COURSE MATERIAL REVIEW 2

54 I PART I Visions of War and Peace

expansion of the military strength of Confucian and Islamic states; to moder- ate the reduction of Western military capabilities and maintain military supe- riority in East and Southwest Asia; to exploit differences and conflicts among Confucian and Islamic states; to support in other civilizations groups sympa- thetic to Western values and interests; to strengthen international institutions that reflect and legitimate Western interests and values and to promote the involvement of non-Western states in those institutions.

In the longer term other measures would be called for. Western civilization is both Western and modern. Non-Western civilizations have attempted to become modern without becoming Western. To date only Japan has fully succeeded in this quest. Non-Western civilizations will continue to attempt to acquire the wealth, technology, skills, machines and weapons that are part of being modern. They will also attempt to reconcile this modernity with their traditional culture and values. Their economic and military strength relative to the West will in- crease. Hence the West will increasingly have to accommodate these non-West- ern modern civilizations whose power approaches that of the West but whose values and interests differ significantly from those of the West. This will require the West to maintain the economic and military power necessary to protect its interests in relation to these civilizations. It will also, however, require the West to develop a more profound understanding of the basic religious and philosophi- cal assumptions underlying other civilizations and the ways in which people in those civilizations see their interests. It will require an effort to identify elements of commonality between Western and other civilizations. For the relevant future, there. will be no universal civilization, but instead a world of different civiliza- tions, each of which will have to learn to coexist with the others.

I magine that it is January 2000, and you ask a fortune-teller to predict the course of the global economy over the next several years. Let's say that you give him some clues, to help him gaze into his crystal ball. The United States

will be hit by the worst terrorist attack in history, you explain, and will respond by launching two wars, one of which will go badly awry and keep Iraq-the country with the world's third-largest oil reserves-in chaos for years. Iran will gain strength in the Middle East and move to acquire a nuclear capabil- ity. North Korea will go further, becoming the world's eighth declared nuclear power. Russia will turn hostile _and imperious in its dealings with its neighbors and the West. In Latin America, Hugo Chavez of Venezuela will launch the most spirited anti-Western campaign in a generation, winning many allies and fans. Israel and Hezbollah will fight a war in southern Lebanon, destabilizing

From The Post-American World by Fareed Zakaria. Copyright© 2008 by Fareed Zakaria. Used by permission of W. W. Norton and Company, Inc.

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FARE ED ZAl<ARIA / Economics Trumps Politics 55

Beirut's fragile government, drawing in Iran and Syria, and rattling the Israelis. Gaza will become a failed state ruled by Hamas, and peace talks between Israel and the Palestinians will go nowhere. "Given these events," you say to the sage, "how will the global economy fare over the next six years?"

This is not really a hypothetical. We have the forecasts of experts from those years. They were all wrong. The correct prediction would have been that, between 2000 and 2007, the world economy would grow at its fastest pace in nearly four decades. Income per person across the globe would rise at a faster rate (3.2 percent) than in any other period in history.

In the two decades since the end of the Cold War, we have lived through a paradox, one we experience every morning when reading the newspapers. The world's politics seems deeply troubled, with daily reports of bombings, terror plots, rogue states, and civil strife. And yet the global economy forges ahead, not without significant interruptions and crises, but still vigorously upward on the whole. Markets do panic but over economic not political news. The front page of the newspaper seems unconnected to the business section ....

What explains this mismatch between a politics that spirals downward and an economy that stays robust? First, it's worth looking more carefully at the cascade of bad news. It seems that we are living in crazily violent times. But don't believe everything you see on television. Our anecdotal impression turns out to be wrong. War and organized violence have declined dramati- cally over the last two decades. Ted Robert Gurr and a team of scholars at the University of Maryland's Center for International Development and Conflict Management tracked the data carefully and came to the following conclusion: "the general magnitude of global warfare has decreased by over sixty percent [since the mid-1980s], falling by the end of 2004 to its lowest level since the late 1950s." Violence increased steadily throughout the Cold War-increasing sixfold between the 1950s and early 1990s-but the trend peaked just before the collapse of the Soviet Union in 1991 and "the extent of warfare among and within states lessened by nearly half in the first decade after the Cold War." Harvard's polymath professor Steven Pinker argues "that today we are probably living in the most peaceful time in our species' existence .... "

It feels like a very dangerous world. But it isn't. Your chances of dying as a consequence of organized violence of any ¼ind are low and getting lower. The data reveal a broad trend away from wars among major countries, the kind of conflict that produces massive casualties ....

