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NEW WORLD COMING:AMERICAN SECURITY IN THE 21ST CENTURY

SUPPORTING RESEARCH AND ANALYSIS

The Phase I Report on the Emerging Global Security Environmentfor the First Quarter of the 21st Century

The United States Commission on National Security/21st Century

September 15, 1999

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Table of Contents

Foreword, Gary Hart and Warren Rudman ................................................................................................iv

Preface, Charles G. Boyd..............................................................................................................................v

Introduction ....................................................................................................................................................1

I: Global Dynamics ........................................................................................................................................5

The Scientific-Technological Future: “What Will People Learn and Build?” ....................................5

Global Economics: “How Is Wealth Created?”..................................................................................21

The Socio-Political Future: “How Will the World Be Governed?”....................................................38

The Military-Security Domain: “How Will Societies Protect Themselves?” ....................................46

II: A World Astir ..........................................................................................................................................58

Greater Europe ......................................................................................................................................58

East Asia ................................................................................................................................................70

The Greater Near East ..........................................................................................................................81

Sub-Saharan Africa................................................................................................................................95

The Americas........................................................................................................................................102

III: The U.S. Domestic Future..................................................................................................................116

Social Trends ........................................................................................................................................116

Technology Trends................................................................................................................................120

Economic Trends..................................................................................................................................122

Values, Attitudes, and National Will....................................................................................................124

Trends Affecting National Security ....................................................................................................128

IV: Worlds in Prospect ............................................................................................................................131

A Democratic Peace ............................................................................................................................131

Protectionism and Nationalism ..........................................................................................................133

Globalization Triumphant....................................................................................................................134

Division and Mayhem..........................................................................................................................135

A Patchwork Future ............................................................................................................................136

V: Major Themes and Implications ........................................................................................................138

Commission and Study Group Staff Rosters ........................................................................................143

Acknowledgements ....................................................................................................................144

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Foreword

Over 50 years ago, President Harry Truman signed into law the National Security Act of 1947, the landmark U.S. nationalsecurity legislation of the latter half of the 20th century. That Act brought the U.S. Armed Forces together under the Secretary

of Defense and established the National Security Council to integrate all aspects of our nation’s power. The 1947 legislation has servedus well, providing us a template with which to deal with our primary challenge of the last half of the century—the Soviet Union. It un-dergirded our diplomatic efforts, provided the basis to establish our military capabilities, and focused our intelligence assets.

Some things do not change. The survival and security of the United States remain our priority, we still cherish our freedom andthe promise of a good life, and we remain committed to our friends and allies. But in the future our national security system will haveto consider a world of chemicals and biological agents as well as nuclear weapons and conventional armies. We will find ourselveschallenged with protecting the information networks on which our banking systems and public services will depend, the disruption ofwhich could paralyze our economy and pose literally life-threatening dangers. Our potential adversaries will range from great militarypowers to “rogue” states to international criminals to malicious hackers. Future battlefields may extend beyond the air, the land, andthe sea into both outer space and cyberspace.

We are changing as a nation, as well, as our human complexion, values, and skill-sets evolve. Economic recessions, environmentaldegradation, and the spread of disease all have the potential to tear at our nation’s social fabric, which is the very foundation upon whichwe stand.

The thinking behind the 1947 law was rooted in the experiences of the Second World War and the earliest days of the Cold War.Fifty years without fundamental revision is a long time for any policy structure to endure, particularly during a period of such vastchange. In 1997, U.S. lawmakers recognized that the country needed to conduct a thorough study of U.S. national security processesand structures. In mid-1998, that study was chartered by the Secretary of Defense under the provisions of the Federal AdvisoryCommission Act and endorsed by the White House and Congressional leadership. Thus was the U.S. Commission on National

Security/21st Century (USCNS/21) born.

The Commission held its first business meeting in October 1998. Since then, it has conducted its effort in three phases, the lattertwo each designed to build upon what has come before:

New World Coming: The first phase, represented by this Report, explores the world developing between now and 2025. It identi-fies what we can anticipate, as well as areas that may remain uncertain or subject to dramatic change. It also tries to understand whatwe will look like as a nation over the next 25 years, and how we will fit into the world at large.

Seeking a National Strategy: The second phase will develop an overview of U.S. strategic interests and objectives for the next 25years. It will describe an overall national security philosophy and a strategy to support those interests and objectives.

Building for Peace: The third phase of the effort will examine our current legislation, government structure, and policy integra-

tion process to determine the extent to which the system inspired in 1947 supports our needs for the 21st century. To the extent that itdoes not, changes will be proposed for implementation.

This Report represents the culmination of phase I of our efforts. We trust that it will prove to be the sturdy foundation we needto build the rest of the study. We believe it is that foundation.

Warren Rudman Gary Hart

iv

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Preface

The United States Commission on National Security/21st Century was chartered to provide the most comprehensive govern-ment-sponsored review of U.S. national security in more than 50 years. The Commission’s tasks are three:

First, to analyze the emerging international security environment;

Next, to develop a U.S. national security strategy appropriate to that environment;

Finally, to assess the various security institutions for their current relevance to the effective and efficient implementation of thatstrategy, and to recommend adjustments as necessary.

In sum, this Commission seeks to promote the security interests of the nation and its citizens at home and abroad, to safeguardAmerican institutions and values, and, ultimately, to preserve the independence and well being of the United States for succeeding gen-erations of Americans.

It has fallen to us, just as it has to all generations since the founding of the Republic, to “provide for the common defense.” Wedo so, moreover, at a time when the international landscape is changing rapidly in the wake of the Cold War. Our security institutions,fashioned in an earlier era under conditions that no longer exist, may not be able to respond to circumstances their designers did notforesee. The first step in assessing the current suitability of those institutions is to anticipate the emerging conditions under which theymust function. But how, as one classical historian put it, are we “to divine the unseen future that lies hidden in the present?”

Broadly speaking, there are three methods of contemplating the future. One assumes that the future will mirror the past. A secondenvisages abrupt change and tries to hedge against it. A third attempts to discern the underlying causes of current trends, in order toanticipate how those causal forces will shape the future. Each has its merits and limitations. The problem, of course, is to understandwhich method is most appropriate to the particulars of time, place, and subject.

Had a study similar to our own been undertaken in 1956, anticipating the quarter century to come, the first method would haveworked best. From 1956 until 1981, much of the world was divided, geo-strategically and ideologically, into two hostile camps. TheUnited States, the Soviet Union, the United Kingdom, Germany, France, and Japan were the centers of economic and military-indus-trial power. Nuclear weapons prevailed in the strategic arsenals of the world’s great military powers; their surface combatants andsubmarines continued to roam the seas, artillery and main battle tanks dominated land operations in warfare, and air power was ubiquitous. Despite many changes in the world, both the political alignments and military technology that dominated in 1956 stillremained in 1981. The world grew accustomed, uneasily, to continuity.

