For nearly five years, the international system has revolved around the confrontation between the world's only global power, the United States, and a relative handful of al Qaeda members. This is not a U.S.-centric view of the world. We have lived in a U.S.-centric world since the collapse of the Soviet Union. The U.S. surge into the Islamist world after Sept. 11 defined the broad processes of the international system. The war continues, of course, and continues to be significant, but the behavior of nation-states will, we expect, become as or more important. Russia, China and Iran all loom as significant this year.

The most important process in the world today is a near-universal desire to contain American power, whether by challenging it or resisting its challenges. This is a natural process. Ever since the collapse of the Soviet Union, the international system has been out of balance, with one nation so powerful no coalition of nations could contain it. Following Sept. 11, the United States became so focused on al Qaeda and the Islamic world that most other powers prudently either cooperated or evaded. No one wanted to challenge the United States.

As the war wore on, natural processes reasserted themselves. As the United States ran into trouble in Iraq, the process accelerated. Now, regardless of what happens in Iraq, other nations are going to challenge the United States -- some directly, some indirectly -- but all seeking to contain its enormous power. The United States, therefore, will not face an amorphous group nearly as much as it will engage in traditional power politics. The question for the year is how long it will take the United States to refocus on the shifting landscape.

The two most important global dynamics next year -- although not necessarily the most dangerous -- will be the U.S.-Russian and U.S.-Chinese relationships. The Russians signaled their intention to reverse American penetration -- and they very much regard it as American -- of their "near abroad," meaning the areas of the former Soviet Union which they regard as properly part of their sphere of influence. The United States, in the course of the war in Afghanistan, made substantial inroads in Central Asia, and in 2005, in spite of Iraq and the Islamist conflict, became involved -- from the Russian point of view -- in Ukraine. For Russia, this has generated a fundamental rethinking of its foreign policy. It has been asserting itself all along its periphery and rebuilding its military. 2006 will see an intensification of that process.

China will also become more assertive, but for different reasons. Our view of the Chinese "economic miracle" is that it needs a miracle to sustain itself. China will always be a great economic power, but its severe economic imbalances will have equally severe consequences. This, in turn, will cause social unrest. We have already seen substantial unrest and even violence in China in 2005. We have seen Beijing respond by trying to use patriotism to hold together a fractious country. Virulent anti-Japanese campaigns, for example, were driven by domestic political considerations. We expect to see more unrest and more recourse to Chinese nationalism. We also expect China to look for levers to control U.S. pressure. China's ability to contain North Korea is such a lever. But it is a lever only if the North Koreans are threatening enough that China's good offices need to be used. We do not think that North Korea might use nuclear weapons, but this year, unlike in the past, North Korea has a great-power patron that might not be unhappy with a regional crisis.

Iran is a country that has also learned lessons from North Korea -- and from other great powers. Approaching the United States with a smile and handshake works, but not nearly as well as approaching it with a smile, handshake and a possible nuclear weapon. Iraq remains the Iranian obsession. Events are not going poorly for Iran there, but not nearly as well as Tehran had hoped. The United States appears to have created a dynamic that will prevent Iraq from becoming an Iranian satellite. The Iranians want to have leverage in Iraq and, in the worst case, want something with which to threaten the United States.

Iran understands that it will not be able to develop a deliverable nuclear weapon -- as opposed to a nuclear device too large or fragile to deploy -- without the United States or Israel taking it out. Israel does not want to carry out the strike. Indeed, no effective strike might be possible on Iranian weapons facilities except nuclear attack. Israel wants two things. First, that Iran stop at a line before it has a deployable weapon. Second, that if it does not do so, that the United States, or NATO, carry the burden. That may or may not happen, but one geopolitical constant must be taken seriously: Israel will not permit Iran to deploy nuclear weapons.

Iran knows this. It has three possible strategies. First, hope that Israeli or American intelligence misses the development of weapons until after they are deployed, giving Iran a deterrent. Second, hope for an Israeli attack in order to position themselves in the Islamic world as the real leader and victim of the anti-Zionist struggle. Third, carefully approach the line of deployability without crossing it.

