The World Next Week: Global Economic Risks After the Fiscal Cliff, Hugo Chavez’s Inauguration, and U.S.-Russian Talks on Syria

The World Next Week podcast is up. Bob McMahon and I discussed global economic risks, Hugo Chavez’s presidential inauguration in Venezuela, and upcoming U.S.-Russian talks on Syria with UN and Arab League envoy Lakhdar Brahimi.

[audio: http://www.cfr.org/content/publications/media/editorial/2013/20130103_T…]

The highlights:

• The World Economic Forum releases its annual Global Risk Report next week. Last year’s report cited income inequality, bad government balance sheets, and greenhouse gas emissions as top risks. All three could easily repeat as top risks again in 2013. There certainly is enough to worry about on the fiscal front. Washington reached an agreement this week on avoiding the fiscal cliff, but in doing so it set up three new potential crises for the first quarter of 2013: late February when the U.S. government runs out of ways to avoid hitting its $16.349 trillion debt ceiling; March 1 when the sequestration process temporarily suspended by the fiscal-cliff deal goes back into effect; and March 27 when the appropriations resolution funding the U.S. government’s operations expires. The new deadlines, and the inevitably bitter debate within Washington about how to meet them, likely mean a turbulent few months in the financial markets and a consequent drag on global economic growth.
• Hugo Chavez, who was reelected back in October to his fourth term as Venezuela’s president, is scheduled to be inaugurated on January 10. But Chavez, who is hospitalized in Cuba following his fourth cancer surgery, is in a “complex and delicate situation,” accordingly to Vice President Nicolas Maduro. Speculation abounds about whether Chavez will recover sufficiently to take the oath of office and what will happen if he doesn’t. Chavez presumably selected Maduro as his vice president because he was confident that the former bus driver would continue his Bolivarian revolution. Maduro may turn out to be a loyal lieutenant. But history offers up many examples of protégés who abandoned their mentor’s course or lacked the political skills to remain in power.
• The U.S. and Russian governments say they will send diplomats to meet with UN and Arab League envoy Lakhdar Brahimi to discuss Syria. The meeting is not likely to produce a breakthrough in a conflict that has now killed more than 60,000 people. Brahimi was in Moscow last weekend, where the Russian foreign minister told him that Syrian President Bashar al-Assad has no intention of giving up power and that “there’s no possibility to change this position.” Moscow’s refusal to pressure Assad to go partly reflects Russia’s longstanding support for his government and concerns about the fate of Syria’s Orthodox community. But it also reflects deep disagreement with the United States and Europe over the wisdom and propriety of overthrowing sitting governments, however wretched they might be.
• Bob’s Figure of the Week is Joe Biden. My Figure of the Week is three. As always, you’ll have to listen to the podcast to find out why.

For more on the topics we discussed in the podcast check out:

Global Economic Risks After the Fiscal Cliff: WEF’s 2012 Global Risks report warned that economic imbalances and social inequality threatened to reverse the gains produced by globalization. The Washington Post reports on how Vice President Joe Biden and Senate Minority Leader Mitch McConnell pulled Congress away from the fiscal cliff. The National Journal offers its own tick-tock on the fiscal-cliff deal, as does Politico. Suzy Kimm argues that the fiscal-cliff deal may have made the markets happy for a moment but will prove to be a drag on economic growth.

Hugo Chavez’s inauguration: The Associated Press writes that secrecy about President Chavez’s health condition is fueling rumors and uncertainty in Venezuela. Reuters reports that Venezuela’s opposition movement has demanded the government come clean about Chavez’s health. following his prolonged stay in Cuba. The Financial Times explains that Chavez’s potential absence from his scheduled inauguration could trigger a constitutional crisis.  Al Jazeera cites government officials saying that Chavez is alive and conscious.

US and Russia hold talks with Syria envoy Brahimi: Bloomberg reports that while Syrian President Bashar al-Assad has no plans to step down, Russia has increased pressure on him to engage in a political dialogue with the opposition. The Associated Press writes that a Philippine shipping company recently canceled its contract with Syria citing increasingly dangerous conditions, further weakening the Syrian economy. Reuters argues that the window of time for a peaceful solution to the ongoing violence in Syria is slowly closing. The Washington Post explains that despite Russia’s willingness to meet with the Syrian National Coalition, the two parties strongly disagree on whether or not Assad should remain in power.  Samuel Charap explains why Russia won’t help on Syria.