Why 2011 Will Be a Happier Year
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 instability.
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.
In 2011 the U.S. will have greater global credibility. Once a real recovery is under way, the U.S. economy will begin to regain some of the luster it lost during the financial crisis. The American model will begin to shine again, and in retrospect, American policymakers will look pretty good compared with their counterparts in Europe and Japan: they acted fast and aggressively, averted a great depression and stabilized the U.S. system at a substantially lower cost than the savings-and-loan bailout of 1989. Given that the world has just one superpower right now, only an America with credibility can act to propose global solutions to global problems, whether on terrorism, trade or climate change.
I realize that much of this good news could be temporary, that real problems lie underneath and might even be growing. But that's for another week, not one that ushers in the New Year.