We suspect that the third option is the Iranian strategy. The problem with the strategy is it assumes that the United States and Israel are both seeing the same thing as the Iranians, which assumes that they have not only excellent intelligence but trust its excellence. The United States will have trouble with that assumption, while the Israelis have so much at stake that they will have a much lower trigger point. In short, the possibilities of miscalculation in the Iranian situation are substantial. The unintended rather than the intended consequence is the most dangerous.

It is important to stop and consider what we are talking about. Russia's desire to achieve a sphere of influence. China generating foreign-policy crises to restrain internal unrest. Iran using nuclear weapons development in a complex game of deterrence. As we will see in the report that follows -- which includes our successes and failures in forecasting in 2005 -- these three examples repeat themselves. A much more traditional world is emerging, replete with nation-states, spheres of influence, strategic weapons and so on.

The war in Iraq is clearly not over. But it is also not defining the international system any longer. We expect Iraq to remain unstable and violent, but we expect a government to slowly emerge this year and in spite of endless crises, allow the United States to draw down its presence there. If al Qaeda -- in its 9-11 form -- is still out there, it hasn't shown itself in quite a while. This phase of history is not over, but it appears to have been sufficiently contained for other forces to rear their heads.

East Asia: Buying Time

The 2005 annual forecast says of Asia: "China -- and particularly its precarious economy -- will be Asia's geopolitical epicenter in 2005. Changing global trends will cause the Chinese economy to begin faltering. When the Chinese economy suffers, economic pains throughout Asia are sure to follow. Moreover, a faltering Chinese economy could cause the Communist Party to struggle to maintain control."

The year 2005 saw significant problems inside the Chinese economy, as the government revealed -- intentionally or otherwise -- the depths of inefficiencies, the growing rural-urban gap, the bad loan problems and, perhaps most troubling, the rising social backlash. Though China has managed the growing crises, it has not eliminated them. We overestimated the speed and degree of the Chinese meltdown, while underestimating Asians' ability to continue to pursue non-solutions and trick foreigners into believing all is well and good; but the general trend remains as we predicted.

China has postponed its debt crisis by spinning off bad debts to asset-management firms and giving foreign banks a vested interest in improving the viability of the major Chinese financial institutions. China has restated its gross domestic product (GDP) figures to make the country sixth-ranked in the world in terms of GDP -- and soon to be fourth. But growth does not equal health, particularly in a country where rapid growth remains necessary just to keep in place, and even the 9 percent growth rate is barely keeping up with the population's employment needs. China is running as fast as it can just to avoid slipping backward.

The fate of the Chinese economy, and the government's means and ability to maintain control, will remain front-and-center in 2006. China continues to struggle with massive bad debts racked up over years of running businesses for social stability rather than profit. In addition, several years of decentralization of economic priorities have compounded inefficiencies and redundancies even as China moves toward a market economy (albeit with Chinese characteristics). The social backlash to these local initiatives -- which have been tinged with corruption, if not thickly painted with it -- is now showing. Protests are growing larger and more violent -- with a recent clash in Shanwei, in southern Guangdong province, ending in local security forces opening fire at protesters.

In 2006, China will have to face this situation squarely. The government recognizes the problems; it just does not have a clear solution. The new five-year plan, set to be approved by the National People's Congress in March, sets as a goal the rectification of the rich-poor, urban-rural and geographical gaps. There is no clear plan for accomplishing this, but the government has let it be known that those who already have benefited from China's economic opening will be asked to "sacrifice" in order to bring up the rest of the country -- only "the rest" is some 900 million individuals.

The Chinese government has also sent another message, this one to those who are growing bolder in their protests. The government's reaction to the Shanwei incident sends a clear signal that social disturbances are about to be treated more seriously -- and deadly force could again be employed. At the same time, Beijing is not only attacking the demonstrators, it also is going after the corrupt local and regional officials and holding the bureaucracy responsible for social dissatisfaction. This is setting up a dangerous combination, but Beijing is betting that the threats will lead to another period of calm, instead of setting off the powder keg.

