Two Cheers for 2011: Expectations in Politics, the Economy

Two Cheers for 2011: Expectations in Politics, the Economy
2010 was a tough year, not just for Barack Obama, not just for America, but
for the West. Whether one looked at the U.S. or Greece or Ireland, the
images were of unemployment lines, political protests and general despair.
Every few months, a new crisis cropped up, threatening to once again derail
the global economy. Many problems persist, and crises will come again, but
let me tell you why I think the year ahead will prove to be a lot better
than 2010. Call it my glass-half-full column.

First and most important, the American economy is likely to improve. It’s
perilous to try to make specific predictions, but most experts believe that
in 2011 it will grow 2% to 3%, with some arguing even higher numbers. If
that’s true, it will add to growth everywhere. Let’s remember that the
American economy remains the world’s biggest. At $15 trillion, it is still
three times as large as China’s. And as the economy expands, almost all the
short-term problems in the U.S. become more manageable. Tax revenues go up,
budgets look better, and fears of state bankruptcies recede.

Europe will survive. It has taken the Europeans much time and many crises to
come to the realization that they will have to bail out their spendthrift
and unlucky partners in Greece and Ireland and perhaps in Portugal and Spain
as well. Germany can afford the bill, and truth be told, despite what some
German officials imply, Germany benefits mightily from the euro. The
politics of making this all work out are very difficult, as Chancellor
Angela Merkel has found, but the real news from 2010 is that Europe’s
governments have come to understand that they can save the euro, and in the
end, they should and will. Europe will grow at a decent pace, as will Japan.
So the entire global economy will be in recovery.

The new year might also bring a moderation of China’s new arrogance, which
will then dampen tensions in East Asia. Over the past year, China —booming while the West has been reeling — has been assertive with regard
to Japan and South Korea and even the U.S. Since Obama took office, his
Administration has made a series of overtures to Beijing and received almost
nothing in return. But senior Chinese officials seem to recognize that they
might have overplayed their hand, and perhaps they will spend 2011 signaling
their benign intentions to East Asia and being more cooperative with the
U.S. In the most recent tensions on the Korean peninsula, Beijing has been
more helpful than in the past in talking tough to its ally in North Korea.

In Afghanistan, the Taliban’s momentum will be broken. There are already
some signs that the Taliban are being defeated in some of their traditional
strongholds, like Helmand province. Other reports from Pakistan suggest that
the notorious Haqqani, the deadliest terrorist network that operates in the
region, has been degraded significantly. The Afghan army is in better
condition than before and thus could well succeed in holding on to places
that the U.S. Army clears of the Taliban.

Iraq will stay stable enough to not create an international crisis and to
not require any return of American combat troops. That doesn’t mean Iraqi
democracy will look pretty. It’s a tough, sectarian system with many deeply
anti-American forces in ascendancy. But it won’t create regional or global

Iran will continue to be checked by a large group of regional and global
powers. As the WikiLeaks cables showed, Israel, most Arab nations and the
Western powers are united in trying to stop Iran from acquiring a nuclear
arsenal. That containment strategy will keep Iran in a box, raising the cost
of aggression for the regime. The government, facing significant internal
economic and political challenges, will focus its energy more internally
than externally. There will be no American or Israeli strike.