<H3<A Name= Europe >Europe</A</H3>

<h3<a name="Europe">Europe</a</h3>

European Union member states are not as committed to the bloc as they once were. The states that joined the union before 2000 did so with the understanding that the union was created to contain German ambitions. The states that joined after 2000 did so with the understanding that the union would protect them from Russian domination. All members joined with the additional understanding that the union would grant them wealth. However, all those understandings are now in breach.

In the past year, Germany has steadily rewired European structures to its advantage. The German-dominated (and <newly modified bailout fund now operates largely independent of EU authority or scrutiny. A reawakening Germany has discovered that it has many reasons to collaborate with a strengthening Russia: energy, security and limiting U.S. influence throughout Eurasia.And overall, the European economy is stagnant at best. German-imposed austerity measures are slowing economies further and might have already created a recession for Europe as a whole. One of the few European states still showing signs of economic activity is Germany.

STRATFOR anticipates that ongoing efforts to strengthen the eurozone's bailout fund -- a precondition for any solution that would save Europe -- will continue apace in the coming quarter. We do not expect a Greek default, euro dissolution or general European catastrophe in the fourth quarter of 2011. But the fondness EU member countries have felt for the bloc is ending. In the fourth quarter, the leaders and masses of the 27 EU states will feel nostalgic for the past but unwilling to bear the collective financial burden required to preserve it, disillusioned with what Europe is becoming but only willing to blame others and most of all evaluating the options they might have if the European experiment comes to an inglorious end.

Several weak points in the European system could trigger a cascade of events that would accelerate that end. The most likely are:

<ul<li> The Italian government and Belgian caretaker government are both in precarious positions. An Italian government collapse likely would overwhelm the failsafes the Europeans have thus far established. Belgium does not even have a government in any practical sense, making it impossible for Brussels to negotiate -- much less implement -- austerity measures. A financial break in Belgium would usher the financial crisis in to the Northern European core.</li>

<li> Political miscalculations or opposition to more bailouts in Germany could limit financial support to Greece at a key moment. Greece is living on bailout funds and will default on its debt should the payout schedule be more than moderately interrupted. Such interruption would trigger afinancial cascade, starting in Greece and ending in the Western European banks before EU bailout programs are expanded sufficiently to handle the fallout.</li</ul>

<h3<a name="South Asia">South Asia</a</h3>

U.S.-Taliban negotiations mediated by Pakistan will advance in the fourth quarter. On the surface, these talks will appear to be fruitless as all involved parties attempt to strengthen their negotiating positions and fringe groups try to derail the process. Pakistan and Taliban affiliates(do we mean Pakistani Taliban and Afghan Taliban, or actual Pakistani forces, or Pakistani-linked militants not affiliated with the Taliban?) will launch attacks to increase U.S. desperation to exit Afghanistan, while the United States will try to force Pakistan to accept an ultimatum: Cooperate in facilitating and insuring an agreement with the Taliban to place strong constraints on transnational jihadist activity in the region, or risk the United States taking the war into Pakistan itself.Though the United States faces many disadvantages in these negotiations, Washington will enhance its position by decreasing its dependence on Pakistani supply lines.

The seemingly chaotic talks will intensify over the next three months, but STRATFOR believes the fundamentals of these negotiations -- the United States' strategic need to extricate its forces from Afghanistan, Pakistan's need to remain cohesive and rebuild its influence in Afghanistan with U.S. support to counter India and the Taliban's need to dominate a post-war political settlement -- will carry the negotiations forward, though not necessarily at a steady pace.

<h3<a name="Middle East">Middle East</a</h3>

<strong>Iran-Iraq</strong>

The next three months will be critical for Iran. By the end of the quarter, the United States will face a deadline to complete its troop withdrawal from Iraq. The increasingly nervous Arab states in the Persian Gulf region will not view whatever ambiguous troop presence the United States maintains in Iraq beyond that deadline as a sufficient deterrent against Iran. Tehran will want to exploit its Arab neighbors' sense of vulnerability to reshape the region's politics while it still has the upper hand. To this end, Iran will use a blend of conciliatory and threatening moves to try and drive the United States and its Arab neighbors toward an accommodation on Iran's terms.

Iran will have to work within constraints, however. Though Tehran's strongest covert capabilities are in Iraq, Iran likely will exercise restraint in this arena to avoid giving the United States justification for a prolonged military presence. Meanwhile, Iran will continue efforts to build up assets in Bahrain, but its best chance of success is in the Levant, where Tehran likely can exploit its existing militant proxy relationships to accelerate an already developing Egypt-Israel crisis that would keep Israel busyand distract from Syria's internal troubles. Despite Iran's best efforts, we do not anticipate that Tehran will be able to force a fundamental political realignment in the region as early as this quarter, though Iran will emerge from this quarter stronger.

