Tempering Trump Policy: Ongoing federal investigations and intensifying budget battles with Congress will make for another distracting quarter for U.S. President Donald Trump. But these disruptions won’t mitigate the rhetoric of White House ideologues, or broader speculation that the United States is retreating from the global stage. The reality of the superpower’s role in global governance, of course, is far more complicated. Meanwhile, the administration’s more extreme policy initiatives, particularly on matters of trade and climate, will be tempered at the federal, corporate, state and local levels. And though the United States will maintain its security alliances abroad, it will also generate enough uncertainty to drive its partners toward unilateral action in managing their own neighborhoods.
Sparks Fly in the Middle East: Qatar’s standoff with Saudi Arabia and the United Arab Emirates will persist throughout the quarter amid intensifying battles among regional powers’ proxies across the region. More visible competition within the Gulf Cooperation Council and growing distrust between Turkey and its Gulf neighbors will reveal the weaknesses of the White House’s strategy to conform to Riyadh’s increasingly assertive foreign policy in an attempt to manage the region. The risk of clashes among great powers is also on the rise in eastern Syria: As Iran works to create a land bridge from Tehran to Damascus and the Mediterranean coast, Syrian loyalists and U.S.-backed rebels are racing toward the Iraqi border, all while Russia uses the Syrian battlefield to jockey with the United States for influence.
A Stressed but Stable Oil Market: As Saudi Arabia’s young Crown Prince Mohammed bin Salman continues to amass power, much of his focus will stay fixed on preparing for the initial public offering of Saudi Aramco in 2018. Part of that plan entails preserving a deal on production cuts among major oil producers in hopes of keeping prices stable amid climbing output in the United States, Libya, Nigeria and Kazakhstan. Compliance with the agreement will hold through the quarter, but it will slip toward the end of the year as signatories begin to craft their exit strategies.
Dancing Around the North Korean Crisis: The limits to China’s cooperation in sanctions against North Korea will become clearer as trade talks between Beijing and Washington head for a rough patch. Pyongyang’s nuclear and weapons tests will continue to fuel friction in the region, though they will not increase the chances of U.S. military action this quarter unless the North Korean regime can demonstrate a credible long-range missile capability — an achievement that is probably still at least a year away.
Europe Buys Time While Russia Airs Its Dirty Laundry: A likely electoral win for Germany’s moderate forces and early reform successes in France will reinvigorate calls to take advantage of the prevailing calm on the Continent to revamp the European Union. Doing so, however, will expose the many fault lines festering in Europe as each camp proposes a different vision for integration. And with a wary West on guard against Russian cyber-warfare and propaganda campaigns, there will be little room for substantive negotiation between Washington and Moscow this quarter. At the same time, a burgeoning protest movement will keep the Kremlin’s hands full at home.
From Stratfor: 2017 Third Quarter Forecast