36-Month Forecast

Intelligence is the place where the future international challenges and threats against the US should be envisioned. For many years it has been the practice to look at the world by studying population and resource trends and draw conclusions about regions or belts of instability that might be flashpoints for disorder and require U.S. military assistance or intervention. Today, however, as the United States shifts its gaze after ten years of almost near exclusive focus on the Middle East and Central Asia, it is discovering that a new geopolitical context has emerged in the world.

Nations are seeking to offset U.S. power, to regain past positions of strength and to become regional and even global hegemons in their own right. They are achieving this by recreating themselves, upgrading their military power, formulating and executing maneuvers and plans to advance their regional and international objectives as well as countering U.S. power and interests.

In a world where the United States is the dominant power, multipolarity means the United States will face not one challenger but coalitions of smaller challenges, all seeking to limit and manage American power. Intelligence forecasting, then, must focus on identifying the core nations around which these coalitions will be built before they begin effectively asserting challenges to the United States.

U.S. military strategy most often aligns to fight the last war and it will be hard to break the fixation on the Afghanistan experience as the model for the next conflict. U.S. led combat operations in Afghanistan represent a particularly unique warfare experience for the United States – quite possibly one of the more unique in its history. Long term operations in a land-locked country, using surrounding third countries’ infrastructure, road and ports to transport logistics, fighting a level one insurgency with light infantry where US forces must deal with the politics and cultures of local populations as much as fighting insurgency is less a model for the type of warfare of the future than a model for the most extreme and least likely scenario.

Formulating a forecast on the principal strategic adversaries of the future and where Marine forces are likely to be engaged requires developing a taxonomy of international challenges and likely threats. Otherwise everything looks the same and it is easy to be drawn to the most frequent events and distracted from the most critical until an unforeseen surprise forces readjustment. The international landscape of challenges can be divided into three types: sub-critical missions whose outcome has only short-term consequences; critical missions whose outcome can reshape a region and a generation; and existential missions whose outcome can threaten the republic. The first is the most common, the second less common and the third least common. But it is not the frequency of a type of war that determines its importance, but its significance. Neglecting the existential war that occurs once or twice in a century can be catastrophic. The Marines must fight all three types of wars and resist the temptation to focus only on the most frequent types.

The Marine Intelligence forecast for the next 36-60 months consists of four parts. The first is that the primary mission of the United States in the Jihadist wars has been achieved. Radical Islamists have not been eliminated but that is militarily impossible. They have been weakened. The goal now is containment of these groups largely achieved by fighting an intelligence war and mounting operations from time to time to disrupt hostile groups or shatter areas where they are organizing. Counter terrorism will be a permanent feature of U.S. military strategy but not a dominant theme. Maintaining careful watchfulness, supporting other countries in this fight, and conducting periodic surgical intervention will come to define the appropriate U.S. allocation of forces to minimize this threat to the homeland.

The second part of this forecast involves critical, and possibly existential, geopolitical threats in the Middle East and South Asia and the power shifts that will occur there as the U.S. relocates from Iraq and Afghanistan. The U.S. and its allies will bring an end to the large-scale conventional military campaign in Afghanistan by 2014. This is the defining near-term dynamic of the conflict, and the region will continue to face significant security challenges.

Iran will emerge as the dominant force in the Persian Gulf. It will attempt to consolidate its gains in Iraq and to reshape the politics of the region. It will continue to make moves and to work to build up its assets in Bahrain and other Shiite areas of the region. Iran sees the next several years as a critical window of opportunity to take advantage of unprecedented changes to achieve its aspirations to readjust the economic alignment in the region to its favor and assume its perceived place as the regional hegemon. The environment will be especially tense. For Iran, the risk will be that too aggressive and overt action might instigate an American response. Similarly, any American response might well be perceived by Iran as a prelude to a wider war. The potential for rapid escalation is significant. Most scenarios for Iranian-instigated crises in the Persian Gulf are almost certain to encompass American partners and allies as well as some degree of threat to freedom of passage within the Strait of Hormuz. In that event, the capability to readily conduct amphibious operations in the strait and the wider Gulf will be critical.

Evolving political dynamics in Egypt will likely drive the country toward an increasingly confrontational stance with Israel over the next three years. As Israel's vulnerability increases -- especially if Hamas with support from the Egyptian Muslim Brotherhood is able to escalate violence -- it more seriously will have to contemplate a policy of pre-emption toward Egypt, which could result in an Israeli redeployment to the Sinai Peninsula. A serious breach of the 1979 peace treaty between Egypt and Israel remains within the realm of possibility within this time frame, thereby raising the potential for U.S. military intervention to contain a Suez crisis.

In the third part of this forecast are the critical and possibly existential threats of two major regional hegemons that have emerged in the 10 years the United States has been in involved in wars in the Middle East and Central Asia: China and Russia. China accurately sees U.S. attention returning to the Pacific, and it will read U.S. actions as part of a strategy

of encirclement. Chinese power has been growing, with particular investment in developing high technology naval, air and cyber forces. The effectiveness of these forces is undetermined, but China is capable of putting a spectrum of strategies in play to respond to perceived or real U.S. actions that threaten encirclement or internal instability -- China's two greatest fears. It is not China's cutting-edge weapons development that dominates this forecast period, but rather its ability to escalate or de-escalate crises and its ability to readily funnel higher-end but established and proven weaponry (anti-ship missiles, air defense systems, anti-tank guided missiles, etc.) to proxies and disputed territories to complicate a crisis to its advantage. Should the Chinese feel significantly threatened at home, they have the ability to instigate crises in different locations, drawing the attention of the United States and its allies to places away from Chinese shores. Places like Aceh on the Strait of Malacca or West Papua in the Indonesian islands, or minor skirmishes in the South China Sea, or even in places in Africa or South America could be areas where China could use low-cost, low-risk activities to kindle crises that distract the United States.

