Populist politics and the Dutch elections

Le Pen

“All politicians should be populists”

Netherlands Prime Minister Mark Rutte

A leading Dutch politician declares in an open letter to the Dutch population that immigrants who don’t integrate should “act normal or go away”. You, the reader, may think that this is just one more incendiary statement from the populist firebrand politician Gert Wilders, except, your wrong. The open letter was in fact signed by the current centre-right Prime Minister of Netherlands, Mark Rutte, who won the most seats in the elections, held this week.

The media and political elites of Europe, the Pundocracy, have hailed Gert Wilders failure to come first as a defeat of populism. Gert Wilder’s is a highly provocative right-wing populist politician who advocates, in a one page manifesto, the banning of the Koran, the shutting down of mosques and the withdrawal from the European Union (“EU”).  Wilders shows little interest in actually taking power or accepting the inevitable compromises which come from governing a nation. Comparisons between Wilders and Marine Le Pen should thus be treated with caution. Even Le Pen’s harshest critics accept that she is a formidable, charming and intelligent foe with a ruthless hunger for power.

The real story of the Dutch elections was the embracing of nativist, nationalist and populist rhetoric and policies by the centre-right parties, including most notably, the Prime Minister Mark Rutte. The key to Rutte’s electoral success was his hard-line position with Turkey in the days running up to the election which was intrinsically populist and played well with the voters.

What we are actually seeing is the start of the mainstream-isation of populism in centrist politics, which is why populist politicians are struggling, in both the UK and parts of the Continent. UKIP has seen its vote share drop in by-elections since the centre-right governing Conservatives embraced whole chunks of their manifesto, including grammar schools, immigration controls and exiting the EU.

The Telegraph notes that the anti-immigrant parties of the Right now command 45% of the overall vote, almost half of the Dutch electorate. Yet the Netherlands, despite issues with the integration of a growing Muslim minority, has a successful economy, low unemployment and no recent history of jihadi terrorism. If anti-immigrant and populist politics can enjoy such success in the Netherlands, one must wonder how Le Pen will perform in the up-coming presidential elections as the metrics are far worse in France. A series of horrific jihadi terror atrocities, high youth unemployment, a stagnating economy and a deep national malaise provides fertile territory for her goal of becoming the next occupant of the presidential Élysée Palace.

I have written before that the key to the French elections will be how the French “silver vote” swings in the second round. Polls show that Le Pen is equal or ahead in every age bracket, from the ages of 18 to 64, and only falls of a political cliff with the over-65’s, as shown in the FT graphic.

The older French voter still associates Le Pen with the dark days of her fascistic father Jean-Marie Le Pen and a stigma remains regarding voting for the National Front. If Le Pen can persuade sufficient numbers of these grey voters that she is not an extremist, she will likely win the French presidential election, as I have predicted at the beginning of this year.

The conservative Republican candidate Francois Fillon enjoys solid support from the elderly with his traditional social views and hard-line worldview on the perceived growing threat posed by Islamic fundamentalism. Fillon, like his political peers Theresa May and Mark Rutte, belongs to a new breed of European political leaders who have combined populist language and policies despite emerging from the traditional political establishment. One can call them and their voters the “soft populists”.

Should Macron embrace a strongly liberal, open border and pro-immigration/European stance in a Le Pen versus Macron clash in the second round, the question remains whether “soft populist” voters on the centre-right will vote for Macron or go for the “hard populist” option of Le Pen in the absence of Fillon.

Whilst it is certainly plausible that Macron will win the French presidential election, the chances of a shock Le Pen victory is more likely then the political pundits and markets assume, and will have profound implications for Europe if the unthinkable does indeed happen.

Populist politics and the Dutch elections

Götterdämmerung

This article is part of a series of articles on the end of the liberal world order and the emerging post-liberal geopolitics which will replace it. I recommend that readers also read, in conjunction to this article, my post Europe’s coming Campi Flegeri explosion, the global implications of a Trump presidency and winter is coming.  

Berlin, Tagung Warschauer Pakt, Gruppenfoto

“The most important trends shaping the political landscape of our time, to my mind, are the descent of the liberal movement into its final decadence, and the first stirrings of the postliberal politics that is already emerging in its wake.”

John Michael Greer (The Coming of the Postliberal Era)

On 29 May 1987 the pictured leaders of the Warsaw Pact, the Communist military alliance, met to discuss matters of importance within the Soviet bloc. The division of the world into two major blocs had been a permanent feature of geopolitics since the end of the last Gotterdammerung, the fall of the Third Reich in 1945. The possibility that the Soviet world would implode within a few years would have been considered unthinkable by most observers of world politics, including the foreign policy elites of the Western world.

