TWQ: Revisiting the Future: Geopolitical Effects of the Financial Crisis - April 2009
April 1, 2009
Every four years, the National Intelligence Council (NIC) publishes an unclassified report projecting global trends over the next fifteen years. The intent is to help incoming decisionmakers lift their sights above the here-and-now, focusing on longer-term trends likely to shape the strategic future of the United States. Inevitably, the NIC’s estimations find a far wider audience. The most recent edition, Global Trends 2025: A Transformed World (hereinafter the report), was published last November, and already has received substantial media attention both within the United States and overseas. Completing the report in the midst of the financial crisis required the NIC to make risky predictions on the world’s most volatile issues, from youth bulges and climate change to odds on a nuclear Iran, from whether the International Monetary Fund (IMF) might soon be spelled SWF for sovereign wealth funds in the developing world, to a Russia (and a Gazprom) rising, even as the ground was shifting day to day beneath its feet.
The report highlighted the emergence of a multipolar global order with rising states like China and India economically overtaking most of the older Group of Seven (G-7) powers by 2025. The United States’ traditional partners, Europe and Japan, would increasingly be challenged to maintain economic growth in view of their aging populations. While the rising states would want seats at the international high table, the report anticipated that they would be cautious about assuming global burdens, despite a packed agenda composed of new challenges like climate change and energy security in addition to growing threats such as nuclear proliferation and weapons of mass destruction (WMD) terrorism. By 2025 the international order, although unrecognizable from its post-World War II contours, would remain in transition and be one in which the United States, though still preeminent, would be less dominant even as others would still look to it to shoulder many of the global burdens.
Such was the world the NIC foresaw as the crisis unfolded. Now, emerging markets the world over have lost more than half of their value since September 2008 alone. Banks that have never reported a net loss earnings quarter were dissolved in a matter of days. Even with the one year anniversary of the Bear Stearns collapse approaching in March, markets may have yet to find a floor. The proportions of the current crisis hardly need familiarizing. As the panic has not yet given way to a lucid picture of the impacts, most economists and political forecasters are smart enough to shy away from sweeping predictions amid the fog of crisis. Yet, in the post-crisis world, it seems conceivable that global growth will most likely be muted, deflation will remain a risk while any decoupling of the industrialized from developing countries is unlikely, the state will be the relative winner while authoritarianism may not, and U.S. consumption as the engine for global growth will slowly fade. Whether U.S. political and market clout will follow, and whether U.S. political leadership will come equipped with knowledge of the strategic forces affecting the United States remains to be seen.