In an effort to keep things on track, Beijing will pump more money into central and western transportation infrastructure -- trying to bring the jobs to the people, rather than have the people move to where the jobs are. The government, in an attempt to slow the growth of inefficient and redundant industries -- including steel, copper and some construction sectors -- also is launching an initiative to "encourage" investments in certain industries while discouraging others. Finally, Beijing will continue to stir patriotism -- fanning nationalist sentiments against Japan while playing up the positive accomplishments of a China that instead of being isolated is now engaging, and being engaged by, major world powers.

Beijing will continue to seek an accommodating dialogue with the United States, staying just out of trouble and thus having a freer hand to deal with internal strife. In addition, the government will continue to pursue a path of providing economic rewards to opposition parties in Taiwan in order to further weaken the ruling pro-independence Democratic Progressive Party. China will expand its energy cooperation with its neighbors, from former competitors in the South China Sea to ally North Korea to western neighbors India and Kazakhstan. And Beijing will continue to try to create a unifying sense of "Chineseness" through the space program, changes in global GDP ranking, anti-Japanese nationalism and preparations for the 2008 Olympics.

The rest of Asia will focus on what happens in China. Japan sees Beijing's continued rise as a threat -- and an opportunity to accelerate the reconstitution of Japan as a "normal" state, meaning one with a standing military no longer bound by a foreign-written pacifist constitution. Tokyo will continue to advance its own economic, political and security interests, re-emerging as a regional and even global player. This will bring it into confrontation with Beijing, and create a new battle between the two for friends and influence in East Asia and beyond.

The most visible aspect of this struggle will be in energy exploration in the East and South China Seas, where competing claims and shows of force could quickly lead to an accidental clash similar to the 2001 U.S.-Chinese EP-3 incident. Beijing and Tokyo also will clash over relations with Russia -- and access to Russian oil and gas resources. Though there will be some sense of cooperation in dealing with North Korea, each side will pursue its own national interest -- once again leaving Pyongyang free to maneuver and get the best deal.

This will all play out later in the year, when Japan's ruling Liberal Democratic Party (LDP) chooses a new leader -- who will then become prime minister. Prime Minister Junichiro Koizumi has pledged to step down on schedule, but has set in motion a system whereby the traditional factional politics of the LDP is being subsumed by the party's need for popular support -- and this will leave the popular Koizumi directing the future of Japan long after he steps aside as prime minister.

The China-Japan rivalry will shape another major regional trend: the continued attempts to create a regional bloc, or at least define what it means to be "Asian." The Association of Southeast Asian Nations sits at the center of the effort, but throughout East Asia there is a drive toward regional cooperation, from economic and security initiatives to political exchanges. At the same time, Asian arms spending and military deployments will increase, and nationalism will rise even amid the moves toward regionalism.

East Asia also will deal with a new phase of Islamist militancy, as the Philippines seeks a final accord with the Moro Islamic Liberation Front, Jemaah Islamiyah (JI) recovers from the loss of a key bombmaker, and Thailand continues to struggle with ongoing sectarian violence in the southern provinces. With the core of JI eliminated, the pattern of a single major strike once a year in Indonesia could fall by the wayside, and individual cells might start to carry out smaller but more frequent strikes in Indonesia, the Philippines and perhaps even Malaysia.

And, in the eternal saga of North Korea's nuclear program, the year's developments will depend as much as anything on how strong and secure U.S. President George W. Bush is, as Pyongyang eyes Washington's readiness for a potential compromise and the path toward normalized relations. But time may no longer be on Pyongyang's side. As the agricultural situation improves -- if ever so slightly -- and economic cooperation with Seoul increases, North Koreans could start to lose some of their siege mentality and begin to view their own leadership, not the imposition of blockades and sanctions by foreign powers, as the core of their problems.

FSU: From Russia with Realism

The first rule of Russian geopolitics is that a Russia without considerable strategic depth is an indefensible entity. Russia lacks any natural barriers to invasion and so its policy has always been to establish buffers between itself and potential aggressors. In the Russian mind, Ukraine is not merely an indivisible part of the Russian psyche or industrial and agricultural heartland -- it is the most important of these buffers.