The current apparent calm in U.S.-Russian relations is false and will not last. Fundamental geopolitical conflicts of interest exist and are coming to a head. Russia considers the last few years to have been enormously fruitful in terms of consolidating Russian control over a number of former Soviet states (not including the Baltic States), and sees its efforts in the next few years as setting up the chess pieces for a strong game in the latter half of the decade. Moscow is also acutely aware of the narrowing window of opportunity as the United States disengages from its wars of the past decade, and is moving deliberately to consolidate its gains and push its advantage in the next three years. At present, it is using its amassed sovereign wealth to buy up banks, utilities and other fiscally distressed institutions -- and these growing investments are part of a broad, active and multifaceted campaign to divide and control Europe. The financial crisis in Europe plays squarely into this effort. It is clear that Russia already has, and is continuing to expand, the strength of key relationships and a variety of means of leverage amid an increasingly divided landscape on the European continent. A carefully crafted, Russian-devised and -instigated crisis in the Baltics within the next three years or soon thereafter is extremely likely.

To be clear: given the current instability of Europe, the Russian Caucasus policy, and inroads into Kazakhstan, Russia should be seen as the most significant potential danger to the United States. This does not mean it is the only danger, nor that the potential danger will with certainty evolve into conflict. However, Russia should be regarded as the single most significant challenge of the next decade. The danger is less a full-scale war than a forced encounter. The most immediate threat is in the Baltics, where the Russians are in a position to incite unrest among the Russian population. Given the strategy threat the Baltics pose to the Russians, and given Baltic membership in NATO, a forced encounter, where the U.S. must engage directly, is a possibility and how it plays out could have significant, long-term strategic repercussions. Depending on circumstances and sequence, similar encounters of lesser probability exist in Moldova and Georgia.

The fourth and final part is the always-present brush fire actions that erupt across the globe and grab the headlines. These perennial missions often require Marines to deal with a range of situations that must be addressed, but which are not central to U.S. strategy.

These range from relief operations in natural disasters and civil wars to peace-making and -keeping, to the rescue of U.S. citizens and diplomats and so on. While not posing existential threats to the United States, these are important elements of U.S. foreign policy and commitment to the international community and its own citizens. These operations are complex, frequently dangerous and politically sensitive and in nearly every case involve Marines operating from Naval ships. They are impossible to predict but occur a minimum of three to five times per year on average up to six to nine times in busier years.

Of note are worsening trends in terms of the destabilizing effect of transnational criminal networks in places like Central America and particularly Mexico. It is critical first to distinguish between that illicit trade and the violence. Immensely powerful financial forces, particularly the demand for narcotics in the United States and the prices those narcotics command, underlie the former; the struggle between transnational criminal organizations for control of that trade underlies the latter. The majority of the Mexican economy is off the books. Official economic figures do not reflect the tremendous significance of these financial flows to the overall Mexican economic system. Ultimately, ending the drug trade is as unrealistic as winning the "long war" against transnational terrorism.

The example of Afghanistan is an important not only because it cannot be used as a model, but also because it should not be so used. It is a cautionary tale of how a mission to disrupt a transnational jihadist network spiraled into a decade-long counterinsurgency and nation-building effort. Similarly, interventions in brush fires are dangerous not simply for the work itself but because the brush fire is generally rooted in long-standing and difficult-to-reconcile local and regional dynamics. They take place in areas with real, persistent and deeply intractable problems. Being clear on the mission and keeping it tightly focused is critical. The challenge of brush fires is not only getting in, but getting back out. Forces committed and intended to achieve a limited objective can quickly inherit non-military problems they are not equipped to address. And since the key U.S. potential adversaries -- Iran, Russia and China -- have every interest in precisely this dynamic, brush fires must be confronted with enormous caution, reticence and a robust exit strategy. We therefore see three major areas where Marine deployment is possible to likely, the Persian Gulf, Russia and China. In the Persian Gulf, intervention to resist Iranian forces or proxies becomes critical. Such an intervention would include both a balance of power aspect and a choke point dimension centered on the Strait of Hormuz. The second points of conflict and potential intervention are on the Russian periphery, in particular in the Baltics or in the Caucasus, especially Georgia. Many of these operations can only be carried out with extensive amphibious operations, sustained airpower into potentially dangerous air defense environments and with the possibility of significant resistance. The third is not China itself, but is likely along the South China Sea or Strait of Malacca where China has a hand either in overtly asserting its regional dominance or covertly manipulating a situation to its advantage.

Indeed, a significant potential for an element of deliberate, clandestine support and manipulation by Iran, Russia and China exists across these three theaters. Each of these powers has demonstrated a strong understanding of U.S. thinking, decision making and

operational practice. They are students of the American way of war, and have invested much in devising weapons, tactics and strategies to upset that way of war. Each has the capability to move operatives and weapons of particular lethality into what may appear to be a seemingly more benign environment. This goes beyond the isolated instance of an Iranian Islamic Revolutionary Guard Corps unit launching a single anti-ship missile at an Israeli corvette in 2006. The potential both for more modern weaponry and a larger volume of it to be moved into a conflict area to the advantage of the sponsoring power and the detriment of the intervening force (which could readily prove to be the Marine Corps) cannot be ignored. In other words, the Marines cannot know exactly what awaits when they go ashore. And precisely because of the nature of the more strategically significant contingencies it may be called upon to make, they must assume that the adversary and the threat environment is more dangerous and severe than appearances suggest. And given the interest of these same powers in distracting and bogging down the United States, even apparent brush fires may entail or take on greater significance.

