Winners and Losers in a G-Zero World
Published by the Penguin Group
Penguin Books Ltd, 80 Strand, London WC2R 0RL, England
Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, USA
Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P 2Y3 (a division of Pearson Penguin Canada Inc.)
Penguin Ireland, 25 St Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd)
Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty)
Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi – 110 017, India
Penguin Group (NZ), 67 Apollo Drive, Rosedale, Auckland 0632, New Zealand (a division of Pearson New Zealand Ltd)
Penguin Books (South Africa) (Pty) Ltd, Block D, Rosebank Office Park, 181 Jan Smuts Avenue, Parktown North, Gauteng 2193, South Africa
Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England
www.penguin.com
First published in the United States of America by Portfolio/Penguin, a member of Penguin Group (USA) Inc. 2012
First published in Great Britain by Portfolio Penguin 2012
Copyright © Ian Bremmer, 2012
Cover design: Joseph Perez
Cover image: Mirko Ilic Corp
All rights reserved
The moral right of the author has been asserted
ISBN: 978-0-67-092106-5
INTRODUCTION
CHAPTER 1
What Is the G-Zero?
CHAPTER 2
The Road to the G-Zero
CHAPTER 3
The G-Zero Impact
CHAPTER 4
Winners and Losers
CHAPTER 5
What Comes Next?
CHAPTER 6
G-Zero America
NOTES
ACKNOWLEDGMENTS
Ian Bremmer is the president of Eurasia Group, the world’s leading global political risk research and consulting firm. He has written for the Wall Street Journal, the Washington Post, Newsweek and Foreign Affairs. His eight books include the international bestseller The End of the Free Market and The J Curve. He lives in New York City and Washington DC.
www.ianbremmer.com
‘Global political economy has no sharper or more prescient analyst than Ian Bremmer. Everyone who cares about our collective future will need to carefully consider this book’ Lawrence Summers, former US Treasury Secretary and
Charles Eliot Professor, Harvard University
‘A provocative and important book about what comes next. Ian Bremmer has again turned conventional wisdom on its head’
Nouriel Roubini, Chairman, Roubini Global Economics
‘Bremmer’s astute assessment of how the shifting geopolitical landscape will impact political and economic alliances provides essential insights for anyone conducting business at the global level’
Dominic Barton, Global Managing Director, McKinsey & Company
‘Required reading for anyone interested in the current state – and near-term future – of global affairs’
Muhtar Kent, Chairman and CEO, The Coca-Cola Company
to ann and rob (and moose)
G-Zero—\JEE-ZEER-oh\– n
A world order in which no single country or durable alliance of countries can meet the challenges of global leadership.
One beautiful Napa Valley evening in October 2011, I found myself in conversation with Paul Martin, the man who created the G20—the forum where nineteen countries plus the European Union bargain over solutions to pressing international challenges. I had just given a speech arguing that the G20 is an unworkable institution, liable to create as many problems as it solves.
As Canada’s finance minister from 1993 to 2002 and then prime minister from 2003 to 2006, Martin had irked his country’s allies by declaring that Western dominance of international financial institutions was on the wane. He argued that the world needed a club that welcomed new members from among the leading emerging powers. Officials in Washington, Western Europe, and Tokyo had politely ignored Martin’s idea—until the 2008 financial crisis forced them to admit he might have a point. Three years later, the G20 was a fixture of international politics.
Martin and I began a good-natured debate. I argued, as I had in my speech, that the G20 is more aspiration than organization, that twenty is too many, and that there is too little common ground for substantive progress on important issues except under the most extreme conditions. Martin countered that the G20 gives more countries than ever a stake in the success of the global economy and in resolving the world’s political and security challenges.
Then the conversation took an unexpected turn. Martin explained that his early advocacy for the G20 was based less on a vision of global governance than on what was best for Canada. His country had long been a member of the G7—a privileged position, to be sure, but within an increasingly irrelevant organization. By arguing for the acceptance of a trend he considered inevitable, Martin believed that Canada could exchange its first-class seat on a sinking ship for a secure spot on a bigger boat. And by leading the effort to build that boat he also hoped to win his country valuable new friends. Like every other delegation present, Canada had its own reasons for being there.
