• Accounting for inertia in geopolitical forecasting


    GEOPOLITICS, at least in the sense that we practice, is neither deterministic in its approach to understanding nations and their interactions nor simply synonymous with current events or international relations. At its most basic, geopolitics as a discipline seeks to explain the intersection between place and people, or more specifically between place and the nation, and the impact they have on one another. Practitioners assess geography, politics, economics, security, history and society inclusively to build a deeper understanding of nations, sub-nations, regions and the world.

    Constraints, compulsions and circumstances
    Geopolitics teaches us how to identify and assess the compulsions and constraints on nations and their principal actors — the driving forces and limiters that shape the behavior and direction of nations and their interactions. The balance between “compulsions” (what must be done) and “constraints” (what cannot be done) — a tension that induces or restricts certain behaviors, actions and directions — changes with differing “circumstances,” or the current state of being domestically, regionally or internationally at a given moment in time. Thus, some compulsions may exist for years or decades, but only in a very special set of circumstances do they really induce action.

    By identifying these constraints and compulsions, the limitations on options become more apparent, allowing predictions of patterns and actions. If history explains the past with an eye on the present, geopolitics explains the present with an eye on the future. The purpose is not only understanding the pressures on nations, but also predicting future responses — and thus providing time to prepare for, dissuade or counter the actions of others.

    At a certain level, geopolitics eliminates the impact of the individual human element: Each individual is diluted in the totality, subsumed in some sense by the forces at work, namely, the broader constraints and compulsions that compel and limit options and decisions. Individuals by their very nature are highly variable, being affected by numerous unseen elements at any given moment. Consider, for example, John Lewis Gaddis’ musing in The Landscape of History on the potential that an unrecorded flea may have given Napoleon itchy underwear, leading to his loss at Waterloo. While individuals are relatively unpredictable on a short time frame, their collective behavior, their decisions as they shape the directions of nations, are less variable and more compelled or constrained. Thus, in rising above the individual, geopolitics presents a framework for forecasting and a method that can be taught and tested.

    The relationship between the constraints and the compulsions is in a constant state of flux and influenced by circumstances. Assessing these three factors presents a picture of fairly limited options and, in reducing possibilities, leaves a very small number of likely directions for future action. This allows geopolitics to serve as the starting point for forecasting. Frequently, however, a directional pattern that appears obvious from a geopolitical assessment and forecast will not come to pass within the expected time frame, or a dynamic that may appear highly constrained will suddenly break forth far ahead of the forecast.

    Three case studies
    As a case in point, let’s look at the current European crisis. Nearly from the beginning of our existence, Stratfor has clearly seen and identified the core constraints on European unity, and in particular on the creation of a common European currency. Our 1995-2005 Decade Forecast stated:

    The European Union’s enjoyment of this period will be limited somewhat by Germany’s ongoing digestive problems—absorbing the old East Germany—and an inability to create a Monetary Union. On the one hand, the reluctance of major powers to abdicate sovereignty to Brussels makes negotiations difficult and subject to collapse and breakdown. On the other hand, the fact that the EU contains both net creditor and debtor nations makes the creation of a single, integrated fiscal policy—the precondition for monetary union—difficult to imagine. The idea that Greece or Portugal and Norway or the Netherlands will share fiscal strategies is a bit difficult to imagine. As the EMU frays, European integration in general will be questioned. The great reversal of 1997 will resonate through the next decade.

    Our Fourth Quarter of 1998 forecast continued to expect the failure of the EMU:

    We continue to believe that the EMU will be dead on arrival. The EMU is an economic colossus built on a base of political sand. Each European election now has the potential of undermining the entire edifice. Even if this German election doesn’t, some election will. The EMU, like Russia and Asia, is going to meet the dark face of politics sooner rather than later. This last quarter of 1998 may destroy the EMU, postpone it, or most likely, allow it to go forward with political constraints that will guarantee its failure.

    Applied geopolitics clearly showed that the EMU and the euro were inherently flawed. We assumed that if these flaws appeared obvious to us, they would be as obvious to the Europeans. We also believed the Europeans would be unable to bring the new currency to fruition even if they did not consciously recognize the same constraints we had identified. But not only did the euro move forward, for a time it was a very strong global currency. In our 1999 Annual Forecast, we admitted: “We were clearly wrong when we expected the euro to fail. The euro is here and seems likely to work in the short run.”

    Today, however, the European Union is hampered by many of the very constraints we recognized two decades ago. While an integrated fiscal policy may have worked relatively well during times of economic prosperity, in times of crisis, it stripped some countries of the tools they needed to respond — bringing increasing political strain within member countries and toward the entire European experiment. Put simply, the very different economic models of Northern and Southern Europe require more than a “one size fits all” set of economic tools. While geopolitics exposed those constraints, we missed something in initially predicting that they would block the formation of the EMU and the euro or give rise to a monetary union so politically constrained it would be destined to fail from the outset. The error was not one of failing to recognize constraints but rather of failing to understand how they applied and in what time frame.

    Now consider our long-standing forecast of an economic crisis in China as “the Chinese miracle” outlived its growing internal contradictions. For more than a decade, we identified the constraints that would bring an end to the miracle and lead to a political crisis as China sought to manage the social consequences of slowing growth. Many of the problems we identified are now generally accepted as obvious precursors to China’s economic slowdown, which was finally set in motion by the European financial crisis. Though what is obvious now to many was obvious to us for a long time, we still failed to forecast the timing of the crisis.