Though we do not see a fundamental shift in tools at adversaries’ disposal in the next three years, Marines must be prepared to face far more modern weapon systems operated far more proficiently and in a more operationally adept and coherent manner than the relatively poorly equipped small unit and light-infantry engagement they have experienced in Afghanistan in recent years. Potential contingencies in places like the Persian Gulf, the Baltics or on the periphery of the South China Sea are likely to entail an element of deliberate, clandestine action by Iran, Russia and China (respectively). Each of these powers has demonstrated a strong understanding of U.S. thinking, decision making and operational practice – they are students of the American way of war and have invested much in devising weapons, tactics and strategies to upset that way of war. And each has the capability to move operatives and weapons of particular lethality into what may appear to be a seemingly more benign environment. This goes beyond the isolated instance of an Iranian Islamic Revolutionary Guard Corps unit launching a single anti-ship missile at an Israeli corvette in 2006. The potential for both more modern weaponry and a larger volume of it to be moved into a conflict area to the advantage of the sponsoring power and the detriment of the intervening force (which could readily prove to be the Marines) cannot be ignored. In other words, Marines cannot know exactly what awaits when it goes ashore, and precisely because of the nature of the more strategically significant interventions it may be called upon to make, it must assume that the adversary and the threat environment is more dangerous and severe than appearances suggest. And given the interest of Iran, Russia and China in distracting and bogging down the United States, even apparent brush fires may entail or take on greater significance.

In particular, the Marines must concern themselves with three obvious vulnerabilities. The first is logistics. The speed at which the American war machine can move into a theater and the logistical vulnerabilities of supply lines is well understood (including further up the logistical chain at key hubs outside the immediate region – consider the Russian ability to cause trouble for the Air Transit Center at Manas in Kyrgyzstan). Tactics – not all involving the exercise of military force – to deter, slow and complicate intervention are to be expected. Second are space-based systems. The advantages the United States military derives from space-based systems is well understood. Any competent adversary will seek

to deny those advantages through any means at its disposal. Because it is expeditionary and the first to move ashore, more robust architectures and the ability to rapidly expand and even reconstitute on-orbit systems are Marine issues. Early attempts at GPS jammers and other means of interference are a harbinger of the future operational environment and it will be Marines ashore that pay the price if the next iteration proves more capable than Air Force assessments predict. Finally is access and recent trends in asymmetric – essentially guerilla – warfare at sea. The way the U.S. Navy has doctrinally retreated further and further off shore should be seen as a shaping of potential future battlespaces in ways detrimental to the Marines. The use of naval mines, the proliferation of anti-ship missiles and small boat swarms are simply the most visible tools in a guerrilla war at sea that may well define many of the more strategically significant contingencies in the Strait of Hormuz and the Persian Gulf, Aech and the Strait of Malacca and in the Baltic Sea. The further the U.S. Navy actually retreats offshore and particularly the unexpected success of guerrilla tactics here will be detrimental to getting and sustaining Marines ashore.

The range of operations in the future will span a wide continuum. The common theme is that many of these operations will come from the sea. They will occur with surprising speed and Marines will go ashore, secure beaches, sustain themselves and conduct a range of military operations from humanitarian assistance to mid- and high-intensity combat operations. And while some will no doubt be true isolated events, many will take place in a larger geopolitical environment where other powers will be manipulating events.

Detailed Regional Analysis

Middle East and South Asia

Iran and the Persian Gulf: With the withdrawal of most or all of American forces from Iraq by the end of 2011, Iran will emerge as the dominant force in the Persian Gulf region. As Tehran seeks to consolidate its recent gains, it also will be highly conscious of the limited time it has to exploit a historic opportunity to extend its influence in Iraq and the wider region while its position is strong. Iran rightly views the United States as highly unpredictable and cannot be assured that the United States will remain as constrained as it is now in the coming years. Moreover, Iran is facing off in the long term against Turkey, a country with deep political, economic and military power that far surpasses that of Iran. Turkey may still be early in its re-emergence, but already Iran and Turkey are falling into their natural competitive roles in Iraq and Syria.

The next three years will thus be critical for Iran to force a regional realignment of interests on its terms while the United States tries to regain its strategic footing. Within the coming years, Iran will work to mitigate threats from its Arab neighbors (for example, by keeping tight limits on Iraq's military capabilities) while trying to maximize the extent to which it can extract economic concessions from its neighbors. Iran's strategic interest is to drive the United States toward an accommodation on Tehran's terms while it still has the upper hand in the region and while the United States remains too distracted to deal decisively with Iran. Along with this effort, Iran will use its covert

assets to try and reshape the politics of the Persian Gulf region. While Iran's first imperative will be to try and consolidate influence in Iraq, it will also be making a concerted effort to develop its covert assets in the eastern littoral of the Arabian Peninsula. Bahrain is the key target in this effort, where Iran hopes to stir up Shiite unrest to the point that it spreads to Saudi Arabia's oil-rich Eastern Province and thus compel Riyadh to negotiate more seriously with Tehran.

Iran must also contend with internal political struggles in trying to pursue a coherent foreign policy. The faction represented so far by Iranian President Mahmoud Ahmadinejad, which charges the corrupted clerical elite of betraying the revolution and ignoring the demands of the poor, significantly has undermined the clerical regime. The most striking aspect of this power struggle is not the idea of a single firebrand leader getting ganged up on by the country's senior-most clerics, but the fact that such a leader would not be attacking the clerical establishment unless it already was perceived as weakening and undergoing a crisis in legitimacy. Ahmadinejad, a mere politician, should therefore not be the main focus in monitoring the development of this power struggle. The far more important issue is the underlying faction that he represents and the delegitimization of the country's enriched clerical elite. Iran's internal pressures are not likely to distract the country from meeting its imperatives in Iraq, but with time, the discrediting of the clerics is likely to create an opening in the country for the military -- as opposed to pro-democracy youth groups -- to assert itself in the political affairs of the state.

Iran will rely on its unconventional military capabilities to deter the United States from a major military intervention that would risk a crisis in the Strait of Hormuz. Most scenarios for Iranian-instigated crises in the Persian Gulf are almost certain to encompass American partners and allies as well as some degree of threat to freedom of passage within the strait. In that event, the capability readily to conduct amphibious operations in the strait and the wider Gulf will be critical. For Iran, the risk will be that too aggressive and overt action might instigate an American response. Similarly, Iran might well perceive any American response as a prelude to a wider war. The potential for rapid escalation is significant.

