Global Trends 2025

Global Domestic Politics

Frederick Kempe — Fri, 08 Apr 2011 12:02:48 -0500

One of the most important findings in my new book, Berlin 1961: Kennedy, Khrushchev and the Most Dangerous Place on Earth, is that domestic politics shapes foreign policy in ways that most historians have failed to adequately recognize.

In 1961, when the Berlin Wall went up, Soviet Premier Nikita Khrushchev was fighting off challenges of Stalinist remnants and new threats from Chinese Communists. Mao Tse-Tung had an outsized impact on Khrushchev’s standing within his politburo because he was challenging the Kremlin’s leadership of World Communism. That meant that although Khrushchev was trying to improve relations with the West, if only to ease the burden of military spending on his economy, he constantly had to be wary of hard-line opponents with knives drawn.

For his part, President John F. Kennedy had been elected in November 1960 by one of the narrowest margins in the history of the United States – and part of the reason he won was that he had campaigned as more of a hawk toward Moscow than opponent Richard Nixon. In that frame of mind, Kennedy failed to test Khrushchev’s conciliatory gestures in the first days of his presidency – the release of captured American airmen from U-2 reconnaissance planes chief among them. He at the same time exaggerated the importance of a Khrushchev speech that he thought was a declaration that he would escalate his Cold War against the new president.

So I read Philip Stephens’ column in today’s Financial Times with fascination as he handicapped the domestic politics that now shapes the world, under the headline, “The new global geometry of power.”

If you want to understand why Obama is half-in when it comes to Libya, then turn to this analysis of U.S. domestic politics for your insight. If Obama had showed too much weakness during the current Mideast upheavals, that could have hurt his re-election chances in 2012. That likely encouraged him to act, but not to go too far in a place most voters don’t consider worth a drop of American blood. In U.S. electoral terms, Stephens argues, “getting rid of Muammer Gaddafi is a distraction – a ‘nice to have,’ as one White House aide has been heard to remark. So the task has been left largely to the French and the British. Mr. Obama, his advisers forever remind hm, promised in 2008 to bring US troops home.” He adds, “The U.S. has lost its appetite for fixing other people’s problems. It’s much harder to be transformative in a multipolar world.”…

In the current global context, the more intriguing domestic political drama to watch may be in China, which shares with the Soviet situation in 1961 the fact that it is both opaque for most outsiders – including the U.S. President -- and crucial to the current state of the world.

The National Intelligence Council in its Global Trends 2025 report rightly said that, of all countries in the world, it would be China’s course that would be the most decisive in determining the world’s direction over the next two decades – though it was uncertain what that course would be.

The political leadership outcome in China is in little doubt. Hu Jintao’s successor will almost certainly be Xi Jiuping, but what’s not known is who he is and how he will lead. Stephens usefully informs us that he is a modernizer, that he likes Hollywood movies (who doesn’t?) and that he has sent his daughter to Harvard. At six feet and more tall, he towers over his politburo colleagues.

“In an unguarded moment,” writes Stephens, he once observed that he does not much like lectures from “foreigners with full bellies.” He likely will reflect far more openly the increasing Chinese comfort with its own success and its impatience with Western institutions, Western advice and U.S. benchmarks.

In 1961, the epicenter of what would shape world events was Berlin, where the world’s leading two ideologies were facing off quite literally on two sides of a still-unmarked border. What made a difference most then was the domestic politics regarding that city’s status of two adversaries, the Soviet Union and the United States.

The year 2011 is one that many believe may shape world events just as dramatically as did 1961. Yet in a year of Mideast upheavals, it’s worth asking whether today’s epicenter is far from Libya and in Beijing, where Stephens argues that China will have to decide whether it wants to adapt the Western institutions and approaches for the new world it will do so much to shape, or whether it will let them whither.

Fred Kempe is president and CEO of the Atlantic Council. His latest book, Berlin 1961, will be available May 10.

Muddling Through to 2025

James Joyner — Wed, 22 Sep 2010 11:14:08 -0500

Global Governance 2025, a joint effort of the Atlantic Council and its global partners, offers a wide range of trajectories for the international system depending on whether we adequately address known threats. They are summarized as follows:

Scenario I: Barely Keeping Afloat
In this scenario, seen as the most likely one over the next several years, no one crisis will be so overwhelming as to threaten the international system even though collective management advances slowly. Crises are dealt with ad hoc and temporary frameworks or institutions are devised to avert the most threatening aspects of them. Formal institutions remain largely unreformed and Western states probably must shoulder a disproportionate share of "global governance" as developing countries prevent disruptions at home. This future is not sustainable over the longer term as it depends on no crisis being so unmanageable as to overwhelm the international system.