The feelings harbored toward the Russians by the people who live in such buffer regions are obviously less than cordial, and this creates the second rule of Russian geopolitics: Russia must choose to expend its efforts on either security or economics; it cannot have both. In the period from 1985 to 2004, the Kremlin attempted to trade geopolitical space for economic benefits. With the Ukrainian Orange Revolution in 2004, it became apparent that that strategy had failed.

And so in 2005 Russia began to push back wherever intrusions occurred, with wildly varying results. In Chechnya, Russia finally seems to have turned the tide of the insurgency by assassinating all of the nationalist leaders. That left the international jihadists more or less in charge, and changed the nature of the war to essentially a law-enforcement operation. In Uzbekistan, Russia successfully played on local fears of a "color revolution" to convince Tashkent to give U.S. forces the boot.

But elsewhere, Russian efforts came to naught. Ukraine and Georgia, while destabilized, remain outside the Russian orbit. Chinese and Muslim encroachment continues in the Russian Far East and south, respectively.

The reasons for the inconsistency in performance are simple. Antipathy to all things Russian runs very strong in the Russian borderlands -- and while powerful, Russia is hardly omnipotent. Just as important, Russia's competitors have a very clear idea of what their end goals are: China wants Siberia, the European Union wants Ukraine, the United States wants to remain the only global superpower. But Moscow lacks a countervision -- all it knows is that it does not like U.S. influence in its near abroad. And even acting to achieve that "goal" is circumscribed by the fact that President Vladimir Putin is loathe to sever his ties with the West or to trigger an outright confrontation.

Though Russia moved everywhere in 2005, it experienced only two true successes: containing the Chechen insurgency and ejecting U.S. forces from their Uzbek base. But bear in mind that 2005 was only the beginning of Russian resistance -- 2006 will witness a maturing and sharpening of the strategy.

The November elevation of Gazprom Chairman of the Board Dmitry Medvedev to first deputy prime minister and Defense Minister Sergei Ivanov to deputy prime minister marks the adoption of a much more coherent and clear-eyed Russian foreign policy. Part of the reason that Russia has slid so much since 1992 is that policy has been dominated either by delusional idealists who want to copy all things Western, or by equally delusional paranoids who are convinced the West is poised for mass invasion. The results were the disasters of shock therapy and anti-U.S. diplomacy that is the political equivalent of a shrill scream.

Under Medvedev and Ivanov, Russian efforts will be far more pragmatic -- and therefore more effective. The two will leverage Russia's many strengths in intelligent ways instead of relying on rhetoric or myth. For example, irritating the Western powers by assisting the Iranian nuclear program is useful to Moscow only if Iran is not pushing for a crisis. In contrast, fomenting problems for the fledgling pro-Western Ukrainian government serves Russia's interests any day of the week. As such, Russia will make great strides in areas where barriers to progress are weak and Russia's tools are powerful.

 

Russia is Western Europe's largest -- and Central Europe's only -- supplier of natural gas. Prices charged will skyrocket in 2006 as Russia establishes a new basis for Moscow's relations with its western neighbors. In fact, state consolidation of Russia's energy industry will turn from a trend to a tool used to effect policy changes throughout Russia's periphery and beyond. As Ukraine discovered Jan. 1, actual oil or natural gas cutoffs are realistic options. Even Western Europe is not immune -- already Gazprom, the Russian state natural gas monopoly, has dictated that its Western European customers must increase their payments for 2006 by some 50 percent over 2005 levels.

 

The various Central Asian governments have long justified their tyrannies by trumping up the threat of international jihadists, but now they fear a far greater threat in the form of "color revolutions." Russia will play on that fear to project military power throughout the region. By addressing the issue on a bilateral basis rather than under the auspices of the Commonwealth of Independent States or the Shanghai Cooperation Organization, Moscow can be sure to maximize both permanence and penetration. The goal is to excise all meaningful U.S. military influence.

 

Several years of strong energy revenues and sound financial decisions means that in 2006 Russia will finally be able to afford to purchase new weapons. Those new systems will affect in no small way the means by which Russia influences its neighbors, granting it both more effective carrots (for Central Asia and Middle East) and sticks (for Ukraine and the Caucasus).

 

 

But in places where opposition is strong, Russia's actions will be slow, methodical and probing.

