2006: A Look Ahead

December 22, 2005

Backgrounder
Current political and economic issues succinctly explained.

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Introduction

Defining a year just past is often a matter of perspective. Sometimes it’s self-evident: 1989 saw communism fall in Europe, 2001 saw terrorism arrive in a big way in America. Any reasonable measure of the past year would have to factor in the myriad natural disasters: the awful aftermath and recovery from the tsunami in South Asia, a devastating earthquake in Pakistan, an inundated New Orleans that exposed weaknesses in the United States’ ability to provide emergency disaster relief. The continuing conflicts in Iraq and Afghanistan—and the more hopeful electoral strides both nations took—would also rank high on the year’s list of important events, as would the defeated referendum on Europe’s constitution. Many of those developments would have been impossible to predict before New Years Day, 2005. With that in mind, cfr.org looks at some of the issues likely to make news in 2006, and, more importantly, offers the background resources to help you understand them:

Palestinians and Israelis Head to the Polls

The Palestinian Authority (PA) is scheduled to hold parliamentary elections January 26, though PA President Mahmoud Abbas is under some pressure to postpone the vote for fear the Palestinian militant group Hamas will win a landslide victory. Hamas is expected to win 30 percent to 40 percent of the vote. In addition, a youth movement within Abbas’ Fatah party, including a faction led by jailed intifada leader Marwan Barghouti, is mounting a strong campaign to share power. 2005 was a big year for Palestinians: Abbas succeeded former PA President Yasir Arafat, who died in late 2004, in a major election victory in January amid hopes of renewed peace efforts. Later, a shaky mutual ceasefire deal signed February 8 by Abbas and Israeli Prime Minister Ariel Sharon was threatened by ongoing attacks by Palestinian militants and Israeli retaliation. And in August, Israel unilaterally withdrew from Gaza and parts of the northern West Bank after occupying both territories for more than three decades.

Meanwhile, across the green line, Israelis are preparing for landmark elections March 28. The controversial withdrawal from Jewish settlements caused a permanent rift within the right-wing Likud Party. Following the withdrawal controversy, Sharon quit Likud—the movement he helped to create in the early 1970s—to lead his newly formed centrist party, Kadima, or "Forward." Sharon will be supported by ex-Prime Minister Shimon Peres, ousted as head of the Labor Party by Amir Peretz in November’s party elections. Sharon, who is recovering from a stroke he suffered in December, faces a tough race against his opponents Peretz and former Prime Minister Benjamin Netanyahu, the new head of Likud.

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New Leadership at the Fed

At the end of January, Alan Greenspan retires as chairman of the Federal Reserve after serving as the central bank’s head since his appointment by President Ronald Reagan in 1987. President George Bush’s nomination for Greenspan’s successor is Ben Bernanke, who currently serves as Bush’s chairman on the Council of Economic Advisers. The Economist predicts Bernanke, who is expected to carry on Greenspan’s anti-inflation legacy, could face major challenges posed by high fuel costs, flattening or even falling housing prices, and rising interest rates meant to counter mounting inflation fears.

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Terrorism Threat at the Winter Olympics

Turin, Italy, will host the 2006 Winter Olympics in February amid fears of another terrorist attack on European soil. The July 7, 2005, suicide bombings on London’s public transport system that killed over forty civilians have left an indelible mark on European security measures. Like Greek officials who undertook careful counterterrorism measures ahead of the 2004 summer Olympics in Athens, the Italian government has implemented new anti-terrorism measures to ramp up public security. According to news reports, the plans provide for 9,000 police offers and a national information center on the Olympics linked up to police and intelligence services.

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U.S. Midterm Elections and the Iraq war

2005 may end on a high note for President Bush with prospects for democracy in Iraq looking better than they have in months. (The president’s job-approval ratings have rebounded similarly). The December 15 parliamentary elections saw nearly 70 percent of eligible Iraqi voters turning out at polls around the country, even among Sunnis who had boycotted January’s interim elections. As the political situation develops in Iraq, the political debate is set to heat up in the United States with congressional midterm elections scheduled for November 2006 and the 2008 presidential election looming. Americans have already had a preview as to how political pressure will play out in the Iraq debate, and it does not look good for the president or his backers in Congress.

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North Korea and Iran: Proliferation Deadlock

Months of multilateral nuclear negotiations with the world’s two most threatening rogue states, North Korea and Iran, have led to little if any progress, and no breakthrough is expected in the near term. Iraq will likely continue to dominate the foreign policy scene as both North Korea’s leader Kim Jong-Il and Iran’s newly elected President Mahmoud Ahmadinejad defend their countries’ rights to develop nuclear facilities. By October 2006, Iran’s first nuclear power plant, the $1 billion Bushehr facility, is due to come on stream. Since the United States confirmed North Korea was pursuing a secret nuclear weapons program in 2002, Pyongyang has pulled out of the Nuclear Non-Proliferation Treaty (NPT), expelled UN monitors, and, according to arms specialists, may now be able to produce enough plutonium for up to six nuclear bombs a year.