This scenario, which I like to call "muddling through," is no doubt the most likely. It is, after all, essentially the course we've been on since shortly after World War II.

The failures of the League of Nations that allowed that conflict to happen sparked the development of a more realistic set of institutions. The United Nations was much more flexible than its predecessor, in that its creators allowed for the very real possibility that the Soviets and other major players would not see eye-to-eye with the West. The Security Council provided a powerful collective security regime in the event of a shared vision on the part of its Permanent Members but, through the veto power, allowed a default to collective defense and state security in the event that any one of them objected.

Similarly, the economic regimes created at Bretton Woods proved very flexible and severable, with such institutions as the IMF and World Bank now performing very different functions than envisioned in 1944 and surviving the collapse of the fixed exchange rate mechanism in the early 1970s.

Scenario II: Fragmentation
Powerful states and regions try to wall themselves off from outside threats. Asia builds a regional order that is economically self-sufficient. Global communications ensure globalization does not die, but it slows significantly. Europe turns its focus inward as it wrestles with growing discontent with declining living standards. With a growing work force, the US might be in a better position but may still be fiscally constrained if its budgetary shortfalls and long-term debt problems remain unresolved.

This scenario is not mutually exclusive from the first. Indeed, occasional retreats inward happen periodically even as the momentum toward globalization proves inexorable.

One could argue that the movement toward centralization of power in the EU puts a wall around Europe even while it tears them down internally. Not only does the common currency, lack of internal barriers, and central regulatory measures provide rather strong incentives to do business intra-Europe but they pose rather substantial barriers to entry. At the same time, moves to strengthen the EU's defensive capability, while potentially providing economies of scale and removing redundancy and frustrations, also potentially undermines the need for transatlantic cooperation.

An intra-Asia trade regime that displaces the need for trade with the West strikes me as decidedly less likely. It's almost unfathomable that the Western consumer market can be replaced locally. But moves to break down barriers to commerce within Asia -- and, indeed, Africa and Latin America -- should be welcome, as they'd not only increase short term prosperity for the people who live there but also move us further down the postwar trend toward freer trade.

Ultimately, however, fragmentation is a short-term option that's unsustainable in the longer run. A more prosperous Asia is one that will want the benefits of increased trade with the West -- and one finally able to do so on a more equitable basis.

Scenario III: Concert of Europe Redux
Under this scenario, severe threats to the international system---possibly a looming environmental disaster or a conflict that risks spreading---prompt greater cooperation on solving global problems. Significant reform of the international system becomes possible. Although less likely than the first two scenarios in the immediate future, such a scenario might prove the best outcome over the longer term, building a resilient international system that would step up the level of overall cooperation on an array of problems. The US increasingly shares power while China and India increase their burden sharing and the EU takes on a bigger global role. A stable concert could also occur incrementally over a long period in which economic gaps shrink and per capita income converges.

This is the report authors' preferred outcome, although the one that seems most fantastical in the current international climate. (See yesterday's "Global Governance: Vital But Impossible?") Beyond that, yearning for a repeat of the Concert of Europe seems rather odd, in that the original was a rather spectacular failure, unable to stop a whole series of major wars among its players.

That said, while a formal institution along the lines of the Concert is unlikely, we're already moving in this general direction through the aforementioned policy of "muddling through." The EU is becoming a stronger global player simply by virtue of its cohesion. And, while the U.S. isn't "sharing" power with China and India, we're ceding it as a matter of practical necessity. The shift from the G7/G8 to the G20 as the prime economic forum is the most obvious example.

Scenario IV: Gaming Reality: Conflict Trumps Cooperation
This scenario is among the least likely, but the possibility cannot be dismissed. The international system becomes threatening owing to domestic disruptions, particularly in emerging powers such as China. Nationalistic pressures build as middle-class aspirations for the "good life" are stymied. Tensions build between the United States and China, but also among some of the BRICs as competition grows for secure resources and clients. A nuclear arms race in the Middle East could deal an equally destabilizing blow to prospects for continued global growth. Suspicions and tensions make reforming global institutions impossible; budding regional efforts, particularly in Asia, also are undermined.

The report authors are right: the possibility is remote but not non-existent.

The Chinese government is going to have a difficult time keeping up the massive growth needed to simply keep even with the needs of a growing and aging population. And they're going to have to figure out a way to make domestic consumption a much bigger part of the pie, given both internal demands and the practical limits of export-driven growth. And the prospect of an Iranian bomb — which seems a virtual inevitability — could certainly lead to a regional arms race.

