iStockPhoto.com

Confused U.S. attempts to create a ruling coalition of Iraqi moderates may end in the collapse of the central government. It could be “followed by an attempt to set up a strongman,” says Middle East expert Marina Ottaway. Such a dictator would probably be “benign,” according to security consultants Stratfor, but the new government would likely deal harshly with its enemies, both Shia and Sunni, as it strives to impose order. Meanwhile, the push by Kurds to annex oil-rich Kirkuk could provoke southern Shiites to form their own federal region, an event deemed the “most probable” by Ottaway. As for Sunni Arabs, they will flee violence in Baghdad by the tens of thousands during 2007.

The last Russian troops left Georgia in December of 2006 upon mutual agreement, but that hasn’t prevented the two countries from remaining at loggerheads over energy rights and disputed territory. Georgian confidence, boosted by the misperception that the United States will intervene to protect it, may finally be too much for the Russians in 2007. South Ossetia, the breakaway region of Georgia, declared itself independent after a referendum in November 2006, but lack of international recognition will lead to frustration and violence. The Russians may cite Georgia’s inability to control the region as an excuse to send in troops once again.

In 2006, China’s trade surplus with the rest of the world reached a staggering $170 billion. But Oxford Analytica expects 2007 to be yet another record year, as China easily surpasses the $200 billion milestone. Western countries will surely respond by increasing their pressure on China to allow the yuan to appreciate fully. At first, Chinese officials will continue to insist on doing so at their own pace, citing fears that too rapid a revaluation might destroy the Chinese boom. But with pressure mounting from the U.S. Congress, the Chinese will finally agree to float the yuan. This move, says leading China analyst Minxin Pei, will lead all Asian currencies to appreciate against the dollar by 8-10 percent, cooling China’s export sector but arriving too late to appease growing protectionism in the West.

Concerned about a renewed buildup on its northern border, “Israel will take military action against Hezbollah,” predicts Stratfor. The Israeli Defense Forces (IDF) will warn U.N. peacekeeping forces to withdraw before attacking the radical Shiite group’s positions in southern Lebanon. By then, Hezbollah will be completely re-supplied by its Syrian and Iranian patrons, but the IDF’s new reinforced tanks and anti-guerrilla tactics will give them a stronger hand than in the summer of 2006.

A new Japanese constitution is expected in 2007, according to Stratfor, and it will likely be more hawkish than its predecessor. Since taking office in September, Japanese Prime Minister Shinzo Abe has faced dwindling poll numbers, a stalled economic recovery, and the threat of no-confidence motions from the parliament. Expect Abe, who began his term in office with subtle, conciliatory diplomacy in China and South Korea, to launch a populist campaign to include a provision in the new document allowing Japan to possess nuclear weapons.

Serbia’s parliamentary elections in January offer the “potential for civil unrest and another civil war,” predicts Stratfor. Last year was an unhappy one for Serbian nationalists, as Montenegro became officially independent and Serbian reluctance to bring war criminal Gen. Ratko Mladic to justice led the European Union to indefinitely postpone association talks. With little debate and dubious democratic procedures, the government railroaded a new constitution into law that declared the ethnic Albanian province of Kosovo an inseparable part of Serbia. Extreme nationalists will likely capitalize on the European rejection and Kosovo’s drive for independence to whip up nationalist sentiment—and violence—following this month’s elections.

Since Fidel Castro first handed power to his brother Raúl in July 2006, Cuba’s governance has largely been a continuation of existing policies. Shannon O’Neil of the Council on Foreign Relations expects Raúl to “remain firmly in control” of the reins of power in 2007. It won’t be until his brother’s death, however, that Raúl feels comfortable announcing a major series of pro-market reforms. Notably absent from the agenda: any expansion of Cuba’s attenuated civil liberties.

The upcoming presidential contest in April promises the unprecedented: a Nigerian leader voluntarily surrendering power to an elected successor. But the initial voter registration process that began in December has been rife with problems, and it’s likely the legitimacy of the election results will divide elites. The Eurasia Group expects increased violence and dropping oil exports to mar the election’s aftermath.