Iraq and Iraqi Kurds: Ultimately, Iraq will be defined first and foremost by this U.S.-Iranian dynamic. The fall of Saddam Hussein has allowed Tehran to become the driver of events in Iraq. It is no mistake that the status of Iraq has become more dependent on Iran – to the point of even internal domestic Iranian dynamics. Post-Baathist Iraqi elites are even more attuned to Iranian interests and susceptible to Iranian pressure. The Iranian ability to destabilize Iraq should not be underestimated, particularly if tensions between the United States and Iran increase. The risk of ethnosectarian backlash if Iraqi security forces are exercised too aggressively for political and ethnosectarian gain is important for the domestic balance of power, but it is in Tehran that the near-term fate of Baghdad will be decided.

Kurdish populations in other countries remain under the thumb of the respective regimes. It is Iraqi Kurds that remain in play. Ultimately, Iraqi Kurdistan is beholden to

Turkey (and to a lesser extent, Iran). Ankara will tolerate a degree of Kurdish autonomy in Iraq, but only under strict guarantees to work against Kurdish militants attacking Turkey. If the autonomy goes too far or if Iraqi Kurds support those militants we can expect Turkish intervention, which will be supported by the Iranians. Both Turkey and Iran already conduct military operations against Kurdish militants taking sanctuary there, and both countries simultaneously are seeking to weaken any residual American presence in the Kurdish north to deny Iraqi Kurds any real sense of autonomy and independence and also, increasingly, in competition with each other.

Afghanistan, Pakistan and India: The United States and its allies will bring an end to the large-scale conventional military campaign in Afghanistan by 2014. This is the defining near-term dynamic of the conflict at the moment, though the region will continue to face significant security challenges.

Within the negotiation effort over the next three years Pakistan and the Afghan Taliban (with the political authority held by Mullah Omar and with the subservience and deference of the Haqqani network) largely will work in concert to achieve their respective aims in a postwar settlement. Pakistan will seek a dominant role in Afghanistan to keep rivals out and extend its buffer space, while the Taliban will be looking for political dominance (but not total control) in any future coalition government, constitutional change that strengthens its position and major limitations on residual U.S. forces in country.

But the Taliban ultimately remains a diffuse, decentralized phenomenon. Subfactions, what remains of al Qaeda, the Pakistani Taliban and other fighters will continue to conduct aggressive operations and attacks and attempt to play a spoiling role. Pakistan itself will have some role here, as its interest is to eliminate any channels of negotiations not controlled by Islamabad. Pakistan will exploit the reduced U.S. and allied military footprint in Afghanistan to return Afghanistan to its sphere of influence. The U.S.-Pakistani alliance will remain uneasy given Pakistan's inherent need to maintain strong ties with the Afghan Taliban (as with all other significant players in the country) and its militant affiliates in preparation for ensuring its long-term leverage in a postwar scenario. Ultimately, this scenario is in Pakistan's fundamental national interest.

In the near-term, the U.S.-Pakistani alliance will rest on a common interest in preventing the re-emergence of a transnational jihadist force. Given the withdrawal deadline the United States has set for itself and for its allies, the American reliance on Pakistan and the importance of Pakistan in Afghanistan, Islamabad sees itself in a stronger position than the United States at present. The Pakistani view is that the United States is running out of options, and consequently perceives any arrangement made by Washington at the current time as one of expediency and therefore inherently temporary. But the military-dominated regime in Islamabad remains strong, and has every interest in a strong relationship with the United States that allows it to continue

to acquire the weapons and support it sees as essential to maintaining its defensive capabilities against India.

Turkey: For the last hundred years, Turkey has occupied an unnatural position, confined primarily to Anatolia and with limited regional influence. That is changing. With the United States reducing its presence in the region, Turkey is emerging as the dominant Muslim nation. Its economy is the largest of any Muslim country and the 17th largest in the world. Its military is one of the most substantial in Europe. As Turkey develops, it will return, at least partially, to its historical role of the dominant regional power in the Arabian Peninsula, the Balkans and Caucasus and in the Eastern Mediterranean. The U.S. relationship with Turkey is, therefore, one of the most important relationships for both countries. The U.S.-Turkish relationship will be essential in maintaining U.S. influence in Iraq and beginning to craft a long-term balance to resurgent Iranian power.

Egypt and Israel: Evolving political dynamics in Egypt will likely drive the country toward an increasingly confrontational stance with Israel over the next three years. A number of regional players with significant covert capabilities have an interest in creating an Israeli-Palestinian conflict that would undermine the clout of the Egyptian military regime and thus produce a shift in Egypt's orientation toward Israel. As Israel's vulnerability increases, it will have to contemplate a policy of pre-emption toward Egypt more seriously, something that could result in an Israeli re-deployment to the Sinai Peninsula. A serious breach of the 1979 peace treaty between Egypt and Israel remains possible within this time frame, thereby raising the potential for U.S. military intervention to contain a Suez crisis. In terms of managing Israel, the sale of U.S. weaponry can be used to gain greater U.S. leverage over the country.

Syria and Lebanon: The Syrian Alawite-Baathist regime led by Syrian President Bashar al Assad will weaken significantly over the next three years, but its break point probably is not imminent. Fractured opposition forces in Syria are unlikely to overcome the logistical constraints preventing them from cohering into a meaningful threat against the regime within this time frame. In the long term, however, Syria's geopolitical trajectory is pointing toward a weakening of Alawite power and the re-emergence of Sunni power in the state with the backing of major regional Sunni powers -- most notably Turkey, Saudi Arabia and Egypt. A number of factors indicate any political transition in Syria away from the al Assad clan probably will entail a violent, protracted civil conflict, one that will enflame sectarian unrest in Lebanon, where civil war is a defining characteristic of the state.

Yemen: Yemen's ongoing political crisis could rise to the level of civil war over the next three years, thereby intensifying Riyadh's sense of insecurity and exacerbating the jihadist threat in the Arabian Peninsula.