In a few years, when the Berlin wall came crashing down and the Red Army withdrawn from Eastern Europe, these confident leaders of a once mighty military and political bloc would fall from power amid massive street protests. The collapse of the Soviet Union and its external empire was an end of a world order based on the ideology of Communism. Perceptive observers of the Soviet bloc had noticed for years the crumbling of its foundations and there were a number of individuals who successfully predicted the collapse of the Soviet world order. Yet, with hindsight, it is sobering to note that few foresaw the possibility that the Soviet “house of cards” could and did come crashing down.

I consider the liberal world order, based on the free movement of labour, capital and trade within a globalized economic model is now facing its own terminal decline and death. One could write a book on the causes behind the collapse but I would argue that the primary factor, the Limits to Growth megatrend, is driving this collapse even if it is gone largely unnoticed. The peaking of conventional oil supplies and the long-term rise in oil prices, contributed to the financial crisis in 2008 and the “secular stagnation” which has so puzzled economists since then. Hard limits in the resources which powers our economy is incompatible with an economic-financial system which assumes limitless sources of energy will always be available and that physical reality is starting to impact.

The stagnation and decline in real living wages for the bulk of the citizenry of the developed world, which is a direct consequence of our growing resource scarcity predicament, has been a body blow to the authority and power of our governing liberal elites. The political shocks of 2016, the Brexit vote, the election of Donald Trump and the crushing defeat of the “yes” campaign in the Italian referendum, are the belated political reaction in the face of these long-term trends.

A core part of the liberal world order was a belief that nationalism was a thing of the past which would surely fade away as we became ever more globalised in the brave new world of Facebook, cheap flights and Amazon. This has not happened. Raw nationalism is back as a powerful political force as nationalist strongmen come to power across the world. The rise of these Caesar’s is a common pattern in history and is a sign that our own industrial civilisation is in a state of terminal decline, as John Greer wrote recently.

To understand why these charismatic strongmen, and potentially strongwomen, are coming to power one must explore the writings of Arnold Toynbee. I have written before on Toynbee’s civilisation model, with its division of the world into a dominant minority who rule a society, an internal proletariat (the workers) and an external proletariat outside the core regions of the civilisation at that time. The ideology of political liberalism finds its strongest adherents among the elites of society and those who benefit from the status quo, the financially comfortable middle classes, who constitute approximately 20% or more of society. Among the internal proletariat, who constitute the rest of the population, support for liberal values is in progressive decline as their living standards slowly disintegrate.

ch

This collapse in support for liberal values can be illustrated in the sobering opinion poll commissioned by the prestigious Chatham House institute, the results which are shown above. Majorities across Europe now support a ban on any further migration from mainly Muslim countries, including a remarkable 61% in France, which faces presidential elections in April/May. Currently only the National Front candidate Marine Le Pen has indicated that she could support such a policy. Clearly the internal proletariat’s of Europe are embracing populist, nativist and nationalistic ideologies which pose a huge challenge to our modern dominant minorities.

One response of a dominant minority is to enter into an alliance with the hordes of desperate external proletarians who wish to benefit from residing in the wealthy core of a civilisation. For decades, big business in America has benefited from the work ethic of millions of illegal immigrants who have come across the Mexican border to do jobs ordinary Americans don’t want to do. The election of President Trump, as I predicted in January 2016, was in part to the growing anger of many within the American proletariat to this state of affairs.

The German liberal elites, led by Angela Merkel, made a deliberate decision in 2015 to let in over a million predominately Muslim migrants from the non-European world into Germany. As this German article notes, the German government is aware of Germany’s low birth rate and the need to find new workers as its own internal proletariat shrinks in size. Or, to use Toynbee’s language, the German dominant minority have imported over a million external proletariat’s to in effect replace and supplant a declining internal proletariat which is increasingly hitting retirement.

The liberal world order, already in a profound crisis with the election of a neo-isolationist and nationalist President Trump, is unlikely to survive in the face of the defection of their internal proletariat’s to the new post-liberal ideology of populist nationalism. Opinion polls show that the majority of Americans back the Trump administration’s hard-line immigration policy and crackdown on illegal immigration, despite the howls of outrage from the liberal elites. It is also noteworthy that sixty-five percent of Americans reacted positively to the “America First” message in President Trump’s inauguration speech. The truth is that whatever individual voters views on the man himself, majorities back Trumpism and reject the foundations of the liberal world order.

