FEATURE: Political Scientist Ian Bremmer: American-led order is over

TOKYO (The Japan News/ANN) -  Participants in the 2019 GZERO Summit, including politicians, bureaucrats and experts from Japan, the United States, Europe and Australia discussed how to deal with a chaotic world in which no nations are acting as leaders.

The 2019 GZERO Summit, organized by Eurasia Group and supported by The Yomiuri Shimbun and other entities, was held in Tokyo on Monday. Participants including politicians, bureaucrats and experts from Japan, the United States, Europe and Australia discussed how to deal with a chaotic world in which no nations are acting as leaders.

In his keynote speech titled "The End of the American Order," Ian Bremmer, a U.S. political scientist and president of Eurasia Group, discussed the U.S.-China rivalry, the U.S. presidential election next year and its impact on the world, and Japan's role in the GZERO world.

The End of the American Order

China has made its decision. Beijing is now building, for the first time, a separate system of Chinese technology—its own standards, and infrastructure, and supply chains—to compete with the West.

Make no mistake: in my view this is the single most consequential geopolitical decision taken by any country in the world in the last three decades. It’s also the greatest threat to globalization.

It wasn’t supposed to be like this.

Globalization has lifted billions of people from poverty around the world. We all now live longer, healthier, and more productive lives than ever before. Japan is of course leading the way. We are better educated and better informed than at any time in history. There has never been a better place right? A better time to be alive, right here, right now. We all know this.

So why are so many people so angry, and why is globalization under unprecedented threat? 

Why are citizens in country after country bitterly casting aside both governing and opposition parties in favor of political disruptions?

At this moment in history, why is there so much alarm?

Because this IS a moment of transformation, and uncertainty. In much of the world, the lightning-fast, cross-border flows of ideas, information, people, money, goods and services—the same forces that have created so much opportunity —also generate fear. 

Fear that the world now becomes more complicated and more dangerous in real time. Fear that the world we knew is gone for good, and fear that no one is willing or able to do anything about it.

And I want to talk with you today about why all this is happening, and why it’s so vitally important that we’re having this conversation at this moment—and in the heart of this great country.

Japan of course is both blessed and burdened by its unique place in this G-Zero world. Japan has the political stability, has the foresight, and has the technological talent to help lead the world into a brighter future than the one if we are being honest than we currently face. We all have reason to hope that Japan’s leaders, its companies, its political will, and most importantly its citizens will help lead the transition toward a new order, one in where human ingenuity, moral imagination, and courage can help all of us meet the challenges to come. 

The Geopolitical Recession

When I started Eurasia Group in 1998, people were interested almost exclusively in the emerging-markets, because they were countries that presented big growth and political challenges. 

Back then, I defined an emerging market as “a country where politics matters at least as much as economic fundamentals for market outcomes.” Countries like Japan, the United States, Canada, and the leading nations of Western Europe were much more stable and predictable in their politics, but they are also more modest in terms of growth.

Those days are gone. The financial crisis of 2008 and the turmoil that followed have brought politics directly into the performance of economies and markets in even the world’s richest countries.

We also face a growing number of transnational threats. The US-led global order is finished. That is not about who the president is, that is a structural reality. And so many of the dark clouds that is now hanging over us—from climate change to cyber-conflict, from terrorism to the post-industrial revolution—move unchecked across borders, leaving national governments much less able to meet the needs of our citizens.

Today, it is not economics but geopolitics that has become the main driver of global economic uncertainty, for the first time in my lifetime. The world has entered a “geopolitical recession,” not a boom but a bust cycle for the international system and for relations among governments. This is a time when alliances, and institutions, and the values that bind them all together are coming apart.

From an historical perspective, geopolitical recessions are both rarer than economic recessions they are also longer-lasting. And I do believe we’ll be living in this geopolitical recession for at least a decade to come.

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So how did we get here?

Economists tell us that the process of “creative destruction” fuels the engine of growth that builds the future, and history says that’s true. But lives and livelihoods are destroyed in the process, and growing numbers of people say their government is either powerless to help them manage or doesn’t care what happens to them. Resentment of elites is on the rise in every region of the world today. The system is rigged against them, they believe; it’s increasingly hard to argue that they’re wrong.

This is creating opportunities for a new breed of populist leader that offers scapegoats and promises of protection. And it’s clear these politicians did not invent this problem. They’re just profiting from it. 

And the greatest worry is this: All this anger is building in good economic times. What happens when economies start to slow?

