The trick in life isn’t to know the answers: it’s to ask the right questions. At the end of 2014, I asked three questions about 2015 that I believed would shape the year. Columnists are too rarely held responsible for their work, so, in the name of accountability, here were my questions for 2015, with new ones for 2016.
My first question last year was whether low-cost Saudi oil production would destroy U.S. fracking. The data lags, but as of June, the United States was producing 2.8 million more barrels per day than Saudi Arabia. Lower prices have driven inefficient frackers out of the market, not crushed them all. Even if production drops more, you can’t put the genie back in the bottle. I’d call that a win for the United States.
My second question was whether the brutality of radical Islamism in Syria would alienate their foreign fighters from Europe, just as it alienated the people of Afghanistan. So far, there are few signs of this. The desire by the so-called Islamic State to be a state makes me fear it may have more staying power than I’d hoped, though alienation still seems a reasonable bet over the longer haul.
My final question was whether the world’s dictators would take further advantage of President Barack Obama’s apparent preference for dictatorial order over liberty. That’s a big yes: from the Iranian nuclear deal to our tacit alliance with Russia against ISIS, we’ve spent much of 2015 being suckers for strongmen.
In 2016, the obvious questions relate to who will win the U.S. presidential election. But the range of uncertainty is small: fewer than 10 people in the world might be the next president. And it’s something we’re all thinking about already.
We might think instead about the world economy. Economic crises start when everyone thinks things are going well. The U.S. economy is hardly booming, but the current expansion will shortly be the third longest in post-war history. It’s going to end — likely sooner rather than later.
Abroad, things look far worse. The Euro crisis is not over; the BRICS — Brazil, Russia, India, China, and South Africa — are wobbly at best; and Nigeria is so short of foreign exchange that Nigerian ATM cards no longer work abroad. As the United States starts to raise interest rates, these markets will become less attractive. My question: How that will play out in 2016?
I fear the stage is set for the mother of an emerging markets crisis. The emerging world in general, and China in particular, accounted for most of the world’s growth over the past decade. But they’ve done it by riding a commodities boom and by spending money in unprofitable ways. Not all the growth was fake, but there’s enough rottenness in the system to make a heck of a crash.
My other questions are about the Middle East, in one way or another. Today’s conventional wisdom is that we need to cooperate with Russia to fight ISIS. It’s an example of Vladimir Putin’s ability to reinvent himself as a Western ally. He did after 9/11. I wonder whether we’ll fall for his act again in 2016.
Finally, there’s the Iran deal. The Iranians seemingly have a lot to gain from not doing anything too outrageous before Obama leaves office: the longer the deal seems to be working, the harder it will be to get rid of once he’s gone. But so far, from continuing to test nuclear-capable missiles to imprisoning U.S. journalist Jason Rezaian, the regime has been just as provocative as ever.
I doubt Iran will change its spots: the regime was born radical in the Iranian Revolution of 1979. So my question is less whether Iran will change, and more whether we will. If this year we re-learn Ronald Reagan’s lesson that deals have to be based on verification, not just trust, that would make 2016 a good year, indeed.
Ted R. Bromund is is a senior research fellow in The Heritage Foundation’s Thatcher Center for Freedom.