Should Europe join America in rejecting the key tenets of liberalism, including free trade and relatively open border migration policies, the liberal order would go down a similar path to the lost world of Soviet Communism. I consider this very likely in the years ahead. Future historians may look back at the gatherings of our current Western liberal leaders in the same way that we react to pictures of those stony faced Communist leaders in the eighties before they were swept away by the forces of history.

Götterdämmerung

Europe’s coming Campi Flegrei explosion

civilization-collapse

‘In creating barbarian war-bands the external proletariat has merely prepared itself for a destructive attack upon the dying civilisation.’

‘Ancient civilisations were destroyed by imported barbarians; we breed our own’

Arnold J Toynbee “A Study of History Part 1”

Scientists have discovered that the Campi Fegrei caldera, off Italy, is heating up again. Over 30,000 years ago, the caldera erupted and spewed almost a trillion gallons of molten rock in the atmosphere, in the process setting of a “volcanic winter” which contributed to the wiping out of the Neanderthals.

Europe is geopolitically and literally sitting on a volcano and we are getting closer to the point when one of the core regions of a declining industrial civilisation disintegrates politically, economically and socially. The election of President Trump marks a sea change in the globalised liberal world order which was already struggling under the impact of the post-Lehman Great Recession, the long-term rise of resource prices, driven by limits to growth, and an increasingly rebellious populace angry about a perceived loss of cultural identity, economic stagnation and rising jihadi terrorism.

Europe has enjoyed a long summer under the benign protection of the US military which has meant that most European nations have been able to effectively opt-out of paying for their own defence. The post-Cold War “peace dividend” has allowed the European political class to focus on that ultimate grand liberal project, the European Union (“EU”), and its ever further integration. That world is now dying.

President Trump, in his inaugural speech, outlined an “American First” manifesto which has horrified the European political class. In it, President Trump articulated a return to neo-isolationism and an end to the certainties of a post-Cold, and indeed, the post WW2 era. Although Prime Minister Theresa May managed to get a grudging confirmation from the president that America is still committed to NATO, it is clearly on the condition that European allies will commit to the minimum 2% defence spending.

I am sceptical whether this will actually happen if the price is further cuts in welfare spending which will be deeply unpopular among continental electorates. It is therefore only a matter of time before President Trump effectively pulls the plug on America’s security commitments to the European continent. A Trump America may form bilateral military protection agreements with traditionally pro-American states like Poland and the Baltic states. However, this will be on the condition that these countries contribute far more to their own defence spending.

The EU itself can be considered a classic case of “sophisticated state failure”, with a Byzantine governance model which even the experts struggle to understand. The Ostrich type position of the Brussels establishment since the Brexit vote in June 2016 is an example of how the European political class is increasingly incapable of thinking creatively on how to restructure the EU.

A creative and bold European leadership would advocate a reformed union with a new class of membership, involving a repatriation of powers back to the member-state, for those countries historically more sceptical of European integration. A re-think on the principle of freedom of movement, internal border controls and a much tougher external border policy on economic migrants from the troubled Middle East and North Africa (“MENA”) region, along the lines of the Australian model, would also be significant moves in shoring up support for the project.  As you may have noticed, none of this has happened, to date.

The eurozone itself remains a half botched job with a monetary union without a corresponding fiscal or political union. The single market is in deep trouble as “temporary” border controls pop up around the Continent due to the security threats posed by jihadi terrorists and massive refugee flows from the MENA zone of disorder. Warnings from leading experts that the eurozone is a “house of cards” which could collapse soon are multiplying, reflecting the growing levels of alarm within elite European circles.

My conclusion therefore remains that the eurozone is likely to collapse within the next 5 years, as noted in my post “winter is coming”, and that the migration crisis will accelerate the collapse of the EU itself in the coming decades. The trigger for the coming collapse will be the rise to power of governments with a mandate to withdraw from the eurozone and even the EU itself on the Continent. I have predicted that this could happen as soon as this year, with the up-coming elections in the Netherlands, France and potentially even Italy and Austria.

The migration crisis which has hammered the Continent since the summer of 2015 should be understood within the broader historical context of a declining civilisation. Arnold Toynbee, a little known figure these days, wrote a 12 volume universal history comparing the rise and fall of 19 civilisations. His aim was to see, in this long cyclical story of the rise and fall of successive civilisations, whether common patterns could be discerned.

Toynbee argues that civilizations break down when there is deterioration within the social order, an inability to respond to challenges, and a subsequent loss of that self-determination that had once impelled growth, instead of variety and versatility there is deadening uniformity and uninventiveness. A disintegrating society breaks up into a dominant minority, and internal proletariat, and an external proletariat (barbarian warrior bands).