History shows that governments that are unpopular at home are more likely to make trouble abroad, especially with their neighbors, to rally public support and divert attention from domestic troubles. That breeds less trust among governments. The risk of misunderstanding rises. Accidents are more likely—and more likely when they happen to escalate toward conflict.

There are three implications to consider…

The first is “tail risks,” what we call the low-likelihood-but-high-impact events that have become commonplace in a world that is reshaped by China’s rise, Middle East turmoil, populist Europe, revanchist Russia, maximally divided America, a world-record 71 million displaced people, and the destabilizing effects of technological and climate changes.  

Imagine a military accident in the South China Sea, at a time when the US and Chinese presidents are locked in a war of wills over trade and technology, and determined to project strength at home, that spirals out of control.

Turn to the Middle East—the US has you know confronted Iran. Since President Trump withdrew unilaterally the US from the Iran nuclear deal and then re-imposed sanctions, Iran’s economy has deteriorated. They then have taken bold action action—including a strike on the heart of Saudi oil infrastructure. Washington responded by sending troops to Saudi Arabia ,that’s a move you might remember, that sharply increased the risk of terrorism in the United States just a generation ago. 

What if President Trump is defeated for re-election next year, and North Korea’s Kim Jong-un discovers the next US president won’t accept his calls? “Want do a summit?” What provocative action might he take? What accidents might he risk?

What if a debt crisis hits Italy, created when a future Italian government defies EU budget rules and creates a financial crisis too large for lenders to manage? Or a miscalculation in Ukraine pulls Russia into a shooting war? Or a perhaps more likely US-Russia cyber confrontation around US elections hits critical infrastructure, creating a humanitarian crisis inside an American city?

The lack of coordinated leadership in today’s world, our G-zero world, makes all of these crises both more likely to happen and more difficult to manage when they do. Individually, they are long-shots. We wouldn’t expect any of them but collectively, they pose unprecedented danger.

The second implication of the geopolitical recession is the breakdown of our international institutions. 

The tens of millions of displaced people around the world today create one of the most urgent and expensive problems that the United Nations has had to cope with in its history. Yet, even as national governments are less willing to welcome big numbers of refugees, even fewer are willing to invest more to support the UN Refugee Agency. 

We see the fragmentation of European institutions as voters send growing numbers of anti-EU politicians to serve in the European parliament. There is nothing close to consensus among Europeans on free movement of EU citizens across borders today, on how to manage the immigrants they have from outside the EU, or on important questions like how best to manage relations with Russia.

The Trump administration has threatened the coherence of NATO, the most successful military alliance in history and from last week you see the French President Macron certainly seems to agree, and has withdrawn the United States from the Trans-Pacific Partnership trade deal, he withdrawn the Intermediate-Range Nuclear Forces treaty “INF” with Russia, the UN Human Rights Council, and the Paris Climate Accord, to name only a few.

The inevitable consequence of all this is a world that has become more unpredictable, it’s the world that has become less safe.

There is really little chance in this environment to establish new agreements and new institutions to help manage tomorrow’s crises.

Instead, individual governments will adopt their own rules in an attempt to contain challenges that don’t respect borders. They will threaten economic penalties and military retaliation in a world with fewer institutions able to enforce generally accepted rules and practices.

And then the last implication of the geopolitical recession: The weakness of today’s international system not only leaves the world more vulnerable to crisis, but less resilient when that crisis comes. In recent years, we’ve been fortunate to avoid any major international crisis. We’ve seen Brexit still going after 3 years, we’ve seen the election of Donald Trump, the growth of populism across Europe, Russia’s bid to undermine Ukraine’s sovereignty independence, Xi Jinping’s consolidation of power in China, a meltdown in Venezuela, and plenty of individual fires across the Middle East and now in democracies across the world. But we have not yet experienced anything during this period that poses a challenge to the international system, and the global economy has remained relatively robust.

Our luck won’t last.

There is one superpower in today’s world, one country that can project political, economic, and military power into every region. That superpower is still the United States.

And that’s why it should matter so much that Americans themselves no longer agree on what role their country should play in the world. Everywhere I travel, including here in Japan, I hear questions and concerns about President Donald Trump. As if he would be the true source of all this confusion. As if his departure from the political stage, either next year or in five, would set America and the world on a path back toward some idea of normal.

That’s not going to happen, because Donald Trump is a symptom, not a source, of this anxiety and confusion. Yes, it is Trump who questions the value of NATO and whether US troops should be stationed abroad. Trump is the one who suggests Japan and South Korea should develop nuclear weapons of their own, the one who has declared trade war on China, while threatening Europe, Japan, Mexico, and even Canada.

