“What will the world look like in the Obama era?”
Article for Private Banking Magazine
6 Nov 20-09
Three factors make the years ahead completely different from those of the last century and will force us to think in a completely different way about the world around us and what we have to do to prosper in it.
The first of these factors is not unique. But it is not going to be any more comfortable for that.
We are on the edge of one of those periods of history when the pattern of world power changes and a new order begins to emerge. And these are, almost always difficult times for the weak, tough for those whose power is waning and usually turbulent for almost everyone.
This economic recession is not like any other we have recently experienced. We will not, this time plummet down and then bounce back comfortably to where we were, before it all started. This is about something much deeper. Underneath the tectonic plates of global power are shifting. And when it is over we in the Western nations will, relatively speaking, be weaker and those in the Eastern nations, especially China will be stronger.
I am not saying that the rise of nations like China will be smooth or comfortable for them either. Beijing is trying to do something very difficult and, in a Chinese context, very dangerous, too. Their economy may be largely liberalised. But their society is not. And my guess is as they begin to loose the bonds of their old communist structures in favour of a freer society, as they must, there will be considerable turbulence in China too.
But, though this may alter the time scale and manner of China’s rise, it will not, I think, change the basic fact that great power status is her ultimate destination.
Nor do I agree with some of my more left wing friends who tell me that we are seeing the end of American power in the world.
The symptoms of decline in nations, as in humans are scleroticism, institutional arthritis and resistance to change. And the United States shows none of these – as the still remarkable election of Barrack Obama very clearly shows. I do not think that we have seen the end of the American century yet.
But, though the United State’s position as the world’s pre-eminent power, is not likely to change soon, the CONTEXT in which she holds that position is now certain to.
We are no longer looking at a world dominated by single super power. The growth of new power centres means the emergence of a much more multi polar world – one which will look much more like Europe in the nineteenth century than what we have seen over the second half of the twentieth.
And this will have a number of important consequences.
One will be a rise in regional groupings – of which history may say the EU was the first albeit highly imperfect, example.
Second and linked will be an increase in protectionism and probably a reversal of the movement towards free trade of the last half century – with all the implications that carries for a destructive period of beggar my neighbour economic policies.
The third implication of this new pattern of world power, is for us in Europe.
In such a multi sided world the eyes of the US are likely to be just as much, west across the Pacific as east across the Atlantic. The Atlantic relationship will not have the unique importance as a lynch pin for all other policies, as it has had over the last half century. The US security guarantee, under which we in Europe have sheltered since World War Two and which has given many the opportunity to take a free ride on Uncle Sam for their national security, no longer exists. There is hardly an American soldier left in Europe, beyond those whose purpose is not our protection, but the servicing of their operations in Iraq and Afghanistan.
My guess is that Europe will be less important to every future US president, including Barrack Hussein Obama, than we have been to every past one, including George W Bush.
In future we are likely to be judged by Washington, not on the basis of emotion and history, but on a rather more brutal appraisal of what we can deliver when it comes to pursuing our joint interests – and here the answer is not much, if Afghanistan is anything to go by.
The United States is increasingly going to have interests in the world which do not always coincide with those of Europe. And Europe is going to have interests which do not always coincide with those of Washington. For Europeans this will mean having a rather more sophisticated foreign policy in the future, than simply hanging onto the apron strings of our friendly neighbourhood super power, as we have in the past.
And things are more threatening for us elsewhere, too. We now have an increasingly assertive Russia, prepared to use the lever of energy, skilful at dividing and ruling, asserting the old Brezhnev doctrine of spheres of interest and backing it with military force when the opportunity arises. And beyond that we have a rising China and increasing economic power in the East.
If we Europeans do not realise that the right reaction to these new circumstances, is to deepen the integration of our institutions, especially those of defence, foreign affairs and economic policy, then we are fools and the next few decades are going to be much more painful than they need to be.