A dominant minority is the elites of society, the rich and powerful, who run the civilisation but who have lost the respect and authority in the eyes of the rest of the population, the internal proletariat. The Brexit vote occurred despite the fact that the majority of the academic, cultural, political and economic elites of Great Britain advocated for a Remain vote. A majority of the internal proletariat decided that their interests were better off out of the EU. This is a good example of Toynbee’s theory in action. The internal proletariat have lost respect for the judgements, wisdom and “expertise” of the elites and voted accordingly.

The external proletariat is the mass of the population who physically reside beyond the core zones of the civilisation of that time. The fearsome barbarian warrior tribes of the steppes were the external proletariat of the Roman Empire, which the Roman legions kept out, for centuries. Eventually the Roman Empire imploded and these warrior bands, led by charismatic strongmen, plundered, raped and murdered their way around the once wealthy Roman Empire.

In our industrial civilisation, the external proletariat is the mass of the world population who live beyond the core zones of North America, Europe, Russia, Australasia, and parts of south-east Asia. We call this the developing world where a small minority (their own dominant minority) lead a luxuriant lifestyle amidst a sea of poverty.  The eruption of the migration crisis is a sign that as the MENA region disintegrates into state failure and lawlessness, the fit young men of the external proletariat, will risk their lives to get to the security and perceived economic opportunity of the West.

It is important to note that just as the bulk of the “barbarians” who were initially allowed to settle in the twilight years of the Roman Empire had no intention of destroying the Roman world, the vast majority of the predominately Muslim migrants pouring into Europe only wish to enjoy the fruits of European prosperity. In an era of economic decline and worsening resource scarcity, the migrants will form part of a growing urban underclass, with little prospects of bettering themselves through legitimate ways. This is illustrated by the fact that approximately 99% of the German migrants are still unemployed.

The rise of Islamist and violent jihadi ideology among the Muslim populations of Europe is a sinister warning that as Toynbee warned, we are breeding our own barbarians. The thousands of trained jihadi terrorists across the Continent are being joined by ever further waves of radicalised Muslim migrants, creating a growing security nightmare for the European authorities.

The terrorists/barbarian warrior bands are already within the cities of the European heartland of our industrial civilisation and their numbers are growing. If history is any guide, we will see ever bigger waves of determined migrants forcing their way into Europe, as the MENA region faces water scarcity, food and energy shortages and protracted state failures across the region. A small but significant number of these migrants will start plundering, raping and murdering Europeans as Attila the Hun and his warriors did to the ancient Roman citizens. The Cologne sex attacks on New Years Eve, the wave of migrant crime in Paris and the horrific suicide bomb attacks in Brussels are an early sign of that grim future.

Should the European elites fail to get a handle on the growing security threats facing the continent and the significant flows of migrants from the external proletariat into the ranks of the pan-European urban underclass, than violence, social disorder and even civil war could erupt. This is the worst case scenario.

The alternative scenario, which I consider more likely, is that starting from 2017 countries across Western Europe will start electing populist and nationalistic political forces to power. These conservative and populist politicians will have a mandate from their internal proletariat to restore sovereignty, border controls and end the creeping Islamification of their societies. This will involve brutal measures, including the shutting down of mosques, deportation of Islamist extremists and refugees and potentially even the mass deportation of non-assimilated Muslim populations. The former conservative German Chancellor Helmut Kohl wished to deport half the Turkish Muslim population from Germany, declassified documents, now reveal. It is not inconceivable that similar conversations are on-going within security, military and political circles within Europe.

Fortress Europe, led by a club of sovereign states, will shut the borders and prevent, if needs be by force, the mass migrations of the external proletariat into the European continent. These political forces, who will be the new European establishment, will align themselves with the bulwark of traditionalism, the Russian Federation, under the de facto Tsar Putin. Russian influence in a post-eurozone and probable post-EU Europe will grow as America withdraws into isolationism and Russian gas, oil and coal become the main energy sources of an energy starved Europe.

The future of Europe largely depends on the electoral choices of the European people over the coming decade. The current liberal elite who run Western Europe are wedded to a set of policies that have failed and are causing more problems than they are solving. As Paul Arbair notes in his essay on Brexit, “The growing popular revolts against globalisation, the EU, or multiculturalism are signs that our societies are already struggling to uphold their level of complexity and are subject to strong forces that are pulling towards a break down to a lower complexity level i.e. localised economies, national governance, homogeneous societies, etc”. The rise of populism can thus be seen as a reaction against a failed system that is now in a systemic crisis and showing growing signs of collapse.

To conclude, Europe faces profound challenges as we enter into the twilight era of industrial civilisation. The drum beats of the barbarian war-lords can already be heard in European cities, the nativist warrior bands are stocking up their arsenals and millions of the external proletariat are planning to pour into Europe.