THE ISLAMIC THREAT Islamic terror, which makes the headlines daily, is a large and persistent prob- lem, but one involving small numbers of fanatics. It feeds on the dysfunctions of the Muslim world, the sense (real and imagined) of humiliation at the hands of the West, and easy access to technologies of violence. And yet, does it rank as a threat on the order of Germany's drive for world domination in the first half of the twentieth century? Or Soviet expansionism in the second half? Or Mao's

561 PART I Visions of War and Peace

efforts to foment war and revolution across the Third World in the 1950s and 1960s? These were all challenges backed by the power and purpose of ma- jor countries, often with serious allies, and by an ideology that _was see1:1: as a plausible alternative to libe:ral democracy. By comparison, consider the Jihad- ist threat. Before 9/11, when groups like Al Qaeda operated under the radar, governments treated them as minor annoyances, and they roamed freely, built some strength, and hit symbolic, often military targets, killing Americans and other foreigners. Even so, the damage was fairly limited. Since 2001, govern- ments everywhere have been aggressive in busting terrorists' networks, follow- ing their money, and tracking their recruits-with almost immediate results. In Indonesia, the largest Muslim nation in the world, t~e government ~apture? both the chief and the military leader of Jemaah Islamiah, the country s deadli- est jih~dist group and the one that carried out the Bali bombings i? 2002: With American help, the Filipino army battered the Qaeda-style terronst outfit Abu Sayyaf. The group's leader was killed by Filipino troops in Janua~y 20?7, and its membership has declined from as many as two thousand guernllas six years ago to a few hundred today. In Egypt and Saudi Arabia-Al Qaeda's original bases and targets of attack-terrorist cells have been rounded up, and those still at large have been unable to launch any new attacks in three years. Fi?ance ministries-especially the U.S. Department of the Treasury-have made life far more difficult for terrorists. Global organizations cannot thrive without being able to move money around, and so the more terrorists' funds are tracked and targeted, the more they have to resort to small-scale and_ hastil_y imp~ovised operations. This struggle, between governments and terronsts, will persist, but it is the former who have the upper hand ....

Here is the bottom line. In the six years since 9/11, Al Qaeda Central- the group led by Osama bin Laden and Ayman Zawahiri-has been unable to launch a major attack anywhere. It was a terrorist organization; it has become a communications company, producing the occasional videotape rather than actual terrorism. Jihad continues, but the jihadists have had to scatter, make do with smaller targets, and operate on a local level-usually through groups with almost no connection to Al Qaeda Central. And this improvised strategy has a crippling weakness: it kills locals, thus alienating ordinar~ Muslims-a pro~ cess that is well underway in countries as diverse as Indonesia, Iraq, and Saudi Arabia. Over the last six years, support for bin Laden and his goals has fallen , steadily throughout the Muslim world. Between 2002 and 2007, approval of suicide bombing as a tactic-a figure that was always low-has dropped by over 50 percent in most Muslim countries that have been tracked. There have been more denunciations of violence and fatwas against bin Laden than ever

· before, including from prominent clerics in Saudi Arabia. Much more must happen to modernize the Muslim world, but the modernizers are no longer so scared. They have finally realized that, for all the rhetoric of the madrassas and mosques, few people want to live under the writ of Al Qaeda. Those who have, whether in Afghanistan or Iraq, have become its most dedicated opponents. In contrast to Soviet socialism or even fascism in the 1930s, no society looks with admiration and envy on the fundamentalist Islamic model. On an ideological

FAREED ZAl<ARIA / Economics Trumps Politics 57

level, it presents no competition to the Western-originated model of modernity that countries across the world are embracing ....

The ideological watchdogs have spent so much time with the documents of jihad that they have lost sight of actual Muslim societies. Were they to step back, they would see a frustration with the fundamentalists, a desire for modernity (with some dignity and cultural pride for sure), and a search for practical solutions-not a mass quest for immortality through death. When Muslims travel, they flock by the millions to see the razzle-dazzle of Dubai, not the seminaries of Iran. The minority that wants jihad is real, but it op- erates within societies where such activities are increasingly unpopular and irrelevant ....

