Weekly Forecast Monitor: Dec. 6, 2024

Summary 

The Russia/Ukraine war trended toward military escalation and diplomatic de-escalation scenarios as Russian President Vladimir Putin renewed threats to strike Kyiv with intermediate-range ballistic missiles and approved a record increase of the Russian defense budget. A senior adviser to Ukrainian President Volodymyr Zelenskyy met with incoming Trump national security officials in Washington, D.C., and Zelenskyy expressed willingness to cede territory in exchange for a NATO security deal.

Forecast indicators 

Military escalation scenario 

• During a meeting of the Collective Security Treaty Organization in Astana, Putin threatened to attack Kyiv with IRBMs. Russian Deputy Foreign Minister Sergei Ryabkov separately warned that Russia would prosecute the war with “even stronger military means” if the U.S. continued to “test” the Kremlin.
• Putin has signed off on plans to raise Russia’s 2025 defense budget by nearly $28 billion more than in 2024 to a total of $145 billion, which would put it at 32.5% of planned national spending.
• During a trip to Kyiv on Monday, German Chancellor Olaf Scholz announced a $685 million aid package for Ukraine and vowed that Germany would remain the country’s largest European backer.
• Ukraine’s military intelligence agency reported that Russia is deploying mercenary forces from Africa Corps to Syria to support Bashar al-Assad amid an offensive by Syrian rebels.

Hybrid escalation scenario 

• Russia targeted Ukrainian energy infrastructure with nearly 200 missiles and drones in an overnight attack that cut power to over 1 million homes.
• Ukrainian Prime Minister Denys Shmyhal said Ukraine is expected to begin receiving frozen Russian assets promised by the U.S. and the EU in 2025.
• U.S. President-elect Donald Trump has threatened to impose a 100% tariff against BRICS nations if they create their own currency to lessen reliance on the U.S. dollar.
• Yale’s School of Public Health published research showing that Russian presidential aircraft were used to forcibly deport hundreds of Ukrainian children into Russia as part of a program to strip them of Ukrainian identity and place them with Russian families.

Diplomatic de-escalation scenario 

• Head of the Ukrainian Presidential Office Andriy Yermak met with Trump’s incoming National Security Advisor and current U.S. Rep. Mike Waltz and envoy to Ukraine and Russia Keith Kellogg in Washington, D.C.
• Incoming Trump administration officials, including Vice President-elect J.D. Vance, have proposed their own peace plans in Ukraine that include Russia keeping large swaths of occupied territory and exclude the possibility of NATO membership for Ukraine. Trump has neither endorsed any of these plans nor provided details of how he would end the war.
• German Foreign Minister Annalena Baerbock described cease-fire conditions, including Ukrainian membership in NATO and an international peacekeeping force with German troops stationed in Ukraine, as “conceivable.”
• NATO allies are waiting for Trump to assume office before publicly taking a stance on Ukraine’s bid for NATO membership, according to Latvian Minister of Foreign Affairs Baiba Braže.
• Zelenskyy stated in an interview with Sky News that Ukraine would be willing to cede territory currently occupied by Russia in exchange for NATO security guarantees on all remaining unoccupied territory.
• The Ukrainian Ministry of Foreign Affairs stated Ukraine would not accept any security guarantees other than NATO membership, citing the failed Budapest Memorandum as the reasoning.

Summary

Conflict in the Middle East trended toward military escalation and diplomatic de-escalation scenarios as rebels in Syria captured the city of Aleppo and Hama following a surprise resumption in fighting. Meanwhile, U.S. Secretary of State Antony Blinken said the cease-fire in Lebanon was “holding” despite Israeli bombings against Hezbollah positions in Lebanon and Syria. Senior Israeli security officials arrived in Cairo to participate in Hamas hostage release negotiations. Hamas and Fatah agreed on the structure of a joint administration of post-war Gaza.

Forecast indicators 

Military escalation scenario 

• Syrian rebel group Hay’at Tahrir al-Sham (HTS) captured Aleppo and Hama from the control of President Bashar al-Assad in a surprise offensive. Abu Mohammad al-Jolani, the leader of HTS, said the goal of the offensive is the removal of Assad from power.
• Russian forces have bombed rebel positions in Aleppo, Idlib, and the outskirts of Hama, Iranian-backed Iraqi militias have deployed into Syria, and Iran has pledged additional weapons and military advisers to support Assad’s forces.
• Numerous Israeli airstrikes targeted Hezbollah positions in Lebanon and Syria despite being in a 60-day cease-fire period.
• Israel expanded the construction of military bases in northern Gaza, while dozens of Palestinians were killed in tent encampments and residential areas across Gaza as Israel continued its offensive throughout the territory.
• Israeli security forces arrested nearly 20 Palestinians in cities across the West Bank and reportedly opened fire inside a hospital in the city of Tubas while conducting a raid.