Had a study begun in 1925, pointing to 1950, the second method, which envisages abrupt change, would have been best. As thatera began, Germany and the Soviet Union were weak powers, and Asia and Africa were still largely controlled by the great and wealthyimperial powers of Europe. The United States had recoiled from world politics following the frustrations of the Great War and its aftermath. Battleships were the capital ships of the world’s great navies, infantry doctrine defined armies, and the airplane was seenprimarily as a tool to support land forces. By 1950, however, European economies were just emerging from ruin, their overseas colonialempires were dying, the Soviet Union and the United States had become rival superpowers, and America was committed by treaty tothe defense of Western Europe. The military domain had absorbed at least two major revolutions: the full exploitation of the third dimension through air power, and the advent of nuclear weapons. Warfare for the United States had changed dramatically throughunifying the operations of land, sea, and air forces, and would never be the same again.

Given the magnitude of change now clearly underway, our study primarily adopts the third way to contemplate the next 25 years.We have attempted to distinguish the determinants of current trends so as to anticipate their effect on the future. As before, the com-ponents of change will be technological, economic, political, and military.

No one, of course, can predict exactly how that next quarter century will unfold. Through available lenses, we can foresee somethings with reasonable clarity—demographic patterns, for example. Other phenomena, however, are rather more opaque. Nonetheless,we have used every analytical tool we could find to discern and analyze the emerging world. Finally, we have tried to find a properbalance between confidence and humility, both being important in any effort of this kind. We trust we have achieved that balance, andthat its result will prove to be a sturdy foundation and an illuminating guide for the next two phases of the Commission’s effort.

Charles G. Boyd

Executive Director

v

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DisclaimerThis document reflects the work of the National Security Study Group, a collection of national

security scholars and practitioners whose task it has been to provide basic research and analyticalsupport for the chartered task of the United States Commission on National Security/21st Century.From this document, the Commissioners have drawn fourteen major conclusions that they havepublished separately under the title, New World Coming: American Security In The 21st Century,Major Themes and Implications. Not every proposition or nuance in this analysis is endorsed byevery Commissioner.

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SUPPORTING RESEARCH AND ANALYSIS

U.S. Commission on National Security/21st Century

Introduction

The future, in essence, is this: TheAmerican “moment” in world politics,

which combines bloodless victory in the finalstage of the Cold War with the apparent globaltriumph of fundamental American ideals, willnot last forever. Nothing wrought by man does.In the next 25 years, the United States willengage in an increasingly complex world toassure the benefits that we—and most of theworld with us—derive from American leader-ship.

As powerful as the United States may wellbe over the next 25 years, the world will not betidily managed, whether from Washington orfrom anywhere else. History has not ended,mankind’s cultural diversity endures, and boththe will to power and the pull of passionateideas remain as relevant as ever in political lifeboth within and among nations.

A diffusion of power thus stands before us,but not necessarily one of the classical sort. Anew balance of power may arise that would beintelligible even to the statesmen of the 18th and19th centuries, but something more, and some-thing different, will overlap and perhapsoverwhelm it. The ever tighter harnessing ofscience to technological innovation, and of thatinnovation to global economic integration, ischanging the rules of international engagement.It is even affecting the identity of its engagingparties. The sway of state power has alwaysfluctuated within society, and states have oftencompeted with other institutions for influencebeyond their borders. But the challenges nowbeing mounted to national authority andcontrol—if not to the national idea itself—areboth novel and mighty.

It is not a foregone conclusion that the roleof the state will be permanently diminished, or

the system of sovereign states reformed orreplaced on account of these challenges. Butboth the system and its member units arecertain to change as a consequence, as theyhave always changed from having been tested.In the years ahead, borders of every sort—geo-graphical, communal, and psychological—willbe stressed, strained, and compelled to recon-figuration. As the elements and vulnerabilitiesof national power shift, they will often leavecurrent institutional arrangements at logger-heads with reality. Already the traditionalfunctions of law, police work, and militarypower have begun to blur before our eyes asnew threats arise.

Notable among these new threats is theprospect of an attack on U.S. cities by indepen-dent or state-supported terrorists usingweapons of mass destruction.1 Traditional dis-tinctions between national defense anddomestic security will be challenged further asthe new century unfolds, and both conventionalpolicies and bureaucratic arrangements will bestretched to and beyond the breaking pointunless those policies and arrangements arereformed.

The future is also one of rising stakes, forgood and for ill. Humanity may find ways tocompose its disagreements, succor its poor,heal its sick, and find new purpose in commonglobal goals. But if it fails at these tasks, itstands to fail more spectacularly than ever. Thatis because greater global connectedness leadsone way to benefit and another way to misfor-tune. Economic downturns that have usuallybeen episodic and local may become, thanks tothe integration of global financial markets,more systemic in their origins and hence moreglobal in their effects. The greater wealth thatmay be expected to flow from global economic

1 See William S. Cohen, “Preparing for a Grave New World,”

Washington Post, July 26, 1999, p. A19.

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2 NEW WORLD COMING

integration will nevertheless produce growinginequality within and among nations. Themarch of science and technology, too, willprovide ever more powerful tools—tools thatcan be used for benefit in the right hands, butthat may pose even genocidal dangers shouldthey fall into the wrong ones. The next 25 yearsmay well force mankind back to first principlesover the ethical dilemmas inherent in biotech-nology. Our concept of national security willexpand. Our political values will be tested asour society changes. In every sphere, our moralimaginations will be exercised anew.

Some things, however, will not change. Wewill no doubt revisit many times the threeoldest questions of political life: How is legiti-mate authority constituted? What is fair insocial and economic life? How do we reconciledisagreements? Historical principles will stillapply as we ponder these and other questions.There will still be great powers, and theirmutual engagement will still matter. As ever,much will depend on the sagacity and goodcharacter of leadership. Misunderstandings,misjudgments, and mistakes will still occur, butso will acts of brave leadership borne on theinsight of exceptional men and women.

The upshot of the changes ahead is thatAmericans are now, and increasingly willbecome, less secure than they believe them-selves to be. The reason is that we may noteasily recognize many of the threats in ourfuture. They will differ significantly from thedangers to which history has accustomed us:ranting dictators spouting hatred, vast armies onthe march, huge missiles at the ready. They mayconsist instead of unannounced attacks by sub-national groups using genetically engineeredpathogens against American cities. They mayconsist of attacks against an increasingly inte-grated and vulnerable international economicinfrastructure over which no single body exer-

cises control. They may consist, too, of an un-raveling of the fabric of national identity itself,leading several important countries to fail ordisintegrate, generating catalytic regional crisesin their wake.

The main policy challenge in all suchcases, diverse as they may be, is the same:How does an American national leadershipbring the country together and marshal its re-sources to both seize new opportunities anddeal with novel threats? But we are gettingahead of ourselves. Before moving to argu-ments and evidence, let us first briefly describeways and means.

