• New Year’s Sale! Get A Free Month Of Hedgeye

    New Year's Resolution? Leave Wall Street in the dust. Get a free month of any Hedgeye investing product. Win this year.

Editor's Note: Below is a complimentary research note written by National Security analyst LTG Dan Christman. To access our Macro Policy research please email sales@hedgeye.com.

The 2021 Global Policy Outlook  - MadMadCovidWorld 2020 NEW copy

The New Year is always prime time to speculate on developments for the coming 12 months. Particularly in light of the massive and persistent Russian hack which exposed unprecedented U.S. security vulnerabilities, there’s heightened interest on 2021 challenges beyond our shores. 

No question President-elect Biden will be almost completely consumed domestically by COVID mitigation and economic recovery. But we also know, based on the SolarWinds hack, that U.S.- Russian relations have now been catapulted to the top of the foreign policy agenda.

Further, the U.S.-China in-box, with yet more targeted U.S. sanctions and China’s enhanced air and maritime patrols around its periphery, will demand a disproportionate amount of time for Biden’s foreign policy and national security teams.  

But where to look in the year ahead, beyond these two obvious challenges? A traditional way might be to join other pundits and lay out exhaustive lists of the “Top 2021 challenges” – countries, leaders, issues, worries. 

However, another option pursued here is to look for specific events that give tips on unfolding dramas – like elections in the year ahead, or impactful political deadlines. For a new Biden foreign policy team in a new year, these events can be more than “tips;” they can be guides and drivers for decisions on U.S. policy. 

So, what 2021 Tips loom? There are potentially dozens, of course. But with the wearying BREXIT debate now apparently on the road to resolution (at least for trade in goods and services), there are at least five other events - disparate in type, sequentially arrayed below, at least of equal importance to BREXIT - to watch closely over the next 12 months: 

On February 5th, the expiration of the U.S.- Russia NEW START nuclear arms agreement. This deadline will indicate early-on whether there is any chance for Biden and Putin to work together on what should be the simplest issue to resolve – whether to extend the 2011 agreement.

  • The Tip? Notwithstanding his cyberattack on the U.S., does Putin stick with his offer of a one-year extension of the agreement, with no conditions? And if so, do we say yes?

On March 23rd, yet another Israeli election. To no one’s surprise, the coalition government with Bibi Netanyahu and Benny Gantz that ruled through most of 2020 collapsed; it is now an Israeli media-described “Zombie” government until March.

  • The Tip? Do Bibi and his far-right governing coalition head for the exits? If so, the historic Abraham Accords with the UAE and Bahrain will deepen; if not, Bibi’s goal of annexing 30% of Palestinian territory gets new life and potentially dooms the Accords.

In June, national elections in Iran. We are likely to see in the voting results the full impact of November’s targeted assassination of nuclear scientist Fakhrizadeh.

  • The Tip? Does sitting President Rouhani get a new term, or is he ousted in favor of a Revolutionary Guard firebrand? If the former, Biden has a slightly easier time enticing Iran back into the nuclear deal; if not, add Iran to the top tier security worry.

On July 1st the 100th anniversary of the founding of the Communist Party of China. This will not be a quiet celebration. The question is whether President Xi burnishes his nationalist credentials in advance of the 2022 Party Congress with a military move on China’s periphery.

  • The Tip? Taiwan. More pressure here by Beijing surrounding the centennial sinks any tension-reducing off-ramp Biden might contemplate.

Watch too in the spin-up to July 1st whether China continues its outrageous pressure campaign against close U.S. ally Australia. The trade restrictions Beijing has already imposed, and the media and political pressure on politicians in Canberra who call out Chinese oppression in Hong Kong and Xinjiang, if not ratcheted back, should demand a forceful U.S. counter well before July 1st. Will we act?

And no later than September 19th Russian parliamentary elections for the Duma. Putin clearly feels the pressure of a stagnating economy, western sanctions, and the growing unrest in both his “near abroad” (Belarus, Moldova, and Kyrgyzstan) as well as in the Russian far east.

  • The Tip? Alexei Navalny, the opposition leader nearly killed by a Russian nerve agent. Does he return to Russia? Does he meet another “accident?” The September election will be a Putin-Navalny political duel; Putin’s United Russia party will win of course. But deepening protests surrounding the Duma elections will see Putin pulling out the oldest play in the “authoritarian leaders’ playbook:” start (more) trouble abroad. 

    Bottom Line: With any luck, by the end of 2021, global cooperation on vaccines should put the worst COVID ravages in our collective rearview mirror. The president-elect sees opportunities in the new year - climate, rebuilding alliances, strengthening international institutions like the WHO. Yet, as suggested above, stressors on the international scene remain, and in many respects, are likely to deepen, particularly with China. 

    One of John McCain’s favorite quotes (which he incorrectly attributed to Chairman Mao), was ”It’s always darkest, just before it goes totally black.” Guarded optimism heading into 2021 is warranted; but so is extreme caution in the always perilous early months of a new presidential term.

    As The Economist editor highlighted recently, “the number 21 is connected to luck, risk, taking chances, rolling the dice.” Watch the five dates above, keep recalculating risks as the new year unfolds, and hope the darkness of the past year is not a McCain predictor of a totally black 2021.