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Contents:
The ISA Global Update
Issue #682
19th
of April 2017
• Key Political Issue
• Key Economic Issue
• North American Review
• South American Review
• West European Review
• Central and East European Review
• Middle East and North African Review
Published by ISA (International Strategic
Analysis)
• Sub-Saharan African Review
• Central and South Asian Review
• East Asia and Pacific Review
• Statistics in Focus
www.isa-world.com
ISA Global Update #682 - 19th of April 2017
ISA (International Strategic Analysis)
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Key Political Issue (part one):
Russia’s Decline
Summary - During his time in power, President Vladimir Putin has done everything in his power to restore Russia to the status of a
great power, one that can compete globally with giant powers such as the United States and China. When he succeeded President
Boris Yeltsin in 2000, Russia was a broken country whose power and influence was decimated by the collapse of the Soviet Union
and the economic disasters that had befallen the country during the 1990s. In the early years of his leadership, President Putin
focused nearly all of his efforts on restoring centralized control in Russia, something that had been lost in the chaotic years of the
Yeltsin presidency. These efforts were bolstered by rising natural resource prices as demand for Russian energy and minerals
soared, particularly in emerging markets. As the Russian economy grew and centralized power was restored, President Putin turned
his attention towards rebuilding Russia’s dominant position in its near abroad, attempting to partially reverse the losses the country
suffered during the collapse of the Soviet Union. Now, Russia is seeking to take the next step and assert its power and influence
further abroad, much as the USSR did during the height of its power. However, Russia’s efforts may prove in vain as a number of
factors are contributing to the long-term decline of Russian power, a decline that is likely to continue over the longer-term.
Too Many Negative Factors
In the decades following its victory in the Second World War, Russia (through the
Soviet Union) was the world’s second-leading power and possessed fearsome military
strength. However, in the final decades of the Soviet Union, it fell behind the United
States and other rivals in terms of economic power, and this decline weakened all
other measures of power in Russia, including its military power. Since the collapse of
the Soviet Union, many factors have contributed to Russia’s overall weakness. For
example, Russia faces one of the world’s most pressing demographic declines and the
total population of Russia today is less than half of the population of the USSR in its
final days, due to the loss of much of its territory as well as a general decline in
Russia’s population. Likewise, a lack of economic diversification and a shrinking
domestic market has resulted in Russia having an economy that is increasingly
dependent upon natural resource exports, a dangerous situation that has been
exposed by the low price of natural resources in recent years. A shrinking population
and a weak economy have both played a role in Russia’s loss of military power and
limits Moscow’s ability to rebuild Russian military strength in the future. Altogether,
Russia is a much smaller player on the global stage than the Soviet Union was,
despite the best efforts of President Putin to reassert Russia’s global influence.
ISA Global Update #682 - 19th of April 2017
ISA (International Strategic Analysis)
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Key Political Issue (part two):
Russia’s Decline
Necessary Reforms
Given Russia’s demographic and economic situation, it is clear that the decline of
Russian power will continue without some major changes. On the demographic front,
the Russian government has taken steps to boost the country’s low birth rate, but any
change here will take a long-time to be a factor in influencing Russian power.
Furthermore, Russia remains a highly-divided country in terms of ethnicity and religion,
and the government must do more to unify the country before it loses its grip on areas
of Russia that are populated by ethnic and religious minorities. Economically, Russia
remains a major power in terms of natural resources, but it must diversify its economy
in order to reduce its exposure to fluctuating natural resource prices, particularly as
long-term demand for Russian natural resources could fail to meet expectations.
Externally, Russia finds itself being overshadowed by the much greater power of the
United States and the fast-rising power of China. Without a dramatic shift in the
balance of power, Russia will find itself falling even further behind these two powers.
Long-Term Decline
Given the factors facing Russia, many have questioned whether or not the country’s
decline can be reversed? On one hand, the Putin government has recognized some of
the factors that have weakened Russia’s hand in recent decades. For example, the
government’s efforts to raise the country’s birth rate is a welcome sign for Russia, as
demographic weakness impacts all other measures of power. Likewise, Russia’s
efforts to restore its influence over its near-abroad are a form of recognition that
Russia, as it is today, is not a great power that can compete with the US or China.