A certain degree of social disorder and violence is inevitable but how much and on what scale remains to be seen and will depend on how European politics changes in the coming decade.

Europe’s coming Campi Flegrei explosion

Guest post: Washington: You’re fired

Forecasting Intelligence welcomes back the political journalist who predicted Trump’s victory in his popular post Hilary Clinton and the alligator. Here is his personal take on what to expect as Donald Trump prepares to become the next president of the United States.

This Friday, 20th January 2017 will go down in history as the day that the man who shed the USA of huge swathes of its unwanted and ineffective autocracy, the Washington deadwood, took office.

I’m certain that Donald’s celebrated catchphrase from the Apprentice, ‘you’re fired’, has massively contributed to his successful run to become the next POTUSA.

Washington, prepare to be fired. And you deserve it.

There has been quite frankly too much self-interest, horse-trading and wastage going on in Washington for years and the electorate, who are far smarter than the so-called elites could ever bring themselves to believe, know it.

Telling Lockheed Martin and Boeing to come back to the table with much better deals for their bloated F-35 and Air Force One projects was just the start. And Trump isn’t even the president yet.

The appointment of Donald Trump’s cabinet has caused some consternation as he has surrounded himself with hard nose billionaire businessmen, generals and litigators.

I view it as being a bit like a sheriff or an outlaw, if you like, finding the roughest, toughest men in the village in order to pull off the hardest job they have ever faced.

Overturning the Washington special interests, lobbyists and cosy contracts is going to be a gargantuan task and Trump is going to need a rock solid team around him to do it.

Their opponents will include people like the CIA who make a living based on outdated diplomatic attitudes residual from the Cold War, which will be permanently displaced as Trump forges a new thawing of Russo-American relations.

They will not be shifted easily, but they and plenty other’s self-interest and archaic attitudes are damaging the USA and will ultimately bring down the country unless they are removed.

Trump would be wise to fear for his life in the face of such powerful adversaries.

But he is seen by the American people as a man who is ultimately hard but fair and can fix their country. It all starts by draining the swamp – the rallying cry towards the end of his barnstorming presidential campaign.

Donald Trump has his work cut out achieving this but his energy levels are incredible, his work ethic second-to-none and his passion to succeed never-ending. And he is a patriot.

Those in Washington who are not pulling their weight or hurting America will soon find themselves on the wrong end of the Donald.

And will soon be told: ‘You’re fired’.

Guest post: Washington: You’re fired

My predictions for 2017

Reading the annual forecasting jamboree of the media and political elites (the “Pundocracy”) is an illuminating exposure to the worldview of our contemporary Dominant Minority. A common theme is bewilderment about the events of 2016 and a sense that the normal “rules of the game” have been shattered by the victories of Brexit and Trump.

Various reasons have been given for this inexplicable shift from the status quo, ranging from nefarious Russian hacking, the rise of so-called “fake news” media or an up-surge of racist and xenophobic attitudes among sections of the electorate. For a perceptive minority of commentators, there is a dawning understanding that the globalised economic system is under threat by a growing army of economic “losers”, across the developed world.

Those who have read my “winter is coming” post will understand that powerful structural forces, including accelerating climatic change, the peaking of global conventional oil supplies and growing resource and water scarcity around the world are a mega-trend which will shatter the current business-as-usual model over the coming decades. Coupled with the huge levels of debt in the global financial system, the sovereign bond super-bubble and the long-term stagnation of wages across the developed world, it is therefore not surprising that there are growing warnings about the longevity of our globalised liberal world order.

It is in this broader context that I have prepared a series of probabilistic forecasts that I think are likely to occur in 2017. I have tried to make the forecasts as specific as possible and have focused on European politics as this may prove a “game-changing” year for the future of the euro zone and the European Union (“EU”) itself.

Please note that these forecasts will expire on 31 December 2017.

  • Marine Le Pen will succeed in getting into the second round and go on to win the presidential election in May (60% probabilistic chance)

Assuming the opinion polls are correct, it is likely that Marine Le Pen of the National Front  (“NF”) will succeed in mobilising sufficient support to get into the second round of the presidential elections and should face Francois Fillon of the centre-right conservatives in a second round contest.

There is a risk that Le Pen will be edged out in the first round by tactical left-wing voters and for this reason, along with the polling lag against potential opponents in the second round, I have placed only a 60% probabilistic chance of my forecast coming true.