“No man can have in his mind a con-ception of the future, for it is not

yet,” wrote Thomas Hobbes in Leviathan, “Butof our own conceptions of the past we make afuture.” Hobbes meant two things by this state-ment: most obviously, that the past is the onlybasis upon which to forecast the future; moresubtly, that social life tends to freeze into itselfthe conceptions we have of it. Hobbes wastwice right. Absent the gift of prophecy,history’s recurrent patterns, discontinuities, andintimations about human nature compose ouronly means of reckoning ahead. It remains true,as well, that the very act of probing the futuretends to shape it, for we often act on our antic-ipations in ways that invite their arrival.

It is therefore no mean feat, and an act ofno little consequence, to describe the interna-tional environment for U.S. national security 25years hence. Let anyone who doubts the diffi-culty inherent in the task look back as far as thisstudy looks ahead.2

In the late summer of 1974, just 25 yearsago, the United States had just passed thedeepest throes of a major constitutional and po-

2 See Study Addenda, part 1.


SUPPORTING RESEARCH AND ANALYSIS 3


litical crisis. Its economy was more anemicthan it had been at any time since the GreatDepression and it had just lost a war, a processaccompanied by deep social divisions and amassive loss of faith in the national purpose.America’s most serious global adversary, theSoviet Union, was steadily augmenting itsstrategic military clout and pursuing territorialencroachment by proxy from Africa to CentralAmerica. Meanwhile, America’s key allies inEurope and Asia were hedging their bets overAmerican leadership and seemed set toovertake the United States economically. Faithin the future of democracy and the health ofmarket economies declined both at home andabroad. Not many predicted then that just 25years later, the United States would be standingat a pinnacle of national prosperity and interna-tional power, its institutions very much intactand its core political values vindicated on aglobal scale.

Clearly, the U.S. national trajectory in theworld has pointed upward since 1974. Over thenext 25 years, however, it could point otherways. Nevertheless, our point of departure inthis study is an assumption that the UnitedStates, a primary political, military, economic,and cultural force in the world today, willremain such a force through 2025. Its size,wealth, power, cultural sway, and diplomaticreputation render it inevitable that the UnitedStates will retain a significant role, and be asignificant factor, in shaping the internationalsecurity environment.

We also make three key methodological as-sumptions: that the definition of nationalsecurity must include all key political, social,cultural, technological, and economic variablesthat bear on state power and behavior; thatfuture projections based solely on today’strends are liable to be misleading; and thatwhile forecasting a range of futures is possible,

predicting a specific one is not. The reason forthis last assumption is critical, and it is this: thefuture is contingent. Human history does notjust happen; it is made. The state of globalaffairs in 2025 will be determined by an arrayof decisions, large and small, most of whichhave not yet been made. Our problem, there-fore, is not how far we can see out on the roadahead with the best of analytical tools. Theproblem is that the road is not straight, and noteven the highest power binoculars allow us tosee around curves.

However difficult looking into the futuremay be, it is both necessary and irresistible. Itis necessary because the stakes are so high thateven an imperfect effort is better than none atall. It is irresistible because we are humanbeings: curious, emotionally engaged,beckoned to challenge. We have organized NewWorld Coming in five parts. Part I, “GlobalDynamics,” sketches an overview of the rangeof major systemic changes we see arising overthe next 25 years. These are organized, in turn,according to four basic categories: scientific-technological, economic, socio-political, andmilitary-security. Part II, “A World Astir,” looksat regional trends in light of global dynamics.

Part III, “The U.S. Domestic Future,” examineswhat the United States itself will be like overthe next quarter century. American resourcesand social cohesion will influence how muchpower the state will have at its disposal, andAmerican domestic political culture will helpshape how the United States exercises thatpower in the world at large.

Part IV, “Worlds in Prospect,” translates theanalyses of the three foregoing sections intofour global scenarios. The purpose is not topredict which of these worlds will come intobeing, but rather to offer heuristic devices tohelp us encapsulate the forces that will drive



4 NEW WORLD COMING

the world toward one of several alternativefutures over the coming 25 years. The scenariosdescribe the interplay of developments in tech-nology and economics with associated social,political, and military environments. These fourscenarios are followed by a speculation that thefirst quarter of the 21st century will be a patch-work of these four worlds.

Part V, “Major Themes and Implications,”is a summation of the Commission’s findings.




I: Global Dynamics

The future is an enigma wrapped in fa-miliarities. If we were suddenly

transported back 25 years to 1974, we wouldfeel much at home, yet we still could notforesee the world of 1999. We could not predictthe end of the Cold War, the information revo-lution, the sustained economic growth of the1990s, or the specific collection of conflictsthat have lately roiled international politics. So,too, even though we are liable to feel at homein 2025—if only because our arrival there willbe so comfortingly gradual—many things willhave changed that we cannot foretell.

Social change involves not a single but atwin puzzle. To the one side is the ceaselessbuzz of natural and human activity that seem-ingly amounts to nothing of real significance.But to the other side, we suddenly awake togreat transformation in domains where we havesensed no activity at all. Just as we do not feelthe earth turning on its axis despite the consid-erable speeds and distances involved, weusually do not “see” social or political changeas it occurs.

There are grand theories of social changethat grapple with this twin puzzle, but we needonly recognize that social reality has multipleand interactive sources. Some are proximate,such as those animated by personalities, intellec-tual fashions, and happenstance. Others are moreremote, including those embedded in thephysical environment, the biological constitutionof the species, and the perdurable patterns ofhuman culture. We proceed here by examiningscientific-technological trends and prospectivepatterns in the global economy, then move to thesocio-political dynamics affecting and affectedby both, and conclude with a discussion of theinternational military-security domain.

The Scientific-Technological Future:“What Will People Learn and Build?”

The tools that Americans and othershave built in this century alone have

wrought major social and political changes intechnologically advanced countries, most ofthem unanticipated. Mass electrification trans-formed economies by revolutionizing bothmanufacturing techniques and consumptionpatterns. Extensive private ownership of auto-mobiles led to vastly increased labor mobility,to new spatial patterns in residential life and,particularly in the United States, to the adventof the suburbs. Suburban life, in turn, accelerat-ed the integration of diverse communities into anew mainstream, changed voting patterns andpurchasing behavior, accelerated the separationof generational cohorts within extendedfamilies, and altered the social functions andeconomics of major cities. Antibiotics begot ademographic revolution and, with otheradvances in medical science, contributed to thetransformation of religious sensibilities.Television brought a nascent commercialculture still at the margins of social conscious-ness in the mid-1940s into the core of sociallife. Birth control technologies have alteredgender roles and family patterns.

The political impact of these developmentsis virtually incalculable. Skill-sets and civicvalues, even the foci of national identity, haveall been altered. If the point that technology in-fluences social and political life is notsufficiently clear at the national level, considerthe epic struggles of the 19th and 20th centuriesbetween various forms of socialism and liberaldemocracy. The basis for those struggles wasthe enormous social and psychological disconti-nuities unleashed by the Industrial Revolution,since it was that Revolution that turned the so-cialist idea into programmatic ideologies. Newsocial and political discontinuities will surely



6 NEW WORLD COMING

flow from the major scientific discoveries andtechnological innovations that await us in thenext century. Indeed, so vast are their implica-tions that we can only hint at them here.

