1. Military security - risks of instability

Looking back at experts’ forecast about international security for 2015, it appears that many things remain the same; international security remains unpredictable and complicated, subject to a variety of advantages and disadvantages. Although peace was relatively widespread, the sources of international security threats continued to accumulate and risked spiralling out of control, drawing special attention from researchers, security-defense policy makers, and the media. Upon evaluating the potential security concerns and development trends including reformed national strategies, particularly of the most powerful countries, researchers and analysts of international situations have brought forth many projected scenarios, arguments, and predictions. Some predictions have garnered the attention of policy makers and the media, such as the following:

First, in 2016, the international situation are being dynamic and unpredictable. Struggles between the newly shaping security laws with old ones may introduce additional difficulties. However, “peace and cooperation are still a prevalent global trend”.

The struggle between the shaping “multi-polarized” world order with the “single polar” order has become increasingly drastic; unilateralism has not yet been eliminated during the transformation of global security from orientation (multipolar) to shaping (with one or more centres - a country or group of countries or regions and positioning of developed, developing, and least developed countries). Influential countries continue to adjust their strategies, enhance their position, protect their interests and create more balance within the international balance of power at the regional and global level.

The United States will remain the world’s premier global power in 2016 with its dominance of economic potentials, science and technology advancements, and military power. While executing “synchronous” strategies, President Obama has laid out plans to revive the economy and renovate the society of the US. Resources under these plans will be concentrated on dealing with internal issues. However, as military expenditure decreases. The US’s relative strength in comparison with other powers will continue to shrink, perhaps posing a challenge to position as the leading military power. Despite the many dramas of the US Presidential election of 2016, the US will continue its global strategy of increasing its competitiveness with other powers, particularly China and Russia, while it also accelerates the “rebalance” of the Asia-Pacific, promoting the TPP, and intervening in the Eastern Sea according to Obama’s doctrine.

Russia will continues to promote measures that consolidate its national strength, protect and expand its interest in neighboring regions, and increase its collaboration with a host of newly emerging countries (Brazil, Russia, India, China - BRICS) and the Shanghai Cooperation Organization (SCO), thereby increasing its influence in the Asia-Pacific with a focus on the Middle East. President Putin’s National Message of 2015 demonstrates that Russia strongly disagrees with Western countries on such issues as the Ukraine crisis, the anti-IS war in Syria, and NATO’s strategy of “expansion to the East” - deploying forces closely to Russian borders. In the last months of 2015, Russia has taken strong initiatives to reinforce its position by attacking IS, which forced the US and the West to take notice. From a position of initial coldness, Foreign Ministers of Russia and the US have discussed anti-IS methods to end Syria crisis. Western countries such as Great Britain, France, and Germany also expressed their willingness to cooperate with Russia in the attempt to fight against IS.

China will promote strategic initiatives to increase its influence in the world, continuing its drastic struggle with the US in the Asia-Pacific region, expanding relations with its large partners and applying appeasement tatics with its neighbours, all the while remaining solid in protecting its “core interests”. According to analysts, China has taken a hard line in recent years to challenge the status quo of the Eastern Sea, specifically around the Hoang Sa (Paracel) and Truong Sa (Spratly) Archipelagos of Vietnam, which are currently illegally occupied by China. On November 7^th of 2015, during a visit to Singapore, Xi Jinping stated: “the islands in the Eastern Sea have been part of China’s territory since ancient times”. As a result, Beijing must take necessary actions to “safeguard its territorial sovereignty and legitimate maritime interests”.

Japan will also promote its foreign security policies by implementing a new Security Law, which calls for more interventions in regional and international issues as Japan shares global responsibilities with the US and competes with China. Japan is giving great importance to improve its military force in order to safeguard national sovereignty. New provisions were recently added to the Security Law related to the participation of the Japanese army in operations with allies and foreign partners. The Law on Organization of Ministry of Defense was revised and the Constitution is about to be modified accordingly. Japan will also focus on strengthening its relationship with the US and Korea while promoting alliances with the Philippines, Australia, and India, further expanding cooperative efforts with ASEAN nations and proactively intervening on international and regional issues to manifest the role of “political power” (in a broad sense).

India plans to reinforce its economic and defensive capabilities by implementing more dynamic, determined, and practical foreign policy with the aim of gradually becoming a military power in the region and the international arena. Currently, India is promoting research, production, and the purchase of arms and military equipment while promoting relations with other powers, deploying policy known as “Look East” policy, improving its relationship with China, strengthening its cooperation with the US, promoting the US-Japan-India trilateral security cooperation, promoting relations with Russia, Germany, Britain, Korea, EU and Central Asia countries, and supporting the central role of ASEAN within the security structure of the region.