    The recent action by Russia in Ukraine fits a similar pattern. We identified the stresses on Russian-U.S.-European relations, the sense of unease felt by Russia at seeing its periphery eroded, and the likely locations for a Russian response to reassert its national security interests. And yet we failed to forecast the timing of the crisis in Ukraine. In this case, it was not an issue of being too early, but rather of being too late. Though very challenging to nail down, the time factor in forecasting is critical: The best forecast with an inaccurate time component is of limited value.

    In looking back at nearly two decades of inaccurate forecasts, particularly those that erred in timing, three basic factors emerge. The first is an intelligence gap, where key information needed to make an accurate forecast is either missing or has been overlooked or misinterpreted. The second is a basic analytic failure, namely, the failure to adhere to our methodology due to complacency, allowing assumptions to become “facts.” The third is something that I will call “inertia.” In physics, inertia is the principle that an object moving in a particular direction will tend to continue moving in that particular direction unless acted upon by some factor or force, or that an object at rest will remain at rest unless acted upon by some factor or force. In short, objects tend to continue to do what they are doing unless something knocks them off kilter.

    The role of inertia in geopolitics
    Applied to geopolitics and forecasting, inertia is perhaps most often seen as acting against a change in a certain direction but not fully constraining it. Inertia, then, is a key factor in understanding the time component of geopolitical forecasting. With a change in circumstances, a compulsion may require a certain new action, and a constraint may mitigate against continuing with an existing action, but inertia may significantly delay the change in action. The constraints that militated against the formation or success of the euro were real, but they were initially overcome by the institutional inertia of a Europe that had considered and launched upon a unitary path, one initially put in motion to balance German and French interests and competition and thus reduce the likelihood of another European war. And the compulsions that now would appear to lead to European re-division are being delayed by the inertia of the assertion that the European experiment should continue as is.

    Inertial factors may be institutional (the structure of government, for example), fiscal (the method of budgeting and spending), societal (the nature of society and the population), or manifest in other sub-systems. Regardless, inertia must be assessed and understood to add greater time accuracy in forecasting. What geopolitics makes apparently simple and clear is made complex and muddy by inertia.

    We know a large ship is hard to turn quickly and keeps moving forward long after the helm is thrown over. A ship of state is much larger, and its direction is accordingly more difficult to alter even after a crisis moment is recognized and acted upon. We also know that the economic effects of certain policies or of changing circumstances are often not fully felt until the next leadership is in place, and that the repair is often not noted until long after circumstances have improved. Inertia is the factor that shapes these delays and, as such, complicates the time factor in forecasting.

    What are the inputs in measuring inertia? How is inertia different from constraints, or should it be considered among the constraints? And are inertial factors universal or situational? When we look at differing groups of peoples, different nationalities and sub-nationalities, there are often common characteristics in the ways they act and react. In some sense, there are French, American and Chinese ways of acting. Stereotypes exist for a reason: They are exaggerations of national characteristics. This is not to say that every individual is the same, or that there are no differences within cultures and nations, but rather that places exert certain forces on the development of a people over time that eventually produce common characteristics.

    What has shaped the mindset of the leadership of Japan over time is far different than what has shaped the mindset of the leadership of Congo. Geography places certain constraints, encourages certain behaviors, and over time builds in a set of generally identifiable characteristics of thought and typical responses. These are, at their core, conditioned by geography, by place. In some sense, this is one step in what we refer to as “empathetic analysis,” or understanding the factors that shape the outlook of the individual leaders. Whereas geopolitics often rises above the individual, the narrower the time frame and the more discrete the scope, the more the individual and their worldview matter.

    Constraints such as political power, political checks, economic activity and natural resources may be shared by all, but they are still expressed differently in different places, and their relative significance to one another changes. Empathetic analysis, our term for the process of getting inside the thinking of geopolitical actors, tells us to look at the constraints within a particular geographical area, system and time. If constraints were common across geographic space and time, then there would be no need for empathetic analysis; applying my own paradigm would be sufficient to assess the paradigm of another. But as that is clearly not the case, then there must be something like a national characteristic, the culmination of history, culture, economic activity and societal factors in a particular geographical area shaped, guided and constrained by the realities of that geography.

    If geopolitics helps reveal this national characteristic, perhaps inertia and the factors and balances to consider also have national characteristics, as well as elements unique to specific locations at specific times. The general types of inertial factors may be common across differing locations, but they exert a different balance of forces based on location.

    What are the compulsory factors that direct behavior? Perhaps they are external stresses, domestic economics, politics, demographics, etc. The balance of these factors may shift with differing circumstances, one being more important at one moment, another at another moment. What is the response time to these pressures, to these compulsions? Is it always conscious, is it at times nearly inevitable, and is the response limited by constraints? It would seem that inertia can be considered an important component that determines the delay time between stimulus and action/reaction. Inertia may be fairly elastic, exerting a slow resistance, but is by no means insurmountable, instead merely producing steady delays on the timelines of expected outcomes. Inertia may also be fairly inelastic, exerting a strong resistance until, all at once, it is overcome in a massive breaking moment.

    Understanding the inertial forces applicable in a given place and time is critical to improving forecasting accuracy because it impacts the critical time component of the forecast. Timing in forecasting is just as important as accuracy and separating the significant from the insignificant. But timing requires a more complete understanding of the balance between compulsion, constraint, circumstances and the resistant pull of inertia. Inertia exerts a strong pull on the time factor in any otherwise obvious forecast produced by the overall assessment of constraints, compulsions and circumstances. Given what we have learned over the years, inertia will be elevated as a variable in our practice.


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