Saudi Arabia and Jordan: The Saudis continue to look to the United States for leadership, but lacking that or finding that insufficient, they will consider themselves left with no choice but to deal with an aggressive, assertive and resurgent Iran directly.

The overall Saudi imperative is regime survival. If Riyadh considers U.S. management of the situation insufficient in the face of a powerful Iran, its alternative will be to reach a strategic political accommodation with Tehran.

The Hashemite regime in Jordan has weathered recent unrest with flexibility and firmness. It remains in control and we not expect instability unless the Palestinian organizations change their policy of not engaging the Hashemites (which we do not see as a viable option for them). Jordan will remain a close American ally for the next 36 months, though it will be important to monitor any slow drifts as a result of recent regional unrest and regional shifts away from that status in the long run.

East Asia

China: China is in the midst of a major social, economic and political crisis that has been building for many years, one exacerbated by the lack of a robust recovery of European and American economies (and the lack of one on the horizon). This internal tension and internal focus will persist beyond the 2012 leadership transition, which will see increasing military representation and influence in the civilian leadership. Whereas Japan appears outwardly weak but stands on strong fundamentals, China is the opposite: Beijing has become increasingly expert in perception management -- crafting the outward image of a strong and inexorable growth masking internal weakness and contradiction.

Ultimately, the primary goal of the Chinese system is the maintenance of Party leadership, e.g., regime survival. The second is the unity of the nation, as this serves the primary goal. Last and least is the enrichment of the Chinese people -- which in any event is never in fact a goal in itself, but simply a vehicle toward the first two objectives. Amid this crisis is another: The shift from the decentralized management of the economy back to a centralized model. Deng Xiaoping promoted a model of economic growth that ultimately largely devolved to the provincial and local governments. So long as they met or exceeded their growth targets, they were seen as successful. The idea was rapidly to accelerate China's economic growth, and in many ways it was successful. But the result was something seen throughout Chinese dynastic history: The devolution not only of economic policy, but ultimately of overall power from the center to the regions. As the economy grew, so did the connections between local officials and business interests. Matters have reached a point where Beijing has a difficult time enforcing any central macroeconomic policies due to local leadership's resistance. But the changes in the global economic situation, and the limits of the Chinese economic model, as well as the perceived sense of rising social dissatisfaction, have triggered a drive toward recentralization of economic and social control. This in many ways is pitting the central government against regional and local interests. It is also causing problems for private industry, in a country where small- to medium-enterprises comprise some 70 percent of employment. Central government policies to deal with inflation have triggered a contraction of available lending, and Chinese banks are strongly favoring state-owned enterprises over comparable-sized or smaller private enterprises. This lack of available capital has led to a boom in grey-area lending with

high interest rates, at a time when commodity imports and raw material prices are high and export prices of manufactured goods are low.

Perceptions of Chinese military power are equally skewed. The development and showcasing of high-end weapons capabilities has two values. The first is its nationalistic value -- a nationalism that might transcend ethnicity or region and highlight more generic Chinese achievement. The second is the more that China can appear to be a military-technological near-peer competitor to the United States (or even increase discussion of such capability), he Chinese interest is served by making the threat of war more imposing, thereby disincentivizing and deterring any attempt by an outside power to do what the regime really fears: tinkering with internal stability.

In truth, there is little indication that the Chinese have mastered the integration of the various systems they have so deliberately acquired through various means. This piecemeal copying and clandestine acquisition of individual pieces of high-end military hardware does not entail the ability to integrate it into a functional system -- much less to operate it effectively.

However, China is succeeding at cultivating its influence around the region, focusing its efforts in Melanesia and through archipelagic and continental Southeast Asia. China is deliberately buying influence and cultivating relations both state-to-state and with every available political group within a country to ensure maximal leverage and flexibility. It is not China's cutting-edge weapons development that should be of concern, but rather its ability to escalate or de-escalate crises and its ability to readily funnel higher-end but established and proven weaponry (anti-ship missiles, air defense systems, anti-tank guided missiles, etc.) to proxies and disputed territories to complicate a crisis to its advantage. Should the Chinese feel significantly threatened at home, they have the ability to follow the Soviet model and instigate crises in different locations, drawing the attention of the United States and its allies to places away from the Chinese shores. Aceh, on the Strait of Malacca; or West Papua; or the South China Sea, against adversaries such as Vietnam; and even Africa or South America could be areas where China could use low-cost low-risk activities to kindle crises that distract the United States.

The South China Sea 'Battlebox': China's fundamental problem and the critical geographic feature of the region is the 'battlebox' of the South China Sea. The geography favors the one who controls the outer territory of the chain, and that is currently the United States Navy. The nations that border the South China Sea are already wary of increasing Chinese assertiveness and aggressiveness and are anxious for a more distant power to play a balancing role. Joint training exercises with and cultivation of domestic naval infantry forces in Indonesia, Vietnam, Malaysia and the Philippines in particular would be a low-cost, high-return strategy. Chinese aggression could thus strengthen the value various countries in the region place on their relationship with the United States, but it also creates the risk that those allies and partners will expect U.S. involvement and support in territorial disputes and other security related issues with China. Thus, allies and partners could interpret U.S. deference to China in a naval skirmish with a

smaller nation in the South China Sea as evidence of the weakness of the U.S. security guarantee.

Already, China perceives every minor U.S. effort in East Asia as evidence of a containment strategy. And in this context, should China perceive itself to be without allies, the natural model for them to pursue would be to underwrite and support wars of ‘national liberation’ on the Cold War model. Taking advantage of divisions in countries like Indonesia or the Philippines, the Chinese would support insurgencies in key countries to undermine the regime or create threats at maritime choke points. Chinese money could energize regional unrest if Beijing chose to do so.