The former Soviet republic of Georgia may be weak, but anti-Russian feeling is strong and the country's economy is backed up not just by the Western alliance, but also by energy supermajor BP -- also the largest foreign investor in Russia. Moscow may want Georgia -- and the new oil pipeline running through it to Turkey -- to fail, but it will need to manipulate events so that Georgia falls apart on its own. It cannot afford a direct confrontation.

Ukraine is on a knife-edge. The Orange Revolution has stalled and 2005 saw the Russians help intensify the country's innate political chaos. 2006 will be the year that Russia subtly moves behind the scenes to position itself as the logical savior, with parliamentary elections being the key event. The trick will be to act quietly enough that the West does not weigh in as a heavy counterbalance.

 

 

Middle East and South Asia: Accommodation

The Middle East and South Asia in 2005 continued to witness developments very much connected to the U.S.-jihadist war that began with the Sept. 11 attacks. Key among them were the following:

Iraq made progress toward a political accommodation, and the insurgents proved unable to derail the process.

 

Iran saw the ultraconservatives rise to power over the more West-friendly reformists.

 

Israeli Prime Minister Ariel Sharon consolidated his hold on power, and Hamas moved toward becoming a political group -- trying to exploit its popular appeal to push ahead with its agenda -- after seeing its military capabilities progressively deteriorate under Israeli pressure.

 

The Saudi government, with a new king at the helm, successfully contained al Qaeda jihadists in the kingdom.

 

In Egypt's parliamentary elections, brought about under U.S. pressure to democratize the region, the Islamist Muslim Brotherhood movement became the main opposition force in the country.

 

While it staged a number of significant operations in the United Kingdom, Egypt and Jordan, al Qaeda continued to lose its strategic relevance.

 

Under pressure from the United States to give up its influence in Lebanon, the Syrian regime maintained its hold on power, avoiding the crisis generated by the assassination of former Lebanese Prime Minister Rafik al-Hariri.

 

Pakistani President Gen. Pervez Musharraf strengthened his grip on power and was able to make gains against al Qaeda and move ahead with the process of normalizing relations with India.

 

Afghanistan, despite the surge in Taliban and al Qaeda activity, moved ahead with its political process with the election of its first parliament since 1969.

 

 

The year 2006 will be one of political accommodations and negotiations. These talks -- which will involve emerging political forces (both state and non-state actors), incumbents and the United States -- will not translate into a state of peace, but will bring violence in the region more or less back to pre-Sept. 11 levels, where the intensity of the conflicts will no longer provoke geopolitical urgency of global proportions.

Violence will continue in Iraq, Afghanistan, Lebanon and the Israeli-Palestinian theater, and jihadists will stage occasional attacks elsewhere in the region; but the political negotiations will be much more geopolitically significant than the militancy. The general trend will be toward political settlements of one kind or another.

The dust that was thrown up by the Sept. 11 attacks appears to be settling. Every state, in flux since Sept. 11 -- and each conflict, impacted by the Sept. 11 attacks and the U.S. response -- seems to be returning to business as usual. Actors at the domestic level are negotiating with each other, and to varying degrees the United States is involved in these talks. There also are talks at the international level. In essence, militant Islamism no longer poses a strategic threat to the region.

We will see this process of accommodation play out in the domestic politics of Iraq, Iran, the Israeli-Palestinian conflict, Syria, Lebanon, Afghanistan, Pakistan and India.

The new Iraqi government will act to stabilize the country, and there will be movement toward a significant reduction in U.S. and coalition forces toward the end of 2006. The year will see major violence as Baghdad seeks to go after the jihadists and the other rejectionist Sunni elements. There also will be intense political negotiations involving Shia, Sunnis and the Kurds on power-sharing matters, likely resulting in a coalition government. Given that the Sunnis will be included in this new full-term regime, the insurgency likely will decrease in intensity.

The crisis over the Iranian nuclear program will ratchet up to dangerous levels of brinksmanship with Israel and the United States. However, this likely will result in a negotiated settlement, with Tehran eventually backing down.

