Five out of six

How Quartz’s geopolitical forecasting algorithm fared in 2013

December 26, 2013
December 26, 2013

In 2013 the US and Iran struck a nuclear arms agreement, Republicans and Democrats found a way to a budget deal, and—at least so far—Japan and China have stayed away from outright war. In less-peaceful international news for 2013, Afghanistan has seemed worse by the day and Syria’s opposition has failed to oust president Bashar al-Assad. Meanwhile, the race to exploit oil in the Arctic continued.

These are the six geopolitical forecasts that Quartz made in January. They were not stabs in the dark, but led by the 14 rules of global events, our algorithm for making sense of international news. In five of the six cases above, the algorithm helped us to single out the decisive dynamic and get them right.

In a couple of weeks, we will publish our 2014 forecasts, among which will be whether the West and Iran succeed in a follow-on agreement in May. We also intend to unveil a 15th rule. We welcome your thoughts (email s@qz.com).

In the meantime, here’s a breakdown of how we got 2013 (mostly) right.

Iran’s nuclear deal. In January we predicted a two-way deal in which Iran halted nuclear enrichment and the West loosened its US-led oil sanctions against the country. On Nov. 24, an interim agreement was signed in Geneva. For the next six months, while talks continue, Iran will stop creating the highly enriched uranium that can be used for bombs.

Some eleven months ago, the prediction seemed a gamble, especially if you considered rules 11 and 12. They state that places governed by true believers (11) with extremist conviction and an exaggerated sense of self-importance (12) can tend to ignore pragmatism and follow self-destructive policies. Since 1979, Iran’s leaders had cultivated and been driven by a base hatred and suspicion of the United States. It has not been a one-sided attitude—American policy, too, is rooted in a dug-in distrust of Iran. Over the years, hopes for a diplomatic breakthrough have come and gone. So what made us think that this time was different?

We saw chances for an opening in other rules. First was Rule 7, which highlights the most fervent wish of leaders around the world and through time: to stay in power. Second was Rule 14 (the Local Politics rule), which among other things points out that, generally speaking, governments do in fact have to worry about public opinion. Sanctions have been biting and ordinary Iranians have been unhappy about it; was Ayatollah Ali Khamenei prepared to risk another Green Revolution such as the country faced in 2009? We thought not, especially when we added another matter—tighter sanctions that were scheduled for July 1. This combination, we decided, would lead Khamenei ultimately to adhere to Rule 2 (the Precipice rule), which states that even violence-riven peoples with great passions tend to stop before or at the brink of destruction. All in all, we decided that Rules 2, 7 and 14 would trump the others. The June election, in which Hassan Rohani won the presidency, provided a perfect inflection point for Khamenei to step back from the precipice, and he did.

Japan vs. China: The year was filled with heated rhetoric and minor skirmishes. And as it drew to a close, China created a self-styled air defense zone over disputed islands in the East China Sea and Japan announced its highest defense spending in nearly two decades. Yet the Asian giants did not cross the line and fire shots, thus bearing out our forecast that they would not go to war.

Industrial nations can get bumptious and bomb small nations, but they rarely attack each other. Yet, given the countries’ chin-out new leaders—Japan’s Shinzo Abe and China’s Xi Jinping—it was useful to build a more detailed framework for why they would not actually fight. Rule 8 explained the friction: When territory is involved, countries can lose their usual rationality; they can become hostage to public passions (Rule 14). But as in our evaluation of Iran, Rule 2 seemed most crucial—when there is so much to lose, countries rarely plunge over the precipice.

Afghanistan’s decline: History has been undeviating: When it has come to foreign armies, Afghans have first embraced them, then violently made it impossible for them to stay. The United States thinks it is an exception—it wants NATO to leave behind 8,000-12,000 troops, most of them American, after the official military withdrawal next year.

Neither has Afghan history been kind to collaborators with the foreigners (think Shah Shuja in 1842 and Najibullah in 1996). That is what drives president Hamid Karzai’s recent obstreperous behavior towards the West—he hopes that if he looks anti-Western enough, the Taliban will overlook the last dozen years and allow him to live in peace once he steps down next year.

Our forecast was for deterioration in Afghanistan, aligning with history and boding ill for the aims of both the US and Karzai. Our reasoning stemmed from Rules 11 and 14—the ambitions of the true-believing Taliban along with public opinion both for and against them would rip at the Afghan fabric. Sadly, this is what happened in 2013.

Syria’s civil war: We forecast that the opposition would not manage to unseat Assad. Two rules would cancel each other out—Rule 4 (injustice breeds rebellion) and Rule 7 (leaders want above all to stay in power)—while Assad’s scorched-earth offensive and the opposition’s divisiveness would combine to keep him in power. Getting Assad out would require the introduction of Rule 6, the Caesar rule, in which a strongman is removed by either assassination or the defection of a vital ally or set of allies. So far, that hasn’t happened. And Assad’s position has looked considerably more secure since the end of the summer, when Western governments pushing for a military strike against his forces were forced into an embarrassing climbdown in the face of opposition from their own publics as well as from Russia and China.

The US budget deal: This is the one we got wrong—at least in part. We forecast that, in accordance with rule 2, Republicans and Democrats wouldn’t step over the precipice and let the US default—with calamitous global consequences—when it reached its debt ceiling. We were right about that, but they did go over the brink when it came time to authorize a new spending bill, leading to one of the country’s longest-ever government shutdowns, with plenty of ill effects.

Why the two parties were in this mess was clear enough: Republicans behave somewhat like a perceived or recovering great power (Rule 12, corollaries 2 and 3), unreconciled to president Barack Obama’s re-election and Democratic control of the Senate. Members of the party’s Tea Party wing are true believers (Rule 11), pledged to seemingly any action in service of their budget-cutting convictions. Still, we expected everyone to step back from the brink at the last moment and cut a deal. And what a deal: we foresaw budget cuts, immigration legislation, Medicare reform, a higher retirement age under Social Security, the closure of tax loopholes, and the approval of the Keystone XL Pipeline.

Then the wheels came off the wagon. Rule 11 became much more important than Rule 2, in addition to a closer inspection of Rule 14 (local politics)—to the folks back home, the Tea Partiers were heroes.

In the end, the two sides did compromise by passing a two-year spending bill earlier this month. But they managed it only by leaving a lot of disagreements for another day. And Republicans seem to already be spoiling for another fight when the debt limit is reached again in February.

The Arctic: We forecast that the aroma of oil would overcome environmental concerns and result in a continued drive to exploit the resources underlying the Arctic. To do so, we applied another set of Quartz guidelines–the indicators of energy geopolitics.

The drive to drill was animated by Indicator 1, “oil prices,” which says that once oil is discovered, it almost always pushes past any obstacles into the marketplace. The impetus to stop it was explained by Indicator 6, in which public opinion—worried about a catastrophic spill—would step in and bar the way in the Arctic.

We saw the prize in the Arctic as so great, however—experts believe that 25% of the world’s remaining oil and gas sits underneath the northern region—that it would outweigh public opinion.

In Russia, which contains most of the oil and gas, authorities imprisoned 30 Greenpeace activists in September on charges of piracy for trying to stop drilling in an Arctic field called Prirazlomnoye (though it is now dropping the charges). On Dec. 22, Gazprom said it began drilling there. Offshore from Alaska, we said added safety measures would be needed in respect to public opinion, but that then it, too, would go forward. In February, Shell called a halt to drilling in Alaska’s Arctic but last month it made the first regulatory move to resume next summer.

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