What technologies will emerge overthe next 25 years? The general char-

acteristic that stands out with respect to newtechnology is a major shift in paradigms ofscale. Until the 1970s, the reigning industrial-

technological paradigm was one in whichfactories grew larger to serve global markets;buildings grew taller, concrete spread wider,and continents were linked by ever largerjumbo jets. Gigantic rockets lifted men to themoon and, with multi-megaton warheads, un-derwrote the nuclear standoff. Efficiency andstatus lay in large scale. Now, however, minia-turization, adaptability, and speed are primarytraits. Ever more capacity is being placed on

tiny silicon wafers, and we are beginning tomimic the molecular assembly capabilities ofbiological systems.

The most striking innovations of the nextquarter century will occur in three basic cate-gories, and combinations thereof. Thesecategories are information technology, biotech-nology, and micro-electromechanics (MEMs).

Great strides in information technologywill continue, and the social impact will begreat. Internet use is increasing dramaticallyaround the globe and will continue to do so.

Computing power will grow and costsper unit of value will decline. Networks willbe ubiquitous, software will be smarter, andcomputers will assume more “human” char-acteristics in terms of voice and visual

Internet Users Are Increasing




capacities. There will be near-universalaccess to information and many forms of ex-pertise on a global scale by 2025, if notbefore. The entire world will be linked, so thatfrom any stationary or mobile station it will bephysically possible to send and receive near-instantaneous voice, video, and other serialelectronic signals to any other station. If themillennium about to pass into history is re-membered as the time when humanity firstrecognized its common planetary space, thefirst century of the coming millennium may beremembered as that in which humanityachieved the potential, if not the reality, of fullconnectedness in real time. We will witness,as it has been called, the death of distance.3

Information technology will make much ofour environment interactive, both with respectto devices that respond to our wishes, and withrespect to other people. By 2025, vast numbersof people—large majorities in advanced soci-eties—will carry their own personalinfospheres with them, perhaps wearing themin their clothing and powering them with themere kinetic motion of walking.4 Most peopleand vast amounts of information will be acces-sible at all times, in all places, in a world wherea tailored virtual work environment will ac-company us whenever we wish. When wetravel, our cars will have GPS receivers net-worked to central databases, allowing for aconstant update of map and traffic information.Upon arriving home, the environment willadjust to our presence thanks to linked, pro-grammable appliances. Entertainment will takeon a more cosmopolitan flavor since it willreflect global connectivity. We will be able toassociate “virtually” with any person or groupsharing our interests in hobbies, politics, eth-nicity, or religion.

Even more dramatic than new innovationsin information technology, major developments

await us in biotechnology. By 2010, biotech-nology may overtake information technology interms of economic investment; whether it doesor not, it will almost certainly overtake it interms of macro-social impact.5 Both businessand, to a lesser but not small extent, govern-ments will sustain large research anddevelopment funding in biotechnology. Thisfunding, along with parallel advances ingenetic engineering and tissue-growth research,will spur rapid innovation and related economicgrowth.

Capabilities could be startling by today’sstandards. If governments permit, genetic engi-neering will allow sex and specific traitselection in infants. Cloning human organs willbe possible, and in some instances common.Many viral diseases will be better understood,and stem-cell technology could allow treat-ments for many degenerative neurologicalailments. Treatments to enhance the humanimmune response against diseases will bepossible. “Farmaceuticals” will be readilyavailable, with cows, pigs, and sheep withaltered genes providing proteins with medicalvalue in their meat and milk. Agriculture willbe transformed by higher productivity, nutri-tion- and vaccine-enhanced foods, and greaterplant resistance to (known) pests. Takentogether, these innovations suggest that thehuman life span in the developed world couldshift from the present average of about 75years to at least 85 years—and perhaps to as3 Coined by Frances Cairncross, The Death of Distance: How

the Communications Revolution Will Change Our Lives(Boston: Harvard Business School Press, 1997).

4 MIT’s Lincoln Lab is experimenting with a sneaker-bornebattery powerful enough to drive integrated circuits.Merely walking produces sufficient energy. See T. Starner,“Human-powered Wearable Computing,” IBM SystemsJournal, Vol. 35, Nos. 3&4, 1996.

5 See Forecast `98: A Vision for Advanced Research andTechnology (Fort Meade, MD: National Security Agency,1998), p. 29; and The U.S. Biotechnology Industry, Officeof Technology Policy, 1997.



8 NEW WORLD COMING

much as 120 years—within the next quartercentury.

Between now and 2025, cheap, high-density microelectronics will proliferate in thetools and the physical environment of thoseliving in technologically advanced societies.We will become familiar with MEMs: micro-electromechanical devices in which sensors,transmitters, receivers, or actuators (switchesthat activate mechanical devices) have beenminiaturized to the size of a transistor. Suchtechnologies will affect our lives in many ways.Should we become sick, our doctors will knowas soon as, or even before, we do, for micro-sensors will constantly monitor our health.Smaller, more capable sensor devices will helpinsure the safety of both home and work.Energy bills will drop due to the use of lowpower devices. Airplane wings will feature mi-croscopic sensors on their surfaces, allowingfor faster travel at more efficient speeds. MEMsmay also allow far more intrusive and cost-ef-fective exploration of outer space, withunknown economic, political, and possiblymoral implications.

Dramatic new capabilities in MEMs deviceswill appear as the long awaited nanotechnologyrevolution takes hold. In nanotechnology,devices are manufactured using molecular fabri-cation techniques not unlike those found in thehuman body. Many new technological advanceswill be based on bio-mimicry—the deliberateattempt to capitalize on what nature has learnedthrough millions of years of evolution. Toborrow from Eric Drexler, one of the foundingfathers of nanotechnology, we will be engagingthe “engines of creation” to alter the tools weuse.6

Current developments indicate that nano-technology, though in its early stages, willdevelop rapidly. In July a research team was

able for the first time to fashion simple com-puting components no thicker than a singlemolecule.7 This is a breakthrough that, in retro-spect, may come to rival in importance EnricoFermi’s nuclear chain reaction in a squash courtat the University of Chicago in 1942.

The implications of nanotechnology areparticularly revolutionary given that such tech-nologies will operate at the intersection ofinformation technologies and biotechnologies.This merging and melding of technologies willproduce smaller, more stable, and cheaper cir-cuitry that can be embedded, and functionallyinterconnected, into practically anything—in-cluding organic life forms. The implications ofsuch a fundamental innovation for advances inmaterials science, medicine, transportation,energy, manufacturing, and agriculture are si-multaneously huge and still mostly unknown.8

What is clear is that such basic innovationwill allow for more sophisticated scientific ex-plorations of our environment. It will facilitatethe gathering of information and advance ourunderstanding of complex distributed systems.Such technologies may also merge with, andaid, major advances in theoretical physics, par-ticularly in the areas of complexity and chaostheory. The results will not be just theoreticaland intellectual, but will have dramatic impli-cations for creating new technologicalsynergies and for developing ever more so-phisticated applications of our new tools.

