Ten Trends That Will Define the Geopolitical Agenda in 2016

Full Moon, Full Earth
Image Credit: NASA, NOAA/DSCOVR

Overview –

A challenging but promising year lies ahead in 2016.

On the one hand, a series of crises are poised to deepen: Foreign aid to developing countries is drying up; mass migration, including refugee resettlement, is pushing Europe to the brink; independence movements within Europe are gaining strength; post-World War II humanitarian norms are in danger of extinction; China is increasingly asserting itself globally, at times in provocative contradiction to American and Western interests; Vladimir Putin’s Russia is engaged in seemingly perpetual brinkmanship; Latin America’s economies are in trouble without a clear political way out; the whole world is about to be tested on the seriousness of its commitments to mitigating climate change.

On the other hand, there is reason for optimism, with new opportunities on the horizon: final frontiers of global trade are opening up in Cuba, Iran, and Myanmar; Russia’s aggressiveness may come back to haunt it; the war on drugs may come to an end, creating new markets for medicine and recreation; crypto-currencies like Bitcoin will come out of the shadows; governments around the globe will work together to crack down on tax evasion; breakthroughs in artificial intelligence and machine learning may open the door for technological innovation the way the iPhone appstore did seven years ago.

It is only fitting that a year that will likely see so many trends coming to a head will also end with the election of a new US president and UN secretary general.

The trends are:

1. Fortress Europe under strain

2. Crisis of humanitarianism and development

3. Final frontiers falling: Cuba, Iran, Myanmar

4. The overdue climate change deal

5. China flexes its muscles

6. Russia could be in trouble

7. Continued Latino malaise

8. The end of the war on drugs

9. New age of finance

10. Artificial intelligence’s breakthrough

1 — FORTRESS EUROPE UNDER STRAIN

Minecraft Europe

It is perhaps stating the obvious to assert that Europe will continue to be strained, possibly to the very breaking point, in 2016. But consider these trends and developments: the European Commission expects more than three million refugees and migrants to arrive in the European Union by the end of 2016 — compared to roughly 700,000 between January and November 2015. These 700,000 overwhelmed border authorities, reception centers, and European politicians who could not agree on a coherent response as the year went on (other than, as most countries did, closing their borders and re-instituting border controls). According to UNICEF, 700 children are claiming asylum on European soil every day.

There is little sign that the influx will let up: violence and bloodshed continue to shape the Middle East (Syria and Iraq are among the most common countries of origin); demographic and economic pressures continue to drive young people out of South Asia (Afghanistan, Pakistan, and Bangladesh also feature prominently); and insofar as families can scrape together funds to pay people-traffickers to send relatives into the unknown, they’re fleeing Africa as well (particularly Eritrea, Ethiopia, Somalia, Nigeria, Chad, Niger and Central African Republic).

There is little prospect that European leaders will be able to institute the far-reaching policies and programs that would be necessary to mitigate the wave of migration. On the contrary, continued efforts to close Europe’s borders will only lead to more desperate attempts by migrants to breach the fortress. Even Social Democrat-governed Sweden, long a beacon of humanitarianism and refuge, declared in late 2015 that it would tighten migration regulations, having in recent years received more asylum seekers per capita than any other EU member state. More migrant deaths are likely, as are more urgent appeals to the humanity of Europeans.

But the counter-reaction will also continue: a rise in xenophobia, and growing support for far-right parties will shape European politics and create additional difficulties for existing leaders seeking to cope with the crisis. This trend will be reinforced if there are further incidents in the vein of the Paris terrorist attacks of November 2015 — strengthening the appeal of anti-immigration parties who will lay the blame for such attacks at the door of migrants from Syria, Iraq, Afghanistan, and the entire Muslim world. Elections in a number of smaller countries across Europe (e.g. Lithuania, Romania, Slovakia) are likely to reinforce a general political trend towards the right, which has already brought new hardline governments to power in places such as Poland and Croatia. In Germany, state-level elections could see a considerable protest vote against Angela Merkel’s governing Christian Democrats, or their coalition ally, the moderate Social Democrats.