However, assuming Le Pen passes the first round, the NF leader will most likely go on to narrowly win on the back of a huge surge of support from an increasingly angry army of unemployed youth, the blue-collar industrial working class along with a broad coalition of the middle classes. This will include a middle class “shy Le Pen” vote and the conversion of a section of the nominally leftist public sector workforce on a traditionally socialist and anti-austerity message which promises to protect the bloated public sector from reform and mass redundancies.

The majority of the French populace fear the impact of economic globalisation and therefore will struggle, when the moment comes, to vote for the economically Thatcherite and socially conservative policies of Fillon, which is politically toxic to left-wing voters. Le Pen is very different to her fascistic father and it is likely that her brand of nationalistic, populist and statist politics will resonate with broad layers of the French electorate.

According to Bloomberg, 51% of the French electorate consider security their top priority, hardly surprising considering the wave of jihadi terror attacks that have afflicted the nation over the past few years. Mainstream parties have shifted to the hard-right on security issues and adopted policies once exclusively owned by the NF. Le Pen is a clever, charismatic and forceful political figure who will likely persuade a narrow majority of the French electorate that only she can crush the growing jihadi threat once and for all.

To summarise, I consider it likely that Le Pen should manage to get through to the second round, and if so, has a good chance of defeating her opponent on a platform of using the power of the French state to protect the populace from the impact of economic globalisation and crush the threat from Islamic fundamentalism.

  • Geert Wilders of the Party of Freedom will become the biggest party in the March elections in Netherlands (75% probabilistic chance)

Geert Wilders of the Party of Freedom will become the biggest party in the March elections, leading to either political paralysis, becoming part of a coalition government in some capacity or the formation of an anti-Wilders coalition of the other parties.

The growing threat of Wilders to the political establishment has familiar themes to the rise of Donald Trump and the shock victory of the Leave campaign during the Brexit referendum. It may be the case that the centrist parties will succeed in locking out the populists from power this year but it is probably only a matter of time before Wilders ends up in power in the Netherlands.

  • The Alternative for Germany (“Afd”) will narrowly beat the Social Democrats into second place in the federal elections (70% probabilistic chance)

The German federal elections, due in the autumn, will see the populist, anti-immigrant and anti-establishment party the Afd narrowly defeat the centre-left Social Democrats into second place with approximately 20% of the vote. Angela Merkel is struggling to unite her political base in readiness for running for a fourth term and it is a possibility that she may withdraw from politics should she fail to develop a common consensus on migration and security issues.

However, assuming that the Pundocracy is correct and Merkel does succeed in getting the conservatives behind her re-election bid, I expect that Merkel will get re-elected but will be an increasingly lame duck leader due to  the rising power of right-wing populism in Germany.

  • At least one major West European country will elect an anti-Euro government into power (65% probabilistic chance)

At least one major West European country will elect an anti-Euro government into power (most likely candidates France or Italy if the latter has elections this year) which will cause a deepening political crisis in the euro zone.

I have written before on the internal contradictions which have beset the euro zone since its inception in 1999. The original sin of the founders of the euro was the failure to create structures of political and fiscal union across the currency zone and this has ensured that the experiment has lurched from one crisis to another since the Great Recession of 2008/09. European polling reflects a steady and systemic collapse in faith in European institutions, the political leadership and the common currency and at some point these trends will culminate in an anti-euro movement sweeping to power in at least one euro zone member state.

  • Deputy Crown Prince Mohammed Bin Salman of the House of Saud will be removed in a palace coup (55% probabilistic chance)

Deputy Crown Prince Mohammed Bin Salman (“MBS”), the leading figure in the Saudi Arabian royal family, has led a bold economic reform agenda which includes a public austerity drive, the proposed selling of a portion of the giant state oil company Saudi Aramco and challenging the traditional social contract with the Saudi populace. Whilst it may be the case that the reforms are sensible and long overdue, in a country with no political democracy, the risks of a public backlash are high.

MBS has also led the way in pushing for a more aggressive foreign policy and has been the public face of the controversial and costly Yemen war against the Shia rebels. Growing concern within royal family circles and the entrenched hostility among the powerful clerical establishment could lead to MBS being removed from power in 2017. There is even a wild card possibility of civil unrest from disgruntled members of the Saudi population which will aggravate a sensitive and dangerous moment for the Saudi Kingdom.

  • The sanctions regime against Russia will be eased or ended by President Trump by the end of the year (80% probabilistic chance)

Donald Trump has consistently said that it is in the best interests of America to work with President Putin in areas of mutual interest, in particular, the crushing of ISIS in the Middle East. I therefore consider it very likely that Trump and Putin will meet and arrange a grand strategic reset over the status of Crimea, coordinated military action over ISIS, spheres of influence in borderlands of Eastern Europe and the phasing out of the economic sanctions regime imposed on the Russian Federation by Europe and America.