Later that evening, as I replayed our conversation in my mind, I found myself imagining an enormous poker table where each player guards his stack of chips, watches the nineteen others, and waits for an opportunity to play the hand he has been dealt. This is not a global order, but every nation for itself. And if the G7 no longer matters and the G20 doesn’t work, then what is this world we now live in?
For the first time in seven decades, we live in a world without global leadership. In the United States, endless partisan combat and mounting federal debt have stoked fears that America’s best days are done. Across the Atlantic, a debt crisis cripples confidence in Europe, its institutions, and its future. In Japan, recovery from a devastating earthquake, tsunami, and nuclear meltdown has proven far easier than ending more than two decades of political and economic malaise. A generation ago, these were the world’s powerhouses. With Canada, they made up the G7, the group of free-market democracies that powered the global economy. Today, they struggle just to find their footing.
Not to worry, say those who herald the “rise of the rest.”1 As established powers sink into late middle age, a new generation of emerging states will create a rising tide that lifts all nations. According to a much-talked-about report published by London-based Standard Chartered Bank in November 2010, the global economy has entered a “new ‘super-cycle’ driven by the industrialization and urbanization of emerging markets and global trade.”2 New technologies and America’s emergence lifted the global economy between 1870 and the onset of World War I. America’s leadership, Europe’s reconstruction, cheap oil, and the rise of Asian exports drove growth from the end of World War II into the 1970s. And we can count on increasingly dynamic markets in China, India, Brazil, Turkey, and other emerging nations to fuel the world’s economic engine for many years to come. Americans and Europeans can take comfort, we’re told, that other states will do a larger share of the heavy lifting as our own economic engines rattle forward at a slower pace.
But in a world where so many challenges transcend borders—from the stability of the global economy and climate change to cyberattacks, terrorism, and the security of food and water—the need for international cooperation has never been greater. Cooperation demands leadership. Leaders have the leverage to coordinate multinational responses to transnational problems. They have the wealth and power to persuade governments to take actions they wouldn’t otherwise pursue. They pick up the checks that others can’t afford and provide services no one else will pay for. On issue after issue, they set the international agenda. These are responsibilities that America is increasingly unwilling, and incapable, of assuming. At the same time, the rising powers aren’t yet ready to take up the slack, because their governments must focus on managing the next critical stages of their own economic development.
Nor are we likely to see leadership from global institutions. At the height of the financial crisis in November 2008, political leaders of the world’s most influential established and emerging countries gathered in Washington under the banner of the G20. The forum helped limit the damage, but the sense of collective crisis soon lifted, cooperation quickly evaporated, and G20 summits have since produced virtually nothing of substance. Institutions like the UN Security Council, the International Monetary Fund, and the World Bank are unlikely to provide real leadership because they no longer reflect the world’s true balance of political and economic power.
If not the West, the rest, or the institutions where they come together, who will lead? The answer is no one—neither the once-dominant G7 nor the unworkable G20. We have entered the G-Zero.
This book is not about the decline of the West. America and Europe have overcome adversity before and are well equipped over the long run to do it again. Nor is this a book about the rise of China and other emerging-market players. Their governments stand on the verge of tremendous tests at home. Not all of them will continue to rise, and it will take longer than most expect for those that emerge to prove their staying power. Rather, this book details a world in tumultuous transition, one that is especially vulnerable to crises that appear suddenly and from unexpected directions. Nature still hates a vacuum, and the G-Zero won’t last forever. But over the next decade and perhaps longer, a world without leaders will undermine our ability to keep the peace, to expand opportunity, to reverse the impact of climate change, and to feed growing populations. The effects will be felt in every region of the world—and even in cyberspace.
The pages that follow will define this world and anticipate the turmoil to come. Chapter 1 explains what the G-Zero is. Chapter 2 details how we got here, from the rise of American power and Western-dominated institutions following World War II to the geopolitical and economic upheaval of the past few years. Chapter 3 takes on the G-Zero’s impact on the world around us: politics, business, information, communication, security, food, air, and water. Chapter 4 looks at the ability of countries, companies, and institutions to navigate the risks and opportunities created by the G-Zero world—and separates the era’s winners from its losers. Chapter 5 asks what comes next, and offers predictions on the international order that grows out of the G-Zero. The sixth and final chapter provides ideas on how Americans can shape—and help lead—that new world.