However, Russia’s efforts in Eastern Europe and Central Asia have had mixed results
so far, with little to show for its growing commitments in these regions. Moreover,
Russia will never return to superpower status if it cannot diversify and modernize its
economy, and here, the Putin government has failed to take the steps needed to make
Russia a major economic power. As such, as long as Russia’s demographic situation
remains poor and as long as the country’s economy remains dependent upon natural
resource exports, Russia will not be able to achieve the global ambitions of its president
and may yet find itself trapped in a prolonged period of decline.
ISA Global Update #682 - 19th of April 2017
ISA (International Strategic Analysis)
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Key Economic Issue (part one):
China’s Economy Beats Expectations
Summary - The global economy has experienced a run of positive news in recent weeks, the latest of which was the stronger-thanexpected performance by the Chinese economy over the first three months of this year. China’s strong performance, coupled with
positive news emanating from other leading economies, is raising hopes that the five-year run of sluggish growth for the global
economy might be coming to a long-awaited end. No long ago, the Chinese government lowered its economic growth target for 2017
to 6.5%, a move that signaled to many that the Chinese government was growing increasingly concerned about the prospects for
their country’s economy and the risks it faced. However, at least for the first quarter, these fears were not realized. In addition, there
were other positive economic results from China in recent weeks, signaling that the uncertainty that has lingered over the Chinese
economy over the past two years has dissipated. However, this uncertainty has not completely disappeared, as the outlook for China
over the remainder of this year is mixed.
A Positive Development
During the first quarter of 2017, the Chinese economy expanded by
6.9% on a year-on-year basis (1.3% quarter-on-quarter), the higher rate
of growth for the world’s second-largest economy since mid-2015. Last
year, the Chinese economy grew by 6.7% for the year, the lowest
annual rate of growth in China in 26 years and a far cry from the 14.2%
GDP growth recorded in China a decade ago. However, it is important
to note that China’s 6.7% GDP growth last year contributed more to
global economic growth than did 2007’s 14.2% as a result of China’s
vastly larger economic output today. Once again, government spending
on infrastructure remained a major driver of growth in China in early
2017. Furthermore, the country’s real estate sector continued to grow
at a rapid (and disconcerting) pace in the first quarter. Finally,
consumer spending continued to become a more important component
of the Chinese economy, with retail sales growth remaining above 10%
during the first three months of the year.
ISA Global Update #682 - 19th of April 2017
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Key Economic Issue (part two):
China’s Economy Beats Expectations
Hopes for More Strong Growth
With the Chinese economy beating expectations and with the United States economy
likely to gain momentum this year, the world’s two largest economies are providing a
major boost for the global economy. Add to this the fact that Europe is benefitting from
a weak-currency-driven export boom, while many emerging markets are beginning to
pull out of their recent slumps, and the outlook for the global economy is brighter than
at any time in recent years. As far as China is concerned, the fact that consumer
spending continues to grow at a rapid pace, even as credit growth has begun to slow,
is a sign that the transformation of China into a more consumer-driven economy is
proceeding. Meanwhile, the improving economic situations in many of China’s leading
export markets is raising hopes that the deep slump experienced by many Chinese
exporters over the past two years is finally coming to an end. With domestic and
external demand rising, growth rates in China have the potential to remain near current
levels in the months ahead, provided that China can avoid some major pitfalls.
Risk Levels Remain High
In fact, while much of the economic news out of China in recent weeks has been quite
positive, the Chinese economy continues to face a number of risks that could result in
slower economic growth rates in the coming months. First, debt levels remain
dangerously high as China’s combination of public- and privately-held debt is now at
the level of much more developed economies, and is continuing to rise at a dangerous
pace. Second, over-capacity remains a major threat to a number of China’s leading
industries and little has been done about this issue in recent years. Third, China’s real
estate sector is growing at such a pace that the threat of overheating is now a very
real concern and this could produce a market bubble that threatens the entire Chinese
economy. Finally, while export demand is rising once again, China’s export
competitiveness is beginning to decline as labor costs rise and as new competitors
emerge. With these risks in mind, it is easy to understand why the Chinese
government has been putting so much effort into tempering expectations for the
Chinese economy in 2017. Nevertheless, the positive results in the first quarter of this
year could spur faster growth, or, if the key risks facing the country are ignored, they
could lead to a significant slowdown in the months ahead.
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Regional Overview: North America
Regional Summary:
The outlook for the United States economy remains mixed, despite soaring confidence levels in the US. The Trump Administration
continued to focus heavily on international affairs in recent days. Mexico is actively seeking trade and investment deals around the
world in the wake of the deterioration in its relationship with the United States.
Lead Story: Which Way for the US Economy?
