The failed state next door, and other black swans

The Black Swan was one of those little books that have done so well in recent years. The Tipping Point is another. If you pass through airports, you know them well. They all contain one big idea that is revealed entirely through colorful anecdotes in however many pages you can read on the average flight from Chicago to New York. They provide just enough intellectual substance to place them slightly above a Vanity Fair article in the intellectual food chain, perfect for regurgitation at cocktail parties and in your more ambitious suburban book clubs. Which doesn’t, of course, mean that they don’t contain some interesting and useful ideas.

The black swan as described in one of these books, written by Nassim Nicholas Taleb, is meant to characterize events that are as impossible to anticipate as was the discovery of black swans in Australia to Europeans who had only known the white variety. Taleb explores the idea as a recurring theme throughout history in which key events or discoveries of real significance forced a rethinking of the rules and standard approaches that had previously guided society.

Black swans are both a statistical reality (events with long odds happen all the time) and a useful cautionary tale for those whose business it is to plan. When the planners are basing their forecasts on hard data and statistical models, the black swans offer a useful way of tweaking the algorithms. But when the planners are just making stuff up, which is primarily what the foreign policy community does, then the idea has greater resonance. If most of your expectations are based on extrapolations colored by selective memories of what we deem the relevant past, pretty much everything is going to be a swan of some color other than white. Which is to say that while we can reasonably expect history to give us the bird, it is seldom the bird we expect.

The best place to begin looking at what might be unexpected is to identify what most Washington types think is in store for us. As of right now, 2009 looks like this: deeper, messier recession worldwide, the beginning of the U.S. pullout from Iraq, worries about Pakistan and Iranian nukes, hopes that Obama can restore U.S. standing. Oh, and recently a recognition that Israel-Palestine will continue to be an open wound. But here’s five black swans that could arrive and wreak unanticipated havoc: 

1. The failed state next door

At a meeting of leading diplomats from around the Americas I attended not too long ago, the subject that caused the greatest concern was the situation in Mexico. Organized crime has taken a dominant position in a number of provinces and the federal government is struggling to contain the growing security threat. The country is losing oil revenue due to plummeting prices and mismanagement of PEMEX, the national oil company. The Merida Initiative, Plan Colombia-lite for Mexico, has not made the progress some had hoped for and the result is a fragile situation. Add the possible consequences of a very tough 2009 economically and a match is tossed on tinder. In a world in which there is no such thing as foreign policy any more — every key event has U.S. domestic consequences — there is no better example than our neighbor. The symptoms of crisis will come streaming over our borders and border-state politics will make it a problem Obama cannot ignore. (Especially with a Homeland Security secretary who is a former border-state governor.) 

2. When the economic crisis becomes a political crisis

It is only a matter of time before the worldwide recession starts producing political consequences. Viable states will become weak, and weak states will start to fail. In cases like Turkey this could make a vital strategic partner turn increasingly hostile to the West. In cases like Ukraine, it could create vulnerabilities that a struggling Vladimir Putin (see below) might seek to exploit. The uprisings in Greece might be seen as a sign of problems to come elsewhere. China, too, has seen unrest triggered by the downturn. Struggling regimes will likely be forced to find scapegoats and distractions, political tricks that have often led to mayhem. As noted above, Mexico could become the failed state next door and Argentina, which seems committed to doing everything wrong in the face of this crisis, could also revisit its penchant for political drama. Many emerging countries feel as though they have dodged the worst of the crisis and are ill-prepared for the consequences of the commodity price collapse that seems likely if Chinese growth slows to 5.5 or 6 percent as it might. Old-fashioned debt crises could follow. And what if the defaults are triggered by or coincide with a second dip in the economies of the developed world…another wave of institutional failures like we saw this fall…perhaps this time set off as a consequence of consumer credit failures? The donor countries might catch bailout fatigue at just the moment a number of major emerging economies face their most precarious situations. 