Iran seeks guarantees on Iraq and is playing the anti-Israeli card to pressure Washington into obtaining those guarantees. The emergence of a regime in Baghdad dominated by Tehran's allies among the Iraqi Shia, along with the negotiations over the long-term presence of U.S. military forces in the Iraq, will coincide with a deal on the nuclear issue. Iran is likely to achieve a deal that allows the clerical regime to have enrichment capability but that, to satisfy the Israelis, will prevent it from moving toward weaponization. This will be achieved with Russian involvement at the technical and political levels. Though the conflict will make its way to the United Nations Security Council, no substantive punitive measures are likely to be taken against Iran -- the real issue is the back-channel talks between Washington and Tehran over Iran's strategic position regarding Iraq.

Iranian President Mahmoud Ahmadinejad's mentor, Ayatollah Mesbah Yazdi -- a leading cleric within the ultraconservative camp -- has a fair chance of making it into the Assembly of Experts when elections for the 86-member body take place. This organ of the regime is in charge of appointing the supreme leader of the radical Islamist Shiite republic, monitoring his performance and removing him if he is deemed incapable of fulfilling his duties. This suggests that there will be a lot of negotiations between the ultraconservatives and the pragmatic conservatives, as neither group can enforce its own choice for supreme leader unilaterally.

Despite the blowback incurred from the assassination of al-Hariri, Syrian President Bashar al Assad will be able to keep his regime intact to reach the 2007 presidential elections. This will give him time to work out some form of accommodation with Washington whereby Damascus will maintain its presence in Lebanon in return for actively cooperating in containing the Iraqi insurgency at its borders. Fledgling militant Islamist movements in neighboring Lebanon likely will make their presence known in the Levant region through sporadic attacks, but will fail to spark sustainable insurgencies.

Should jihadists begin to use Lebanon as a launchpad for attacks against Israel, Israel can be expected to retaliate. Iran and Syria will use the opportunity to regain influence over Lebanon by offering to guarantee stability in the country, so long as Israel does not resort to a ground invasion. Lebanon will suffer from its usual degree of political instability as political jockeying will intensify to unseat lame-duck President Emile Lahoud. Lebanese-based militant group Hezbollah will likely manage to work out an arrangement with the ruling government to incorporate its militia into Lebanon's formal security apparatus and avoid pressure to disarm.

Al Qaeda, meanwhile, is becoming more of a brand name than an actual organization, or even a movement. So long as Osama bin Laden and his deputy, Ayman al-Zawahiri, remain at large, they will serve as figureheads, providing moral support and broad strategic guidance to the fighters dispersed across the globe who will do the actual training, planning and execution of operations. The only branch that al Qaeda has thus far been able to rely on is Abu Musab al-Zarqawi's Iraqi group, which itself is faced with the threat of destruction given the increasing involvement of Iraqi Sunnis in the country's political process. Eventually al Qaeda will lose Iraq, at which point it will effectively cease to exist as an organization. Only loosely affiliated local and regional cells will remain, as the jihadist campaign devolves into low-intensity insurgencies with occasional attacks in select areas in North Africa, the Levant and the Arabian Peninsula.

But a decentralization of the group will not necessarily decrease the threat level in the West, especially in Europe. Al Qaeda will undergo a severe decline in 2006 with the loss of Iraq, but its usual stream of major operations will continue.

Hamas will emerge as a major player on the Palestinian political scene in the wake of the parliamentary elections in January. This will lead to major internal upheaval within the Palestinian territories, as the ruling Fatah will adjust to the challenge from Hamas and try to deal with internal rifts. Hamas will soften its militant stance and take care to choose government slots primarily in the security apparatus, avoiding positions that would require direct contact with Israel. Hamas will struggle with retaining its legitimacy as a militant resistance movement in light of its newly acquired political prowess, and will attempt to co-opt its militants into the Palestinian security apparatus to bypass pressure to disarm. Another approach that Hamas could take is formalizing a split in the organization to include a political and militant wing.

Once the January elections have passed and Hamas' capabilities are built up in the West Bank, it will follow through with its plans to revive attacks against Israel if it feels its political interests are threatened. If, however, Hamas gains a major share in the Palestinian National Authority, it will likely gain a degree of control over Palestinian security forces. Given that it is the largest militant group with influence over other militant factions, this could lead to a more stable internal security situation. However, that development could lead to an increase in clashes between Israeli and Palestinian security forces on the borders of the Palestinian proto-state.