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Latin America Drifts Left of Center


Latin America will host a dozen presidential elections and thirteen legislative elections across the continent. Many election observers predict the elections will result in a regional tilt to the left for years to come. Since 1999, when Hugo Chavez was voted into office in Venezuela, left-leaning leaders have emerged in three-quarters of the hemisphere countries, and now head Latin America’s three largest economies: Brazil, Argentina, and Venezuela. Already, elections at the end of 2005 brought socialists of moderate (in Chile) and not-so-moderate (in Bolivia) stripes into office. The key issue in 2006 will be whether the recent left-wing trend will continue, and if it does, what these new left-leaning governments will look like. The most important of these votes will occur in Latin America’s two giants: Mexico and Brazil. Will Latin America’s newly elected leftist leaders fall in line with anti-American, anti-private sector Chavez, or will these governments look like the more moderate administration of Brazilian President Luiz Inacio Lula da Silva?

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Hope for Africa


2005 saw moderate progress toward stability in Africa. Ellen Johnson-Sirleaf was elected president in Liberia, making her the continent’s first female president. But civil conflict and disease continue to dominate the continent’s agenda. Wars of varying degrees rage on in the Democratic Republic of the Congo, Uganda, and Sudan’s Darfur region. Tensions arose between neighbors Ethiopia and Eritrea, threatening a return to warfare there. Chad’s president renounced a groundbreaking deal with the World Bank that would have ensured revenues from an oil pipeline would flow to poor citizens as well as into the usual bureaucratic pockets. The bank could decide to halt pipeline construction in the coming year. AIDS continues to ravage the continent and Zimbabwe’s Robert Mugabe continued his transformation of Africa’s bread basket into a basket case. Political protests in Kenya and regional violence in Nigeria—targeting the country’s oil infrastructure—punctuate the challenges that even the more established African states will face. But there are some bright spots: Pressure is building on wealthy nations to offer debt relief and forgiveness to African nations and to lower the subsidies they pay to their own farmers, which hurt poor farmers in Africa.

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Big Year for Germans


After a contentious campaign and drawn-out leadership negotiations between the conservative Christian Democratic Union (CDU) and the leftist Social Democratic Party (SPD) parties, the conservative Angela Merkel was chosen as Germany’s new chancellor. She is the first woman to occupy the post. But in 2006 she faces an uphill battle leading a coalition government as she tries to reduce Germany’s 11 percent unemployment rate and kick-start its stagnant economy. One area where Germans can reasonably expect to shine in 2006: as hosts of the World Cup, which begins in June.

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Security Assistance in Afghanistan


Next year will significantly test NATO’s continued relevance a decade and a half after its arch enemy, the Soviet Union, disappeared. In Afghanistan, NATO plans to increase its International Security Assistance Forces (ISAF) and take over some critical security functions from U.S. troops—including searching for al-Qaeda leader Osama bin Laden along the country’s restive border with Pakistan. The United States will draw down its troops from 16,000 to 13,000 over the next year. The UN assistance mission mandate in Afghanistan is also set to expire March 2006, after it was extended for twelve months in March of this year. Afghanistan will be seeking to build on political progress made in 2005, when the country held parliamentary elections that added a freely elected legislature to President Hamid Karzai’s government. Despite the political gains, Afghanistan continues to face serious problems with warlords, drug cultivation, and security.

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New Leadership at the UN


At the end of 2006, Kofi Annan will step down as secretary-general of the United Nations. "Regime change" at the UN will force a review of the organization’s reform package, agreed to last September at the UN summit in New York. The document is a watered-down version of Annan’s own reform proposal. In an increasingly globalized world, more is expected of the UN as a global institution than ever before. The UN’s new leadership will be asked to answer for many of the organization’s shortcomings, chief among which was the oil-for-food scandal in Iraq. The report of the independent commission, led by former Federal Reserve Chairman Paul Volcker, documented misconduct that helped to undermine Annan’s final years in office and fuel the worst charges of the UN’s many enemies, including those on the right in the U.S. Meanwhile, the Security Council’s unwillingness to undertake serious peacekeeping in the Darfur region of Sudan was the source of enormous criticism, much of it unfairly leveled at the UN itself rather than the powerful member states that dominate it. Observers say the coming year will bring a true test of whether the UN is able to remake itself. If the United Nations’ member states, who ultimately determine the organization’s success or failure, quickly and properly implement September’s modest reform proposals, experts say, there will be an opportunity for real progress at the UN.

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The Threat of an Avian Flu Pandemic


The beginning of the 2005 flu season revived the ever-present danger of a possible bird flu pandemic, which health experts say could spark a public health catastrophe on the scale of the 1918 influenza outbreak that killed 50 million people in eighteen months. In the face of a modern-day avian flu outbreak—which could strike next month, next year, or in the next decade—experts say more than 500 million people could die.

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