Honestly, who threatens Canada?

But step back a dozen years and think about why Barack Obama was elected president in the US. After eight years of George W. Bush’s war on terror, it was Obama that promised to end the wars in Iraq and Afghanistan—and not to start new ones. Other Democrats, including Hillary Clinton, who ran against them, were tainted in the minds of many Americans by their support for the war on Saddam Hussein.

Step back further. In 1992, Bill Clinton promised that the end of the Cold War meant the end for the US of Cold War burdens. Clinton promised a “peace dividend,” money no longer needed to defeat the Soviets could instead be invested in strengthening America at home.

Let’s be honest. Americans don’t want to run the world. They haven’t for a long time. 

And with each passing year, there are fewer Americans old enough to remember the Cold War, say nothing of World War II. In fact, there are now American soldiers on the ground in Afghanistan who were not even born on September 11, 2001.

The reluctance of the United States as superpower creates a global vacuum of leadership. And no one is stepping up to take that role in the way that, more than a century ago, America emerged just as the sun began to set on the British Empire. 

Europe remains profoundly preoccupied, particularly over economic issues dividing north and south and political issues dividing east and west. And while President Xi Jinping has declared a new era for China in the world, an extraordinarily change from Beijing, no question, China’s leadership remains fundamentally cautious when it comes to accepting heavy international burdens.

That’s why, when it comes to international leadership, Beijing will not soon become any more reliable a provider of public goods than Washington.  

And why a future crisis will be so hard to manage.

Fallout for globalization

Then there is the impact of global recession, geopolitical recession on globalization itself.

And it’s mixed. Globalization has changed our understanding of how things are made and how we might live. Around the world, we celebrate our national holidays with fireworks made in China. The customer service calls we make to fix our computers are answered in India. Our cars are made from parts that come from dozens of countries including Japan. We are all globally integrated. It is no longer meaningful to say where our products are produced.

And, until recently, politics hasn’t played a big part in those processes. That’s no longer true.

There is no longer a global free market. China, soon to be the world’s largest economy, and it practices state capitalism, which is a system that allows government officials to ensure that economic growth ultimately serves political and national interests.

China’s state capitalist system distorts the workings of a market-driven economy by relying on state-owned enterprises and state-backed national champions to ensure economic—and therefore critically political stability. It depends on state subsidies that allow political officials to direct enormous capital and other resources as they choose. The government picks winners and losers.

The success of this system for China and the Chinese Communist Party is undeniable. The good news, it really is, good news for the rest of us is that Chinese growth has supported global growth. Crucially, the hybrid global economy it has created does not end globalization. Both free market and state capitalist systems still enable goods and capital to move around the world.

But the future of globalization is not so simple. Different parts of the global economy are adapting to the end of the US-led global order in very different ways.

The marketplace for commodities—especially food, metals, and energy—is actually becoming more globalized. US and Chinese tariffs dominate the headlines, for as long as they last, but the bigger story is the expansion of global commodity markets.

New technologies are making energy production more efficient and lowering costs at a faster pace than politics makes them higher. That’s why, even after a dramatic missile strike earlier this year against Saudi oil infrastructure took half of their oil offline, the resulting jump in oil prices left them at levels half of what they were in 2008.

With more than a billion people entering a global middle class over the past two generations, and the pace of that growth driving globalization. The commodities market being more global will only continue. 

The market for goods and services, on the other hand, is becoming less global. That’s in part because the role of labor in production is shrinking dramatically, new technologies bring automation and machine learning into the workplace. Manufacturers want to produce where production is least expensive. That is not going change. What has changed is the search for cheap labor, because the rise of middle classes in all these emerging market all over the world has increased wages. Giving producers good reason to automate production. 

Further, the growth in populism we’ve seen is being driven in part by anger over job losses. That means that political officials are more likely to build barriers designed to protect local jobs rather than to restrict the flow of trade. 

These trends will shorten global supply chains for goods and services over time. It won’t happen immediately, because CEOS don’t want to make difficult decisions until they have to. But as the global economy weakens, those executives will increasingly produce goods and services where the customers are and supply chains will pull back a bit.

But finally and critically, as I said in the beginning of the speech, there is the global market for data and information. And this market is breaking in two. It is no longer global NOW. The Worldwide Web was driven by a single set of standards and rules. With very few exceptions, one consumer had virtually the same access as another. That’s gone.

