Islamic Republic of Iran and its controversial nuclear enrichment program. As sanctions begin to take a greater toll on the country, many believe the regime will look, in desperation, toward provocative maneuvers -- such as closing the vital Strait of Hormuz -- to disrupt regional stability and inflate global oil prices.

Last week’s assassination of yet another Iranian nuclear scientist appeared to be just the latest strike in a growing cold war between Tehran and the West over the Islamic Republic’s nuclear ambitions. Iranian influence through proxy organizations in Lebanon and the Palestinian territories, in addition to a friendlier government in Baghdad, only make the potential consequences of a preemptive strike against Iran that much worse.

However, while the threat of war in Iran weighs heavy on the Mideast, Tehran’s allies in Damascus may in fact be the next domino to fall. As confrontations between loyalists to Syrian dictator Bashar al-Assad and army defectors increase, other Arab powers are beginning to fear a full-blown civil war in the Levant.


The U.S. war in Afghanistan is now in its 11th year in 2012 with an outcome that remains hazy and uncertain. For its part, the Obama administration has quietly but unmistakably engaged the Taliban in the hopes of finding a negotiated settlement. The Taliban now has offices in Qatar where officials claim they will attempt to "reach an understanding with the international community." The chances the two sides will find common ground remain remote, as previous negotiations have collapsed.

Support for the war in allied capitals is likewise collapsing. As the U.S. enters its election season and as Europe enters into a prolonged period of budgetary austerity, sustaining a large-scale deployment and aid mission in Afghanistan is proving to be a difficult sell. As the Center for Strategic and International Studies' Anthony Cordesman has observed, neither President Obama nor his GOP challengers have bothered to address the Afghan war even though monumental decisions about the long-term U.S. footprint are looming.

Meanwhile, U.S. relations with Pakistan have reached a post-9/11 low at a moment when Pakistan is reeling from another domestic political crisis. The so-called "Memogate" controversy is splitting Pakistan's political elite along familiar civilian/military lines and risks triggering further domestic instability at a time when U.S. leverage in the country is at its lowest ebb. 


At this time in 2011, the Arab world was just embarking on what would prove to be a year of revolution and reform that has altered the face of the region. Few knew that the self-immolation of a fruit vendor in Tunisia would quickly grow into widespread unrest and leap-frog from country to country, empowering frustrated Arabs and resulting in the end of once impervious monarchies and dictatorships. Regional stalwarts such as Egyptian President Hosni Mubarak and Libyan leader Moammar Gaddafi are now, respectively, either deposed or dead, and for perhaps the first time in history, Arabs appear ready to empower, rather than oppress, their own people.

But though the status quo has been upended, many questions remain for the region. In the absence of secular dictators and despots there is now the powerful electoral force of political Islam. Whether these movements -- which often push for stringent social regulations and Koranic interpretations of the law -- foreshadow an era of liberal democracy or religious theocracy is still unclear.

Such geopolitical shifts and uncertainty have left Western powers, not least of all the United States, in a rather precarious spot. The old formula of buying off despots for regional stability and easy access to energy resources, while still prevalent, might not remain viable in the years to come. Early indicators suggest that the U.S. is adapting to the new realities on the ground, as just last week it was reported that “high-level” meetings between the State Department and Egypt’s Muslim Brotherhood have been ongoing. Similarly, in the Sunni monarchy of Bahrain, a once routine U.S. arms sale has been put on hold due to concerns over human rights violations against the kingdom’s disgruntled Shia majority. 


Perhaps Christine Lagarde, head of the International Monetary Fund, had the pithiest summation of the state of the global economy on the eve of the new year: "quite gloomy."

That is, if anything, an understatement. Lagarde herself has warned of the dangers of a second Great Depression if coordinated action was not taken to stem the sovereign debt crisis in the Eurozone. In 2011, Eurozone leaders managed to avoid key existential questions surrounding the future of the Euro currency -- whether the Eurozone would be a true union that would involve cash transfers from the rich core to the profligate periphery or whether nations like Greece should break off from (or be kicked out of) the group. They would undoubtedly like to delay such a fateful call, but the bond market is already signaling its displeasure. The European project may be facing its reckoning in 2012.

The state of affairs looks brighter across the Atlantic, as the U.S. enters a new year with economic indicators generally positive. Yet America's economic fortunes are bound up in a global economy, and beyond the Eurozone, China's own blistering economy is showing signs of cooling off. Analysts have begun raising the alarm about a potential "hard landing" for the Chinese economy, but even a soft one, coupled with a recession in the Eurozone, could be sufficient to tip the U.S. back into its own recession. A gloomy prospect, indeed. 


Several key questions hang over the world in 2012. Will the Eurozone collapse? Will the Arab Spring yield a new and generally more stable and benign Middle East or something worse? Will the U.S. and NATO find a satisfying off-ramp in Afghanistan? Will Iran's nuclear program trigger an arms race, or worse? Will China avoid a political or economic crisis?

Most of these questions may not find a satisfactory answer in the year ahead, and there remains the ever-present possibility of "unknown unknowns" that could rear up to dominate the global discussion. In any event, the course ahead looks rocky and uncertain.

Buckle up.