Then again, the prospects of these things could be forcing agents for greater cooperation. To the extent a nuclear Iran can be averted, it'll come from a united front from the West, China, and India. And the long-term success of China's economy will require internal liberalization and coming into greater harmony with global norms.

James Joyner is managing editor of the Atlantic Council.

Global Governance: Vital But Impossible?

James Joyner — Mon, 20 Sep 2010 13:50:15 -0500

This morning, the Atlantic Council hosted the launch of Global Governance 2025, a report following a long collaboration with several partners. The fundamental takeaway is that, while cooperation between the United States and Europe is essential, it "is no longer enough to effectively manage global challenges." Instead, key players from around the globe will need to develop new institutions to deal with the world's problems.

The report stresses that "formerly localized threats are no longer locally containable but are now potentially dangerous to global security and stability." The listed challenges range from migration problems to resource scarcity to climate change to state collapse. And the authors do a superb job of laying out the case that neither individual states nor existing global frameworks are adequate to the tasks.

And, yet, while the need for cooperation seems obvious, the prospects for achieving it seem bleak.

It's true that the surging power of China, India, Brazil, and others means that they deserve a seat at the "big table." But it should be recognized that, while transatlantic consensus on dealing with the big issues is inadequate, it also hasn't been achieved, despite the fact that we "share fundamental values and strategic interests to an extent not matched by any other partners in the world." Figuring out how to do that while also getting the cooperation of players with very different values and strategic interests is going to be a neat trick, indeed.

And that's not to mention, as was noted many times by the report's primary authors at the launch event, the lack of domestic consensus even within the West. We're in the midst of a global recession (albeit, one that technically "ended" last summer in the United States) and face polities that are turning inward, demanding solutions to short term issues like jobs and out-of-control budgets. The mood for ambitious global projects is, to say the least, not apparent.

To take one obvious example, there is strong doubt in the United States as to whether global warming even exists, much less consensus that we need strong action to deal with it. It's virtually inconceivable that a serious treaty regulating carbon emissions could make it through the Senate.

None of this is to say that we shouldn't try to build new frameworks toward multi-lateral cooperation. We don't have much choice. The United Nations and the other institutions devised in the aftermath of World War II simply aren't up to today's challenges. But "global governance" may be too ambitious a name for the likely end result. After all, we can barely govern ourselves.

James Joyner is managing editor of the Atlantic Council.

Global Governance 2025

Mon, 20 Sep 2010 09:12:40 -0500

This report analyzes the gap between current international governance institutions, organizations and norms and the demands for global governance likely to be posed by long-term strategic challenges over the next 15 years. The report is the product of research and analysis by the NIC and EUISS following a series of international dialogues co-organized by the Atlantic Council, TPN, and other partner organizations in Beijing, Tokyo, Dubai, New Delhi, Pretoria, Sao Paulo & Brasilia, Moscow, and Paris. The executive summary is below.

Executive Summary

Global governance—the collective management of common problems at the international level—is at a critical juncture. Although global governance institutions have racked up many successes since their development after the Second World War, the growing number of issues on the international agenda, and their complexity, is outpacing the ability of international organizations and national governments to cope.

With the emergence of rapid globalization, the risks to the international system have grown to the extent that formerly localized threats are no longer locally containable but are now potentially dangerous to global security and stability. At the beginning of the century, threats such as ethnic conflicts, infectious diseases, and terrorism as well as a new generation of global challenges including climate change, energy security, food and water scarcity, international migration flows, and new technologies are increasingly taking center stage.

Three effects of rapid globalization are driving demands for more effective global governance. Interdependence has been a feature of economic globalization for many years, but the rise of China, India, Brazil, and other fast-growing economies has taken economic interdependence to a new level. The multiple links among climate change and resources issues; the economic crisis; and state fragility—“hubs” of risks for the future—illustrate the interconnected nature of the challenges on the international agenda today. Many of the issues cited above involve interwoven domestic and foreign challenges. Domestic politics creates tight constraints on international cooperation and reduces the scope for compromise.

The shift to a multipolar world is complicating the prospects for effective global governance over the next 10 years. The expanding economic clout of emerging powers increases their political influence well beyond their borders. Power is not only shifting from established powers to rising countries and, to some extent, the developing world, but also toward nonstate actors. Diverse perspectives and suspicions about global governance, which is seen as a Western concept, will add to the difficulties of effectively mastering the growing number of challenges.