Korean Peninsula: In a strategic sense, North Korea is much less dynamic than it may at first appear, and the perceptions of internal instability or external unpredictability are exaggerated. Nonetheless, Pyongyang has learned to shape and harness perceptions, and events in North Korea can reverberate on a day-to-day basis on the Korean Peninsula and in the surrounding region. North Korea is currently attempting its first live transfer of power, from Kim Jong Il to his son Kim Jong Un. The elder Kim delayed identifying which son would succeed him for quite some time, seeking to head off any formation of cliques or competing centers of power around the three sons. (Kim himself began building his own cadre of support long before the death of his father, Kim Il Sung, and did not always hew to the same line as his father.) However, particularly amid ill health, it became necessary to clearly identify a successor. Despite his best efforts, internal factions already were forming around the three sons, and neighboring countries were trying to influence the choice and strengthen their own preferred successor. With Kim Jong Un now clearly the chosen successor, the next leader is working to consolidate his own support base, with and in spite of assistance from his father. As was seen in the 1994-7 transitional period between Kim Il Sung and Kim Jong Il, we are now seeing again the pattern of internal reshuffling and purges as the next in line to the Kim dynasty cleans house and removes obstacles to his authority. This is not an entirely chaotic process, and is being done within the framework of the oversight of Kim Jong Il. But as North Korea is not a monolithic regime, but rather one where the top leader retains power and control by balancing various internal interest groups, the process is not without its resultant increases in domestic social instability and resultant crackdowns. Complicating matters externally, much of the information about what is taking place in North Korea is coming from various private interest groups that have a clear agenda to exaggerate perceived instability and brutality, or extrapolate the conditions in one part of the country as applying to all. As Pyongyang prepares for an experiment in live transfer of power (the idea being that Kim Jong Il would continue to control things from behind the scenes while Kim Jong Un would get on-the-job training, in a manner similar to that followed by Deng Xiaoping in China), there is an increased desire to resolve the longstanding contentious relationship with the United States, potentially opening new economic opportunities for the north. This does not mean North Korea will give up on its perceived strategic interests, or be an easy negotiating partner. As we have seen repeatedly, Pyongyang prefers to blend acts of a threatening nature with its negotiating strategy, and if it follows pattern, there is the likelihood of a new long-range missile/space launch vehicle test and another nuclear demonstration.

Potentially complicating matters for overall negotiations, Russia has re-entered its scene, and is working with North Korea in proposed rail and pipeline projects to South Korea. Moscow's interest is stronger in the implications for relations with South Korea, but its actions in the north may trigger increased competition for Pyongyang with China. That could give North Korea more room to maneuver and make it more difficult to shape North Korean behavior. Amid the leadership transition issues in North Korea, South Korea will hold both parliamentary and presidential elections in 2012. (The two elections only align in the same year every 20 years.) As President Lee Myung Bak nears the end of his constitutionally mandated single term, he may follow the path of previous South Korean presidents and seek to leave his mark on inter-Korean relations by arranging a summit meeting with Kim Jong Il. When the new leadership in South Korea comes to power, disruption in the continuity of North Korean policy could occur.

Japan: Japan remains a key center of gravity in East Asia, and the U.S. alliance with Japan will remain pivotal for the foreseeable future. The Japanese economy effectively remains the second strongest in the world (China only officially surpassed it in total gross domestic product after a decades of manipulated and unreliable economic figures), and the Japanese military has maintained a modernization of equipment, training, inter-operability and evolving doctrine. Japan also possesses high-caliber and far-reaching intelligence capabilities. Where China appears powerful and economically vibrant, underneath it faces significant internal crises. Japan meanwhile appears to be experiencing malaise, but remains socially cohesive and continues as a strong manufacturing and technology power. Japan's quiet strength and stability make it harder for external powers to shape its direction, but Tokyo continues to make cautious, quiet moves around the region and beyond to protect its interests and security. The Japanese political system may be nearing a turning point. The frequent turnover of prime ministers has continued apace even with the transfer of power to the Democratic Party of Japan from the long-ruling Liberal Democratic Party, but there are hints that a more nationalistic sentiment may be emerging in a country that has endured two decades of economic malaise.

Eurasia

Russia: The current apparent calm in U.S.-Russian relations is false and will not last. Fundamental geopolitical conflicts of interest exist and are coming to a head. Russia's goal is the prevention of the consolidation of power along its periphery, and even the alignment of local powers that might represent a coherent bloc that the United States could at any point quickly align with and reinforce. In short, Russia seeks to prevent the re-emergence of another containment scenario and is therefore focused on the so-called Intermarium Corridor: the Baltic States, Poland, the Czech Republic, Slovakia, Hungary, Romania and Bulgaria. Russia is well-advanced in its efforts to roll back the American alliance with the Baltic States while holding the line at Poland on the North European Plain, at the Carpathian Mountains and in the Caucasus by ensuring a foothold on the south side of the Northern Caucasus Mountains in Georgia. Russia considers the last few years to have been enormously profitable in terms of consolidating Russian control over the former Soviet States (thought not in the Baltic States), and sees its efforts in

the next few years as setting up the chess pieces for a strong game in the latter half of the decade just beyond its former vassal states. Moscow is also acutely aware of the narrowing window of opportunity as the United States disengages from the wars of the past decade, and so is moving to consolidate its gains and push its advantage in the next three years. The example of the 2008 invasion of Georgia must be kept in mind; Russia similarly will craft a crisis at many levels and with all elements of its national power to ensure that its gain is easily (and politically conveniently) dismissible by allies while ensuring that any overt intervention contrary to Russian interest is complicated. Moscow's ability rapidly to reorient, to prepare and shape a crisis under the radar of the United States and to ensure its culmination at a time of maximal inconvenience to further its ends is a hallmark of not just Russian but Soviet thinking -- and the last five years should be evidence enough that Russia is back in the game. Already well-engaged in what Russians tend to refer to as a "chaos campaign," focusing all manner of national power on disrupting any unity of mind and purpose anywhere along its western periphery, Moscow already has begun to recognize not just progress but unexpected success.