While Europe seeks to insulate itself from outsiders, there remain considerable anti-EU pressures from within. Momentum is building ahead of the referendum on Britain’s EU membership, likely to take place in 2016, with Prime Minister David Cameron already declaring an end to the notion of “ever closer union”. Even if conservative hardliners and Eurosceptics don’t sway British voters to end the UK’s EU membership, they will nonetheless force significant concessions that by themselves will undermine pan-European governance. Meanwhile, Scotland will also hold parliamentary elections in 2016, likely reinforcing the grip on power of the Scottish Nationalist Party, and very likely renewing calls for a referendum on independence before too long. In Spain, Catalonia declared its desire for independence following regional elections, and the central government will continue to find it hard to respond to such calls.

In short, Fortress Europe will be threatened from both outside and inside. The pressure is significant, but the world cannot afford to see Europe flail and fail.

2 — CRISIS OF HUMANITARIANISM AND DEVELOPMENT

With a global agreement on “Sustainable Development Goals”, the successor to 2000’s so-called “Millennium Development Goals”, 2015 was meant to be a landmark year. The agreement came amid growing recognition of critical policy inter-linkages: between conflict and poverty; between climate change, conflict, and under-development; between the empowerment of women, education, and prosperity. The stage was set, it appeared, for a global deal to increase development aid and build less fragile states with better governance — reducing the global economic burden of conflict and poverty, as well as helping stem the tide of migration. Alas, the contrary has happened, and there is a significant crisis in financial aid available to those who need it most, a trend that will deepen further in 2016.

This financial aid crisis is exacerbated by the largest migration and refugee crisis the world has seen since World War II. At end of 2015, there were 60 million refugees and internally displaced people across the world, a number that rose by nearly 10 million from mid-2014 to mid-2015 alone. One in every 122 people is a refugee, internally displaced, or seeking asylum, and refugees and migrants would form the world’s 24th-largest country by population. But few countries have stepped up to deal with these challenges, and humanitarian assistance is facing a significant shortfall. Rare funds are also increasingly diverted from important longer-term development aid, which is ultimately, ironically, a means to prevent further conflict, poverty, and migration. The United Nations alone is looking for an additional $15 billion to $20 billion a year to cover humanitarian crises, but with Europe seeking to insulate itself — and already under strain from economic crisis and influxes of refugees — there is hardly any money.

Further compounding the crisis, austerity policies across Europe and elsewhere also mean reduced development assistance budgets. While official development aid has grown by two-thirds since 2000, when the Millennium Development Goals were adopted, there are still only five countries in the world that meet the long-standing United Nations target of dedicating at least 0.7% of GNI to official development assistance: Denmark, Luxembourg, Norway, Sweden and the United Kingdom. Across the board, aid to the least developed countries has been falling for years, creating pressures that lead to poverty, conflict, and growing migrant flows.

In addition, long-held humanitarian principles, a fundamental part of the international order forged after the World Wars, are increasingly being cast aside. In Syria, Iraq, Yemen, and Libya, few of the protagonists know or care about international humanitarian and human rights law — which some would dismiss, in any case, as an invention imposed by the West. Even Western countries involved in conflict or in ‘defending’ their own borders — Croatia, Slovakia and a number of other Central European countries come to mind — are no longer fully committed to upholding such principles. Against this background, the UN Secretary-General and the President of the International Committee of the Red Cross made an unprecedented joint appeal in October 2015, warning that “in the face of blatant inhumanity, the world has responded with disturbing paralysis.” Few heeded or even heard their call.

In this sense, 2016 may represent a critical year for humanity: Will the world uphold the post-World War principles of humanitarianism and development solidarity, or will the Sustainable Development Goals go up in a puff within a year of their endorsement? And what will be the consequences if humanitarianism and development partnership disappear as cornerstones of the global political and economic order? There are no easy answers.

3 — FINAL FRONTIERS FALLING: CUBA, IRAN, MYANMAR

It is no longer fashionable to talk about the globalization of the world economy and how it has extended into the farthest corners of the planet, but there is another leap in the making: at least some of the final frontier falling.

In late 2014, the US and Cuba agreed to resume diplomatic relations and establish embassies in their respective capitals, a pledge that was realized in 2015. While considerable obstacles remain, the stage is set for the economic opening of Cuba. This will not take the form of a Western conquest; it will be a cautious and highly controlled opening. Even so, once the door is pried ajar, it is likely to be opened further and further.

