ECONOMIC POWER SHIFTING

Geopolitical risks on the rise

by Brahma Chellaney

DAVOS, Switzerland — At the recent World Economic Forum meeting of top political, business, intellectual and civil-society leaders, the discussions centered on a range of major international challenges — from new threats to the growing strain on water and other resources.

The discussions brought home the point that at a time of ongoing shifts in economic and political power, greater international divisiveness is making it more difficult to build a consensual approach on the pressing challenges.

Indeed, new fault lines are emerging. The changing global equations are reflected in new realities: the eastward movement of power and influence; the lesser relevance of international structures the United States helped established after World War II; and Asia’s rise as the world’s main creditor and economic locomotive. While the world is not yet multipolar, it is no longer unipolar, as it had been after the end of the Cold War.

Tectonic power shifts, as history testifies, are rarely quiet. They usually create volatility in the international system, even if the instability is relatively short-lived. The new international divisiveness may reflect such a reality.

But unlike in past history, the qualitative reordering of power now under way is due not to battlefield victories or military realignments but to a peaceful factor unique to the modern world: rapid economic growth.

The power shifts are linked to Asia’s phenomenal economic rise, the speed and scale of which has no parallel in world history. After making up 60 percent of the world’s GDP in 1820, Asia went into sharp decline over the next 125 years. Now, it is bouncing back and already accounts for 40 percent of global production — a figure likely to rise to 60 percent well within the next quarter-century. This development is helping alter international equations, with the International Monetary Fund in perceptible decline and troubled U.S. and European financial institutions turning to sovereign wealth funds in Asia and the Middle East for bailouts.

Another factor has also contributed to the divisiveness: While we know the world is in transition, we still do not know what the new order will look like. The ongoing shifts signify not only a world characterized by greater distribution of power, but also new uncertainties. Technological forces today are playing a greater role in shaping geopolitics than at any other time in history.

The more the world changes, however, the more it remains the same in some critical aspects. The information age and globalization, despite spurring profound changes in polity, economy and security, have not altered the nature of international relations. In fact, the rapid pace of technological and economic change is itself a consequence of nations competing fiercely and seeking relative advantage in an international system based largely on national security.

The fact is that we live in a Hobbesian world, with power coterminous with national security and success. The present global power structure reflects this reality: Only countries armed with intercontinental-range weaponry, for example, are permanent members of the United Nations Security Council. However, once the economic power structure changes internationally, shifts in military power will follow, even if slowly.

At present, however, the new fault lines signal rising geopolitical risks.

The tensions between internationalism and nationalism in an era of the supposed single “global village,” for instance, raise troubling questions about international peace and stability. With greater public awareness from advances in information and communications technologies encouraging individuals and even some states to more clearly define their identity in terms of religion and ethnicity, a divide is emerging between multiculturalism and artificially enforced monoculturalism. The rise of international terrorism indeed shows that the information age is both an integrating and dividing force. The emerging political, economic and security divides are no less invidious.

The world is moving beyond the North-South divide to a four-tier economic division: The prosperous West; rapidly growing economies like those in Asia; countries that have run into stagnation after reaching middle-income nation status; and a forgotten billion people living on the margins of globalization in sub-Saharan Africa.

There is also a resource divide, with the resource-hungry employing aid and arms exports as a diplomatic instrument for commodity outreach. As the specter of resource conflict has grown, the contours of a 21st-century version of the Great Game have emerged in Asia, Africa and Latin America.

In modern history, the fault line between democrats and autocrats has at times been papered over through a common geopolitical interest. But today the failure to build greater political homogeneity by defining shared international objectives carries the risk that, in the years ahead, political values could become the main geopolitical dividing line.

Also, with the rise of unconventional transnational challenges, a new security divide is mirrored both in the failure to fashion a concerted and effective international response to such threats, including transnational terrorism, and the divisiveness on issues like climate change.

There is clearly a need to improve global geopolitics by building cooperative political approaches that transcend institutions whose structure is rooted in a world that no longer exists. The reality is that just as the Group of Eight, to stay relevant, has initiated the so-called Outreach for dialogue with the emerging powers, the five unelected yet permanent members of the U.N. Security Council can no longer dictate terms to the rest of the world and need to share executive authority with new powers.

It was a mistake to believe that greater economic interdependence by itself would improve geopolitics. In today’s market-driven world, trade is not constrained by political differences, nor is booming trade a guarantee of moderation and restraint between states.

Better politics is as important as better economics. That in turn calls for several major steps whose initiation so far has been frustrated: institutional reforms; greater transparency in strategic doctrines and military expenditures; and cooperative approaches on shared concerns. No international mission today can yield enduring results unless it comes with consistency and credibility and is backed by consensus — the three crucial Cs.

Seen against the significant shifts in power and influence, the world order of the past 60 years will have to give way to a truly international order. The new order, unlike the current one founded on the ruins of a world war, will have to be established in an era of international peace and thus be designed to reinforce that peace. That means it will need to be more reflective of the consensual needs of today and have a democratic decision-making structure.

With Davos attracting 27 heads of state, 113 Cabinet ministers, 74 of the top 100 global companies’ CEOs and 2,300 other delegates, this unique forum seems best placed to promote innovative, out-of-box thinking. The central message from Davos is that silo thinking can only increase global geopolitical risks at a time of greater international fluidity and financial volatility.

Brahma Chellaney was on the faculty of the recent World Economic Forum meeting.