6 Eric Drexler, Engines of Creation (New York: Anchor-

Doubleday, 1987). Many of Dr. Drexler’s concepts await

experimental verification. 7 John Markoff, “Tiniest Circuits Hold Prospect of Explosive

Computer Speeds,” New York Times, July 16, 1999, p. 1.8 There are several ongoing projects that estimate technological

innovation. See, for example, William E. Halal, Michael

D. Kull, and Ann Leffman, “Emerging Technologies:

What’s Ahead for 2001-2030,” The Futurist, Nov.-Dec.

1997.




However dramatic such potential break-throughs may be, they will not

revolutionize everything within a 25-yearperiod.

The belief in a revolutionary shift in worldenergy patterns will not die. Many scientistshold faith in nuclear fusion, or in a hydrogen-based energy economy. Some believe thatenergy may one day be mined from thevacuum of space—zero-point energy, socalled. Still others believe that substitutingethanol for standard gasoline can make a majorimpact on energy balances, and that geneticengineering can radically increase the biomassavailable to make ethanol, thus radicallyreducing the price.9

The problem with these prognostications,save for the last one, is that they offer noviable solution for the inertia inherent inexisting fossil fuel infrastructures. Even if amajor innovation does come from the labora-tory, it will take most of a 25-year period tocreate the supportive production, transporta-tion, and marketing infrastructures necessaryto make a major difference on a global scale.We should expect steady advances in the labsand important practical innovation, not somuch in energy sources as in the efficiencywith which new devices use energy. Majoradvances in batteries are a near certainty, andurban-use automobiles that run on fuel cellsare likely, too. As the economies of manyadvanced countries become more knowledge-based, and as telecommuting, telemarketing,and e-commerce become more prevalent,energy consumption patterns may change forthe better, as well.

But unless the ethanol solution transformsthe global energy industry, fossil fuels andtheir locations will still matter economicallyand in the political calculus of major powers.

Indeed, demand for fossil fuels will grow asthe economies of Asia and other parts of thedeveloping world expand.10 American depen-dence on foreign sources will also grow overmost of the next quarter century. If pricesremain moderate enough to depress the ex-ploitation of marginal or difficult-to-extractfossil fuel reserves—as may well be the caseover the next two and one-half decades—thenthe importance of Persian Gulf producers willactually grow back to levels reminiscent of themid-1970s.

This is not the place to detail all thevarious innovations in science and

technology that will shape our lives in the next25 years, or to speculate about those that willnot. In any event, what matters for the purposesof this study is less the devices themselves andmore their social and political impact, and herethe prospects are mixed. While new scientific dis-coveries and technological innovations hold outthe promise of enormous benefits, they will alsopresent many challenges, some of them cognitiveand practical, others moral and philosophical.

One reason to expect new challenges is thatchange will come upon us faster than ever. Thespeed with which new technological innova-tions enter the commercial and thus the socialmainstream will continue to increase, leavingsociety less time to adjust. It was with great and

9 See R. James Woolsey and Richard G. Lugar, “The New

Petroleum,” Foreign Affairs, Jan./Feb. 1999. The Clinton

Administration endorsed major research in this area in

August 1999.10 See Energy Information Administration, Annual Energy

Outlook 1999 (Washington, DC: Department of Energy,

December 1998); Geoffrey Kemp, Energy Superbowl:

Strategic Politics and the Persian Gulf and Caspian Basin

(Washington, DC: Nixon Center for Peace and Freedom,

1997); and Anthony H. Cordesman, The Changing

Geopolitics of Energy (Washington, DC: Center for

Strategic and International Studies, August 12, 1998).



10 NEW WORLD COMING

justified anticipation that Thomas Alva Edisonthrew the switch that electrified Pearl Street inlower Manhattan in 1882, but it took anotherthirty years before the commercial and socialimplications of electricity hit full stride in theUnited States. Nowadays, moving from thegerm of a scientific breakthrough to the main-streaming of new devices may take little morethan a year.

There are good reasons for the picking upof this pace. First, basic science is increasing-ly wedded to technological innovation, andthis new conjunction in turn is increasinglywedded more closely to industry than to gov-ernment defense labs. One result is thatconsiderably more research and developmentinvestment is flowing to basic science, in bothuniversities and commercial labs, than everbefore. This trend, almost certain to widen andaccelerate, means that the propensity forbreakthroughs has been virtually systematized.

Second and closely related, in much of theworld, and particularly in the United States,markets allow for the rapid commercializationof new technologies, and populations havebecome used to ceaseless innovation. Theresult is a cultural propensity to accept andadapt to innovation, which in turn works as anaccelerator to innovation itself.

Third, information technology acceleratesinnovation because it is simultaneously aproduct and marketing device. The first thingthat television advertising stressed was thepurchase of more televisions, so that the tech-nology became self-replicating in marketterms. The array of new commercial informa-tion technologies, from personal computers toInternet nodes to GPS devices to cell phones,trumps the self-replicating capacity of televi-sion by orders of magnitude. This technologyis its own infrastructure and its own commer-

cial multiplier effect—and it will be used in thefuture to market other innovations, many ofwhich will doubtless be linked with informa-tion technology and biotechnology.11

Fourth, the technologies of the future willbe far more knowledge-based than physicalresource-based, and the constraints imposedby extracting and processing bulk materialswill shrink proportionately. What oncerequired tons of steel and concrete to create agiven increment of GDP growth now requiresa tiny fraction of that weight in plastic andsilicon. While the presumed “de-materializa-tion” of the world can be exaggerated,knowledge-based innovation is freer to moveahead rapidly, constrained only by the avail-ability of human capital and the organizationalcapacities of society to marshal and exploitthat capital.

One of the inevitable consequences ofan increased pace of innovation

married to an interweaving of basic sciencefields is that our capacity to anticipate specificdevelopments shrinks. In a way, we becomesmarter and dumber at the same time. We seethis already in the way that the informationrevolution has played out in the last twodecades; while very few wish to turn back theclock, there is no denying the disruptions inbusiness and personal lives that many have ex-perienced.

Information technologies have already hada significant impact on most individuals in theUnited States and other technologicallyadvanced countries. We already have a rudi-

11 See Daniel A. Losk and Randall P. Nottingham, “Global

Market Penetration of Communications Equipment:

Computers, Telephones, and Televisions,” Standard &

Poor’s DRI World Economic Outlook, First Quarter 1999,

p. 39.




mentary personal infosphere: witness thenumber of people driving down the freewayusing cell phones and staying in daily contactwith relatives and business associates via e-mail. We know, too, that individuals intechnologically advanced societies are in manyrespects more powerful than ever before. Theyknow more, and, by extending their sensesmore effectively, are more efficacious than anygeneration before them. They are more long-lived than any previous generation, as well.