The challenges from rogue states are also real, but we should consider them in context. The GDP of Iran is 1/68 that of the United States its mili-

' tary spending 1/110 that of the Peptagon. If this is 1938, as many conserva- tives argue, then Iran is Romania, not Germany North Korea is even more bankrupt and dysfunctional. Its chief threat-the one that keeps the Chinese government awake at night-is that it will implode, flooding the region with refugees. That's power? These countries can cause trouble in their neighbor- hood and must be checked and contained, but we need to keep in mind the larger world of which they are a relatively small part. Look at Latin America. Venezuela is a troublemaker, but what has that meant on the ground? The broad trend in the region-exemplified by the policies of the major countries like Brazil, Mexico, and Chile-has been toward open markets trade dem-

' ' ocratic governance, and an outward orientation. And that trend, not Hugo Chavez's insane rants, represents the direction of history.

THE GREAT EXPANSION Today's relative calm has a deep structural basis. Across the world, economics is trumping politics. What Wall Street analysts call "political risk" has been almost nonexistent. Wars, coups, and terrorism have lost much of their ability to derail markets more than temporarily. Again, this may not last (it has not historically), but it has been the world we have lived in for at least a decade.

This is not the first time that political tumult and economic growth have come together. Two earlier periods seem much like ours: the turn-of-the- century boom of the 1890s and 1900s, and the postwar boom of the 1950s and early 1960s. In both, politics was turbulent and yet growth was robust. These two periods had one feature in common: large countries were entering the world economy, increasing its size and changing its shape. The expansion of the pie was so big that it overwhelmed day-to-day dislocations ....

We are living through the third such expansion of the global economy, and by far the largest. Over the last two decades, about two billion peo- ple have entered the world of markets and trade-a world that was, until recently, the province of a small club of Western countries. The expansion was spurred by the movement of Western capital'to Asia and across the globe. As a result, between 1990 and 2007, the global economy grew from

581 PART I Visions of War and Peace

$22.8 trillion to $53.3 trillion, and global trade increased 133 percent. The so-called emerging markets have accounted for over half of this global growth, and they now account for over 40 percent of the world economy measured at purchasing power parity (or over 30 percent at market exchange rates). Increasingly, the growth of newcomers is being powered by their own markets, not simply by exports to the West-which means that this is not an ephemeral phenomenon. .

Some people dismiss such trends by pointing to the rise of Japan m the 1980s, when Westerners were scared that the Japanese would come to dominate the world economy. That turned out to be a phantom fear: Japan in fact went into a fifteen-year slump. But the analogy is misleading. In 1985, Japan was already the second-largest economy in the world. Many experts believed it was on track to unseat the United States as the larg- est but because Japan's economy, institutions, and politics were still not fully modernized, the country. could not make that final leap. China, by contrast, is still a poor country. It has a per capita GDP of $2,500. It will certainly face many problems as and when it becomes a first-world co~n- try. But, for the foreseeable future, it will surely manage to double the size of its economy just by continuing to make toys and shirts and cell phones. India, starting at an even lower base income, will also be able t? grow for several decades before hitting the kinds of challenges that derailed Japan. Even if India and China never get past middle-income status, they are likely to be the second- and third-largest economies in the world for much of the twenty-first century ....

THE THREE FORCES: POLITICS, ECONOMICS, AND TECHNOLOGY How did all this come to be? To answer that question, we have to go back a few decades, to the 1970s, and recall the way most countries ran their econo- mies at the time. I remember the atmosphere vividly because I was growing up in India a country that really didn't think it was playing on the same field as the Uni;ed States. In the minds of India's policy and intellectual elites, there was a U.S.-led capitalist model on one end of the spectrum and a Soviet-led socialist model on the other. New Delhi was trying to carve a middle way between them. In this respect, India was not unusual. Brazil, Egypt, and Indonesia-and in fact, the majority of the world-were on this middle path. But it turned out to be a road to nowhere, and this was becoming apparent to many people in these countries by the late 1970s. As they stagnated, Japan and a few other East Asian economies that had charted a quasi-capitalist course succeeded conspicuously, and the lesson started to sink in.

But the earthquake that shook everything was the collapse of the Soviet Union in the late 1980s. With central planning totally discredited and one end of the political spectrum in ruins, the entire debate shifted. Suddenly there was only one basic approach to organizing a country's economy. This is

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why Alan Greenspan has described the fall of the Soviet Union as the seminal economic event of our time. Since then, despite all the unease about various liberalization and marketization plans, the general direction has not changed. As Margaret Thatcher famously put it in the years when she was reviving the British economy, "There is no alternative."