Hybrid escalation scenario 

• Iran is expected to have received $1 billion yearly from an oil smuggling operation in Iraq since 2022. Reuters reported that the scheme is overseen by the Iranian-backed Iraqi militia group Asaib Ahl al-Haq and is used by Iran to fund its militia network.
• President-Elect Donald Trump’s nominee for director of the FBI, Kash Patel, was the target of a recent Iranian cyberattack.

Diplomatic de-escalation scenario 

• During talks mediated by Egypt, Palestinian political rivals Hamas and Fatah agreed to form a joint committee to govern Gaza in a potential postwar scenario.
• Blinken said “the cease-fire is holding” in Lebanon despite continued Israeli bombings against Hezbollah.
• Israeli Defense Minister Israel Katz and Shin Bet Director Ronen Bar traveled to Cairo, where they participated in efforts to secure a hostage release deal with Hamas.

Summary

Tensions in the Indo-Pacific trended toward a hybrid escalation scenario, as China announced it would ban critical minerals exports to the U.S. following new U.S. trade restrictions against Chinese tech companies. South Korean President Yoon Suk-Yeol is facing possible impeachment after having declared martial law, a decision that was swiftly reversed following unanimous domestic opposition. Chinese and Philippine coast guards clashed near the Scarborough Shoal in the South China Sea, and a Myanmar rebel group unilaterally called for a cease-fire with the military government.

Forecast indicators 

Military escalation scenario 

• China and the Philippines conducted coast guard patrols around the disputed Scarborough Shoal, resulting in an exchange where Philippine ships were repelled by Chinese water cannons. The incident occurred days after Beijing vowed to “resolutely safeguard” its national sovereignty regarding the disputed reef. The Philippines filed an official diplomatic protest in response and conducted joint maritime drills with Japan and the U.S.
• The U.S. agreed to a new batch of weapons sales to Taiwan worth $385 million that includes spare parts for fighter jets and radar systems due to be delivered in 2025. China responded with sanctions against 13 U.S. military contractors.
• A Russian attack submarine intruded into the Philippines’ exclusive economic zone, sparking concern from President Ferdinand Marcos Jr., who deployed naval and air assets to shadow the submarine through the area.
• The U.S. Navy developed a new system for reloading missiles onto its ships at sea, addressing concerns that too much time would be lost reloading these systems in Hawaii or California in the event of a conflict in the Pacific.
• China’s People’s Liberation Army stated it has modernized its training program, furthering team integration and coordination between units and branches to reflect more realistic combat scenarios.
• Japan dispatched a surveillance plane and navy ship to monitor a Russian submarine that was spotted 50 kilometers south of Yonaguni Island, east of Taiwan.
• Japan and the Philippines signed a new security cooperation agreement, with Japan pledging 1.6 billion yen ($10.65 million) in security assistance.
• Taiwan’s Ministry of National Defense tracked 80 Chinese aircraft and 58 naval vessels around the island this week, with 41 aircraft crossing the Taiwan Strait median line, Taiwan News reported.