Trump and his inner circle of advisers consider China the main strategic threat to American interests and wish to align Russia in a global anti-Chinese alliance. There will be entrenched institutional resistance to such a rapprochement from factions within the intelligence and military establishment and I would expect to see a number of high-level resignations from the upper echelons of the CIA as Trump forces through a radical shift in America’s foreign policy.

My predictions for 2017

Review of 2016

2016 will do go down in the history books as a game-changing year with the post-Cold War liberal world order shattered by the rise of populist and anti-establishment forces across the Western world.

What made this even more remarkable was that the vast majority of the Pundocracy were clearly stunned by the events that unfolded, whether it was the Brexit vote, the rise of Donald Trump to become the Republican candidate or his victory to become the 45th president of the United States. The media and political classes across the developed world have become a self-reverential echo chamber of the affluent, mixing only amongst their own elite circles and becoming ever further removed from the average voter.

One of the services of Forecasting Intelligence is to provide an alternative to the conventional wisdom of the chattering classes and hopefully provide accurate predictions of key political events and trends for the reader. As part of that process, I will on an annual basis, review my predictions made during the year and calculate my overall performance, using the Brier score.

If you wish to read my forecasts in further detail and my probabilistic scoring, please click here. So, how did I do?

The first two predictions related to the US presidential election and I scored trump cards on both of them (pardon the expression), successfully predicting both the election of Trump as Republican candidate as well as his eventual victory against Hilary Clinton on election night.

Trump rise to power should be seen, primarily, through the prism of class rather than the racial and sexual identity politics which so obsesses our liberal elites. Trump hard-line positioning on illegal immigration, trade policy and offshoring of jobs by American companies as well as his “America first” foreign policy was hugely appealing to blue-collar voters throughout the heartlands. The economic populism of the Trump message cut through to many, including first time or “once in a generation” voters who came out in force on Election Day. Trump also performed much better than expected among minority voters which helped ensure his narrow victory in Florida among other key battlefield states.

Donald Trump’s victory may have appeared highly improbable to the betting markets and political experts but for the few who did consider him in a strong position to win, the potential profit awards were huge. For those who had placed a bet on the Donald winning the election on the day I published my 2016 predictions, 10 January 2016, the odds were heavily stacked against Trump with a £100 wager delivering a profit of nearly £800 on betfair. Forecasting can be a very lucrative business for those who get it right.

My third prediction was that Britain would narrowly vote to leave the European Union (EU) in the Brexit referendum. Whilst the refugee crisis wasn’t as bad as I feared at the beginning of the year, the broader issue of the migration crisis, the question of future Turkish membership and concerns about the impact on jobs and local public services was central to the referendum debate. As it turned out, I was correct in forecasting that these concerns, along with a broader anger over the loss of sovereignty to Brussels, would tip the British electorate to vote for a narrow Leave victory.

So, for the three fixed political events of the year, which were guaranteed to happen, I successfully predicted every one.

My fourth prediction that civil unrest would explode in Germany between refugees and far-right activists, clearly did not happen on the scale predicted. Whilst the German town of Bautzen did see violence between refugees and the local far-right on one night in September, this did not act as a trigger for wider violence across the country.

Angela Merkel has had a difficult year, culminating in the horrific Berlin Christmas market terror attack at the end of 2016. The German public is waking up to the huge challenge of integrating over 1.2 million migrants. A sobering statistic is that currently only 3% of the refugees who have arrived since 2015 are in employment with the rest unemployed.

Although Angela Merkel’s own party has endorsed her as a candidate to run in the federal elections in 2017, her sister party, the Christian Social Union (CSU) has refused which is unheard of in post-war German politics.

The refusal of the Bavarian CSU to endorse Merkel is clearly part of an on-going revolt by the conservative forces within the CDU/CSU political bloc to drag Merkel to the right or force her out of office. Therefore, the above events provide a minimum clearing to trigger my forecasting prediction made at the beginning of the year that conservative forces would try to remove Merkel from office during 2016.

My final prediction of the year, with a 75% probability rating, was of a simultaneous ISIS terror attack in at least two west European countries. Thankfully, this did not happen as I feared and the European security services have done an excellent job in preventing the many terror plots hatched throughout the year. Europe has seen a number of major jihadi terror attacks, including the cities Brussels, Nice and Berlin. Whilst the jihadi terror threat didn’t play out exactly as I predicted, the countries which have suffered from terrorism was on my list of likely candidates at the beginning of the year.

Overall, my Brier score for my 2016 forecasts is 0.18 with 4 out of 6 forecasts proven accurate.

