The Forbes chairman and former presidential candidate takes a look at the political and economic outlook for 2012, while also assessing the chances that Israel will attack Iran's nuclear facilities.
Steve, what do you make of the tinder-box geopolitical situation we have during 2012—perhaps later—and the economy in the meantime?
Well, the economy in 2012 will be better than it was in 2011 or 2010. We’re like the car on the superhighway, we’re going to go from 20 miles an hour to 40. We should be going 70 to 75 miles an hour...but it’s going to be a greater pace than we had the year before.
What that is going to force I think Republicans to do is not just rely on a punk economy to win, but to actually expound positive Reaganist proposals and principals to move ahead after 2012 to the speed we should be moving at. So the economy will do better.
The market clearly wants to rise. It is very depressed. As you know, it hasn’t gone anywhere in real terms since the late 1990s.
The one big caveat in all of this, of course...well there are two. One is Europe blowing up financially. I think at least for a year they’ll kick that camp proverbially down the road.
Another one is an explosion in the Middle East. I think Israel now feels it must make a decision whether to actively go to war to disrupt...
Will they go to war, in your view?
I think they will. They’ve done in the last few years, I know at least they seriously considered it and backed off from it, but now they feel they must make a decision because more and more of those nuclear assets are being buried in underground bunkers that even the most sophisticated bombs can’t reach.
So I think that is something we’re going to have to face. Leon Panetta has been quoted as saying that he thinks they’re going to make a decision within six months. So I don’t know what we’re doing behind the scenes, especially against the Iranians to encourage regime change or the like before something like this does explode. But that’s a real factor out there that is just full of imponderables and unknowns, as warfare always is.
Unknowns and imponderables—and a major surprise to the market. I suppose the most likely way it would start would be a midnight strike by the Israelis and then go from there? Is that the scenario?
Yes, and then what happens afterwards? Do the Iranians try to close the Straits of Hormuz? That will involve the United States.
When you take the number of missiles in Lebanon, with Hezbollah and Syria and the Gaza Strip and Iran itself, the number out there is now 200,000. Now many of those missiles are inaccurate, but you have a few of those, it’s going to create havoc and create casualties in Israel.
So this is not just going to end with a quick raid, I don’t think, unless you get sudden regime change in Iran. I think it will ultimately involve the United States, and the reaction of global financial markets will be interesting to observe.
How could other superpowers weigh in such a conflict?
Well, I think that if it happens and we haven’t stopped the Israelis, the Russians will be smart enough not to try to go into a confrontation with us over this and prevent the Israelis from doing it.
The Russians already I think making a very bold and reckless move in Syria trying to prop up a regime that clearly lost its legitimacy in the eyes of not only its own people, but its Arab neighbors and the Arab League is crying out loud and said that Hassad must go. Turkey has made it clear it wants a regime change.
So Russia is playing a dicey game here. I hope that even though they have nuclear weapons, I hope they don’t think that gives them the power to move in and try to save Syria and Iran. That would be a huge mistake.
So China’s role would be minimal?
China just wants the oil. If something blows up, they’re not going to get involved. They’ll stand back, be unhappy about it, but that’s about it.
As long as there's a guarantee that once the conflict is over, oil will eventually flow again—as it did with Libya, or Iraq when we went in there almost ten years ago, nine years ago—I don’t think China is going to do anything. The Russians are the ones that might make some mischief, create mischief, that could have again unintended consequences.