The European Union (EU) has been struggling with economic crisis and the challenges of immigration, terrorism, the Ukraine issue, and its relationship with Russia. These issues have contributed to the risk of internal division. More than one million migrants from the Middle East and Northern Africa to the EU has raised security concerns while terrorists have penetrated into Europe. Insecurity, evidenced by the attack in Paris, has made the EU unstable and some countries have threatened to separate from the EU, such as Great Britain and Egypt.

Second, although 2016 will likely not feature any large-scale wars, the possibility of short-term small or medium-scale armed conflicts cannot be excluded. Many new challenges for non-traditional security have arisen.

According to analysts, large-scaled wars are rare because countries are wary of unpredictable consequences, particularly in this era of globalization where national and international interests intertwine and influence each other. However, local wars of a small or medium-scale and short-term armed conflicts are liable to take place; civil wars, national separations, terrorism, ethnic and religious conflicts have become complicated and unpredictable, causing instability in many regions.

The anti-IS war has attracted the participation of many countries; however, there remains a lack of close cooperation due to each party’s considerations of personal interest, especially among Russia, the US, and the EU. Consequently, the war may be prolonged, in no small part because the US continues to pursue its “Great Middle East” policy along with climate change, cyber security, marine security, energy security, and water source security, policies which have affected the behavior of other countries as well. The result of the United Nations Conference on Climate change (COP-21) is a typical example of the United States forcing cooperation from the rest of its allies.

Third, the Asia Pacific remains a dynamic, developing region where a range of world powers have been promoting their investment strategies, creating new opportunities and also challenges of security.

Despite the decline of such powerful economies as China, India, and Japan, the Southeast Asia region will continue its dynamic development in 2016. Powerful countries will promote their investment and security strategies on the region; disputes about territory and national interest will become more complicated. Conflict appears to be on the rise in the coming years, given the increased global focus on Southeast Asia.

With dominant economic power, the Asia Pacific region is slowly becoming the world’s “centre of power”. The US, China, Russia, India, and Japan have all been promoting pursuing their capital interests in the region and the competition among them will create both opportunities and challenges. While cooperation and association, among countries creates a balanced environment, the strong competition, particularly between the US and China, will pose new risks to regional security, especially regarding the Eastern Sea.

Fourth, as a result of territorial and national interests disputes, the risk of an arms race will increase in 2016.

Some countries may choose to reinforce tough measures in settling territorial disputes and pursuing national interests, which makes the regional situation increasingly tense. These situations will force an increase in defense spending and accelerate the modernization of military forces, which will make trust and confidence-building between nations all the more difficult.

According to analysts, due to the complexity and unpredictability of security factors in the Eastern Sea area, there have been a number of proposed scenarios that may occur. The two major scenarios are:  (1) An increased instability in Eastern Sea security; (2) Eastern Sea security will become more stable compared to 2015. Scenario 1 is more likely to happen, although scenario 2 is not impossible.

Regarding scenario 1, according to experts’ explanations about China’s maritime strategy, 2016 will begin phase two of China’s plan to comprehensively develop its maritime economy by 2030. China will build a moderm strategic maritime defense system with the bay playing a core role. The Chinese navy will shift in focus from “off-shore waters defense” to the combination of “off-shore waters defense” and “open seas protection”. Island formation and the illegal construction of military bases on Vietnam’s islands are included in China’s ambitious strategy.

Scenario 2 is based on practical reality and the remarks of Chinese researchers. Beijing’s recent “win-win” measures are based on the competition for sovereignty, jurisdiction and control, which receive dissidence from other countries and even the Chinese people. As a result, during ASEAN Foreign Minister Meeting and meetings between ASEAN and partners, Chinese Foreign Minister Wang Yi made a 10-point proposal, the 6^th point about Eastern Sea security.

On the other hand, economic distress and strong internal contradictions are the overarching issues that demand Beijing’s concentration. Overcoming economic recession requires both the settlement of domestic disputes and the creation of a favourable international environment, especially regarding the issue of the Eastern Sea and its relationship to neighbouring ASEAN countries, which would ensure a more stable situation for the region’s security in 2016.

Fifth, Southeast Asia will continue to develop, and when the AEC comes into action it will strengthen the region. However, there are other challenges, particularly the confirmation of ASEAN’s practical role.

ASEAN member countries will apply AEC coordination mechanisms and implement strategic plans of cooperation inside and outside of the association, strengthening ASEAN’s central role in the region, minimizing differences, and attracting external investments to contribute to the stable peace and prosperous development of the region. However, the internal politics as well as the ethnic and religious conflicts are complicated in some countries. Territorial disputes, particularly with China, may have an effect on dealing with maritime security, terrorism, transnational crimes, natural disasters, and diseases. There are also issue of competition for influence and the arrangement of interests between powers, particularly US-China competition, that could worsen the security in the region and impact the defense-security of countries including Vietnam.