Brazilians feel there is a need for a redistribution of power from developed to developing states. Some experts we consulted saw Brazil tending to like “old fashioned” multilateralism, which is state-centered and does not make room for nonstate actors.
Many of our Chinese interlocutors see mounting global challenges and fundamental defects in the international system but emphasize the need for China to deal with its internal problems. The Chinese envisage a “bigger structure” pulling together the various institutions and groups that have been established recently. They see the G-20 as being a step forward but question whether North-South differences will impede cooperation on issues other than economics.
For participants from the Persian Gulf region, the question is what sort of global institutions are most capable of inclusive power sharing. They bemoaned the lack of strong regional organizations.
The Indians thought existing international organizations are “grossly inadequate” and worried about an “absence of an internal equilibrium in Asia to ensure stability.” They felt that India is not well positioned to help develop regional institutions for Asia given China’s preponderant role in the region.
Russian experts we consulted see the world in 2025 as still one of great powers but with more opportunities for transnational cooperation. The Russians worried about the relative lack of “transpacific security.” The United States, Europe, and Russia also have scope for growing much closer, while China, “with the biggest economy,” will be the main factor in changing the world.
The South Africans assessed that globalization appears to be strengthening regionalization as opposed to creating a single global polity. They worried that the losers from globalization increasingly outnumber the winners.

In addition to the shift to a multipolar world, power is also shifting toward nonstate actors, be they agents or spoilers of cooperation. On a positive note, transnational nongovernmental organizations, civil-society groups, churches and faith-based organizations, multinational corporations, other business bodies, and interest groups have been equally, if not more effective than states at reframing issues and mobilizing publics—a trend we expect to continue. However, hostile nonstate actors such as criminal organizations and terrorist networks, all empowered by existing and new technologies, can pose serious security threats and compound systemic risks. Many developing countries—which are likely to play an increasing role at the regional and global level—also suffer from a relative paucity of nonstate actors, that could help newly emerging states and their governments deal with the growing transnational challenges.

Global governance institutions have adapted to some degree as new issues have emerged, but the adaptations have not necessarily been intentional or substantial enough to keep up with growing demand. Rather, they have been spurred as much by outside forces as by the institutions themselves.

The emergence of informal groupings of leading countries, such as the G-20; the prospects for further regional cooperation, notably in East Asia; and the multiple contributions of nonstate actors to international cooperation—although highly useful—are unlikely to serve as permanent alternatives to rule-based, inclusive multilateral institutions. Multilateral institutions can deliver public goods that summits, nonstate actors and regional frameworks cannot supply, or cannot do so in a reliable way. Our foreign interlocutors stressed the need for decisions enjoying universal legitimacy, norms setting predictable patterns of behavior based on reciprocity, and mutually agreed instruments to resolve disputes and redress torts, such as in trade matters.

We assess that the multiple and diverse governance frameworks, however flexible, probably are not going to be sufficient to keep pace with the looming number of transnational and global challenges absent extensive institutional reforms and innovations. The capacities of the current institutional patchwork will be stretched by the type of problems facing the global order over the next few decades.

Numerous studies indicate the growing fragility of many low-income developing states and potential for more conflict, particularly in cases where civil wars were never fully resolved. Internal conflict or collapse of large populous states on the scale of an Ethiopia, Bangladesh, Pakistan or Nigeria would likely overwhelm international conflict management efforts. Afghanistan, with approximately 28 million people, and Iraq, with 30 million, are among the most populous conflict management cases ever attempted, and they are proving difficult.

Regional organizations have performed comparatively few large-scale operational responses to fragile states requiring humanitarian and peacemaking help. Although we can expect increased political and economic engagement from rising powers—in part a reflection of their increasing global interests—emerging powers have deep-seated concerns about the consequences of the proactive management of state fragility.

Prevention, for example, often can require direct political intervention or even the threat or use of military force as a last resort. Efforts to prevent conflict have often been slowed by reluctance and resistance to intervene directly, potentially overriding another country’s sovereignty. Many experts in emerging states thought their governments probably would be particularly leery of any intervention if it is driven by the “West.”

Another cluster of problems—the management of energy, food, and water resources—appears particularly unlikely to be effectively tackled without major governance innovations. Individual international agencies respond to discrete cases, particularly humanitarian emergencies in individual countries. However, no overall framework exists to manage the interrelated problems of food, water and energy. The stakes are high in view of the impact that growing scarcities could have on undermining the open international system. Resource competition in which major powers seek to secure reliable supplies could lead to a breakdown in cooperation in other areas. Moreover, scarcities are likely to hit poor states the hardest, leading in the worst case to internal or interstate conflict and spillover to regional destabilization.