Hybrid escalation scenario 

• The U.S. announced new export restrictions on 140 Chinese companies involved in China’s semiconductor and microchip industry. China’s Ministry of Commerce responded by stating it would restrict its export of critical minerals to the U.S., including gallium, germanium, antimony, and superhard materials vital to the U.S. semiconductor industry.
• Yoon imposed martial law late on Tuesday, claiming to use it to counter “anti-state” and pro-North Korean forces in the country. Lawmakers unanimously voted to repeal the order, forcing its cancellation hours after it was imposed. The Yoon’s decision drew considerable domestic and international backlash, with lawmakers set to vote on his impeachment on Friday and Saturday and Defense Minister Kim Yong-Hyun resigning. The U.S. criticized Yoon’s decision, and U.S. Secretary of Defense Lloyd Austin called off a planned visit to Seoul.
• Lithuanian President Gitanas Nausėda stated he was confident that the damage to underwater cables in the Baltic Sea in November was the result of deliberate action. Investigators on the matter claim the Chinese Yi Peng 3 cargo carrier was in the area at the time of the damage. Lithuania expelled three Chinese diplomats from the country earlier this week, drawing strong condemnation from Beijing.
• Malaysian companies have stated they will “act aggressively” to counter potential fallout from the incoming Trump administration’s economic policies.
• The FBI and the Cybersecurity and Infrastructure Security Agency issued guidance for telecommunications companies to boost their network security following breaches by Chinese hacking group “Salt Typhoon” in September.
• During their meeting in Tehran, Iranian President Masoud Pezeshkian told Chinese Vice-Premier Zhang Guoqing that Iran would expand its ties with China and Russia to counter “unilateralism” from the U.S.
• Paraguay demanded that the Chinese envoy to the country leave the country after he allegedly urged government authorities to break off ties with Taiwan.

Diplomatic de-escalation scenario 

• China has fully lifted trade restrictions on Australian red meat imports, which had been banned since 2020.
• A rebel group in Myanmar, the Myanmar National Democratic Alliance Army, unilaterally declared a cease-fire in its fight against the national military and called for Chinese-led negotiations to fully restore peace in the northeast of the country.
• Indian Foreign Minister Subrahmanyam Jaishankar stated that India and China will seek other areas of cooperation after having successfully pulled back their respective troops from their contested border areas.
• During a trip to China, Nepalese Prime Minister K.P. Sharma Oli signed a framework deal under China’s Belt and Road Initiative, securing 300 million yuan ($41 million) in financial assistance.
• Shanghai Vice Mayor Hua Yuan is set to visit Taiwan Dec. 16 for the Taipei-Shanghai City Forum, in a rare high-level visit by a Chinese official to the island.
• Japanese and Chinese officials expressed a desire for renewed relations between their countries during the annual Tokyo-Beijing Forum.
• The U.S. spared some of China’s largest chip and semiconductor manufacturers from its latest round of tech trade restrictions, in part due to Japan’s request given its position as major supplier to these companies.

United States

• President-elect Donald Trump nominated former national security official Kash Patel as his pick for director of the FBI, while officials claimed he was reconsidering Pete Hegseth’s nomination as secretary of defense in favor of Florida Gov. Ron DeSantis.
• Trump stated he would require assurances from BRICS countries that they would not create an alternative currency to the dollar, threatening 100% tariffs if they do not comply.
• President Joe Biden issued a pardon to his son Hunter for federal felony gun and tax convictions, despite having previously promised not to do so.
• Significance: The Biden pardon has fueled debate on the morality of the action, with some proponents advocating for more pardons to be granted before the new administration is inaugurated, fearing the new administration’s vows to prosecute political opponents. Trump is continuing to set the stage for his domestic and foreign policy approaches, while his threats of tariffs may be used in future negotiations with both allied and rival countries.

Venezuela

• The U.N. Human Rights Council announced the opening of a probe into Venezuela’s July election and has urged the preservation of tally sheets and other electoral materials.
• Vice President Delcy Rodriguez announced the government will have a budget of $22.7 billion for 2025, nearly an 11% increase from this year’s budget of $20.5 billion.
• Spain has yet to recognize Edmundo González as president-elect. Spanish Foreign Minister José Manuel Albares said González has not requested to be recognized.
• Significance: With a significant increase in budget, there could be some stabilization measures to help jump-start the economy including restoring public infrastructure and social programs and bolstering the education system. However, the probe into the election and the recognition of González as president-elect could present challenges to Maduro for the upcoming inauguration.

South Africa

• On Saturday, Trump announced via social media that the U.S. would impose 100% tariffs on countries in the BRICS coalition, including South Africa, if the bloc continued efforts to replace the U.S. dollar as the global reserve currency. Clayson Monyela, spokesperson for the South African government’s International Relations and Cooperation Department, clarified that the proposed BRICS currency was only to be used among BRICS members. President Cyril Ramaphosa said South Africa would engage with Trump directly over the matter.
• Significance: Trump’s threat of tariffs points to potential economic and political destabilization in South Africa. Hindrances to trade with the U.S., South Africa’s second-largest trading partner, would have significant economic consequences. Further, a U.S. administration that is more hostile to nonaligned countries like South Africa could spark disagreement within the Government of National Unity on how to navigate various international relationships.