<strong>Egypt-Israel-Palestinian Territories</strong>

The Egyptians are scheduled to go to the polls for the country's first post-Mubarak parliamentary elections in November, and Egypt will be consumed with this issue for the entire fourth quarter. The Supreme Council of the Armed Forces (SCAF) has been steadily laying the groundwork for an election that will not allow any one political grouping to dominate the others, and will seek to ensure that the divisions within the opposition will translate into a government that remains weak.

The militant environment in the Palestinian Territories and the Sinai Peninsula will aggravate political tensions in Egypt. Hamas has a strategic interest in exploiting the already shaky political transition in Egypt to undermine the Egyptian military regime and create an opportunity for more like-minded Egyptian groups like the Muslim Brotherhood to enhance their power and fundamentally change Egypt's policy toward Israel. Several other parties, ranging from Iran and Syria to al Qaeda factions operating in the Sinai,also want to create a military confrontation between Egypt and Israel.

The coming months will be extremely trying for the SCAF and Israel as both attempt to prevent Hamas and its affiliates from creating the conditions for an Egypt-Israel crisis. Hamas can be expected to conserve its militant resources until it can deem Fatah's U.N. statehood bid a failure, but will still be operating under heavy constraints as it attempts to lure Israel into a military operation in the Palestinian Territories. Though a crisis between Egypt and Israel is by no means assured as early as this coming quarter, the seeds of that conflict are being sown.

<strong>Syria</strong>

STRATFOR does not expect any dramatic shifts to its Syria forecast this quarter. Syria will continue struggling to stamp out protests, but neither the fractured protest movement nor the regime has the resources to overwhelm the other. The Syrian regime will devote increasing attention to rooting out dissent among the upper ranks of the Alawite-dominated military; this dynamic will need to be watched closely for signs of serious fracturing within the regime. The regime will find relief in the likelihood that Syria's opposition will remain without meaningful foreign sponsorship through the end of the year.

<strong>Turkey</strong>

Turkey will continue encountering obstacles as it tries to push its regional re-emergence beyond rhetoric, especially in the eastern Mediterranean. More importantly, Turkey will have to pay more attention to Iraq, where a power vacuum is waiting to be filled by Iran as the United States draws down its military presence in the fourth quarter.

The next three months will see tensions between Iran and Turkey grow quietly as Turkey increases its efforts to counterbalance Iran in the region, though these efforts will only be in the nascent stages this quarter. Iran, meanwhile, will rely primarily on the shared threat of Kurdish militancy as it tries to maintain a basis for cooperation with Turkey in light of Ankara and Tehran's growing strategic differences.

Turkish-Israeli relations are unlikely to improve in the coming months as Turkey tries to use the deterioration of its ties with Israel to enhance its regional credibility. Turkey will not be able to count on the United States' full support as it becomes more assertive in the eastern Mediterranean, yet given Washington's needs in the region (especially regarding Iran and, in the longer term, Russia), the United States will eventually make its relationship with Ankara a higher priority.

<strong>Yemen</strong>

Yemen will remain in political crisis this quarter as Yemeni President Ali Abdullah Saleh and his clan continue efforts to regain their clout in the capital and undercut the opposition. Street battles in and around the capital between pro- and anti-regime forces can be expected, with Saleh's faction retaining the upper hand yet still unable to quash the opposition.

<strong>Libya</strong>

Friction among the various factions competing for control over Libya will increase in the fourth quarter, as the loose alliance of anti-Gadhafi militias seeks to eliminate the regime loyalists' final strongholds. STRATFOR does not foresee a drawn out insurgency by pro-Gadhafi forces, but even if the National Transitional Council (NTC) declares the country's liberation in the fourth quarter -- an act which the NTC has said is a precondition to any formation of an transitional government -- the resulting political wrangling will leave the country without a unified leadership that can move Libya forward toward elections.

<h3<a name="Sub-Saharan Africa">Sub-Saharan Africa</a</h3>

<strong>Somalia </strong>

The African Union peacekeeping mission in Somalia (AMISOM) will expand by 3,000 soldiers, bringing its total force level to 12,000. The incoming peacekeepers, who will come from Djibouti and Sierra Leone, will be deployed to Mogadishu early this quarter to reinforce the current forces, drawn from Uganda and Burundi. These additional peacekeepers will enable AMISOM to consolidate control of Mogadishu this quarter, giving Somalia's Transitional Federal Government (TFG) a secure space to work on governance and delivering public services. Al Shabaab will remain divided and unlikely to reunify even loosely or surrender to the TFG. While AMISOM and the TFG will not conduct offensive operations against the Somali jihadists outside of Mogadishu this quarter, Al Shabaab's constituent groups will see their range of operations limited to narrow sections in southern Somalia.