Flare-ups in the West Bank or along the Israel-Gaza border, however, will meet an aggressive Israeli response, especially as Israel has been injected with a heavy dose of instability with Sharon's untimely health complications.

Sharon's incapacitation will leave the Israeli political system in a major flux this coming year as the country currently lacks another charismatic leader with the ability to drive a centrist agenda. Sharon's new Kadima party likely will survive through the March elections, although it will not succeed in securing the same degree of support that it would under Sharon. The March elections will likely result in a center-left coalition with acting Prime Minister Ehud Olmert at the helm. Sharon's policy of disengagement from select areas in the West Bank will not be able to make significant headway in the coming year, which will raise the possibility of a revival in the Palestinian militant scene.

In South Asia, the process toward normalizing relations between New Delhi and Islamabad will move forward, but no major breakthrough should be expected this year -- India will want to wait and see what happens in the 2007 Pakistani general elections before deciding how far it is willing to go.

In Pakistan, Musharraf will begin making major decisions toward the end of 2006 with regard to his dual portfolio as president and military chief. Constitutionally, he cannot hold both positions, and he has managed to do so only by casting it as a temporary necessity. With general elections coming in 2007, this will be the year in which Musharraf will have to figure out another arrangement. Opposition parties also will galvanize themselves, and the leadership of the two mainstream parties -- the Pakistan Muslim League-Nawaz and the Pakistan People's Party Parliamentarians -- will return. Meanwhile, Musharraf faces three major nationalist tribal leaders waging an insurgency in the Baluchistan province, which Islamabad will try to handle with a mix of military actions and negotiations.

In India, Prime Minister Manmohan Singh's government will pursue its objective of expanding New Delhi's global influence through arms deals, economic pacts and alliances. This is possible now that India's relations with its traditionally hostile neighbors, Pakistan and China, have significantly improved. However, many factors will impede India's expansionist policy.

Energy will top India's agenda -- New Delhi will attempt to cooperate with Beijing to avoid ending up on the losing side of oil and gas bidding wars. In addition, the government still does not have control over the insurgencies in the northeastern states, and the militancies in neighboring Sri Lanka, Nepal and Bangladesh remain significant.

Economic growth in India is still limited to certain sectors -- the agricultural sector continues to suffer, and infrastructural and bureaucratic problems still exist. As socio-economic conditions do not show signs of improving in the coming year, the leftists will develop a stronger presence in the government, which will only hamper Singh's policymaking abilities and his plans to bolster India's engagement with the United States.

2005 was forecast as the year when "Other Things Start to Matter." What we meant by that was that it would be the year in which other things, aside from the U.S.-jihadist war, would shape the international system. The rebirth of Russian assertiveness and increased Chinese nationalism certainly showed us that other things were starting to matter. We will name 2006 "The Year of Great and Near-Great Powers."

For nearly five years, the international system has revolved around the confrontation between the world's only global power, the United States, and a relative handful of al Qaeda members. This is not a U.S.-centric view of the world. We have lived in a U.S.-centric world since the collapse of the Soviet Union. The U.S. surge into the Islamist world after Sept. 11 defined the broad processes of the international system. The war continues, of course, and continues to be significant, but the behavior of nation-states will, we expect, become as or more important. Russia, China and Iran all loom as significant this year.

The most important process in the world today is a near-universal desire to contain American power, whether by challenging it or resisting its challenges. This is a natural process. Ever since the collapse of the Soviet Union, the international system has been out of balance, with one nation so powerful no coalition of nations could contain it. Following Sept. 11, the United States became so focused on al Qaeda and the Islamic world that most other powers prudently either cooperated or evaded. No one wanted to challenge the United States.

As the war wore on, natural processes reasserted themselves. As the United States ran into trouble in Iraq, the process accelerated. Now, regardless of what happens in Iraq, other nations are going to challenge the United States -- some directly, some indirectly -- but all seeking to contain its enormous power. The United States, therefore, will not face an amorphous group nearly as much as it will engage in traditional power politics. The question for the year is how long it will take the United States to refocus on the shifting landscape.