Cuba is not the only final frontier falling: The landmark nuclear agreement which the permanent five members of the Security Council and Germany (P5+1) reached with the Islamic Republic of Iran is similarly setting the stage for a gradual, cautious, and controlled opening of the Iranian market to the world. The implications are not to be scoffed at: Iran has a population of nearly 80 million who hunger for products from the West. In the years of stringent economic sanctions, Iran’s population has only grown younger and more determined to partake in global consumerism. This does not mean that the end of the Islamic Republic is nigh: Iran’s politics will continue to revolve around the careful balance between conservative hardliners and relative moderates/reformers, not around those who want to upend the theocracy altogether. But given the economic malaise Iran has suffered in recent years, trade will likely be embraced by all, and this creates enormous business opportunities — as well as a potential for further diplomatic rapprochement and collaboration.

A similar dynamic will be at play in a country further east, albeit unfolding far more rapidly and with far less caution. Following the decisive landslide victory which the National League for Democracy won in Myanmar’s November 2015 elections, Nobel Laureate Aung San Suu Kyi will, in 2016, effectively govern a country that has been under strict isolation and military rule for decades. Though barred from the presidency, Suu Kyi made clear even before the elections that she would “make all the decisions”, and President Thein Sein and the military junta appear to have graciously accepted defeat. The new parliament will convene in January and elect a new president, anointed by Aung San Suu Kyi and the NDL. The real challenge, however, will be for the long-time opposition leader and Myanmar’s majority party to handle the remainder of the transition towards democracy and liberalization. As the military still control key media and the economy, this is a process that requires careful and gradual management, especially considering that the country still has millions of people living in poverty, around 70 percent of them working in agriculture. That said, the potential is enormous: Myanmar has already seen an easing of economic sanctions and an influx of foreign aid and investment, with an estimated $7 billion flowing into the country since 2010. The country is rich in hitherto unexploited natural resources. Given these economic and political realities, the fall of Myanmar’s frontiers will be challenging, but could also be extremely rewarding.

All of these developments leave but one final frontier in the world waiting to be breached: North Korea. Significant change does not lie ahead in North Korea in 2016, but it is worth pointing out the many pressures building up in and around it, not least China’s decreasing commitment. How North Korea deals with these pressures, one way or another, may shape the headlines in 2016.

4 — THE OVERDUE CLIMATE CHANGE DEAL

Cleanergy’s Stirling CSP Engine

2015 was the hottest year ever recorded. It was also the year that set the stage for long overdue global action to combat the effects of climate change.

In the course of 2015, the United States adopted a Clean Power Plan, spearheaded by the Environmental Protection Agency, that will cut emissions from power plants — the single largest source of carbon in the US — by more than 30 percent over the next 15 years. Since the US remains among the world’s largest per capita emitter of carbon dioxide and other pollutants, the new plan represents a significant step forward, and the US is now on track to meet its commitment to reduce emissions by 26–28 percent below 2005 levels by 2025. President Obama deserves much credit for this achievement.

But the US is not the only actor to have become serious about climate change. China, the world’s number one greenhouse gas emitter, has also finally embraced the reality of climate change and begun to take action. In June 2015, the People’s Republic outlined plans under which emissions will peak by 2030 at the latest. China has committed to a target of 20 percent of its energy coming from renewable energy sources within 15 years. In 2015 alone, China is expected to add 18 gigawatts of new solar capacity. By comparison, the United States recently surpassed 20 gigawatts in total solar energy capacity.

With the US and China actively committed, the stage was set for a global emissions deal in Paris in November/December 2015. The agreement which came out of Paris seemed to demonstrate that the world had finally embraced the undeniable reality of climate change, and in that sense, 2015 may have seen a critical leap forward. Much will hinge, however, on the practical implementation of the deal, and 2016 will be critical in that respect: How will global commitments to combat emissions and the effects of climate change translate into action, and what political and economic impact will those actions have?