The world has entered a period of transition and remarkable upheaval. For those who would lead nations and institutions through this volatile moment, the G-Zero will demand more than great power or deep pockets. It will require agility, adaptability, and the skill to manage crises—especially those that come from unexpected directions.
It is better to be alone than in bad company.
—George Washington
On December 17, 2009, Denmark’s Queen Margrethe celebrated a much-anticipated climate summit with a gala dinner in Copenhagen’s Christiansborg Palace. Leaders and distinguished guests from around the world enjoyed salt cod puree, scallops, dessert, and a musical performance by the Band of the Royal Life Guards. If the queen’s “life guards” weren’t enough to inadvertently underscore the theme of climate change, the event also included recordings of Frank Sinatra singing “Here’s That Rainy Day” and of George Harrison performing “Here Comes the Sun.” Queen Margrethe managed to ignore diplomatic niceties that should have seated her next to the evening’s longest-serving visiting dignitary—Zimbabwe’s President Robert Mugabe, a man better known for brutalizing opponents, stoking racial violence, and gutting his country’s economy than for his charming dinner conversation or commitment to reversing global warming. “We know that some people don’t want to sit next to others,” explained a Danish protocol officer to a reporter. “It’s like a family dinner. You don’t want Uncle Louis sitting next to Uncle Ernie.”1
Queen Margrethe’s dodge gave the summit its first and only success.
A week after the conference closed, Xinhua, China’s state-run news agency, published a story alleging that Chinese premier Wen Jiabao had learned during the dinner that U.S. president Barack Obama had invited friends and allies for a “clandestine” meeting later that evening to discuss negotiating strategy—and that China’s delegation had not been included.2 It remains unclear whether such a meeting was scheduled or if Wen got bad information. It’s possible the entire story was concocted by the Chinese government to justify Wen’s absence from a key meeting the next day and his delegation’s refusal to agree on a final deal. Whatever the truth, Wen withdrew to his suite at the Radisson Blu Hotel—and the summit went nowhere.
Much of what we think we know about the following day’s closed-door negotiations comes from a secret recording, two 1.2-gigabyte sound files “created by accident” and obtained by the German newsmagazine Der Spiegel.3 On December 18, two dozen heads of state gathered in the Arne Jacobsen conference room in Copenhagen’s Bella Center to hash out differences on a common approach to climate change. More than a hundred other world leaders waited outside the room for the principals to produce an agreement. China’s premier remained at the Radisson.
Instead of bargaining with his fellow head of state Wen Jiabao, the president of the United States found himself negotiating with He Yafei, a Chinese deputy foreign minister well known for his exceptional command of English and his willingness to use it to advance his country’s worldview—with sometimes provocative arguments. German chancellor Angela Merkel and French president Nicolas Sarkozy pressed China and India to commit to binding targets on the reduction of greenhouse gas emissions. China and India announced they could not support a document that imposed specific numerical targets, even on the Americans and Europeans. Norwegian prime minister Jens Stoltenberg asked Indian officials how they could renounce the very plan they had proposed just a few hours earlier. President Mohamed Nasheed of the Maldives, an island chain that lies in the Indian Ocean about seven feet above sea level, demanded that the Chinese delegation explain how it could ask his country to “go extinct.” Sarkozy accused the Chinese of “hypocrisy,” He Yafei lectured the group on environmental damage from the Industrial Revolution, several NGOs accused Western officials of blocking a deal, and a few journalists accused Obama of selling out Europe by letting China off the hook. Not to be ignored, Venezuelan president Hugo Chávez called Obama the devil. A gathering that then–British prime minister Gordon Brown had hyped as “the most important conference since the Second World War” ended in acrimony and conflicting accounts of what had happened, and with no progress toward any meaningful agreement.
But here’s the key takeaway: The summit didn’t collapse because China was snubbed, India is irresolute, the Europeans are stubborn, or Obama is lord of the underworld. It failed because (a) there was not nearly enough common ground among the leading established and emerging players to reach a deal that would have required sacrifice from all sides, and (b) no single country or bloc of countries had the clout to impose a solution.