• Recent economic data from the United States showed a mixed picture for the health of the world’s largest
economy.
• On one hand, a good deal of the recent economic data released in the US suggests that growth levels will
remain lower-than-hoped-for over the near-term.
• On the other hand, business, consumer and investment confidence levels in the United States remain
extremely high, raising hopes that this could boost economic growth in the US in the coming months.
Other Key Issues and Events:
• United States: The Trump Administration continued to play a major role in
international affairs in recent days, highlighted by the announcement that it was sending
a fleet of naval ships to waters near North Korea (although it didn’t) and President
Donald Trump’s congratulating Turkish President Recep Tayyip Erdogan on his
controversial referendum victory last weekend.
Issue to Watch:
• World Bank-IMF: Both the World Bank
and the International Monetary Fund
(IMF) will hold their spring meetings this
week in Washington.
• Mexico: Fearing a disruption in its trade and economic ties with the United States,
Mexico has been very active in seeking trade and investment partners around the world
in recent months. For example, Mexico has moved quickly to push for new trade deals
across Latin America, while championing the continuation of the Trans-Pacific
Partnership (TPP) trade deal without the United States.
• United States: This week, United States President Donald Trump signed an executive
order that will offer new protections for US-made manufactured goods and will review a
key visa program for skilled workers from overseas.
ISA Global Update #682 - 19th of April 2017
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Regional Overview: South America
Regional Summary:
Paraguay’s President Horacio Cartes will not seek a second term in office. A partial recount of the second round of voting in
Ecuador’s presidential election was ordered by that country’s electoral authorities. Another corruption investigation was launched in
Brazil involving the construction firm Odebrecht.
Lead Story: Cartes Reconsiders
• This week, Paraguay’s President Horacio Cartes announced that he would not attempt to change that
country’s constitution in order to seek a second term in office.
• His efforts to remove Paraguay’s single term limit on the presidency prompted widespread rioting last month
that led to the burning of the country’s Congress building.
• Paraguay’s constitution limits presidents to one term in office in order to prevent a return of the dictatorships
that have run the country in the past.
Other Key Issues and Events:
• Ecuador: Ecuador’s electoral authorities ordered a partial recount of the votes from
the second round of voting in that country’s recent presidential election. Former
businessman Guillermo Lasso narrowly lost to Vice President Lenin Moreno, but has
refused to recognize the result, claiming that there was widespread fraud in the second
round of voting.
Issue to Watch:
• Chile: Chile’s struggling economy is
likely to play a major role in this year’s
presidential election in that country.
• Venezuela: This week, eleven Latin American countries (including Brazil, Argentina,
Mexico, Colombia and Chile) called on Venezuela to allow for peaceful protests to take
place in that country.
• Brazil: An investigation was opened into allegations of bribery and other forms of
corruption involving the construction of six of the stadiums that were used for the 2014
FIFA World Cup in Brazil. These allegations involved the disgraced Brazilian
construction firm Odebrecht.
ISA Global Update #682 - 19th of April 2017
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Regional Overview: West Europe
Regional Summary:
Britain will hold early parliamentary elections in June 2017. France prepared for this weekend’s first round of voting in its longawaited presidential election. Turks living in Germany backed the granting of more powers to the Turkish presidency by a margin of
63% to 37%. The IMF warned that it might not take part in more bailout programs for Greece.
Lead Story: Snap Election in Britain
• British Prime Minister Theresa May announced this week that the United Kingdom would hold early
parliamentary elections in June 2017, catching many by surprise.
• The British government had promised the European Union that it would not hold national elections until 2020,
one year after the British withdrawal from the EU is scheduled to be complete.
• Prime Minister May is hopeful that her Conservative Party can win a clear victory as the opposition Labour
Party is in disarray under the leadership of Jeremy Corbyn.
Other Key Issues and Events:
• France: France entered the final days of campaigning for this weekend’s first round of
voting in that country’s presidential election. Polls continued to suggest that the farright candidate Marine Le Pen and the center-left candidate Emmanuel Macron remain
the favorite to reach the run-off election. However, the scandal-hit center-right
candidate, Francois Fillon and the far-left candidate Jean-Luc Melenchon both reduced
the gap with the two front-runners in recent polls.
Election to Watch:
• France: The first round of voting in
France’s presidential election will take
place this weekend.
• Germany: 63% of Turks living in Germany voted in favor of Turkey’s constitutional
changes that will transfer more political power to Turkish President Recep Tayyip
Erdogan in last weekend’s referendum in Turkey, a move that angered many highranking officials in the German government.