Baltic States: With a NATO member state situated just 75 miles of St. Petersburg (as opposed to some 1,000 miles during the Cold War), the current status of Estonia, Latvia and Lithuania is perhaps the most intolerable of items on Russia's remaining reconsolidation list. A carefully crafted, Russian-devised and -instigated crisis in the Baltics within the next three years or soon thereafter is thus extremely likely. Already, Moscow is considering increasing its military presence in the region, including further deployment of Russian military forces equipped with the latest Russian military hardware -- the S-400 strategic air defense system and Iskander short-range ballistic missiles in Belarus and Kaliningrad. Indeed, one of Russia's two French-built Mistral helicopter carriers is slated for the Baltic Sea Fleet. Moscow already heavily is focusing on Latvia due to its larger Russian population and geographic position between Estonia and Lithuania to break the unity of the three countries. Russia has poured money and investment into the region and its political influence within the Social Democratic Party Harmony -- the largest political party in Latvia -- already is strong. In creating a crisis in the Baltics, Russia not only creates a crisis for NATO, but also for the large NATO member on the other side of the Baltics -- Poland.

Central Europe: The main battleground between the U.S. and Russia in the mid-to-latter half of the decade will be Central Europe. For these countries, there is little faith left in NATO, particularly among the Poles, Czechs and Romanians. (The Slovaks, Slovenians and Bulgarians are more undecided -- but precisely because they are already more beholden to Russian pressure and influence.) For those more willing and able to resist -- led by the Poles -- there is a two-pronged approach to establishing and strengthening security. The first is seeking bilateral understandings with the United States that entail commitments (regardless of whether the rationale is training, ballistic missile defense or another arrangement entirely) that entail as permanent -- and ideally as military -- a physical American presence as possible. The second is the formation, solidification and expansion of independent security structures -- specifically the Nordic and Visegrad battle groups, and ideally, the merger of the two. In the near term,

the United States has enormous opportunities to partner with these new security structures as early as possible, but in doing so risks provoking a Russian backlash. Russia's concern is on target, namely, the successful consolidation of these alliances -- with or without overt and direct American involvement -- would create coherent political and military structures that the United States could decide to support more directly. Ukraine, by contrast, is not in play. Russia has reversed the Orange Revolution, and through the confluence of financial, cultural and political leverage can keep the country at best divided if not outright pro-Russian.

Carpathians: Europe's geography is, of course, unchanging. While there is little in the way of geographic barriers on the North European Plain between Berlin and Moscow, the Carpathian Mountains remain of central importance. This explains the enormous Russian focus on Moldova and Transdniestria, the territory between the Dniester and Prut rivers that brings Russian influence to the Romanian border. This dynamic defines whether Russia feels secure in holding its side of the Carpathians or whether it feels threatened by a Western foothold in the eastern foothills of the Carpathians. Russia forces occupy Transdniestria, and Russia would like to focus more on Moldova proper in the coming years.

Black Sea and Caucasus: Moscow has demonstrated its ability to act decisively and freely in the Caucasus. Russia places a priority on investing in, and reconstituting, the Black Sea Fleet. Georgia continues to be a potential flashpoint. Russia has ensured that it has considerable military force in place to dominate and once again decisively demonstrate its ability to power in its periphery, and that intends to ensure that the line in the Caucasus -- already pushed back from the Turkish border and from a firm grip on the Southern Caucasus to the Northern Caucasus -- is held. One possible deterrent to Russian aggression in the short term is the 2014 Olympics, which will take place on Russia's border with Georgia. Tbilisi fears the heavy investment for the Olympics will help build up Georgia's secessionist region of Abkhazia, which is next door to the games. Though Russia will want to keep the lead-up to the elections conflict-free, this does not mean Georgia will not want to draw attention to the build-up of the militant region.

Central Asia: In four of the Central Asian states, a series of unrelated trends have emerged, creating potential instability that could make the region vulnerable to one or more major crises in the next few years. In Kazakhstan and Uzbekistan, succession crises are looming. Adding to this pressure, in both Kyrgyzstan and Tajikistan ethnic, religious and regional tensions are increasingly violent. The return of militants who have been fighting in Afghanistan for the past eight years have exacerbated this, as has as an increase of the militant-run drug trade that transits these two countries. Russia has been moving forces into the region and will continue to have more opportunities to do so.

The Collective Security Treaty Organization (CSTO): The CSTO (comprised of Russia, Belarus, Armenia, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan) is being consolidated into a meaningful military force with rapid reaction capability -- and as

important, it has created a front for Russian military intervention under the guise of a multilateral regional front.

Europe and Germany: In the two decades since the Cold War, Germany has returned to its traditional independent role at the center of continental affairs, a role that has been strengthened by its fiscal cohesion and central role in managing the crisis within the Eurozone. In this role it is moving closer to Russia. The potential for the formation of a coherent German-Russian bloc (the combination of natural resources, military expertise, technological sophistication, industrial capacity and demand for freedom of action) should be seen as one of the foremost threats to American national interests and the maintenance of a balance of power in Eurasia. Former German Chancellor Gerhard Schroder now sits on the board of Gazprom, and is close to Prime Minister Vladimir Putin. Germany has no interest in seeing the United States strengthen its influence in Central Europe and provoking a Russian backlash, and could easily actively oppose any effort by the Intermarium to draw in a U.S. military presence.

The Euro Crisis: The crisis in Europe is more than fiscal: it is a reflection of the fundamental economic, cultural and political contradictions of the single currency. The movement toward transnational European union was easy in times of economic surplus but has now contracted and the same old lines of nationalist tension in Europe have re-emerged -- not temporarily, but in a lasting way. The late 1990s and early 2000s success of the euro was made possible by the way it masked the vast economic, cultural and political differences between Northern and Mediterranean Europe. This crisis is running roughshod over the unifying bonds of the Eurozone, the European Union in general and particularly within NATO (within which there is not only the lack of the unified sense and perception of threat that defined the alliance during the Cold War but within which there are actively divergent and contradictory views of the importance and role of the alliance). It is within this context that Russia also acts. It is not only actively engaged in its "chaos campaign," it has been buying up banks, utilities and other fiscally distressed institutions. Moscow also is looking at how it could possibly dump hard cash to help curb the financial crisis. This is all being done in a manner crafted to appear and cultivate the perception of Russian benevolence but which will inherently be -- as its foremost goal -- intended to continue to divide Europe against itself to Russia's advantage.