Today, China and the United States are building two distinct and competitive online ecosystems. That’s true for the transformation of today’s internet, but also for the internet of things. The American tech ecosystem, with all its strengths and all the shortcomings, is built by the private sector and loosely regulated by the government. The Chinese system is dominated by the state. That’s true for big data collection, it’s true for development of artificial intelligence, it’s true for the rollout of 5G cellular network technology, and for defense and retaliation against cyberattacks.

This leaves us with a very big question: Where exactly will the new Berlin Wall stand? Because we are building it. Where will we find the boundary between one technological system and the other? Will Europe align with the United States? Or will the EU fragment into individual decisions taken by individual countries? How about India, South Korea, Brazil? What pressures will Japan face?

There is another fundamental question which is about the United States. Will the US-led data and information model continue to be driven by the private sector? It’s not clear. Maybe future fears for national security allow for the creation of a “tech-based military industrial complex” in the US?

The answers to these questions carry big implications. And the markets for commodities, goods, and services, global players are competitors and potential partners. Each player wants more market-share, but everyone benefits from an open trading system that creates opportunities for all of us. Trade wars can be launched to achieve goals, but it’s not a zero-sum. Business as usual promises something for everyone. That’s a critical support for global peace and global prosperity. 

This is no longer true in the data and information economy. Here, much as in the US-Soviet Cold War, the existence of two competing systems limits commercial opportunities and threatens all of our national security. Each side’s hoped-for outcome is the elimination of the other system.

America and China

Which means we should now talk about China and the United States. 

What should the rest of the world want from China? We should want it to succeed. The world needs China to remain stable, productive, and increasingly prosperous to fuel global growth. We need China to play a constructive international role, even if for now it’s a limited one. We need China to work with other governments to meet the challenges posed by poverty, conflict, public health risks, lack of education, lack of infrastructure, climate change, and even the advance of disruptive new technologies. And, of course, we need these things from the United States too. 

The threat China poses to the US is smaller than many in Washington believe. China has even less interest in going to war with the United States than the US has in going to war with China. China remains a regional, but not a global, military power. Economic interdependence as I mentioned, will continue, between the two countries that ties are strong despite concerted efforts on both sides to reduce economic vulnerabilities.

The greatest source of US-China conflict comes from technology. Here, China is, today, a true superpower. Here, there is a Cold War structure to the relationship that will affect every region of the world. Here, the US does have an interest in seeing China fail, because China’s technological development poses a foundational challenge to the values on which global stability and prosperity depend. 

This is a subject where America’s Democrats and Republicans actually agree. Imagine that.

The stakes are real. The idea of a Splinternet, the creation of parallel technology ecosystems, isn’t just a threat to globalization. It’s also a competition that those who believe in political freedoms might actually lose.

So what should we do?

Let me offer two proposals. The first is the creation of an organization equivalent to the UN’s Intergovernmental Panel on Climate Change, that’s the body that is objectively assessing the world’s vulnerability and responses to climate change. We need a similar group to establish ground rules for our digital world, the data and artificial intelligence that fuel it, and its future development.

We also need a digital WTO, a World Data Organization. As with the WTO, uniting governments that believe in online openness and transparency in an organization that China will ultimately have an incentive to want to join, especially if it’s the only way that China can access to developed markets. Carrots will ultimately work better than sticks.

America, Europe, Japan, and like-minded willing-and-able partners can work together to set future standards for artificial intelligence, data, privacy, citizens’ rights, and intellectual property. Develop a permanent secretariat to determine these global norms together, develop a judiciary mechanism to enforce them. The Americans have the companies, innovation and startups. But Europeans have regulatory superpower that the US does not have. And Japan has the principle laboratory for a world that needs to see how AI can improve people’s lives without destroying the foundation of capitalism.

That is a strong combination ant that’s how we can address the US-China technology cold war.

There is one area where Chinese cooperation with the West is right now more feasible, and that combats the advance of climate change. What we need is a “Green Marshall Plan,” a mainly Western-funded project that includes the best ideas of private sector thinkers and state-funded scientists from the West and China on how to make the policy changes and invent the technologies to clean the world’s air and water and limit the damage inflicted by climate change. 

Right now in the US we are talking about “Green New Deal” but it presupposes that the US can solve our own climate problems. We can’t. China is the world’s No. 1 emitter of carbon, by a wide margin, and China shares an interest perhaps the strongest interest in fighting climate change with the rest of the world. It isn’t just New York and Tokyo that face the coming storms and rising seas. It’s Shanghai too.

Japan’s Global Role

But to be clear in GZERO world, right now we are not heading towards either of those solutions. We are heading away from them. We have to be honest. So finally I want to talk in my last few moments about Japan. 