The ideological shift in economics had been building over the 1970s and 1980s even before the fall of the Berlin Wall. Conventional economic wisdom embodied in organizations such as the International Monetary Fund and the World Bank, had become far more critical of the quasi-socialist path of countries like India. Academic experts like Jeffrey Sachs traveled around the world advising governments to liberalize, liberalize, liberalize. Graduates of Western economics programs, such as Chile's "Chicago Boys," went home and implemented market-friendly policies. Some developing countries worried about becoming rapacious capitalists, and Sachs recalls explaining to them that they should debate long and hard whether they wanted to end up more like Sweden, France, or the United States. But, he would add, they didn't have to worry about that decision for a while: most of them were still much closer to the Soviet Union.

The financial force that has powered the new era is the free movement of capital. This, too, is a relatively recent phenomenon. The post-World War II period was one of fixed exchange rates. Most Western countries, including France and Italy, had capital controls restricting the movement of currency in and out of their borders. The dollar was pegged to gold. But as global trade grew, fixed rates created frictions and inefficiencies and prevented capital from being put to its best use. Most Western countries removed controls dur- ing the 1970s and 1980s. The result: a vast and ever-growing supply of capital that could move freely from one place to the next. Today, when people think about globalization, they still think of it mostly in terms of the huge amount of cash-currency traders swap about $2 trillion a day-that sloshes around the globe, rewarding some countries and punishing others. It is globalization's celestial mechanism for discipline ....

THE PROBLEMS OF PLENTY I

For the last two decades, we have spent much time, energy, and attention worrying about crises and breakdown in the global economy and terrorism, nuclear blackmail, and war in geopolitics., This is natural-preparing for the worst can help avert it. And we have indeed had bad news-from wars in the Balkans and Africa, to terrorism around the world, to economic crises in East Asia, Russia, and-most dangerously-the United States. But focusing on the gloom has also left us unprepared for many of the largest problems we face: 7:1hich are the product not of failure but of success. The fact that we are living m a world of synchronous global growth is good news, for the most part, but it is also raising a series of complex and potentially lethal dilemmas ....

It's not just oil that has become more expensive. Commodity prices are at a 200-year high. Raw materials of all kinds are increasingly dear. Agricultural

60 j PART I Visions of War and Peace

produce is now so expensive that developing countries face a growing po- litical problem of how to respond to food inflation. The cost of construction has exploded from New York to Dubai to Shanghai. Even the humble gas, helium, which is used not merely in party balloons but also in MRI machines and microchip factories, is in short supply globally-and it's the second-most- abundant element in the universe. These pressures will surely at some point end the era of low inflation that has undergirded global prosperity.

Meanwhile, robust growth has also produced a number of anomalies. Within an increasingly globalized and disciplined world, certain countries- those endowed with natural resources, especially petroleum and natural gas- are getting free rides. They are surfing the wave of global growth, getting rich without having to play by most of the rules that govern the global economy. This phenomenon is the strange but inevitable outgrowth of the success of everyone else. These countries are the nonmarket parasites on a market world.

Consider the principal political challenges to the United States and to Western ideas of international order. In the Middle East they come from Iran, in Latin America from Venezuela, and in Eurasia from Russia. All have new- found strength built on oil. Sudan's ability to defy the world over Darfur is difficult to imagine absent its oil reserves. Petroleum brings in eye-popping amounts of cash. Iran's take from oil in 2006 amounted to $50 billion- enough to dispense patronage to interest groups, bribe the army, and stay in power while still having piles left over to foment trouble abroad. This situa- tion is unlikely to change. Resource-rich countries will thrive as long as the others are growing. It's the yin and yang of today's globalization ....

The most acute problem of plenty is the impact of global growth on natu- ral resources and the environment. It is not an exaggeration to say that the world is running out of clean air, potable water, agricultural produce, and many vital commodities. Some of these problems can be fixed-by improving efficiency and developing new sources of supply-but progress has been far too slow. Agricultural productivity, for example, is rising. But feeding a global population of eight billion, which we will get to by 2025, will require crop yields to reach four tons per hectare from only three tons today. Similarly, our ability to manage and conserve water is not growing nearly as fast as our con- sumption of it. World population tripled in the twentieth century, but water consumption increased sixfold. Americans use more than four hundred liters of water a day to drink, cook, and clean themselves. People in poorer coun- tries today are lucky to get forty, but as they g(!t richer, their rising demands will cause greater stress. Violent clashes over water have already broken out in Africa and the Middle East. Historically, populations have moved to find water; if water sources dry up in the future, tens of millions of people will be forced to start moving.