Latin American

Mexico: Violence in Mexico will continue to rise for the foreseeable future. The most likely eventual outcome of the cartel war is that one or two cartels will dominate all the others, bringing the drugs and violence under centralized control. In the next three years, however, the intensification of the cartel war may pressure the United States to expand its covert and clandestine cooperation with the Mexican authorities. The United States will shy away from overt involvement for fear of retaliation and the vulnerability of U.S. civilian targets. But the roots of illicit trade and the enormous financial flows and violence that characterize it will continue to define the country in the next three years.

Ultimately, it is critical to distinguish between that illicit trade and the violence. Immense financial forces, particularly the demand for narcotics in the United States underlies the former; the struggle between transnational criminal organizations for control of that trade underlies the latter. The majority of the Mexican economy is off the books. Official economic figures do not reflect the immense significance of these financial flows to the overall Mexican economic system. The struggle against the drug trade is as unwinnable as the "long war" against transnational terrorism. But the violence between cartels in Mexico need not be this violent or disruptive. Indeed, business is better and more profitable for the cartels when it is not. But it is essential to keep this distinction in mind.

Central America: Competition for territorial control among Mexican drug cartels has spread to Central America. The influence of these and other transnational criminal organizations will exacerbate political instability and violence in the region. Guatemala, El Salvador and Honduras are particularly vulnerable.

Venezuela: Given his illness, the death, incapacitation or replacement of Venezuelan President Hugo Chavez is likely in the next three years. Chavez has built numerous political support structures that are mutually adversarial, and his removal could destabilize this system. The damage to the economy of the government's populist policies has begun to damage the ability of the government to keep in check the demographic, political and economic forces in has harnessed. Should oil prices fall for an extended period of time, it will cause a collapse of social outreach programs, severely threatening social stability. With all of these factors at play, there is a high likelihood of severe social destabilization in Venezuela.

Cuba: The forecast for Cuba is contingent on events in Venezuela. The Cuban regime is not strong, but neither is it about to collapse. There is enough continuity and financial buy-in in the elite to survive even the death of both Castro brothers -- so long as Venezuelan oil continues to flow. Caracas contributes more than half of Havana's energy mix, constituting over $4 billion annually. The curtailment or cessation of these subsidized deliveries (which is easily conceivable given economic troubles in Venezuela) quickly could escalate to an existential crisis for the regime in Havana. The compromise or outright collapse of the communist regime would thereafter be a serious possibility.

Cuba’s proximity to the United States and politically influential exile population within U.S. borders makes any real destabilization a potentially serious political issue for the United States. There is a distinct possibility that in the event of a Cuban meltdown, the U.S. may seek to get directly involved with the recovery process as a result of political pressure out of Miami and a desire to limit the flight of migrants. This potentiality – the flow of migrants – must be considered a real possibility. But while the possibility of a mass exodus in the event of internal instability cannot be discounted, when we look at the model of other collapsing countries, a movement of Cuban-American exiles into the Cuban economy to take advantage of new realities is the more likely model. It will be important to distinguish the ongoing economic and political crisis from a definitive

regime collapse. Migration would result from the first. It would not result from the second.

Africa

Continent: Africa is an arena in which forces hostile to the United States can be staged, but it is not and will not be a theater of main action or strategic effort. As such, it is important to distinguish between what are essentially police actions and what are imperative military actions. Where possible, transferring responsibility for counterterrorism operations, efforts to stabilize regimes and the maintenance of situational awareness away from war fighting forces can free them for issues of more immediate importance to national security. As a whole, Africa is an arena where allies can and are being leveraged to good effect in managing challenges. For instance, Algeria, Mauritania, Mali and France as well as Burkina Faso, Niger, Chad and Nigeria have all proven willing to cooperate in opposing al Qaeda in the Islamic Maghreb (AQIM) and Tuareg rebels in the Sahel. Somalia is another place where Ethiopia, Kenya and Uganda under the aegis of the African Union have been pivotal.

Somalia: Another example where allies have been brought to bear to good effect is Somalia, where Kenya, Ethiopia and Uganda under the aegis of the African Union have proved pivotal in managing al Shabab and broader challenges in the country. The fissures and challenges of Somalia run deep, and are long-standing and intractable. They cannot and will not be resolved quickly or with military force alone. But these partners and allies in the region are positioned to facilitate the long-term effort to manage and bring those fissures and challenges under control.

Nigeria and the Gulf of Guinea: As a regional power, Nigeria will not tolerate outside intervention by either neighbors or the United States. In any event, while Nigerian militants in the Niger Delta will be a factor impacting U.S. energy security calculations, we forecast relative calm in the delta for the next few years. AQIM does not have and is not expected to gain a foothold here. Similarly, low level piracy and other criminal activity with bearing on the flow on energy security is not expected to escalate to a relevant degree. However, a delicate balance-of-power agreement will be tested in the run-up to the 2015 presidential election and this can be expected to begin to destabilize the situation as that election approaches. The main concern will be politicians in Nigeria who motivate militancy and politicians from the Niger Delta and the southeast.

A note on training: The training of indigenous forces to operate and sustain themselves can help facilitate domestic security efforts in places where intervention would risk becoming mired in conflict too complex and ambiguous for Marine Corps intervention to be desirable, efficient or effective. So while no amount of training with Estonian forces, for example, will allow Estonia to defend itself against a Russian onslaught long enough for NATO to move a counterassault force into action, even limited training with many militaries in places like Africa could help ensure that overt Marine Corps intervention that would be messy, difficult and costly never becomes necessary at all.