2012 - A new year with old problems

As 2012 draws close, the world will carry forward a range of major challenges with no easy solution in sight. Foremost among these remains difficult economic conditions with a flat US economy and the European Union struggling to avoid a full scale recession. Arguably the European Union is, in fact, already in a recession with the continuous risk that Greece will ultimately default on its loans. Portugal which earlier had seemed to be a further fiscal risk to the EU has been able to manage its economic situation effectively within domestic policy and is no longer listed with Italy, Spain and Greece as requiring a bail-out. With China's forecast that its double digit growth is now over the international economy will be flat at best but more likely be marginally negative. Australia is unlikely to avoid a level of downturn as well given the reality that it is China which is propping up the balance of payments and Australia's trade position.

In international relations, the conflict in Afghanistan continues with no likely negotiated settlement with the Taliban and a continuing level of instability in Pakistan. The so-termed 'Arab Spring' which has brought to a conclusion several repressive dictatorships, nonetheless has uncertain outcomes in Egypt and Libya. Only Tunisia where the uprising commenced has there been a largely peaceful and successful result. So 2012 opens with little promise but an overhang of the end-play of existing events.