Over the last decade, many predictions about the effects of climate change have proven to be underestimates because global growth has exceeded all projections. The most recent assessment of the Intergovernmental Panel on Climate Change was released in mid-2007. By the year's end, scientists had shown that the polar ice caps are melting twice as fast as the report expected.

FARE ED ZAl<ARIA / Economics Trumps Politics 61

The~e is ~reate~ demand for electricity, more cars, and more planes than any- one _imagme~ fifteen years ago. And it keeps growing. The McKinsey Global Institute pro1ects that, from 2003 to 2020, the number of vehicles in China will rise from 26 million to 120 million. And then there's India Russia the Middle East. . . · ' '

THE RISE OF NATIONALISM In a globalized world, almost all problems spill over borders. Whether it's terr~ris~,. nuclear proliferation, disease, environmental degradation, eco- nomic_ cn~is, or water scarcity, no issue can be addressed without significant coordmat10n and cooperation among many countries. But while economics information: an1 even culture might have become globalized, formal politicai power remams firmly tethered to the nation-state, even as the nation-state has bec?me less able to solve most of these problems unilaterally. And increasingly, nat10n-states are becoming less willing to come together to solve common problems. As the number of players-governmental and nongovernmental- mcreases and each one's power and confidence grows, the prospects for agree- ment and common action diminish. This is the central challenge of the rise of the rest-to stop the forces of global growth froi;n turning into the forces of global disorder and disintegration. ·

The rise of pride and confidence among other nations, particularly the largest and most successful ones, is readily apparent. For me, it was vividly il- lu~trated a few y~ars ago in a~ Internet cafe in Shanghai, where I was chatting with a young Chmese executive. He was describing the extraordinary growth that was taking place in his country and a future in which China would be modern and prosperous. He was thoroughly Westernized in dress and demeanor, spoke excellent English, and could comfortably discuss the latest business trends or gossip about American pop culture. He seemed the consum- mate product of globalization, the person who bridges cultures and makes the wo_rld a smaller, more cosmopolitan place. But when we began talking about Taiwan, Japan, and the United States, his responses were filled with bile. He explained in furious tones that were Taiwan to dare to declare independence China should instantly invade it. He said that Japan was an aggressor natio~ that could neve~ be trusted. He was sure that the United States deliberately bo1;11-bed the Chmese embassy during the Kosovo war in 1999, to terrify the Chmese people with its military might. And so on. I felt as if I were in Berlin in 1910, speaking to a young German profrssional, who in those days would have also been both thoroughly modern and thoroughly nationalist.

As economic fortunes rise, so does nationalism. This is understandable. Im~gine that you lived in a country that had been poor and unstable for cen- tunes. And then, finally, things turn and your nation is on the rise. You would be P:oud and anxious to be seen. This desire for re~ognition and respect is surgmg throughout the world. It may seem paradoxical that globalization and economic modernization are breeding political nationalism, but that is so only

621 PART I Visions of War and Peace

if we view nationalism as a backward ideology, certain to be erased by the onward march of progress.

Nationalism has always perplexed Americans. When the United States involves itself abroad, it always believes that it is genuinely trying to help other countries better themselves. From the Philippines and Haiti to Vietnam and Iraq, the natives' reaction to U.S. efforts has taken Americans by surprise. Americans take justified pride in their own country-we call it patriotism- and yet are genuinely startled when other people are proud and possessive of theirs. '

In the waning days of Britain's rule in India, its last viceroy, Lord Louis Mountbatten, turned to the great Indian leader Mahatma Gandhi and said in exasperation, "If we just leave, there will be chaos." Gandhi replied, "Yes, but it will be our chaos." That sense of being governed by one's "own," without interference, is a powerful feeling in emerging countries, especially those that were once colonies or quasi-colonies of the West.

Zbigniew Brzezinski recently called attention to what he terms a "global political awakening." He pointed to rising mass passions, fueled by various forces-economic success, national pride, higher levels of education, greater information and transparency, and memories of the past. Brzezinski noted the disruptive aspects of this new force. "The population of much of the developing world is politically stirring and in many places seething with unrest," he wrote. "It is acutely conscious of social injustice to an unprecedented degree ... [and this] is creating a community of shared perceptions and envy that can be galva- nized and channeled by demagogic political or religious passions. These ener- gies transcend sovereign borders and pose a challenge both to existing states as well as to the existing global hierarchy, on top of which America still perches."