• Greece: The International Monetary Fund (IMF) warned that it would not take part in
any bailout programs for Greece unless that country’s debt was reduced to more
sustainable levels.
ISA Global Update #682 - 19th of April 2017
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Regional Overview: Central and East Europe
Regional Summary:
Turkey’s President Recep Tayyip Erdogan won a major victory in a national referendum in Turkey last weekend. A key suspect in
the recent bombing in St. Petersburg was arrested by Russian police this week. 14 people were charged with plotting to overthrow
the government of Montenegro.
Lead Story: More Power to Erdogan
• Voters in Turkey opted by a narrow margin to support a series of constitutional amendments that will greatly
expand the powers of the presidency in Turkey, handing a victory to President Recep Tayyip Erdogan.
• The vote was as close as expected, with 51.4% of voters backing the changes and 48.6% being opposed.
• Much of the opposition came from Turkey’s largest cities, while rural areas supported the president.
• Afterwards, the political opposition refused to concede defeat, claiming that there were widespread voting
irregularities during the referendum.
Other Key Issues and Events:
• Russia: This week, Russian police arrested a Central Asian man that they believed to
have been involved in this month’s subway bombing in St. Petersburg that left 14
people dead. The suicide bombing had been carried out by a 22-year-old Kyrgyz-born
Russian named Akbarzhon Jalilov.
Issue to Watch:
• EU-Turkey: The recent disputes
between Turkey and the European Union
could lead to a collapse of the deal on
migrants and refugees between the two
sides.
• Montenegro: Last weekend, 14 people were charged with plotting to overthrow the
government of Montenegro late last year. Nine Serbs and two leaders of the proRussian opposition in Montenegro were among those charged, and prosecutors there
have accused Russia of being behind this plot.
• Russia: Russia unveiled a new military base in the remote Franz Josef Land in its
Arctic Ocean. This base is just one of many military facilities being created or upgraded
in the Arctic by Russia as that country continues to focus more of its military attention to
the Arctic.
ISA Global Update #682 - 19th of April 2017
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Regional Overview: Middle East and North Africa
Regional Summary:
Syria’s president denied that his government had ordered a chemical weapons attack on a rebel-held town in central Syria earlier this
month. Dozens of people were killed in a car bombing in northern Syria. Heavy fighting continued in western Mosul. Oil prices
began to level off in recent days after rising earlier this month.
Lead Story: Syria Denies Chemical Attack
• This week, Syrian President Bashar al-Assad claimed that the chemical attack on the town of Khan
Sheikhoun was a “fabrication” and that his government had not ordered such an attack.
• In addition, the Syrian president reiterated his claim that the United States was in the process of invading his
country and that any such intervention would only aid radical Islamist groups in Syria.
• This chemical attack by Syrian government forces resulted in the deaths of more than 80 people, including
many women and children, and prompted a missile attack on a Syrian air base by the United States military.
Other Key Issues and Events:
• Syria: At least 70 people, included dozens of children, were killed when a massive car
bomb struck a convoy of buses that were carrying people evacuating government-held
towns in northern Syria last weekend.
• Iraq: Heavy fighting continued in the old part of the northern Iraqi city of Mosul in
recent days, as the narrow streets in that area allowed Islamic State militants to stage
strong defensive actions against Iraqi government forces and their allies.
Issue to Watch:
• Israel: Hundreds of Palestinian
prisoners in Israeli prisons began a
hunger strike to protest against their
detention as well as the conditions they
face in prison.
• Oil: Oil prices levelled off in recent days after their recent rise. While countries such
as Saudi Arabia continued to reduce oil production as a result of the recent deal to cut
oil output, production in countries outside of that deal, most notably the United States,
rose as a result of the earlier rise in the price of oil.
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Regional Overview: Sub-Saharan Africa
Regional Summary:
669 people died in last year’s unrest in Ethiopia. The United States will deploy troops in Somalia. The level of unrest in Cameroon
continues to rise. Abuja’s airport was reopened after undergoing six weeks of urgent repairs that left the Nigerian capital without an
airport.
Lead Story: The US Returns to Somalia
• For the first time since 1994, the United States will deploy troops in Somalia.
• US armed forces will be sent to Somalia to help to train that country’s military in order to combat the alShabab militant group that controls a large amount of territory of Somalia.
• The US deployed troops to Somalia in the early 1990s to help to allow shipments of food aid to get past
militant groups that were intercepting them, but after 18 US special forces were killed in Mogadishu, the US
withdrew its forces from that country.