The domain of the personal infosphere willgrow over the next 25 years, both verticallyand horizontally. In other words, the sophisti-cation of such spheres will rise, and thenumber and types of people who have themwill proliferate over much of the world. As aresult, the physical boundaries of our neigh-borhoods and business locations will becomeless relevant as individuals create virtual com-munities of common interests—“communitiesof choice” or “hobby tribes,” some have calledthem—by electronic means. Through our com-puters we will visit any business site or readthe latest in science and culture as we choose,or communicate with others who share our in-terests anywhere at virtually any time. TheInternet will provide interactive rather thanmainly passive information; it will become atutor rather than just a reference resource insubjects of our own choosing. In that sense ifnot also others, as one observer put it, “timezones will become more important thanborders.”12

This prospective technological environ-ment will pose certain problems. Individualswill have to cope with new levels of complex-ity. No one will fully understand theenvironment or be able to master the massive,continuous flow of information about it. Oneof the key social implications of the technolo-gies in our future is that they will tend to

confound all attempts at centralized control,not unlike the logic of the marketplace. Tosucceed, as individuals and as organizations,will mean adapting to a life of continuous edu-cation and operational redesign. Newinformation/knowledge tools will become ourtutors and guides. Compared to the present,everything will be hurled into relative motion.Some people and some organizations will copebetter than others in such circumstances, andthose left behind will suffer economically. Inshort, new technologies will create new filtersfor sifting out winners and losers in society.

Adding to the press of complexity and in-formation overload will be the pressure ofshort reaction times. The Internet alreadyallows us to do things globally in near real timethat used to take weeks or months. In the pastwe have always had time to prepare and react,and to weigh the potential consequences of ouractions. In the future, we may process more in-formation but, held in thrall by the grip of thetechnology itself, we may actually be prone tothink less about it. Many will learn the hardway the differences between data, information,and knowledge. Hard as this challenge will beon individuals, it will be even harder on largeorganizations and especially on governments.

As a consequence, we may be headed for aconsiderably more stressful cognitive environ-ment. While stress is a subjective notion tosome extent, it does have an objective physio-logical basis, and potential health implicationsflow from it. Disease patterns could shift; wemight learn to cure many forms of cancer onlyto be plagued by a host of cardiovascular andpsychological maladies that rest today at thefringes of our health concerns. Stress may alsolead some people to seek more predictability in

12 Walter B. Wriston, “The Third Technological Revolution,”

Foreign Affairs, Sept./Oct. 1997, p. 172.



12 NEW WORLD COMING

their lives and to compensate for uncertainty insome realms by magnifying certainty inothers.13

But it is not a foregone conclusion that ahigh-technology future will be more stressfulfor most people. More prosperous and healthi-er people with more recreational time on theirhands may well be under far less stress. If, inaddition, telecommuting saves countless hoursof being stuck in traffic and allows more peopleto live in idyllic environs, then, rather ironical-ly, more people would experience more ofnature thanks, in essence, to high technology.

New technologies will also affect develop-mental and educational issues. As with anyyoung animal, a human child’s neural networksform as a function of the pace and nature of thestimuli the child encounters in the environment.Some neurophysiologists believe that a childwho has spent hundreds of hours watching“action” television and playing fast-pacedcomputer games before reaching age six mayhave a hard time sitting still in a standard class-room, where the pace of activity is far slower.This does not necessarily mean that there isanything inherently wrong with the technologyor the games. But this technology does bear im-plications for better understanding controversiesover the definition and treatment of hyperactivi-ty, or attention deficit disorders, in pre-adolescentchildren, and for educational methods general-ly.14 There is a good prospect that educationalmethods will be revolutionized for the betteronce we fully understand and learn how to applythe new technologies at our disposal.

Families as well as individuals will have tocope with new circumstances. The denizens ofthe most advanced countries will face new re-sponsibilities as parents and citizens in managingand utilizing the information age. As the naturallimits and disciplines imposed by physical and

social borders shift and sometimes dissolve, indi-viduals will have to accept more responsibilityfor their own mental and moral balances. As oneobserver put it, a totally open and unfilterednetwork, operating amid the frenetic pace of con-temporary life, means that “the most importantthing parents need to understand about preparingtheir kids for the Internet world is that it requiresnot more whiz-bang high-tech skills, but rathermore old-fashioned fundamentals” such as goodparenting, a functional family life, and highquality basic education.15

Borders between generations and sexeswill shift, too. As to the former, the

faster the rate of technological innovation, themore likely that younger people will be at theforefront of it as “technological generations”grow ever shorter. This is despite the fact that somany people living longer and healthier livesmay compose a “new middle-aged”—thosebetween, say, 55 and 75—who may be far moreactive and productive as a group than ever before.The relatively greater economic utility and statusof young people may have enormous social im-plications in many societies.

For much of human history, advanced agesignified deeper knowledge in nearly every

13 Some believe that the growing popularity of gated communi-ties owes something to this motive, particularly for thoseinvested in the fast-paced, high-stress corporate world. SeeRobert D. Kaplan, An Empire Wilderness: Travels intoAmerica’s Future (New York: Random House, 1998), pp.33-5; and Edward J. Blakely and Mary Gail Snyder,Fortress America: Gated Communities in the United States(Washington, DC: Brookings, 1997).

14 Empircal research relevant to this connection is detailed inJane N. Healy, Your Child’s Growing Mind: A Guide toLearning and Brain Development from Birth toAdolescence (New York: Doubleday, 1994). See also,“Understanding TV’s Effects on the Developing Brain,”AAP News, May 1998; and Committee onCommunications, American Academy of Pediatrics,“Children, Adolescents, and Television (RE9538),”American Academy of Pediatrics, October 1995.

15 Thomas Friedman, “Are You Ready?” New York Times, June1, 1999, p. A23.




society. Old people used to be relatively rare,and it has always made a certain evidentialsense that the more experience someone has thewiser they are liable to be. The nature ofprospective technological processes turns thistradition on its head. With younger minds moreflexible and absorptive, and hence morevaluable to a continuously innovating society,the continued veneration of elders will makeless evidential sense, particularly as populationpyramids invert and there are more elderly thanyoung. This may be especially problematic inConfucian societies, but it will have an impacton Western ones, as well.

As to gender differences, as we head into aknowledge-based economy driven by technolo-gies characterized by smallness and speed, therelevance of males’ greater size and physicalstrength will further diminish. Historically, thelarger average size and strength of males deter-mined the division of labor in families. As firstanimal and then machine calories were substi-tuted for those of human muscle, the economicrelevance of gender distinctions and divisionsbegan to fade. The lag time between economicreality and culture has been considerable, butculture has been catching up. The next few gen-erations of technology should close the gapfurther, and one implication is that women willmove in greater numbers into positions ofpublic authority.