2. Economic security - Close risk of recession

In 2016, economic growth may slow, but in the context of a bright future.In the world economic outlook report from International Monetary Fund (IMF) about global economic prospects in 2015-2016, global growth was estimated at 3.1% in 2015, and is projected at 3.6% in 2016, although these figures are lower than previous estimations. IMF estimates that the US economy may grow at a rate of 2.8%, bringing the country’s annual growth to its fastest rate since 2005. In the Eurozone, economic growth is also projected to increase, although it is only 1.6% higher than 2015. Nonetheless, this would mark the highest increase since 2010.

At the same time, according to IMF’s estimation, Japan’s economic growth will drop by 1% in 2016. The prospect for growth development in emerging and developing economies like Brazil, Russia, Canada are forecasted to lower level by IMF. Among these countries, Canada is the only one to be forecasted having economic growth in 2016.

In addition to estimating the world’s economic growth, IMF also estimates global inflation, which is projected to rise from 0.3% in 2015 to approximately 1.2% in 2016. All told, most forecasting agencies including the World Bank (WB), Organization of Europe Cooperation and Development (OECD) and big news agencies such as Bloomberg all have optimistic prospects about a stronger global economy in 2016.

However, the growth of developing economies around the world will continue to decline.It is estimated that the growth of Asian countries will drop to 5.4% in 2016. The slowed growth of China may prove to create insecurities in the global economy. Moody’s, a credit rating agency estimates that the world’s second-largest economy, China’s, will grow by 6.3% in 2016, down from 7% in 2015 and a peak of 14.2% in 2007.

The growth of other countries within the region such as Indonesia and Malaysia is projected to reduce to 4.7%. Only Thailand and Vietnam are projected to continue their economic growth, with an estimated 3.5% and 6.2% respectively in 2016. The decline forecasted for the above countries are a result of the following factors: (1) the economic growth rate of all developing countries has been falling. (2) The possibility of a raise in FED’s interest rates will make loans more expensive for emerging economies, slowing the flow of capital to emerging market. (3) The price of the world’s raw materials continues to decrease causing losses for exporting countries.

“After 4 years of disappointing performance, growth in developing countries is still struggling to gain momentum. Despite auspicious financing conditions, a protracted slowdown has been underway in many developing countries, driven by shortages in agriculture, power, transport, infrastructure, and other vital economic services. This makes the case for structural reforms all the more urgent”, said Franziska Ohnsorge, editor-in-chief of the Global Economic Prospects 2015 report.

“Unless emerging markets have taken the prudent policy steps to be fiscally and externally resilient, they may face significant challenges dealing with the turbulence and other fallout that could be associated with a tightening fiscal policies of FED,” said Ayhan Kose, the World Bank’s Director of Development Prospects.

Strong volatility of capital flows:According to Mr. Wilson, an expert in economics, volatility in capital flows around the world represents the greatest risk for the fiscal year of 2016. “By nature, the Chinese stock market crash, for example, should have no implications for global growth in itself, but of course it caused huge shifts in capital flows”, he said.  Accordingly, capital outflows from China topped $500 billion in the first 8 months of 2015, peaking at around $200 billion in August, after the country’s stock “bubble” exploded, strongly influencing the global stock prices before Beijing declared China would give up its “exchange rate increasing” policy between the Chinese Yuan Renminbi and US dollar. Over the past year, $940 billion in capital has been withdrawn from 19 emerging economies. According to Mr. Wilson, these were major risks to financial stability in 2015 and they could possibly affect the market in 2016.

According to the Institute of International Finance (United States), it is estimated that approximately 1 thousand billion US dollars of private capital has been withdrawn from developing countries since early 2015. Among emerging economies, China faces many challenges including an aging population and ineffective investment strategies. With China’s shift towards a domestic commodity-based growth model, its influence on the world’s commodity market will likely decline.

More importantly, the global economy may be at risk of facing the biggest challenges since 2008. “Periodic economic distress” has become worse in developed countries while emerging markets such as China have been declining with no signs of slowing. Industrialized countries grow at an inadequate rate in spite of the implementation of a “super fluid” monetary policy, which has in fact slowed the growth rate of industrialized and developed countries.

According to a variety of experts, the FED should be able to prevent a global financial collapse while the European Central Bank and Bank of Japan should be aware that the greatest risk for them, currently, is the slow speed of the economy. At the same time, the FED should be ready to issue effective tools for preventing the risks because, when the bond interest rate is under 1%, the method of quantitative easing (QE) applied by many countries might not prove effectiveness.

To conclude, the security risks of 2015 may contribute to global instability in 2016. However, regardless of the size or ambition of destabilizing powers, they are hindered by the world’s trend towards globalization. The interdependence between countries has become stronger and global interests have arisen, forcing individual nations to limit their own dominant agendas. The extent to which globalization can prevent instability, conflict, and war depends on the will and determination of the international community in preserving peace. Therefore, despite the current uncertainties in terms of security, 2016 is projected to continue the trend of stable, peaceful development for the majority of the world.

Nguyen Nham