One major driver of changing attitudes in the US and elsewhere is the discovery that clean energy makes for good business, rather than creating additional costs. For the first time in 40 years, global economic growth in 2015 did not translate into growing carbon emissions. World Bank lending for renewable energy projects rose to nearly $3.6 billion in 2014, or 38 percent of its total energy lending, and it is now expected that in the same way that some developing economies adopted mobile telephone technology without ever having a landline system, the developing world may move straight into clean energy, without the detour via ‘dirty’ energy. To give one indication: In 2014, the emerging economies of China, India, Brazil and South Africa invested $131 billion in clean energy, just 6 percent less than the developed world.

The need to preserve the environment and combat climate change is also increasingly part of mainstream discourse the world over. Pope Francis’ highly anticipated encyclical on environmental stewardship, released in June 2015, provided an urgent moral appeal to the world. The Pope is in good company, with US President Barack Obama and Chinese President Ji Xinping jointly pledging action at their September 2015 summit. The United Nations has been spearheading the call for urgent action for many years.

Wealthier countries are also more willing to provide funds in support of the developing world on climate change issues than they used to be. According to the OECD, in 2014, the world’s richest countries mobilized $61.8 billion to help poorer countries combat and adapt to climate change — almost two-thirds of a goal to raise $100 billion a year beginning in 2020.

But while all this gives cause for optimism, the urgency remains: Even with the latest proposals by countries such as the US and China to cut their emissions, the world is not on track to keep the rise in global temperatures to within two degrees Celsius above pre-industrial levels, the benchmark generally seen as the maximum acceptable level to prevent catastrophic long-term climate changes — including food shortages and widespread extinctions of plant and animal life.

In this way, 2016 may represent a watershed year, signaling either that the world is ready to embark on a cycle of significant action — or that the world will have to bear far greater costs as a result of a changing global climate.

5 — CHINA FLEXES ITS MUSCLES

As China’s economic growth slows down and the Chinese economy transforms, so does Chinese society. The end of the one-child policy, as declared in 2015, will bring about significant changes — although perhaps not quite as quickly and dramatically as some expect: It takes time to make babies, and economic incentives and continued urbanization will likely maintain a relatively low birthrate for some time to come.

The most significant transformation that China is undergoing, however, is a far more muscular assertion of its role in the world. There are positive aspects to this new stance: In November 2015, China participated in the first trilateral meeting with Japan and South Korea since 2012. Days later, the first summit took place between China and Taiwan since the 1949 split.

Yet China’s new diplomacy is not just “friendly”: In the South-China sea, China has accelerated and expanded the creation of artificial islands in the vicinity of the Spratlys Archipelago, including airstrips (which Foreign Policy likened to building a series of immobile aircraft carriers to project military power throughout the contested region). This construction dismissed the protests and concerns of the Philippines, Vietnam, Malaysia, Taiwan, and the United States. The subject was discussed when Presidents Obama and Ji met at the White House in September, and the US sent a navy destroyer into disputed waters near the islands, but it appears to have made little difference. Coincidentally, news emerged around the same time that China was likely in the process of building its second aircraft carrier, the first to be constructed domestically.

Elsewhere, President Ji Xinping made his first appearance at the United Nations General Assembly since 2012 in September and announced, surprising many, that China would contribute 8,000 troops to the UN standby force, as well as $100 million in support of the African Union’s effort to create an immediate response unit. China has also begun to take a more assertive position in the UN Security Council, with far greater independence than it had previously, when China often followed Russia’s lead.

All of these actions are indicative of a trend that will intensify and accelerate in 2016, as China continues to break out of its long-standing focus on domestic development and growth. This shift in focus has considerable implications for the global economy. What is new this year is that China is increasingly projecting its influence beyond the Pacific and across the globe. The growing political and military assertiveness of the People’s Republic heralds a significant shift in global power dynamics.

This strategic shift is complemented by economic muscle flexing. The China-backed Asian Infrastructure Investment Bank is one manifestation of China’s attempt to shape global economic policy-making, reflecting the People’s Republic’s desire to no longer play meek in existing international institutions. 57 countries became prospective founding members when the Bank was launched in April 2015, including some of the United States’ closest allies, despite White House pressure on them not to join. Meanwhile, China’s launch of a global payment system in October 2015 — which facilitates yuan clearing transactions — bolsters Beijing’s quest to internationalize its currency and could allow it to challenge the primacy of the US dollar in world finance.