Please note that the Brier formula works that the lower the score the more accurate with 1 being the worst and 0 being the best possible score.

I will shortly be publishing my predictions for the year 2017 so please feel welcome to add yourself as a subscriber to Forecasting Intelligence at the bottom of this page.

Review of 2016

A Gallic dark horse emerges

The surprise emergence of the centre-right conservative candidate Francois Fillon as the victor in the Republican’s primary election has transformed the dynamics of the French presidential election. Fillon is a devout Catholic with socially conservative views who appeals to the traditional French bourgeois. These voters are alienated from the metropolitan Parisian elite and have been flirting with the National Front (“NF”) but have now discovered a champion they can identify with.

Fillon is therefore a significant threat to the NF, in particular the traditionalist Catholic strongholds in southern France most associated with the politics of Marion Marechal-Le Pen, the niece of the better known Marine Le Pen. Fillon is also advocating a free market “shock therapy” to the ailing French state with a massive cull of 500,000 public sector jobs and the gutting of workers rights including the 35 hour week, to the horror of the powerful public sector unions. Fillon’s Thatcherite politics has electrified his conservative base but have alarmed many on the Left.

Most experts consider that the most likely outcome of the first round of the presidential elections, scheduled for April 2017, will be a run-off between the centre-right Francois Fillon and Marine Le Pen, of the hard right. The Socialist Party is in a state of collapse and with multiple candidates from the left-wing political spectrum competing, it is unlikely that any of them will be able to overcome Le Pen’s base of support in the first round.

Let us assume, for the moment, that the second round contest will involve a climatic duel between Fillon and Le Pen. The battle for the future of France will be based on the core issues of security, identity and the economy. Both Fillon and Le Pen advocate harsh measures against jihadi extremists and the preachers of hate who spread hard-line Islamism within Muslim communities. The centre-right has largely deserted the “happy identity” rhetoric of the liberal establishment and has embraced the hard right terrain once exclusively occupied by the NF.

Nicholas Sarkozy led the way in the use of a “French first” nationalistic discourse during the primary campaign although he was rejected for being divisive, toxic and unpopular. Fillon has also rejected the ideology of liberal multiculturalism and has emphasized the Christian and secular values which underpin the French republic. This represents a significant shift to the right for the mainstream conservative opposition. For those on the liberal-left of French politics Fillon’s brand of politics doesn’t sound any different to the “detoxified” NF of Le Pen on the key issues of security and identity.

Historically, centrist and left-wing voters have voted for the centre-right candidate to keep out the far-right, which is what happened in 2002 when left-wing voters came out in their droves against the NF, which was led by Marine’s fascistic father Jean Marine Le Pen. However, this was over a decade ago and with both candidates occupying the same hard right political space, this assumption will be tested to destruction in 2017.

On the economy, Fillon has broken with the statist status quo of French politics and has promised massive structural reforms to the French state, which employs half the workforce in France. In contrast Le Pen has shifted NF economic policy in a more socialist direction and has advocated a mix of statism, protectionism and an aggressive defence of the public sector against the forces of globalisation. It is clear that Le Pen’s strategy will be to portray Fillon as an arch-Thatcherite, bent on the destruction of the public sector and the rust belt industries which still employ the industrial working class in the country.

Opinion polls show that 54% of the French electorate are fearful of the effects of globalisation and a significant majority, around two thirds of the electorate, are opposed to the reforms advocated by Fillon. There is a paradox in the opinion polling conducted so far. The surface polling indicates that approximately two-thirds of the electorate will vote for Fillon against Le Pen, even though, the same proportion despise Fillon’s economic policies and favour Le Pen’s brand of socialist statism.

Lurking underneath the surface polling is a huge strategic opportunity for Le Pen, which is the conversion of blue-collar socialist voters and the public sector workforce which has historically voted for the Left. If Le Pen can successfully convince these sections of the electorate that their interests are better represented under a Le Pen presidency than she can pull off a shock victory on election night. The middle class civil servant terrified of losing his plum job in the public sector under a Fillon presidency may be tempted to vote for Le Pen, even if it is a “shy vote”, as has already been seen in British and American elections.

This election will come down to a clash between interests and values. Le Pen will appeal to the hard-headed material interests of the public sector middle class and the industrial working classes whilst Fillon will draw on the lingering values-based politics of liberalism and rejection of the NF.

Time will tell whether centrist and left-wing voters can overcome their hostility to the neo-liberal and pro-austerity policies of Fillon in sufficient numbers to keep Marine Le Pen out of the Élysée Palace.

A Gallic dark horse emerges