Other over-the-horizon issues—migration, the potential opening of the Arctic, and risks associated with the biotechnology revolution—are likely to rise in importance and demand a higher level of cooperation. These issues are difficult ones for multilateral cooperation because they involve more preventive action. Under current circumstances, greater cooperation on those issues in which the risks are not clear-cut will be especially difficult to achieve.

Potential Scenarios

Throughout the main text, we have sprinkled fictionalized scenarios that could result if, as we believe likely, the multiple and diverse governance frameworks struggle to keep pace with the looming number of transnational and global challenges. The scenarios illustrate various permutations that could happen over the next 15 years. The following summarizes what we see as the principal potential trajectories of the international system as it tries to confront new challenges. We believe the risks of an unreformed global governance system are likely to cumulate over time. Crises—so long as they are not overwhelming—may actually spur greater innovation and change in the system. Inaction over the long term increases the risks of a complete breakdown.

Scenario I: Barely Keeping Afloat
In this scenario, seen as the most likely one over the next several years, no one crisis will be so overwhelming as to threaten the international system even though collective management advances slowly. Crises are dealt with ad hoc and temporary frameworks or institutions are devised to avert the most threatening aspects of them. Formal institutions remain largely unreformed and Western states probably must shoulder a disproportionate share of “global governance” as developing countries prevent disruptions at home. This future is not sustainable over the longer term as it depends on no crisis being so unmanageable as to overwhelm the international system.

Scenario II: Fragmentation
Powerful states and regions try to wall themselves off from outside threats. Asia builds a regional order that is economically self-sufficient. Global communications ensure globalization does not die, but it slows significantly. Europe turns its focus inward as it wrestles with growing discontent with declining living standards. With a growing work force, the US might be in a better position but may still be fiscally constrained if its budgetary shortfalls and long-term debt problems remain unresolved.

Scenario III: Concert of Europe Redux
Under this scenario, severe threats to the international system—possibly a looming environmental disaster or a conflict that risks spreading—prompt greater cooperation on solving global problems. Significant reform of the international system becomes possible. Although less likely than the first two scenarios in the immediate future, such a scenario might prove the best outcome over the longer term, building a resilient international system that would step up the level of overall cooperation on an array of problems. The US increasingly shares power while China and India increase their burden sharing and the EU takes on a bigger global role. A stable concert could also occur incrementally over a long period in which economic gaps shrink and per capita income converges.

Scenario IV: Gaming Reality: Conflict Trumps Cooperation
This scenario is among the least likely, but the possibility cannot be dismissed. The international system becomes threatening owing to domestic disruptions, particularly in emerging powers such as China. Nationalistic pressures build as middle-class aspirations for the “good life” are stymied. Tensions build between the United States and China, but also among some of the BRICs as competition grows for secure resources and clients. A nuclear arms race in the Middle East could deal an equally destabilizing blow to prospects for continued global growth. Suspicions and tensions make reforming global institutions impossible; budding regional efforts, particularly in Asia, also are undermined.

Cyber Attack Shuts Down Twitter and Facebook

James Joyner — Fri, 07 Aug 2009 16:29:40 -0500

Yesterday, Twitter, Facebook, and other popular social media sites were brought to a halt by distributed denial of service attacks. It appears the target was a lone blogger in Georgia and the attack was timed to coincide with the anniversary of Russia's invasion of South Ossetia and Abkhazia.

My colleague Alex Petersen reports this is "the talk of the town here in Tbilisi."

So, what's the story?

Bobbie Johnson for The Guardian:

According to senior industry figures, the strikes that affected hundreds of millions of web users around the globe on Thursday were part of an attempt to damage just one individual - a controversial Georgian known only as Cyxymu.

Max Kelly, Facebook's chief security officer, told CNet news that the strike was an attempt to silence Cyxymu - an outspoken critic of last year's conflict between Georgia and Russia in South Ossetia - as the anniversary of the war approaches. "It was a simultaneous attack across a number of properties targeting him to keep his voice from being heard," Kelly said. "We're actively investigating the source of the attacks and we hope to be able to find out the individuals involved in the back end and to take action against them if we can."

The strikes appeared to be one of the most widespread and coordinated attacks ever seen online, shutting down Twitter for significant portions of Thursday, as well as causing serious problems for Facebook and blogging service LiveJournal. Google, too, was subjected to attacks but said it had been able to prevent any damage - although some users reported some unexpected problems with the internet giant's services. It is not clear precisely how the attacks started or who was behind it, but a vast number of spam messages were also sent out simultaneously mentioning the victim.