Against this background, China’s rise to the top is becoming complete. 2016 will, in that sense, signal the pivot to Asia that the Obama Administration had declared several years ago.

6 — RUSSIA COULD BE IN TROUBLE

In 2015, despite economic difficulties, Russia not only stayed afloat but continued to assert itself. The crisis in Ukraine shows little sign of abating, and President Putin took the world by surprise when Russia staged its dramatic entry into Syria — to unhappy chatter but little tangible reaction in the West. Eager to project influence and underline that it could not be ignored in global politics, Russia also presented plans for putting more than 40 new intercontinental ballistic missiles into service. It also leaked its development of a devastating long-range nuclear torpedo system to the media.

Yet by the end of the year, Russia was in an uncomfortable and contradictory position. The country remained ostracized and under sanctions over the seizure of Crimea and the downing of a Malaysian Airlines jet over Ukraine, the latter allegedly by Russian separatists. At the same time, it was also placed under investigation and suspended from the world athletics association. Low oil prices also created significant economic pressure. Vladimir Putin’s Russia thus remained an unpleasant bedfellow, and whatever Putin’s motivation — nationalist fervor, opportunism, security interests in the Middle East, preservation of national dignity — it is clear that Russia’s course is unlikely to be altered in the coming year.

That said, Russia may well find itself over-stretched in 2016: Its disregard for some of the rules and norms that are accepted in the West continue to place it at odds with the US and its NATO allies; its deepening engagement in Syria will force Western allies to strategize and position themselves better in the months ahead; its de facto engagement in two wars — in two different regions — could result in a growing number of dead bodies returning to the Motherland. President Putin’s assertive policies (some would call them an exercise in continuous brinksmanship) have thus far only strengthened the support he enjoys throughout the Russian population, but military expenses and growing casualties could begin to change that. Additionally, ISIS could follow up its attack on a Russian airliner in October 2015, which killed more than 200 people, by enlisting existing Islamic networks in Muslim-majority Russian republics and staging a spectacular attack in Moscow or St. Petersburg — with uncertain political consequences.

Regardless of its foreign policy, Russia will continue to struggle economically. In 2015, Russia’s economy shrunk by nearly 4%, and projections see this recession extending well into 2016. The Russian authorities have done little to kick-start growth so far, and unless oil prices pick up, it is unlikely that the economy will recover any time soon. Household consumption, Russia’s key economic driver, dropped at a record pace in 2015, and the poverty rate has been climbing for the first time since 1998.

Taken together, the costs of Putin’s adventures abroad and the continuing economic crisis could prompt more widespread dissatisfaction in Russia over the course of 2016. Greater trouble could thus lie ahead for the Kremlin — which not a few of international policy-makers would register with a degree of Schadenfreude. But while Russia could see many difficulties over the course of the year, it would not be the first time President Putin weathered them all, defying all predictions and continuing to be a thorn in the side of Western policy.

7 — CONTINUED LATINO MALAISE

In 2015, the Latin American left faced something of a reality check, but further-reaching change has been slow in coming. Particularly in Brazil, Argentina, and Chile, center-left governments have remained at the helm but are reeling under the impact of continued crisis.

For one, Brazil remains tangled in what is now a deep and prolonged recession, recording further significant contraction in the course of 2015 (the economy is projected to have shrunk by 3 percent) and confronting an outlook that gives little cause for optimism in the short term. Real wages are falling, unemployment is rising, and Fitch Ratings downgraded Brazil to “BBB-” in October 2015 — one notch above junk bond status. Brazil needs considerable economic reform, but it is becoming ever more unlikely under a government that is mired in political wrangling, with President Dilma Roussef’s approval ratings hitting all-time lows over the past year. So what next? The Olympic Games taking place in Rio should inject some new hope if Brazil manages to finalize its preparations on time, but Brazil’s road to recovery will be a long one yet.

Argentina and Chile will not be far behind on that road. The new Argentinian president, Mauricio Macri, inherits a country that is, much like Brazil, in need of serious reform — but the Argentinian president will find it hard to quickly overhaul a country that was run by Nestor and Cristina Fernandez de Kirchner for twelve years, which caused political entrenchment on many critical issues. In Chile, President Michelle Bachelet, rumored to be eyeing the job of UN Secretary-General as of 2017, is discovering that a second term in office is not necessarily as successful or easy as the first: Chile’s economic outlook deteriorated over the course of 2015 across the board, and recovery will be gradual and take time.