This argument perfectly illustrates the G-Zero and where it comes from. Rising powers like China, India, Brazil, and South Africa claim that 150 years of industrialization in the West have inflicted nearly all the damage that now has climate scientists in a panic. They insist that Americans and Europeans have no right to expect developing countries to sharply limit their growth to clean up the rich world’s mess. They have a point. The established powers counter that developing states will do most of the environmental damage in decades to come. They add that climate change is a global problem, one that can’t be solved without substantial help from developing countries, even if America and Europe cut emissions to zero. They have a point, too. The urgent issue is that, as with so many of today’s political and economic questions, the world needs established and emerging powers to agree to share both benefits and burdens. Doing nothing will make matters much worse.
This is the G-Zero challenge. To prevent conflict, grow the world economy, manage our energy needs, implement farsighted trade and investment policies, counter transnational threats to public health, and meet many other tests, the world needs leaders who are willing and able to shoulder burdens and enforce compromise. To be sure, many countries are now strong enough to prevent the international community from taking action, but none has the political and economic muscle to remake the status quo. No one is driving the bus.
America was hardly the first modern nation to use its global power to reinforce international peace and maintain the flow of commerce. England, later Britain, was already one of the world’s most formidable naval powers by the beginning of the eighteenth century, and the final defeat of Napoleon in 1815 left it in a dominant position for nearly a century. Throughout this period, Britain acted as the primary provider of global public goods—services that profit nearly everyone and for which no one wants to pay. For example, Britain helped keep the peace by working to maintain a balance of force among the great powers of Europe. It promoted an increasingly open world economy, in part by using its unparalleled naval power to protect international sea lanes. It enabled capital flows and maintained the gold standard. The British pound served as the world’s primary reserve currency.
The rise of Germany and the United States in the late nineteenth century began to undermine Britain’s dominance, and the breakdown of Europe’s concert of nations gave way to the First World War. But it was World War II that permanently crippled Britain’s ability to continue in this role. The United States, which suffered much less damage from the two conflicts than its enemies or its allies, proved ready, willing, and able to take on global leadership. For the next several decades, it did exactly that.
With the end of the Cold War, the United States looked set for an extended run as the world’s sole superpower. Yet, as has become abundantly clear in recent years, America’s debt is on the rise. The country’s increasingly heavy financial burden is not simply a product of George W. Bush–era spending inspired by the multifront war on terror or of the Obama administration’s expansionary response to the financial crisis of 2008–2009. America’s debt problem—arguably, its debt crisis—is a slow-motion emergency that has been developing in plain sight for decades under presidents and congressional majorities of both parties. In an especially vivid study on this subject, scholar Michael Mandelbaum has detailed how U.S. lawmakers balanced the federal budget in just five of the forty-seven years before financial markets began melting down in the fall of 2008. Entitlement programs like Social Security (America’s pension plan), Medicare (health insurance for the elderly), and Medicaid (health insurance for the poor) have now grown large enough to consume about 40 percent of the U.S. federal budget.
Accelerating the issue, the 77 million American baby boomers born between 1946 and 1964 began to qualify for pension and health benefits in 2011. Once that wave has fully crashed, the total cost will be almost four times the size of the entire 2010 American economy.4 As pension and health care costs have risen, so have U.S. deficits. Within a generation, Washington will be spending more money servicing the country’s debt than it does on defense.
To help finance this debt, the United States now borrows about $4 billion per day, nearly half of that from China. But the Chinese government has fed American fears that it won’t continue to bankroll U.S. consumption. Senior Chinese officials have publicly expressed doubts that U.S. debt can remain a sound long-term investment and warn that the demands of ambitious political and economic reforms within China will force Beijing to spend more of its money at home. In 2009, Wen Jiabao admitted, “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”5 The recent debt ceiling crisis only exacerbated Chinese concerns. Said Stephen Roach, chairman of Morgan Stanley Asia, “This is China’s wakeup call. … They [will] stop buying dollar-based assets, not because they’re mad at us … but just because they don’t need to do it.”6
To help Washington meet its growing obligations, Americans will have to pay higher taxes, but tax hikes alone won’t rebalance the books. Policymakers must cut spending on both entitlements and defense. For tens of millions of workers, retirement will have to wait a little longer, pension and health benefits will be less generous, and the architects of American foreign policy will face tough choices about what Washington can and cannot afford. Without these sacrifices the nation will risk financial disaster on a scale not seen since the 1930s.