With a monicker styled after the cyrillic name for the disputed Black Sea city of Sukhumi, Cyxymu runs a blog written in georgianised Russian and subtitled "of Sukhumi, the war and Bolivia". In the past, it was a home for controversial opinions on the way the conflict was handled by both the Russian and Georgian governments - last year resulting in a similar attack by opponents which had crashed LiveJournal.com.

Like many internet users, Cyxymu has accounts across a number of social networking services, and yesterday appeared to recognise that he or she may have been a target. "It became clear that it is a special attack on me or on Georgians," Cyxymu said in one message. "In my mailbox are hundreds of spam emails." "Spam was being sent on my behalf with an invitation to go to my blog... I apologise to everyone."

The blog at computer protection company McAfee has some technical details on the attack and observes,

We believe this campaign had a dual purpose. On one hand, the attackers spoofed the email address of the blogger, which is hosted on Gmail, as the originator of the spam. As a result, the blogger’s inbox was flooded with out-of-office notifications and vacation bounces automatically sent by mail clients of people who had received this spam. This was likely part of an intimidation campaign designed to send a message to cyxymu about who was the real intended target of the DDoS. In addition, the spam contained links to the blogger’s sites, with the likely goal of bringing even more traffic to bear on the servers of those blogs than would already be caused by the DDoS.

Computer spam and virus consultant Graham Cluley notes that, ironically, "Cyxymu's YouTube channel is still available. It contains a number of videos, many related to skirmishes between Russians and Georgians."

Computer World's Steven J. Vaughan-Nichols argues that Twitter is uniquely vulnerable to these attacks and that we're likely to see more of this sort of thing.

Twitter has become the way for Iranian protesters to keep in touch with each other and let the rest of the world know about how their election was stolen from them. The Iranian opposition had been planning protests against President Mahmoud Ahmadinejad's inauguration ceremony. A great deal of this planning has been over the Internet on blogs, and, of course, Twitter.

Funny timing don't you think that Twitter would be knocked completely off the air at just this time? And, if you think that governments don't use the Internet to knock out their enemies, you haven't been paying attention. Russians already successfully attacked Estonia's Internet infrastructure in 2007. With Windows botnets growing by leaps and bounds, it's easier than ever for governments or even just a handful of people to knock out major Web sites like Twitter.

I'm far from expert in the technology involved but we're almost certain to see more of this sort of thing. The Web and, increasingly, its social media communities, are primary means of spreading information, especially around authoritarian governments. Iran, China, North Korea and Russia have all taken measures to cut their citizens off from these sources and have demonstrated a willingness to engage in cyber attacks when it suits their purposes.

Nearly two years ago, we issued a report pointing out that "the convenience of global connectivity comes at a cost—the vulnerability of network infrastructures and systems to the malicious actions of cyber criminals and espionage agencies" and warning that arguing that CEOs needed to be directly involved in preventing cyber attacks. Similarly, our Global Trends 2025 report warned that the "growing use of cyber warfare attacks" was among factors that "increasingly will constrict US freedom of action."

James Joyner is managing editor of the Atlantic Council.

China-Europe Relations a One-Way Street

Damien Tomkins — Thu, 04 Jun 2009 10:07:10 -0500

Sino-European relations are a one-way street going in China’s direction. A recent report describes it as “unconditional engagement,” a “policy that gives China access to all the economic and other benefits of cooperation with Europe while asking for little in return.”

“A Power Audit of EU-China Relations,” released in April by the European Council on Foreign Relations (ECFR), clearly explains that the problem lies with the European Union and the inability of its 27 member states to devise a single coherent policy towards China. A recent Financial Times headline echoes the report’s findings: “China Sees EU as Mere Pawn in Global Game.” At face value it would seem that an attitude of divide and conquer would be a good mantra for the Chinese when dealing with the European Union. The result is that the values and norms, such as human rights and rule of law, that Europe would like to see implemented within China are not forthcoming because Europe has little to no leverage.

European importance and economic influence is declining within Washington, despite the shared values and historical ties, because of such issues as the reluctance or inability of European NATO nations to put combat boots on the ground in Afghanistan. In addition, as noted in the National Intelligence Council report “Global Trends 2025: A Transformed World,” the economic center is rapidly shifting from Europe to Asia. That Secretary of State Hillary Clinton’s first overseas visit was to Asia and not Europe reaffirms this transition.