The last and arguably most important consequence of this new shape to world power is this; we are reaching the beginning of the end of perhaps six centuries of the domination of Western power, Western institutions and Western values, over world affairs. If we want to get things done, such as re-designing the world economic order, or intervening for peace, we cannot any longer just do them within the cosy Atlantic club; we are going to have to find new allies in places we would never previously have thought of. And they will probably prove less congenial and more demanding than we find it comfortable to cope with.
Iraq and Afghanistan may well be the last interventions we attempt depending on Western power alone. In future, if we cannot find wider partners for these affairs we will probably not be able to do them.
The global financial crisis has made it very plain. If we want a more ordered world at a time of great instability, we are going to have to provide a space at the top tables for nations that do not share our culture, our history, our world view or even, in many cases, our values.
This is going to be uncomfortable, even painful.
We are going to have to accept deals we would have hitherto have found completely unpalatable.
I suspect it will not be long before we look back at the deal we spurned when the Dohar trade talks failed, with the chagrin that comes with the realisation that this was an opportunity lost and we are not going to get anything as good again.
The second factor which is likely to make these the times to try men’s souls, is that, we are seeing a double shift of power.
Power is now not just shifting laterally from West to East; it is shifting vertically, too. Power is now migrating out of the structures of the nation state, which we created to hold it to account and make it subject to regulation and the rule of law, and into the global space, where the instruments of regulation are few and the framework of law is weak.
There is a rule of history. Where power goes, governance must follow. And if it doesn’t chaos, conflict and turbulence are the consequences.
What makes this even more urgent – even more dangerous – is that it is not just power that has been globalised; problems have too. The truth which our politicians in Westminster refuse to acknowledge and our old institutions can find no way to cope with, is that there is now almost no problem which affects our citizens well being or our nation’s future, which can be solved within the nation state or by its institutions acting alone; not our ability to protect ourselves; not our the cleanliness of our environment; not our capacity to tackle global warming; not our health; not our jobs; not our mortgages.
All of these and more now depend, not on the actions of our governments, but on their ability to work with others within a set of institutions which are global in scope and international in character.
The problem is, as the global financial crisis has showed and the issue of global warming showed before it, we have neither the institutions nor the political leadership to do this.
If one of the key phenomena of our time is the globalisation of power, then one of the key challenges of our time is to bring governance to the global space. And I suspect that this will be achieved more through treaty based institutions, such as Kyoto, the G20 and the WTO, than through a further spawning of UN based institutions.
Meanwhile we have a third factor to cope with which is now shaping this age in a way which is different in scale from anything we have ever seen before. Our increasing global interdependence.
Of course nations have always been connected. But today’s interdependence is of a completely different order. Nations today are not just linked by trade, commerce and diplomacy, they are intimately interlocked in almost every aspect of our daily lives.
An outbreak of swine flu in Mexico affects becomes relevant to our health in Britain, mere hours later.
The collapse of Lehman brothers sets in train a domino effect across the entire global economy in days.
The revelation of 9/11, is the revelation of our time.
That, to paraphrase John Donne, every man’s conflict affecteth me.
Even if you are the most powerful nation on earth, the consequence of ignoring what is happening in a far away country of which you know little and care less, can be death and horror one bright September day in one of your most iconic of cities.
One of the primary revelations of our age is that, today everything is connected to everything.
Which means that, in the modern age, the most important part of what you can do, is what you can do with others.
The key part of modern structures is not their internal order, but their external docking points.
It is not the effectiveness of the hierarchies which matters most, but the efficiency of the interconnectors.
And if you want to see the price of failing to understand that, you need look no further than Afghanistan. Here the chief reason for the fact that we are losing, lies, not in the ineffectiveness of the Afghan Government who we love to blame, but in our own complete failure to have any co-ordinated international plan; in our inability to work together between the nations of the coalition to a single international plan enacted with unity of execution and purpose.
The age when even the most powerful can expect success if they choose to at act unilaterally, is over. In the new multi-polar world which we entering, nations will raise the chances of success in their enterprises to the extent that they can make them multilateral and raise their chances of failure, if they are unable to do this.
There are going to be difficult times ahead. But they should not be impossible one, if our leaders, in politics and in business, can learn a new way of thinking. But the question is, can they ?
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