I have believed for a long time, and my friend Nakanishi-san has already said this that the GZERO Summit must take place in the great city of Tokyo. In the international drama I’ve described, the world needs Japan to play a unique role—a leading role. 

Japan is today, in a world where politics is driven by partisan grievance, the world’s healthiest advanced industrial democracy. Japan has the strongest political leadership. Despite the many controversies in Japanese life, this is the one country that has defied the global trend toward polarization.

It is the fairest and most equal society among major industrialized nations. Japan’s institutions have greater domestic politically legitimacy than any other country. Many years of personal experience have taught me that Japan’s private sector is still innovative and dynamic. In a world where governments have repeatedly failed to protect the long-term security and prosperity of their citizens, Japan actually has social safety net that works. That has never been more important.

It’s true Japan still needs the surge of talent, creativity, and hard work that comes from welcoming far more women into the workforce, including in senior positions. And yes, Japan’s challenge of managing unsustainable public debt continues. 

But Japan’s undeniable advantages will help this country offer the world much-needed leadership. Prime Minister Abe’s recent engagement with political and business leaders in India, Germany, Iran, and many governments in Africa show the beginnings of what is possible if Japan seizes the chance to help the world meet the challenges I’ve been talking about. And because Japan has the opportunity, we should recognize that it has an obligation. 

There are five areas I think Japanese leadership is most badly needed:

1. Japan can guide the world toward sustainable economic growth. The cost of “growth at all costs,” has become shamefully obvious. The pollution of our air, water, and soil; the advance of climate change; and the failure of governments to protect the social contract. The world needs a model of “sustainable capitalism.” Japan’s quest for Society 5.0, one built on a foundation of machine learning, robotics, and other innovations for enriching human lives provides opportunities for Japan’s government and industry to show us a way forward that won’t take us over a cliff. 

2. Japan can boost cooperation and limit conflict between China and the US. No one has more interest to do this than Japan. These two countries occupy the center of our future international system, but Japan stands in a unique position to give each side more incentive to coordinate in areas where their interests coincide and to avoid worst-case confrontations where they compete.

3. Japan can bolster multilateral institutions. I believe Japan should join the Asia Infrastructure Investment Bank and push to make that institution more central to China’s Belt and Road Initiative. This would be good for Japan and Japanese companies and good for the world. And further, Japan should work to persuade America to join too. More broadly, Japan should work with Germany, Canada, and other likeminded governments to defend existing international institutions and to participate fully in global rule-making for trade, data transfer, and innovation. The leadership that Japan has already demonstrated in making the TPP a reality proves this is possible. 

4. Japan can continue work on a cyber coordination and monitoring center that promotes and directs investment in Research and Development that was cut during its recession. It can accomplish this in cooperation with the countries that are part of the “Five Eyes” intelligence alliance, which Japan should be allowed to join along with Germany.

5. Japan can lead the way in providing, and coordinating the distribution of, humanitarian aid in a world that desperately needs it. As one of the wealthiest countries in the world, Japan has the influence and credibility and history to coordinate efforts to help people and governments in need. Japan’s industrial sector can offer both leadership and advanced technological solutions to promote sustainable development of global societies, particularly in the areas of healthcare, smart cities, and the redesign of the workplace.

The End of the American Order

So finally, as we look toward the future of relations among nations, there is one prediction we can make with certainty: No matter what happens in next year’s elections in my country, no matter who is president or which party is in power, the American-led order is finished. It is not coming back. I’m not happy to say it.

But it’s very important to recognize that the aspirations that this order represents for many people remain. 

These aspirations, these values, were not invented in the United States. They are not “Western.” They are not just product of Europe’s Enlightenment. The drive for liberty, fairness, drive for rule of law, freedom of expression, and the undeniable human drive for openness and exploration, they are universal.

America can no longer claim to be the primary driving force in the world in defense of these values. We, the US have our role to play. So do Europeans. So do the people of Japan. And inside China, inside Russia, inside Egypt, and Saudi Arabia and Iran, inside countries large and small, there are so many people hungry for the chance to become captains of their own fate.

Competition and conflict among nations is inevitable. The warming of the planet and the rise of artificial intelligence are bringing existential challenges that the world has never faced before.

But we live in a G-zero world, a world without leadership that people can trust and count on. It’s up to all of us to help fill that void. People in positions of power. People in positions of influence. People in this room right now.

It’s always an enormous privilege to come to Japan. And I want to thank all of you for listening to me today. Thank you very very much

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