In many countries outside the Western world, there is pent-up frustration with having had to accept an entirely Western or American narrative of world history-one in which they either are miscast or remain bit players ....

Such divergent national perspectives have always existed, but today, thanks to greater education, information, and confidence, they are widely disseminated on new news networks, cable channels, and Internet sites of the emerging world. Many of the "rest" are dissecting the narratives, arguments, and assumptions of the West and countering them with a different view of the world. "When you tell us that we support a dictatorship in Sudan to have access to its oil," a young Chinese official told me in 2006, "what I want to say is, 'And how is that different from your support for a medieval monarchy in Saudi Arabia?' We see the hypocrisy, we just don't say anything, yet."

After the Cold War ended, there was a general hope and expectation that China and Russia would move inexorably into the post-World War II Western political and economic system. When George H. W Bush spoke of "a new world order," he meant simply that the old Western one would be extended worldwide. Perhaps this view stemmed from the postwar experience with Japan and Germany, both of which rose to the heights of economic power and yet were accommodating, cooperative, and largely silent members of the existing order. But perhaps those were special circumstances. The two

FAREED ZAl<ARIA / Economics Trumps Politics 63

countries had unique histories, having waged aggressive wars and become pariahs as a consequence, and they faced a new threat from Soviet commu- nism and relied on American military power for their protection. The next round of rising powers might not be so eager to "fit in."

We still think of a world in which a rising power must choose between two stark options: integrate into the Western order, or reject it, becoming a rogue nation and facing the penalties of excommunication. In fact, rising powers appear to be following a third way: entering the Western order but doing_ so ?n their own terms-thus reshaping the system itself. As the politi- cal sc1ent1sts Naazneen Barma, Ely Ratner, and Steven Weber point out, in a world where everyone feels empowered, countries can choose to bypass this Weste_rn "center" entirely and forge their own ties with one another. In a post- Amencan world, there may be no center to integrate into. U.S. Secretary of State James Baker suggested in 1991 that the world was moving toward a hub-and-spoke system, with every country going through the United States to get to its destination. The twenty-first-century world might be better described as one of point-to-point routes, with new flight patterns being mapped every day. (This is true even in a physical sense: in just ten years, the number of Russian visitors to China increased more than fourfold, from 489,000 in 1995 to 2.2 million in 2005.) The focus has shifted. Countries are increasingly inter- ested in themselves-the story of their rise-and pay less attention to the West and the United States. As a result, the urgent discussions on the presidential campaign trail throughout 2007 about the need to lessen anti-Americanism are somewhat off-point. The world is moving from anger to indifference, from anti-Americanism to post-Americanism ....

The traditional mechanisms of international cooperation are relics of a_nother era. The United Nations system represents an outdated configura- t10n of power. The permanent members of the UN Security Council are the victors of a war that ended sixty years ago. The body does not include Ja- pan or Germany the world's second- and third-largest economies (at mar- ket exchange rates), or India, the world's largest democracy, or any Latin American or African country. The Security Council exemplifies the antique structure of global governance more broadly. The G-8 does not include China, already the world's fourth-largest economyt or India and South Korea, the twelfth and thirteenth. By tradition, the IMF is always headed by a European and the World Bank by an American. This "tradition," like the customs of an old segregated country club, may be charming and amusing to insiders, but to outsiders it is bigoted and outrageous.

A further complication: when I writt; of the rise of nationalism I am describing a broader phenomenon-the assertion of identity. The n~tion- state is a relatively new invention, often no more than a hundred years old. Much older are the religious, ethnic, and linguistic groups that live within nation-states. And these bonds have stayed strong, in fact grown, as economic interdependence has deepened. In Europe, the Flemish and French in Belgium remain as distinct as ever. In Britain, the Scots have elected a ruling party that proposes ending the three-hundred-year-old Acts of Union that created the

64 I PART I Visions of War and Peace

United Kingdom of England, Scotland, and Wales. In India, national parties are losing ground to regional ones. In Kenya, tribal distinctions are becoming more important. In much of the world, these core identities-deeper than the nation-state-remain the defining features of life. It is why people vote, and what they die for. In an open world economy, these groups know that they need the central government less and less. And in a democratic age, they gain greater and greater power if they stay together as a group. This twin ascen- dancy of identity means that, when relating to the United States or the United Nations or the world at large, Chinese and Indian nationalism grows. But within their own countries, sub-nationalism is also growing. What is happen- ing on the global stage-the rise of identity in the midst of economic growth- is also happening on the local stage. The bottom line: it makes purposeful national action far more difficult ....