Other Key Issues and Events:
• Ethiopia: A new report indicated that 669 people died in the unrest that occurred in
Ethiopia last year, mostly in the states of Oromiya and Amhara. The Ethiopian
government blamed groups based in Eritrea and Egypt for this unrest.
Issue to Watch:
• Zambia: The leader of Zambia’s main
opposition political party, Hakainde
Hichilema, was charged with plotting to
overthrow that country’s government.
• Cameroon: Cameroon has been beset by political and social unrest in recent months
that is raising fears of a meltdown in that country. In recent months, protests have
broken out in the English-speaking part of Cameroon, raising questions about President
Paul Biya’s grip on power. Now, a strike by doctors has crippled Cameroon’s
healthcare care system.
• Nigeria: After being closed for six weeks for repairs, the airport of the Nigerian capital,
Abuja, was reopened this week, well ahead of schedule. The fact that the airport of the
Nigerian capital had to be closed for repairs was a major source of embarrassment for
Nigeria as it showed the poor state of the country’s infrastructure.
ISA Global Update #682 - 19th of April 2017
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Regional Overview: Central and South Asia
Regional Summary:
The United States dropped a massive bomb on a base used by the Islamic State militant group in eastern Afghanistan. Dozens of
people were killed when a rubbish dump collapsed in Sri Lanka. More Bangladeshis are being found among the migrants attempting
to reach Europe.
Lead Story: The MOAB
• The United States military dropped a massive MOAB bomb on an Islamic State base in the province of
Nangarhar in eastern Afghanistan last week, killing more than 90 IS militants and destroying their base.
• The base included an extensive network of tunnels and caves that were being used by the Islamic State to
support their growing presence in eastern Afghanistan.
• The MOAB is the largest non-nuclear bomb used by any military in the world.
• This bombing was part of a wider offensive against the Islamic State in eastern Afghanistan.
Other Key Issues and Events:
• Sri Lanka: At least 28 people died and more than 30 other people are missing after a
massive rubbish dump collapsed in the Sri Lankan capital city of Colombo last week. It
was reported that there were concerns about the threat posed by the dump, but that
these concerns were ignored by the local government.
Issue to Watch:
• India: Meteorologists are predicting
average rainfall levels for this year’s
monsoon season in South Asia.
• Bangladesh: An increasing number of Bangladeshis have been reported to be among
the migrants that are making the crossing of the Mediterranean Sea from North Africa to
southern Europe in recent months.
ISA Global Update #682 - 19th of April 2017
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Regional Overview: East Asia and the Pacific
Regional Summary:
Economic growth in China exceeded expectations in the first quarter of this year. North Korea threatened the United States with a
nuclear attack. United States President Donald Trump no longer considers China to be a currency manipulator. New Zealand was
hit by another powerful storm.
Lead Story: Chinese Growth Picks Up
• The Chinese economy grew by 6.9% on a year-on-year basis in the first quarter of this year, an increase on
the growth rates from last year and a higher rate of growth than had been expected.
• This strong growth was the result of a combination of higher levels of spending on state-managed
infrastructure projects and rising demand in the country’s real estate sector.
• In addition, retail sales growth remained strong in recent months, as consumer spending continued to
become a more important component of the Chinese economy.
Other Key Issues and Events:
• North Korea: The North Korean government warned the United States that it was
prepared to carry out nuclear attacks if the US continued to provoke North Korea. This
statement was made during a massive parade by the North Korean military in
Pyongyang last weekend.
Issue to Watch:
• South Korea: United States Vice
President Mike Pence warned South
Korea that US exporters faced too many
barriers in South Korea.
• United States-China: After meeting with Chinese President Xi Jinping last week,
United States President Donald Trump declared that he no longer considered China to
be manipulating its currency. This was one of a number of signs that relations between
the US and China could be improving.
• New Zealand: Cyclone Cook hit New Zealand last week, causing severe flooding
across many areas of that country. This was the second large storm to hit New Zealand
this month.
ISA Global Update #682 - 19th of April 2017
ISA (International Strategic Analysis)
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Statistics in Focus:
French Presidential Election Polls
Marine Le Pen and Emmanuel Macron remain the clear favorites to make it into the
second round of voting in France’s presidential election, but a recent surge in support
for the far-left candidate Jean-Luc Melenchon, and a slight rebound for the conservative
candidate Francois Fillon, has made the race a little tighter.
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