The two most important global dynamics next year -- although not necessarily the most dangerous -- will be the U.S.-Russian and U.S.-Chinese relationships. The Russians signaled their intention to reverse American penetration -- and they very much regard it as American -- of their "near abroad," meaning the areas of the former Soviet Union which they regard as properly part of their sphere of influence. The United States, in the course of the war in Afghanistan, made substantial inroads in Central Asia, and in 2005, in spite of Iraq and the Islamist conflict, became involved -- from the Russian point of view -- in Ukraine. For Russia, this has generated a fundamental rethinking of its foreign policy. It has been asserting itself all along its periphery and rebuilding its military. 2006 will see an intensification of that process.

China will also become more assertive, but for different reasons. Our view of the Chinese "economic miracle" is that it needs a miracle to sustain itself. China will always be a great economic power, but its severe economic imbalances will have equally severe consequences. This, in turn, will cause social unrest. We have already seen substantial unrest and even violence in China in 2005. We have seen Beijing respond by trying to use patriotism to hold together a fractious country. Virulent anti-Japanese campaigns, for example, were driven by domestic political considerations. We expect to see more unrest and more recourse to Chinese nationalism. We also expect China to look for levers to control U.S. pressure. China's ability to contain North Korea is such a lever. But it is a lever only if the North Koreans are threatening enough that China's good offices need to be used. We do not think that North Korea might use nuclear weapons, but this year, unlike in the past, North Korea has a great-power patron that might not be unhappy with a regional crisis.

Iran is a country that has also learned lessons from North Korea -- and from other great powers. Approaching the United States with a smile and handshake works, but not nearly as well as approaching it with a smile, handshake and a possible nuclear weapon. Iraq remains the Iranian obsession. Events are not going poorly for Iran there, but not nearly as well as Tehran had hoped. The United States appears to have created a dynamic that will prevent Iraq from becoming an Iranian satellite. The Iranians want to have leverage in Iraq and, in the worst case, want something with which to threaten the United States.

Iran understands that it will not be able to develop a deliverable nuclear weapon -- as opposed to a nuclear device too large or fragile to deploy -- without the United States or Israel taking it out. Israel does not want to carry out the strike. Indeed, no effective strike might be possible on Iranian weapons facilities except nuclear attack. Israel wants two things. First, that Iran stop at a line before it has a deployable weapon. Second, that if it does not do so, that the United States, or NATO, carry the burden. That may or may not happen, but one geopolitical constant must be taken seriously: Israel will not permit Iran to deploy nuclear weapons.

Iran knows this. It has three possible strategies. First, hope that Israeli or American intelligence misses the development of weapons until after they are deployed, giving Iran a deterrent. Second, hope for an Israeli attack in order to position themselves in the Islamic world as the real leader and victim of the anti-Zionist struggle. Third, carefully approach the line of deployability without crossing it.

We suspect that the third option is the Iranian strategy. The problem with the strategy is it assumes that the United States and Israel are both seeing the same thing as the Iranians, which assumes that they have not only excellent intelligence but trust its excellence. The United States will have trouble with that assumption, while the Israelis have so much at stake that they will have a much lower trigger point. In short, the possibilities of miscalculation in the Iranian situation are substantial. The unintended rather than the intended consequence is the most dangerous.

It is important to stop and consider what we are talking about. Russia's desire to achieve a sphere of influence. China generating foreign-policy crises to restrain internal unrest. Iran using nuclear weapons development in a complex game of deterrence. As we will see in the report that follows -- which includes our successes and failures in forecasting in 2005 -- these three examples repeat themselves. A much more traditional world is emerging, replete with nation-states, spheres of influence, strategic weapons and so on.

The war in Iraq is clearly not over. But it is also not defining the international system any longer. We expect Iraq to remain unstable and violent, but we expect a government to slowly emerge this year and in spite of endless crises, allow the United States to draw down its presence there. If al Qaeda -- in its 9-11 form -- is still out there, it hasn't shown itself in quite a while. This phase of history is not over, but it appears to have been sufficiently contained for other forces to rear their heads.