By contrast, Mexico and Colombia are on a better path, even if problems remain. Colombia’s peace process with the FARC is likely to yield a final settlement in 2016, liberating the country from a long-standing scourge of conflict and enabling its policy-makers to focus on issues of development and growth. Mexico, meanwhile, will benefit from a stronger and strengthening US economy, and President Peña Nieto should be able to reap at least some rewards from the structural reforms pushed through in 2013 and 2014.

Still, Latin America continues to confront difficult conditions, and 2016 will not be a year of transformative success. Peru’s elections in April could give an indication, to some extent, of whether Latinos react to the continued malaise by supporting renewed leftism or conservative politicians, but societal divisions, in either case, are likely to remain deep. Little wonder that Guatemalans elected a comedian as their new president in 2015.

8 — THE END OF THE WAR ON DRUGS

In June 1971, President Nixon declared the war on drugs, setting in motion a two decade long process of expanding drug control agencies and a near-obsession by the American people: In September 1989, 64 percent of Americans saw drugs as the number one issue confronting the country

In the time since then, belief that drugs are a major problem has waned, and in 2016, the United States and the world stand on the verge of ending the drug war. A century after anti-marijuana laws were first introduced in the Midwest and Southwest, legislation banning drug use is crumbling. Fewer than half of the US’s 50 states now entirely prohibit marijuana (cannabis) possession and sales. Alaska, Colorado, Oregon and Washington have fully legalized the medical and recreational use of marijuana, as have the District of Columbia and individual cities in Maine and Michigan. Twelve further states have both medical marijuana and decriminalization laws; still more states have legalized medical cannabis.

Internationally, the picture is not much different. Portugal decriminalized the use of all drugs in 2001. In 2013, Uruguay became the first country in the world to fully legalize cannabis. Medical use of marijuana is legal in countries including Israel, the Czech Republic, and Canada, and in 2015 the latter voted in a new government which campaigned on a platform of completely legalizing cannabis. With Germany, Spain, France, and others also considering various forms of marijuana legalization, as well as the decriminalization of other drugs, the stage is set for a significant change in the way drugs have been addressed for decades. The combination of the drug war’s exorbitant costs, its spectacular failure as a means to an end, and better education among young people about drug risks has created a situation in much of the industrialized world where at least soft drugs are no longer an issue worth massive investments. There is also a much better understanding of the medical uses of marijuana, which is further fuelling the movement to fully legalize cannabis.

2016 could be the year in which legalization advances decisively. With more US states likely to follow those that have already decriminalized or fully legalized marijuana, the country is set for legalization in a majority of states sooner rather than later.

The economic and social benefits of this shift are often overlooked. In states such as Colorado, Oregon, and Washington, a new economy is thriving, teen use is down and alcohol related criminal incidents from domestic abuse to drunk driving has markedly dropped, and estimates for the potential of a national legalized drugs market range up to $200 billion annually. State authorities stand to benefit as well: In addition to significant savings on drug war expenses, the first year of legalized marijuana in Washington state made more than $70 million in tax revenue; Colorado made $44 million. Across the United States, billions could be generated in tax income from the legalized and regulated sale of drugs — and those positive outcome are on top of decreasing alcohol use (which is often much more dangerous), ending the morally bankrupt incarceration of persons of color for drug use, and stopping the ghastly human sacrifice of our south American neighbors fighting a “war” that should have never been waged.

9 — NEW AGE OF FINANCE

The world has come a long way since the financial crisis of 2008. The US economy is rebounding (probably providing an important boost to Hillary Clinton’s presidential campaign in 2016), and with the major economic problems increasingly under control, attention is turning to previously overlooked aspects of regulation and policy.

Among these regulations and polices are tax evasion and offshore finance, specifically corporate practices known as base erosion and profit shifting (BEPS), which help ensure that global corporations pay little or no income tax. According to OECD estimates, between four to ten percent of global corporate income tax revenues are lost annually, totaling $100 to $240 billion a year. For several years now, calls to better regulate offshore markets and enhance global cooperation against tax avoidance have been growing stronger. Over the course of 2015, this demand was reinforced by stories about global corporations including Apple, Google, Amazon, and Starbucks benefitting from negotiated tax deals in countries such as Luxembourg, the Netherlands, and Ireland. European regulators are beginning to implement concerted action to put an end to such tax avoidance schemes.

