InsideOut Interview: George Friedman

By Owen Lipstein May/June 2009



George Friedman predicted—within an hour’s accuracy—the moment that the 2003 invasion of Iraq was to commence, when no reporter or news network knew, and before the White House had issued any indication. Spooky, right?
Friedman is the founder and CEO of Stratfor, a private global intelligence firm that publishes geopolitical and security analysis for subscribers ranging from military personnel and foreign governments to Fortune 500 companies and Wall Street traders. In addition to designing some of the earliest computerized war games, as a political science professor Friedman often briefed senior commanders in the armed services as well as the U.S. Army War College, National Defense University and the RAND Corporation on security and national defense matters.
He is the author of America’s Secret War: Inside the Hidden Worldwide Struggle Between America and Its Enemies (Doubleday, 2004); and The Coming War with Japan (St. Martin’s Press, 1991), whose prescience remains unproven. His new book The Next Hundred Years: A Forecast for the 21st Century (Doubleday, 2009), has been a New York Times Best Seller for weeks.


InsideOut: You’re very high on the future of the United States (which, for many right now, is a contrarian’s view). Can you explain why?

George Friedman: Well, for some really stupid reasons. The United States’ economy is larger than the next four economies combined. You take Japan, China, Germany and Britain, and we’re bigger than all of them combined. That’s an extraordinary fact. We have an industrial base: You know, we talk about de-industrialization? At this moment, we are de-industrialized to the point that American industrial output is larger than Japan’s and China’s combined. And the United States Navy controls all the world’s oceans. And that’s something that’s never before happened in human history.
Now, these are, in some cases, simplistic facts, but they’re overwhelming facts. So in other words, when you take a look at the fundamentals, at the size of our economy, our population density—Germany has 265 people per square kilometer; Japan has 365 people. We have 34, not counting Alaska. So we take a look at the ability of the United States to grow population, which is a major factor.
In every fundamental characteristic, the United States towers over the world. We are currently going through a cyclical financial crisis. I think the crisis of 1982 was much worse. In 1982, for example, it was impossible to buy a house, because interest rates were between 17 percent and 19 percent for mortgages. Unemployment was over 10 percent, compared to 7-1/2 percent now; we have very little inflation, but inflation then was well over 10 percent. We also had oil shortages, and gasoline shortages.
So it’s very important to use history to benchmark where you are. People in general, but particularly Americans, tend to lack a sense of historical perspective. But that’s deeply imbedded in our culture. We’re one of the youngest civilizations in the world, and I compare us in the book to a 15-year-old. A 15-year-old goes from incredible hubris—“I can drive, Dad. I’ve watched you!”—to total despair within the space of an hour. But more than that, he evaluates his standing in the world by how popular he is. He doesn’t want to do anything that makes him unpopular. And we Americans are manic-depressive. We vastly overstate our power sometimes, and incredibly overstate our problems sometimes.

IO: Can you describe for us the methodology of your forecast, and why you think it’s a little different than others?

GF: I try to be stupid. And by that, I mean I try to recognize the facts that are of enormous importance that are so taken for granted that people don’t discuss them. A few moments ago I went through this exercise to show you how big the American economy is: So think about how the United States got to this point. And then explain to me how an economy this massive is going to disintegrate; don’t simply posit that it’s disintegrating. Tell me how a $14 trillion economy disintegrates. I mean, let’s look at history, and let’s benchmark this. Let’s go back to the Great Depression and ask some stupid questions:

“What happened in the Great Depression?”

“The American economy fell by 50 percent.”

“How much have we fallen so far?”

“About 3, 3-1/2 percent.”

IO: Hmmm... 50 percent to 3-1/2 percent. Do you think we’re about to make up another 47 percent here?

GF: The method requires that you kind of control your tendency to brush aside fundamental truths. It is also dependent on really looking at the physical characteristics of a nation: its demographics, its natural resources, its economic capabilities, its power, and so on. It really is a system anchored in the obvious.

IO: What is your prediction for China?

GF: China has 1.3 billion people. Over 1 billion of them have a standard of living [on] the order of Nigeria. Which is to say, that when you go into a restaurant in Shanghai, the waiter or waitress is making about $60 a month, and regards this as a fantastic job to have gotten, compared to the way they lived [before]. When you bear that in mind, your vision of China as a rapidly industrializing country changes. It becomes two countries: a very small one that has rapidly and magnificently industrialized; and a vast, seething country that’s been left behind—but not left behind marginally, left behind in the Middle Ages, in near-catastrophe.
Bear in mind that China is also an extension of the American economy. One of every seven containers that comes to the United States from Asia is a Chinese container going to Wal-Mart. Isn’t that an amazing image?