There are honest differences as to what thisimplies, but most speculation on the pointexceeds the grasp of current evidence.16 It isclear, however, that women’s issues are themain barometer of social change in many non-Western societies, and in some places thevanguard force in breaking down patterns ofsocial stasis.17 So while the impetus for sexualequality has been mainly a Western phenome-non in this century—and while technology hashad a good deal to do with it—its main global

impact in the next century is likely to be in non-Western domains. The arrival and acculturationof new information technologies in such areasare likely to greatly reinforce this impact, aswomen have an equal chance as men to makethemselves master over such tools.

Several divisive issues will arise onaccount of some new biotechnologies

that will affect gender and other human traits.Many ethical problems reside in the growingtechnical ease with which parents may choosethe sex, and other traits, of their children.Similar ethical—and practical—problems willalso inhere in the use of increasingly precisemeans of altering mental states, including newpsychopharmacological methods of inducinghappiness, self-esteem, and other emotions,entirely divorced from any behaviors in theworld.

Many problems will also be raised by theprospect of radically prolonged life spans. Firstand foremost is the question of access: Whowill get to use such technologies, and who willnot? How will scarce medical resources be ap-portioned if everyone claims a right to aradically lengthened life? Should finite re-sources be spent on prolonging life when thoseresources are needed for saving younger livesfrom the ravages of disease? How willadvanced countries deal with social policyissues concerning retirement age and benefits,pension funds and medical insurance?

16 See Helen Fisher, The First Sex: The Natural Talents of

Women and How They Are Changing the World, (New

York: Random House, 1999); Francis Fukuyama, “Women

and the Evolution of World Politics,” Foreign Affairs,

Sept./Oct. 1998; and the response to Fukuyama by

Barbara Ehrenreich and Katha Pollitt in the Jan./Feb. 1999

issue.17 For one example, see Celia W. Dugger, “India’s Poorest Are

Becoming Its Loudest,” New York Times, April 25, 1999,

(Week in Review), p. 3.



14 NEW WORLD COMING

Individuals, too, may confront totally novelissues, such as how to relate to their grandchil-drens’ grandchildren.

All of this has an international dimension,as well. Those few Americans who haverecently been able to choose the sex of theirchildren have preferred females to males, butthe cultural bias in most other parts of theworld, particularly the Far East, is theopposite.18 If choosing the sex of childrenbecomes widespread, it could in time createsharply divergent population profiles in dif-ferent societies. Moreover, the resentmenttoward advanced societies by those fartherbehind is likely to grow if, for example,people in the Near East or Latin Americacome to have average life spans severaldecades shorter than those in more technolog-ically advanced societies. The lack ofavailability of advanced medical technologiescould prove a stimulus for immigration fromthe developing world.

The boundaries of communities andworkplaces will shift, too. As to the

former, virtual communities may replaceactual ones to some extent, the limit definedby the instinctual human proclivity to socia-bility and social order.19 If virtualcommunities proliferate very widely at theexpense of real ones, then our public spaceitself may contract. The Internet, and themerging of the Internet with commercial en-tertainment culture, will allow individuals tovirtually select their own news. That may re-inforce preexisting biases, and it may narrowpeople rather than broaden them, leadingthem to be less concerned about society-at-large rather than more.20 If so, our publicspace may shrink, and democracy may behollowed out from the inside, even as all of itsoutward forms still appear normal.

On the other hand, local communitiescould flourish in reaction to the proliferationof virtual communities. People who spendmore time at home as they telecommute maytake a greater interest in local concerns andlocal politics. That, in turn, could revivifycommunities and nurture higher levels of po-litical participation at the grassroots.21

As to the latter, telecommuting will notmake workplaces obsolete, for workplaceshave an indissoluble human dimension andneed such a dimension to function effectively.But it will change how workplaces function.22

The fact that many people will be freer to livefarther from a central workplace will alsoaffect residential patterns, and could have sig-nificant implications for land and water use.Closely related, if, as many expect, e-commerce composes half or more of allcommercial transactions before the year 2025,there are implications for the spatial and socialcompositions of city and suburb. The ratio ofresidential to commercial uses of real estatewill rise as fewer stores are necessary to sellsimilar volumes of goods. Labor profiles willchange, too: There will probably be fewer

18 Note the data in Nicholas Eberstadt, “Asia Tomorrow, Gray

and Male,” The National Interest, No. 53 (Fall 1998),

pp. 63-5.19 See also Francis Fukuyama, The Great Disruption: Human

Nature and the Reconstitution of Social Order (New York:

Free Press, 1999), and David Whitman, “More Moral,”

The New Republic, 22 Feb. 1999, pp. 18-9. 20 Andrew Shapiro, “The Internet,” Foreign Policy, Summer

1999, p. 25.21 There are signs that this is already happening in the United

States. See Deconstructing Distrust: How Americans View

Government (Washington, DC: Pew Research Center,

1998), pp. 15-6. 22 Hamish McRae, The World in 2020: Power, Culture, and

Prosperity (Boston: Harvard Business School Press,

1994), p. 179.




retail clerk jobs in stores, but more delivery,sales, and inventory management jobs.

The new economy will transform entertain-ment culture as well as residential and businesspatterns. Here, too, there are implications forthe spatial layout of communities. New placeswill allow for new social mixing and new ideas;new vocabularies will form and new culturalsymbols will evolve. This matters because thespatial features of community—human geogra-phy, so to speak—have always had politicalimplications.23

Telecommuting, telemarketing, and e-commerce are also parts of a wider realitythat is introducing new patterns into work-and marketplaces alike. The ability to bypasstraditional lines of communication has intro-duced new efficiencies in business—the muchdiscussed “flat,” non-hierarchical organiza-tion. The wealth-producing potential of whatamounts to a new way to use human capital isenormous, and we have probably seen onlythe beginning of it so far.24 But new techno-logical patterns have created a need fordifferent organizational structures andprocesses to allow decision making authori-ties to function. It has not always been easy todevise them, nor will it get much easier in thefuture. Obviously, a completely flat organiza-tion is not an organization at all, but just anagglomeration. Moreover, what privatebusiness can do, public bureaucracies in de-mocratic countries cannot do as easily, for thelatter do not measure success in keeping thepublic trust by standard accounting methods.Nor can they, or should they, override therules of accountability essential to demo-cratic governance.

A related technology-driven issue thatwill have an impact on both individuals andsociety at large concerns privacy and secrecy.

Privacy will be more difficult to maintain.Ever expanding capabilities to monitor indi-vidual workers, to intercept messages ormonitor conversations, and to obtain personaldata from databases may conflict with indi-vidual rights in democratic countries. Secretswill be difficult to keep—whether individual,business, or governmental—but individualsand organizations will still try hard to keepthem. We do not yet know who will win therace between encryption and decoding, but itis likely that more basic information will beavailable to those who wish others ill. Therewill be a pervasive tension between divulginginformation, so that one may benefit from thesocial networks of the future, and holdingback information to foil the efforts of thosewho would abuse such networks.