American foreign policy faces additional limits. A raft of polls suggests that Americans worry much more about their jobs, their homes, their pensions, and their health care than about the export of American values or even dangers from abroad—a trend that has widened sharply over the past several years.7 In an age of austerity, Americans have less interest in helping manage turmoil in the Middle East, rivalries in East Asia, or humanitarian crises in Africa, and they insist that elected officials sharpen their focus on domestic challenges. The September 11 terrorist attacks triggered a surge in U.S. public interest in foreign policy, but that was mainly a result of the unprecedented arrival of foreign problems on American soil and the impact of terrorism on confidence in the U.S. economy.
Recent polls from the Pew Research Center and the Council on Foreign Relations show that the percentage of respondents who say the United States should “mind its own business internationally” has spiked higher than at any point in nearly fifty years. Nor is trade as popular as it used to be. Americans are becoming more skeptical that globalization—the increasingly free flow of ideas, information, people, money, goods, and services across borders—is working in their favor.8 For too many workers in the U.S. manufacturing sector, the cheap products keep coming and the jobs keep going.
Adding to the country’s inward focus is the absence of any singular, easily identifiable threat to American security that can rally a broad segment of the public around a more activist foreign policy. China has sharply increased its economic, political, and military clout in recent years, particularly in East Asia, and some U.S. officials will work hard to vilify China and its government—over unfair trade practices, human rights abuses, threats to cybersecurity, and other perceived wrongs. But for the moment, China’s stated commitment to a “peaceful rise,” its willingness to bankroll so much U.S. debt, and the opportunities China continues to provide for U.S. companies make it difficult to paint the world’s most populous country as a Soviet-style supervillain or to conjure up Soviet-scale threats to the international order. China’s top leaders do not threaten to bury the United States, they don’t bang their shoes on desks at the United Nations, and they aren’t looking to base missiles in Cuba.
Islamic militants, ever an elusive enemy, have become a less urgent foreign policy priority, particularly since the 2011 killing of al Qaeda leader Osama bin Laden further undermined public support for an extended troop commitment in Afghanistan.9 Failed or failing states like Yemen and Somalia can create terrorist safe havens that have the attention of U.S. officials, and countries like Pakistan and Iran pose security challenges of their own. But as the American public loses patience with new troop commitments in Afghanistan and elsewhere, U.S. policymakers will be forced to rely on economic pressure and diplomatic coercion to manage these problems.
In fact, an ever-increasing percentage of Americans are not old enough to remember the Cold War and have not absorbed the idea, as previous generations have, that America plays a unique and indispensable role in promoting democracy and keeping the peace. Another terrorist attack on U.S. soil might reignite public interest in an assertive foreign policy, but it might also do just the opposite, by increasing popular demand for a new brand of isolationism.
If this is bad news for U.S. foreign policy, it is worse news for many other countries, because America has acted for decades as the primary provider of global public goods. The American security presence in Europe and Asia has bolstered confidence in both regions that disputes and tensions need not provoke war. Europe can afford to invest in economic and political union rather than military hardware. The presence of U.S. troops in East Asia reassures the Chinese, Koreans, and Japanese that Japan does not need an army. The U.S. Navy safeguards important trade routes. Washington can’t single-handedly halt the proliferation of the world’s deadliest weapons; the past two decades have made that clear. But the United States has done more than any other country to ensure that nuclear development in states like North Korea and Iran comes at the highest possible cost and risk to discourage other would-be nuclear weapons states from following their example.
Yet growing public concern over mounting federal debt virtually ensures that the United States will have to become more sensitive in coming years to costs and risks of its own when making potentially expensive strategic choices. At home, presidents will be hard pressed to persuade taxpayers and lawmakers that bolstering the stability of countries like Iraq or Afghanistan is worth the risk of a bloody, costly fight. That means decoupling support for a “strong military,” an always popular position, from security guarantees for countries that no longer meet a narrowing definition of vital American interests. As a result, questions will arise abroad about America’s commitment to the security of particular regions. Some powerful states will test U.S. resolve and exploit any weakness they think they’ve found. Few of those who have depended on U.S. strength want a global policeman, but many of them will lack protection against the neighborhood bully. Other countries also have reason to value a strong and resilient U.S. economy. Over the past several decades, U.S. consumers have helped stoke growth in many developing countries, and as Americans scale back their spending, the impact will be felt all over the world.