IO: Yes, it is! Can you also talk about some of the rising powers that aren’t so obvious?

GF: Well, apart from Russia, which is going to be our next challenge, I see three.
First is Japan, which already is a great power. It has the world’s second-largest economy; it has the largest navy in Asia; it has a substantial army, about the size of the British army; it has a good air force—and this is why it’s officially disarmed. Japan is the historic challenger for domination in the Pacific. It challenged the United States for that status in the 1930s and 1940s. It has a fundamental interest in China. It is emerging as a great power. Japan is a great power; it just chooses not to act that way.
The second one is Turkey, which has the 16th-largest, 17th-largest economy in the world. It has a bigger economy than Saudi Arabia. It’s richer than Saudi Arabia. It’s bigger than any other Islamic country economically. It has an outstanding military. It also exists within a sea of chaos. So if you travel in the Balkans, or in Central Asia, or really, in the Arab countries, you will constantly encounter Turkish businessmen and military advisors. You think that’s very surprising, then you think back over the past 600 years, and for 500 of those, Turkey, through the Ottoman Empire, has been the dominant Islamic force, dominating the eastern Mediterranean on through Europe, as far as Vienna.
Historically, the past 90 years of Turkey as a minor power is an aberration. The Islamic world is in chaos, and when the Islamic world becomes ordered, the one country that almost always does the ordering is Turkey.
The third country, which everybody will laugh at uncontrollably, is Poland. But here are two things to bear in mind: First, the current economic crisis has really shown that the EU is not real. The countries of Europe are still in charge. Russia has reemerged as a great power. It is moving back to the front tier of Europe. It also controls Germany, in the sense that 50 percent of the natural gas that Germany consumes comes from Russia. Without that, Germany ceases to be a viable economic power. And the Russians cut off all [of Germany’s] natural gas for three weeks in January, just to show them. So the Germans aren’t going to mess with the Russians.
Second, Poland sits between Germany and Russia, and has a very special relationship with the United States. The decision to put ballistic-missile defense in Poland, and the unwillingness of the Obama administration to pull it out, really is a test between Russia and the United States over whether Poland is going to be an American ally. And clearly it’s going to be.
Now, when you think about what being an American ally means, think of South Korea. South Korea was strategically essential to the United States, and if I had said to you in 1950, “South Korea is going to be a major economic power, and you’re going to be buying your TVs and cars from the South Koreans—”

IO: I would have laughed out loud.

GF: Out loud. If anybody had said, in 1950, that Israel was going to be the military dominant power in the Middle East—equal laughter. There is a value in being strategically indispensable to a global hegemonic power, and the U.S. and Poland are experiencing it. In our transfer of F-16s to Poland—you know, when you transfer the planes, you transfer an awful lot of technology and culture. So we are looking at the fact that the Americans want to block Russian expansion, and above all, stop a German-Russian alliance, which would be a nightmare, right? So we’re going to do it [by proxy] as Poland.
It’s just geographically the place you do it. There’s no other option. We’re already deep in a relationship with Poland. Poland and the United States are working on many axes. And over the next 40, 50 years, we expect to see the decline of France and Germany. French decline began, basically, in the 19th century. German decline began in the 20th. But we expect that decline to continue, economically and politically. New powers will emerge. Poland, with its relationship to the United States, is the logical one.

IO: How about Mexico?

GF: Mexico is the world’s 13th-largest economy right now. It has a trillion-dollar economy, 110 million people, and the fact that it appears to be in chaos, and is in chaos, doesn’t mean what it’s going to look like in the end. The United States has a labor shortage; it’s going to import Mexican labor.
If you look at a map, you can see how the territory we won from Mexico during the Texas Revolution [1835-36] and the Mexican-American War [1846-48] is being repopulated by Mexicans. In other words, this is a borderland, like Alsace and Lorraine, and population movements take place. So you have two phenomena going on.
There’s no question that Mexico is going to be one of the largest economies in the world by the middle of the century. It’s already No. 13, you know? You don’t have that many places to move up. It has a population movement going on, and essentially is repopulating what I’ll call the Mexican Cession; that is, the areas of the United States [ceded by] Mexico in the 19th century. And it is clearly a country that challenges the United States in many ways, [that] has deep historical grievances against the United States; and it is a country coming into its own.
So, by the end of the century, one would expect—given the prize, which is North America—these two countries [to be] facing off. I don’t believe that the Mexicans have what it takes to overtake the United States. But we’re already experiencing the first blush of this tension.