THE LAST SUPERPOWER Many observers and commentators have looked at the vitality of this emerg- ing world and concluded that the United States has had its day. Andy Grove, the founder of Intel, puts it bluntly. "America is in danger of following Europe down the tubes," he says, "and the worst part is that nobody knows it. They're all in denial, patting themselves on the back as the Titanic heads straight for the iceberg full speed ahead." Thomas Friedman describes watching waves of young Indian professionals get to work for the night shift at Infosys in Ban- galore. "Oh, my God, there are so many of them, and they just keep coming, wave after wave. How in the world can it possibly be good for my daughters and millions of other Americans that these Indians can do the same jobs as they can for a fraction of the wages?" "Globalization is striking back," writes Gabor Steingart, an editor at Germany's leading news magazine, Der Spiegel, in a bestselling book. As its rivals have prospered, he argues, the United States has lost key industries, its people have stopped saving money, and its govern- ment has become increasingly indebted to Asian central banks.

What's puzzling, however, is that these trends have been around for a while-and they have actually helped America's bottom line. Over the past twenty years, as globalization and outsourcing have accelerated dramatically, America's growth rate has averaged just over 3 percent, a full percentage point higher than that of Germany and France. (Japan averaged 2.3 percent over the same period.) Productivity growth, the elixir of modern economics, has been over 2.5 percent for a decade now, again a full percentage point higher than the European average. Even American exports held up, despite a decade-long spike in the value of the dollar that ended recently. In 1980, U.S. exports represented 10 percent of the world total; in 2007, that figure was still almost 9 percent. According to the World Economic Forum, the United States remains the most competitive economy in the world and ranks first in innovation, ninth in technological readiness, second in company spending for research and technology, and second in the quality of its research institutions.

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China does not come within thirty countries of the United States in any of these, and India breaks the top ten on only one count: market size. In virtually every sector that advanced industrial countries participate in, U.S. firms lead the world in productivity and profits.

The United States' share of the global economy has been remarkably steady through wars, depressions, and a slew of other powers rising. With 5 percent of the world's population, the United States has generated between 20 and 30 percent of world output for 125 years. There will surely be some slippage of America's position over the next few decades. This is not a po- litical statement but a mathematical one. As other countries grow faster, America's relative economic weight will fall. But the decline need not be large- scale, rapid, or consequential, as long as the United States can adapt to new challenges as well as it adapted to those it confronted over the last century. In the next few decades, the rise of the emerging nations is likely to come mostly at the expense of Western Europe and Japan, which are locked in a slow, demographically determined decline.

America will face the most intense economic competition it has ever faced. The American economic and social system knows how to respond and adjust to such pressures. The reforms needed are obvious but because they mean some pain now for long-term gain, the political system cannot make them. The more difficult challenge that the United States faces is international. It will confront a global order quite different from the one it is used to operating in. For now, the United States remains the most powerful player. But every year the balance shifts.

For the roughly two decades since 1989, the power of the United States has defined the international order. All roads have led to Washington, and American ideas about politics, economics, and foreign policy have been the starting points for global action. Washington has been the most power- ful outside actor on every continent in the world, dominating the Western Hemisphere, remaining the crucial outside balancer in Europe and East Asia, expanding its role in the Middle East and Central and South Asia, and every- where remaining the only country that can provide the muscle for any seri- ous global military operation. For every country-from Russia and China to South Africa and India-its most important relf;ltionship in the world has been the relationship with the United States.

That influence reached its apogee with Iraq. Despite the reluctance, opposition, or active hostility of much of the world, the United States was able to launch an unprovoked attack on a sovereign country and to enlist dozens of countries and international agencies to assist it during and after the invasion. It is not just the complications of Iraq that have unwound this order. Even had Iraq been a glorious success, the method of its execution would have made ut- terly clear the unchallenged power of the United States-and it is this exercise of unipolarity that has provoked a reaction around the world. The unipolar order of the last two decades is waning not because of Iraq but because of the broader diffusion of power across the world. . . . '

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