History has shown that it’s never a good idea to bet against the United States. That’s still true. America’s culture of innovation, its economic resilience, its great universities, and its faith in the future remain impressive. Its commitment to security ensures that even sharp cuts in defense spending can’t undermine Washington’s global military edge. Its cultural appeal will continue to translate into all the world’s languages. This period of transition may ultimately allow the United States to get its financial house in order and reemerge on the international stage with new strength. But Washington has serious work to do to restore confidence in the country’s financial foundation, and emerging powers continue to cut into America’s political and economic lead.
This world without leaders is not simply the story of a downsized America. It will be years before any other country or alliance of countries has the resources and self-confidence to fill the growing leadership vacuum.
Because the G7 is an anachronism, and the G20 is more an aspiration than an organization, some have called for a G3 alliance that enables America, Europe, and Japan to pool their resources to achieve common goals. But the barriers to an effective G3 or anything close to it are formidable. First, as the breakdown in the Copenhagen climate summit negotiations and the onset of the financial crisis made clear, attempts in today’s world to meet complex challenges without active cooperation and sacrifice from China, India, and other emerging powers are likely doomed to failure. Second, Americans and Europeans disagree on a growing number of central questions—from the most equitable division of labor within NATO to how best to revitalize the global economy, regulate banks, and broker peace between Israelis and Palestinians.
Most important, following credit crises in several EU countries, European policymakers face years of bitter bargaining to restore confidence in the Eurozone. The process of recovery may well restore Europe’s strength from within, but it will generate considerable mistrust and resentment among European governments along the way. The most obvious friction will come from clashes over policy and political culture between core EU countries, like Germany, which must foot the bill to keep the Eurozone on its feet, and the so-called peripheral countries, like Greece, Portugal, and Spain, which have refused for years to live within their means. Warren Buffett explained the contradiction of the EU monetary union in an August 2011 interview with CNBC: “Seventeen countries that joined the European monetary union gave up the right to print their own money. … They linked themselves. They gave each other their credit cards and said let’s all go out. And some behaved better than others.”10 There is also the tension within the EU between Eurozone countries like Germany looking to bolster the euro and those like Britain that want no part of it.
Germany is a telling case in point. The nation reemerged from the financial crisis with one of the world’s healthiest economies. Thanks to limited exposure to the risky bets of U.S. and other European banks that created a contagion crisis across much of the rest of the continent, Germany has seen growth rebound and wages increase. Its unemployment holds relatively low and its trade surplus remains healthier than that of any other country in the world except China. This success should offer Germany a more prominent global role, but unfortunately for its taxpayers, the Eurozone’s weaker economies now rely on Germany’s economic muscle to help bankroll the bailouts they need to stay afloat. In that sense, Berlin already has more in common with Beijing than with Washington. Germany’s political culture has also become a lot less sympathetic in recent years toward countries that spend more than they take in. Look at recent comments by Germany’s finance minister, Wolfgang Schäuble, who stated that it is “an indisputable fact that excessive state spending has led to unsustainable levels of debt and deficits that now threaten our economic welfare.”11
Not surprisingly, officials in Chancellor Angela Merkel’s government have tried to appease German taxpayers and governing partners by promising them a say in how their money is spent. Berlin has refused to simply present bureaucrats in Brussels with cash to use as they think best. Instead, it has insisted that Germany help determine the reform processes within each bailed-out country. So far, so good: Europe’s profligate nations will never recover until they tackle spending on government wages, pensions, and health care; the taxes these governments charge their citizens and companies; and other elements of fiscal and banking reform. Yet as long-term austerity measures in the bailed-out countries take a toll on the public mood, local politicians will have added incentive to demonize German attitudes. Bottom line: We can expect to see a lot more near-term conflict inside the European Union and a lot less willingness in Europe to take on outside challenges.
The EU will also be preoccupied with battles over borders. Thanks to the Schengen Agreement—a treaty signed in 1985 (and updated in 1990 and 1997)—citizens of European member states don’t need passports as they move from one member country to another. So long as native Europeans were the ones moving passportless across borders, the pact was mostly uncontroversial. But that is changing, in part because protests and violence across North Africa have sent large numbers of people scrambling to escape the turmoil by boat.