<strong>Nigeria</strong>

Nigerian President Goodluck Jonathan's government will continue grappling with Boko Haram in the fourth quarter.The government will engage dissenting politicians from the country's north who are sympathetic to the Nigerian Islamists in negotiations, offering to trade patronage for limits on support for Boko Haram. The government will build and decentralize its intelligence capability -- albeit slowly -- to isolate hardline elements of the fundamentalist sect not interested in negotiations and maintain Joint Task Force deployments of army personnel to interdict radical Boko Haram members.

Separately, the Nigerian government will keep funneling money to its Niger Delta amnesty program, supporting what is effectively a welfare scheme for militants in the oil-producing region in order to keep oil production running smoothly.The militants, from groups such as the Movement for the Emancipation of the Niger Delta, will comply with the government, but both the Jonathan administration and the militants will safeguard the militants' capabilities for political leverage (though this will not be used in the fourth quarter).

<strong>Angola and the Democratic Republic of the Congo </strong>

The neighboring countries of Angola and the Democratic Republic of the Congo (DRC) will hold elections of sorts this quarter: The DRC will hold a presidential election in late November, and Angola will hold a ruling party leadership convention in December. Both instances will be opportunities for the opposition to organize street protests aimed at destabilizing the incumbent, though such demonstrations will not meaningfully affect either government.

Both governments could use the elections as an opportunity to harbor militia or military forces to destabilize each other.Angola is not likely to have its armed forces intervene during the DRC elections, butits relations with DRC President Joseph Kabila's government are cooler than they were in 2006, when Angola prepared its Cabinda-based units to occupy Kinshasa to guarantee Kabila's election. For its part, Kinshasa will not actively harbor anti-Luanda militias, though it will continue ignoring migrations across its shared border by Angolans and Congolese involved in smuggling and illegal mining activities.

<strong>The Sahel</strong>

The Sahel sub-region of West Africa will become crowded as some militants (and their weapons) return from the battleground in Libya. Regional African and foreign government agencies (including U.S. government elements) will strengthen intelligence acquisition and sharingefforts, focusing on the threat of terrorism from Al Qaeda in the Islamic Maghreb (AQIM) and Tuareg rebels largely from Algeria, Mauritania, Niger and Mali. AQIM fighters and hostile Tuareg elements will not have political space, or freedom from intelligence agencies and military forces, to consolidate their forces from the dispersed camps they maintain throughout the Sahel. This means constraints will be in place to limit an increase in militant activities in the region.

<h3<a name="Latin America">Latin America</a</h3>

<strong>Venezuela</strong>

While the status of Venezuelan President Hugo Chavez's health remains a serious concern and the most critical of state secrets in Venezuela, the regime does not appear to be in a rush to prepare for Chavez's imminent departure. Elections have been set for October 2012, giving the regime time to prepare for a transition of power, if one is forthcoming. This next quarter will be dominated by the implementation of major economic reforms that include the Ley de Costos y Precios and the nationalization of the gold industry. Chavez will also be occupied with mediating competition within the inner circle elite. Protests by groups spanning the political spectrum have become more common throughout the country and are expected to continue growing. Barring an outside shock like a collapse in oil prices, no major changes to overall stability are expected in the next quarter.

<strong>Brazil</strong>

Brazil will remain focused on economic management this quarter. Its dual goal of managing inflation while stimulating the local economy will require incremental policy changes as the country reacts to shifting projections of global growth. Increased trade protections are likely. The relationship most likely to grow tense over increased trade protections will be Brazil's relationship with China.

<strong>Mexico</strong>

Mexican drug cartels continue fragmenting violently, spreading volatility throughout the country. There are strong indications that factional violence within the Gulf Cartel could erupt, which would lead security conditions in Tamaulipas, Veracruz and Nuevo Leon states to deteriorate in the near future. Fighting between the Gulf Cartel and Los Zetas will intensify in Mexico's northeastern states. Relative calm in the Northwest, particularly in Sonora and Baja California del Norte, will continue in the fourth quarter as the Sinaloa cartel continues to exert control over the region. As many as seven different factions and organizations are battling for control over transportation corridors in the central, south-central and Pacific coast regions. Jalisco, Nayarit, Guerrero, Colima, Michoacan, Oaxaca, and Sinaloa states will be particularly vulnerable in the next quarter.

<h3<a name="Former Soviet Union">Former Soviet Union</a</h3>

<strong>The Kremlin, the Tandem and Elections</strong>