As the United States continues to work with China, a cosmic shift within the paradigm of international relations continues in which Europe stands to be left by the wayside. There is a real possibility of Europe been reduced to, as the ECFR report describes it, “a future of increasing global irrelevance.” A clearer picture will begin to emerge after the current economic crisis passes — which some suggest will result in the zero been removed from the G20.

There are areas, such as technology and climate change, where Europe could have bargaining power with China. However, Europe must get its own act together before going to the negotiating table with China. As the ECFR report highlights, a good start would be a clearly set of defined policy areas on which to engage China.

An open and frank debate within Europe is urgently required concerning the union’s engagement with China. Ratification of the Lisbon Treaty would be a helpful start, along with a more centralized approach to engaging with China coming out of the European Council. This has to begin with the European President speaking with one voice representing all of Europe to China.

Damien Tomkins is an intern in the Atlantic Council's Asia Program. AP Photo.

State Capitalism on the Rise?

James OConnor — Mon, 01 Dec 2008 09:57:55 -0600

The rise in attractiveness of “State Capitalism” development models is cited as a potential consequence of the increasing economic power of Russia and particularly China in the latest report from the National Intelligence Council, Global Trends 2025: A Transformed World. Particularly in light of the recent financial crisis, the Western capitalist model, particularly the “Anglo-Saxon” model of the US and UK with its greater emphasis on the private sector, may have lost some of its luster. The report describes:

The monumental achievement of millions escaping poverty underpins the rise of new powers – especially China and India – on the international scene but does not tell the whole story. Today wealth is moving not just from West to East but is concentrating more under state control… With notable exceptions like India, the states that are beneficiaries of the massive shift of wealth – China, Russia, and the Gulf states – are non-democratic and their economic policies blur distinctions between public and private. These states are not following the Western liberal model for self-development but are using a different model – “state capitalism.” State capitalism is a loose term to describe a system of economic management that gives a prominent role to the state. (8)

Amid the current turmoil in the West, these “State run” development models will become attractive – and for good reason. These models can be useful in accelerating growth by concentrating capital and focus on particular industries, typically in industrial products for export. South Korea used this model in the post war era to rapidly move from a largely agrarian economy to one that has one of the highest rates of GDP per capita in Asia. These “state run” models seem to be particularly useful when the private sector is not sufficiently mature or organized (or existent) to compete globally. However, as the South Korean example shows, state run economic development is not a long term solution for the proper functioning of an economy. Various pressures, both internal and external, arise and reveal its limitations, and adjustments are made to relax the role of the state in driving the economy.

This is acknowledged in the report, “the state run model does not yet constitute anything like an alternative system and, in our view, is unlikely to ever be one.” (14) The initial rapid development that this model makes possible creates problems as the economy grows and matures. A larger, more complex economy becomes just too big and unwieldy to be controlled by state bureaucrats and eventually becomes a drag on growth.

The weak currency that makes export platforms attractive begins to appreciate necessitating “heavy intervention in currency markets, leading to heavy official asset accumulation, typically until now in the form of U.S. Treasury Bonds.” (9) As an investment, US Treasury bonds are probably not the most productive of asset categories, but they do help keep local currency down and the US dollar up to ensure steady supply to U.S. consumers. In the long term, this arrangement won’t work. These capital flows would probably receive higher returns if invested domestically because capital could mix with (cheaper) labor to create much larger productivity gains. This is in line with accepted economic theory. The export focus of these economies and the policies to support these export bases comes at the expense of local consumption and eventually normal economic progress. The “State capitalist” model thus begins to show its flaws.

Additionally, the “State capitalist” model, while promoting globally competitive “champions” in some industries, does so at the expense of the rest of the economy. Capital is allocated inefficiently, according to government priority and not to where it is most effective. As certain industries are fortified, companies serving the growing consumer class remain weak – certainly not a way to create a healthy, fully integrated national economy that is creating prosperity for the greatest number.

“State capitalist” models are, however, effective in leveraging the power of the state to obtain resources for key industries. “The new powers increasingly will have the means to acquire commodities in an effort ensure continued development.” (12) This will be valuable as resources become scarcer globally and competition for them more fierce, as the report predicts by 2025. This will certainly not be looked upon favorably by western companies who will decry that links to the state bring unfair advantage. But this advantage may sustain the attractiveness of this model – at least for a time.