In April 2011, more than 20,000 Tunisian refugees managed to reach the Italian island of Lampedusa. Overwhelmed, Italy called on other EU governments to share the burden and accept some of the migrants. No one answered the call. In frustration, Italian officials issued the refugees temporary residence permits and encouraged them to fan out across Europe. France intercepted many of the migrants and sent them back to Italy.12 A few of the Tunisians began a hunger strike at the Italian-French border. Others made it all the way to Paris, and when French authorities moved to deport them, they occupied an abandoned building and began calling themselves the Lampedusa Tunisian Collective.13 Far-right European political parties have fanned fears that a flood of refugees will overwhelm already cash-strapped countries. In response, the European Union began considering measures to restore border controls under “exceptional circumstances.” Today, a once-expanding European Union is creating new barriers to entry. Far from the exception, such fights are likely to keep Europe turned inward for the next several years.
Nor has there ever been much momentum toward a true common European defense policy that might give the continent greater international influence on security issues. Germany has extremely limited ability to project power abroad, Britain refuses to join, and few European countries can afford to sharply increase defense spending. France, Britain, and other NATO members will act in extraordinary circumstances, as they did in 2011, preventing Libyan leader Muammar Gadhafi from massacring large numbers of his people. But both France and Britain have sharply cut defense spending to restore their federal budgets to health.
Nor is Japan, still the world’s third largest economy, prepared to play a more demanding global role. Given its imperial history, Japan, like Germany, has been reluctant to assume a greater international political and military presence. Like the United States, Japan has enormous debt problems that must be addressed. Even if a more ambitious foreign policy enjoyed greater popular support, the country’s politics remain deeply dysfunctional. In September 2009, the Democratic Party of Japan won a landslide election victory that ended decades of one-party rule by the Liberal Democratic Party. Yet instead of a two-party system, Japan looked more like a no-party system. The DPJ’s first prime minister, Yukio Hatoyama, quickly found himself unable to fulfill campaign promises and became engulfed in a finance scandal. His successor, Naoto Kan, was not much more successful. In August 2011, Yoshihiko Noda became Japan’s seventeenth prime minister in the previous twenty-two years—a modern-day Asian record. Add to that depressing mix an economy struggling with weak growth and the public outlay to meet the devastating effects of recent natural and nuclear disasters, and Japan is even less likely to accept greater responsibilities beyond its borders.
For a generation, established powers have treated globalization as a Western game. By welcoming hundreds of millions of new players to the poker table, they hoped mainly to build the size of the pot. That’s an attractive prospect for those who make the rules—and those who expect to build the tallest stacks of chips. Operating under a set of guidelines, norms, and institutions created and policed by their home governments, multinational corporations based in advanced industrial democracies eagerly joined the game, lured into the developing world by cheap labor, cheap inputs, a less onerous regulatory environment, and new customers. But the Western way of globalization faces an unprecedented test because the new players want more than a seat at the table; they want to make new rules. They want to run their own games in their own neighborhoods, and increasingly they have the muscle, at least on their home turf, to get some of what they want—particularly when they’re prepared to stand together on their demands.
If geopolitics were scripted by Hollywood, Brazil might take the lead on global environmental issues, India on worldwide poverty, and China on clean energy. Each has deep experience and a vested interest in the assigned subject, and all of them might help a beleaguered world make large strides forward. But G-Zero is not the feel-good movie of the year, and these and other emerging powers are unlikely to bid for a bigger share of global leadership.
Why? Because they face so many formidable challenges at home in managing the next stages of economic development and in protecting their domestic political popularity. For emerging-market countries, emergence is a full-time job, and the demands it imposes on governments are often at odds with those made by other governments at international summit meetings, like the one in Copenhagen.
China seems particularly well cast in the role of emerging global superpower. Its remarkable three-decade economic expansion, dramatically growing geopolitical clout, and steady increases in defense spending have persuaded some observers to call for a G2, an arrangement in which America and China join forces to unite established and emerging players in an ambitious bid to take on pressing transnational problems.14 But as Wen Jiabao told the UN General Assembly during a speech in September 2010, “China is still in the primary stage of socialism and remains a developing country. These are our basic national conditions. This is the real China.”15
For the coming years, China will continue to develop—under the leadership of an authoritarian government that believes the ruling party’s monopoly hold on power depends on a rising standard of living and a steady supply of new jobs. Such an agenda creates clear incentives for China to avoid precisely the sorts of sacrifice required for international leadership.
16