3. Slow-moving swans in a fast-paced world

With economic calamity and two wars to worry about, it is almost inevitable that the new administration will fail to make longer-term threats a top priority. Take global warming. While there will certainly be a green stimulus soon, it is unlikely Obama will introduce a gas tax or a cap-and-trade system early because of (misplaced) fears such a plan might slow the recovery. (Announcing the tax but pushing the implementation date out a couple years solves this problem, providing a price signal but delaying the consequences until the worst is over.) But many scientists feel that the time for effective action to contain global warming is severely limited (some feel it may have already passed). Will it be possible that we deal with the wolves closest to the sled in 2009 only to assure catastrophe of historic proportions a decade or two out? Similarly, the combination of Iraq fatigue and a mountain of other distractions might well lead the new administration to seek to punt on issues from Iranian nukes to standing up to Hamas (and its partners in Hezbollah). Almost certainly that will only invite future crises, possibly crises that come very quickly as others (like Israel) feel less inhibited from taking action because they are so sure we will not take any ourselves.

4. There is a reason Swan Lake was composed by a Russian

Few leaders will feel the pinch of the global contraction in the year ahead like Vladimir Putin. Having built an economy on resource exports, he’s now finding the collapse in resource prices is crushing revenue inflows. Putin has already demonstrated a predisposition to use aggression and international provocation (particularly where tweaking the U.S. is involved) to distract his people from their plight and to assert Russia’s global leadership role (such as it is). Almost certainly he will do so again early in the Obama administration to test the new team’s resolve. It may be in Georgia. It may be in Ukraine. It may be in Iran or elsewhere in the Middle East. It may be in his embrace of Chavez or his rediscovery of the value Cuba can have as a goad to America. It may be in all these areas. But if a distracted, "why can’t we all just get along" Obama gives him an opening, it is likely to guarantee future stand-offs of considerable geopolitical significance and complexity.

5. Out of sight, out of mind and out of the blue

The worst conflict in the world is not in Iraq or Afghanistan, not in Darfur or between the government and the rebels in Colombia. It is in the Congo, where more than 5 million people have died over the past decade and more than 45,000 die monthly as a consequence of a conflict that the media hardly covers and American politicians hardly mention. In such a situation, a dramatic flareup is very possible, whether from an epidemic or an outbreak of genocide. Almost certainly, Obama will have to find a way to react to the conflicts in Africa more effectively than either Bush or Clinton before him. Don’t expect massive numbers of U.S. troops to be called upon to act. Rather, the new administration’s ability to marshal multilateral action will be tested, and a failure may be the beginning of the end of the honeymoon for Barack Obama in the international community.

Other unexpected developments could be even more profound in their consequences. Could economic downturn produce instability in China?  Would a crackdown by the Chinese central government create a crisis between the U.S. and China — at just the time that relationship is recognized to be central to almost all America’s economic, political, security and environmental aspirations? When will Zardari’s inevitable downfall come in Pakistan? Before or after intensifying conflict with India? Before or after all Pakistani nuclear warheads are secure? Will plummeting oil prices threaten the stability of governments in the Middle East? In Iran? In Saudi Arabia? Will the global downturn produce a refugee crisis in Europe-and a rise of nationalist right wing parties or an even more introverted foreign policy for an EU that already barely has a foreign policy pulse? Will there be a big terrorist event? Will there be a big natural disaster? Will recession turn to depression? 

Almost the only event we can categorically rule out is the ridiculous assertion by Russian political scientist Igor Panarin that the U.S. will break up in 2010, a prediction he has been making for a decade…although I do feel fairly secure in predicting that no one will ever hear of Igor again after next year. 

Perhaps the most disturbing factor of all is that more of these outcomes are possible today than at any time in the recent past. It is quite likely therefore that the new administration will be overwhelmed, unable to draw on carefully designed plans and, of course, forced to drag along inept congressional leadership every step of the way. So, while it is hard to predict just what event will test the new team, it can be fairly confidently asserted that they (like most first term administrations) will be in over their heads very soon.