The seemingly unfair advantage of state owned industry will also be a point of contention for direct competitors of these companies and could encourage Western companies to turn to their governments to protect them from this unfair advantage. There will be pressure on China and Russia in particular to adjust their “monetary policy and openness to foreign investment.” (7)

In time the appeal of “State capitalism” will probably run its course, though its popularity will probably increase in the short term. The Japanese model of tight inter-relationship of businesses to promote strong export growth and stability, much touted in the late 1980s, has waned as a development strategy. Both strategies are useful for quickly mobilizing resources and creating fast economic growth, the fatal flaw of each is that they fail to take into account the growth of the domestic, consumer economy. Adjustments will have to be made which will also effect the U.S. and Europe as they would be receiving less liquidity from the emerging markets, this should be done in a measured and methodical way, but the end result will be more mature markets in the emerging countries and a better, more sustainable type of globalization.

James O'Connor is assistant director of the Atlantic Council's Global Business Program. His views are his own. Photo Photo by Flickr user ToastyKen modified under Creative Commons license.

GLOBAL TRENDS 2025 SERIES:

Global Trends 2025: A Transformed World
NIC Chairman Thomas Fingar Presents "Global Trends 2025"
Predicting the Future is Hard - And Necessary – James Joyner
U.S. Dominance Ending – James Joyner
Terrorism Here Today, Gone Tomorrow? – James Joyner
Asia's Ascendency Seen in Intelligence Forecast – Joseph Snyder
Climate Change Will be More Severe in 2025 –Erica McCarthy
Economic Rise of the East – James O'Connor
State Capitalism on the Rise? – James O'Connor

Has Terrorism Lost its Sex Appeal?

Nicholas Siegel — Wed, 26 Nov 2008 05:52:21 -0600

A few years ago I sat at a friend’s kitchen table on a cool summer evening in Dublin, Ireland. I don’t visit there very often, so I inevitably wanted to catch up on Irish sports, the music community, as well as the political scene of a country that, for its size, is well adept at making world headlines. We had so grown used to things being quiet up in Northern Ireland, that when another visitor arrived in a dark leather jacket and greeted the room in a loud Belfast brogue, I almost felt foolish when asking him how things were in the north. He gave me a quizzical look and responded, “Haven’t you heard? Terrorism isn’t sexy anymore.”

He’d made an interesting point. Violent European nationalist movements in Catalonia, Corsica, South Tyrol, Northern Ireland and elsewhere have given up, some of them long since, the armed struggle for independence. One last hold out, ETA, still menaces, yet has been reduced to an ever-changing group of renegades who have so little popular support among the Basque people and intelligent leadership within their ranks that they can hardly engage in any activity without being crippled by recurrent high-level arrests. Last week it was Mikel Garikoitz Aspiazu Rubina, the organization’s suspected military chief, and in May it was Javier Lopez Pena, ETA’s overall leader. Independence movements within China have, despite a recent upswing in political activity, for the most part shied away from using violence. Ideological terror organizations such as the Red Army Faction in Germany or the Red Brigade in Italy have disbanded, and Peru’s Shining Path and Colombia’s Maoist rebels are in their modern form often indistinguishable from organized crime syndicates.

The truth is that 9/11 scared the hell out of everybody, even the terrorists we knew and loved to hate. The more extreme Al Qaeda becomes both in its doctrine and methodology, the more it does to take the wind out of the sails of would-be mom and pop terror outfits around the world. As the recently released "Global Trends 2025" report makes very clear, Al Qaeda risks even doing itself in if it continues to push for hard-line violence aiming at “unachievable strategic objectives,” without more actively engaging in charitable social programs to help alleviate some of the more immediate pains of people throughout much of the Muslim world. The message is clear: terrorism as a tactic of asymmetrical warfare is losing in popularity among the discontented peoples of the world, and terrorists aren’t doing much to help themselves, or their art.

Barack Obama has already become the apple of the world media’s eye. And with Kenyans sporting “I voted” stickers, Indonesians lauding the man who studied in “our country,” and even senior Arab leaders marveling at the kind of country that could elect as president a man with the middle name Hussein while being engaged in what has so often been coined the “War on Islamic Terror,” Al Qaeda seems to have dropped the ball. In personally insulting president-elect Obama, Ayman al-Zawahri last week made terrorism again seem so…unappealing.

Obama has a real opportunity here. It is yet to be seen whether his promising message will translate into real policies of wisdom and balance around the world. If he can convince a hopeful and eagerly watching planet that he is a fair player, terrorism will be dealt a terrible blow. If he fails the repercussions could be severe; perhaps then the same old romantic conception that history has shown to so profoundly stir the human heart would gain renewed footing amongst the disillusioned: Dulce et decorum est, pro patria mori!

Nicholas Siegel is research assistant to the president of the Atlantic Council. Image: Cuban Tapas Bar.