In November 2015, the G20 endorsed a global action plan to crack down on corporate tax avoidance. 2016 will be a critical year of implementation, closing loopholes and instituting a global system of equitability and cooperation to undercut continued efforts at tax avoidance. The economic trouble that continues to plague Europe, in particular, and the growth of populist conservatism and nationalism across the world, will help reinforce the momentum to ensure more stringent regulation and its implementation.

Additionally, trans-national crypto-currencies will also face increased regulation and institutionalization. The most famous (and valuable) crypto-currency, Bitcoin, has been declared dead more times than can be counted, but major players in the financial market — the big banks — are increasingly discovering crypto-currencies’ potential. In September 2015, nine of the biggest financial firms — including Goldman Sachs, JP Morgan, UBS, Credit Suisse and Barclays Bank — joined forces to create a framework for using blockchain technology in the financial marketplace, investing in the very technology that underpins Bitcoin. Within two weeks, another thirteen major banks signed up.

The new framework means that existing crypto-currencies like Bitcoin will soon become redundant as established actors in the financial marketplace adopt the technology and make it part of everyday banking transactions. This means that most of the existing, roughly 40 crypto-currencies will either record significant drops in value or cease to exist altogether. 2016 may well see the writing of Bitcoin’s final obituary, replaced by a bank-supported clone based on the same technology.

10 — ARTIFICIAL INTELLIGENCE’S BREAKTHROUGH

In many predictions of top trends in recent years (if not decades), a breakthrough in artificial intelligence has featured prominently. And it never came. So what makes us include such a breakthrough in our list for 2016?

First, our understanding of what artificial intelligence is and implies has evolved over the years. Tech billionaires like Bill Gates and Elon Musk may worry about an omnipotent computer that will control humankind (or worse) decades in the future, but for the moment, artificial intelligence is understood to mean the ability of machines and robots to learn autonomously and to adapt their behavior to changing circumstances (what the experts call ‘cognitive computing’). In this regard, there have been important technological advances in recent years, and these developments could underpin the breakthrough of artificial intelligence in 2016.

For example, IBM’s new Watson super-computer is capable of interpreting human ‘meaning and intent’ out of questions spoken in natural language. It can also extract meaning from unstructured text, video, photos and speech. Robotics contests have seen tremendous progress in recent years as well, with programmed machines capable of mastering difficult obstacle courses. And of course, the Tesla and Google-pioneered self-driving cars that are becoming increasingly common are another manifestation of machine self-adaptation and interpretation of complex environments. This is not to say that computers and robots will gain consciousness and start ruling the world anytime soon; whenever they are put to the (Turing) test, machines regularly fail to convince their examiners that they can act and think like humans.

But investments are proceeding apace, laying the foundation for further advances. Toyota announced in 2015 that it was investing more than $1 billion in artificial intelligence centers in California and Massachusetts. Facebook and Google (the latter now restructured into an ideas factory called Alphabet) are both investing significant amounts of money into the delivery of new drone technology that will enable wider access to the Internet than ever before. In recent years, Google has acquired seven robotics firms and a series of companies specializing in machine-learning, including the UK-based DeepMind, which is developing a ‘general’ artificial intelligence capability. Google also declared in November 2015 that it would make its second-generation machine-learning system, TensorFlow, available to anyone who wants to use it. This open-source move will create a gold rush among imaginative commercial developers (much as the iPhone appstore did) and, in so doing, further advance the technology and its applicability. Meanwhile, other areas closely related to machine-learning and artificial intelligence are advancing, too, including Facebook’s Oculus VR virtual reality systems, which are becoming increasingly realistic and may soon conquer the mainstream market.

All this paves the way for further significant progress in technology. If a major trend in recent years was ‘big data,’ only to be overtaken by the trend of being overwhelmed by all that data, then artificial intelligence could provide the solution, enabling intelligent mining and processing of ever-larger data sets. The world of AI is ready to see a major breakthrough in 2016.

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