As to the physical environment itself,the future is likely to bring a mixed

picture. No one doubts that human activity hasaltered the biosphere. The expansion ofhuman numbers and habitations has changedthe face of the planet, although there is muchdebate over particulars and over the moralbalance inherent in human activity. Pollutionis bad for humans and other animals, buteconomic growth lifts people out of miseryand the condition of a life nasty, brutish, andshort. Moreover, the technology of environ-mental remediation is now keeping pace withthe damage that industrialization causes inadvanced countries, and it will be increasing-ly available in developing countries as well.

23 For historical examples, see Michael Vlahos, “Entering the

Infosphere,” Journal of International Affairs, Spring 1998.24 For a brief review of the debate over the relationship

between information technology and gains in productivity,

see Steve Lohr, “Computer Age Gains Respect of

Economists,” New York Times, April 14, 1999,

pp. A1, C14.



16 NEW WORLD COMING

Still, even with advances in remediationtechnology, limits to resources are real, in-cluding the availability of fresh water aspopulations grow. There is also a probleminherent in sharp reductions in biodiversityowing to anthropogenic activity.25 Theselimits represent a major challenge to posterity.That said, there is fierce disagreement overseveral major environmental issues. Many arecertain that global warming will produce majorsocial traumas within 25 years, but the scientif-ic evidence does not yet support such aconclusion. Nor is it clear that recent weatherpatterns result from anthropogenic activity asopposed to natural fluctuations.

There is no doubt that natural disasters willroil the future as they have always roiled thepast. It is also clear that as population pressuresand other factors drive large numbers of peoplein developing countries to build homes in riverflood plains and coastal areas, the human tollfrom such disasters will rise.26 Some 40 of the50 fastest growing cities in the world are inearthquake zones. Already half the world’spopulation lives in coastal zones prone toflooding and to the spread of malaria and otherdiseases. Environmental refugees now accountfor more than half of all refugees worldwide,and that percentage may grow.27 There isdoubt, however, about the severity of futuretrends, depending on how one reads the pace,depth, and source of climate change.

Socio-economic borders will also bestressed by new technologies. The new

requirements of an information-based economymay create novel social divisions with seriouspolitical implications. For example, interna-tional connectivity will allow job competitionover an increasingly wide geographical area.The good news here is that efficiencies willrise, and greater efficiency in business trans-lates overall into more wealth in society. But

there is a downside, too. British Telecom nowuses operators located in New Zealand becausethey are wide awake when most people aresnoozing in England; that brings lower costsand greater efficiency to the company butgreater employment pressures in Manchesterand Leeds. Such changes are likely to affectwhite-collar jobs as much or more than blue-collar ones that are physically bound to aparticular place.

The polarization of work forces is also apotentially serious social issue. Those membersof society who are not adept at symbol manip-ulation may have difficulty adjusting to the newtechno-economic environment. It is not clear,for example, that there will be enough low-skillservice jobs for those echelons of the popula-tion that require them for independentsustenance. If there are not, the sprawling andvery liberally defined American middle class—and the middle classes of other formerlyindustrial societies, too—will split, with theupwardly mobile joining the internationalcyber-economy and the rest headed towardmore marginal economic domains.

Moreover, whenever educational segmen-tation reflects racial or ethnic segmentation, thenew geography of labor stratification may ex-acerbate existing social divisions. This could bea particularly volatile issue in those societies,including that of the United States, that have a

25 This activity includes the burning of rain forests for seden-

tary agriculture, the destruction of estuaries and

mangroves, desertification, and the overuse of pesticides

in conjunction with monocultural methods in agriculture.26 See Steve Lonergan, “The Roles of Environmental

Degradation in Population Displacement,” Environmental

Change and Security Project, The Woodrow Wilson

Center, Issue 4 (Spring 1998), pp. 5-15.27 International Federation of Red Cross and Red Crescent

Societies, World Disaster Report 1999 (New York: IFRC,

1999).




relatively benign history of social mobility.New technologies may also affect socialpatterns related to socio-economic stratifica-tion. Already in advanced countries the adventof automated service devices such as automat-ed tellers at banks and voice mail in offices hasreduced the number of face-to-face encountersbetween people of different socio-economicechelons. The social and political implicationsof increased isolation among socio-economicgroups is unclear, but it is not something to betaken lightly in mass democracies.

Clearly, then, technological drivers willaffect social patterns and raise questions ofsocial justice. Such questions will doubtlessbecome major items on the political agendas ofadvanced societies. This is already so to someextent. Over the last several decades there hasbeen a greater skewing of income distributionin the United States, as well as in many otheradvanced societies. Some blame regressive taxpolicies for this, but more likely we have wit-nessed a technology-driven asset expansionamong the wealthy not different in essencefrom the basic economic dynamic of the GildedAge. As before, this asset-driven expansion ofwealth is likely in time to generate a wage-driven expansion, and there is some indicationthat it already has done so. The democratizationof capital that seems to be inherent in the newtechnological environment could also lead to agreater leveling of income and status amid agreater prosperity for all. But we do not yetknow how new technologies, and their effectson domestic and international economicarrangements, will remix opportunity andeconomic achievement in various societies.Most likely, there will be more polarization insome domains and less in others.

A concern with social justice is not the onlymacro-social area liable to be put to new testsby technological dynamics. Changes ahead will

threaten all vested interests whose powerresides in the familiarities of the status quo. Forthose who have achieved high incomes andstatus, the prospect of rapid change can bethreatening, and those who have “made it” veryoften have the power to arrest or even derailchange—at least for a while. One manifestationof such fears is the way in which technologicalinnovation is often depicted by tenured elites.National politicians extol the promise of theInternet, for example, and then turn their atten-tion to ways of limiting it through regulation,censorship, and taxation.

Depending on the wider cultural milieu,some tenured elites do better at resisting changethan others. All of this suggests that the culturewars of advanced societies will shift over time asnew technologies work their way down and intosocial patterns. We may stop arguing so muchover abortion, gun control, and the coarseness ofentertainment culture, and more over eviscerationof public space, the ethics of selling synthetic life-forms for profit, and government regulation ofcyberspace. But argue we shall and, as we do,new content will fill the vessels of our politicalvocabulary, changing what it means to be liberalor conservative, progressive or reactionary.

New knowledge-based technologiescould also divide societies in terms of

basic values. Some unknown percentage ofadults in advanced societies may opt out of alife characterized, in their view, by a freneticpace of cognitive demand, a lack of privacy, thedissolution of comforting boundaries, and themisapplications of human priorities. Somecitizens will be actively hostile to the new cy-berworld, perhaps violently so.

This suggests that the adversary cultures ofadvanced societies will form new ideologies onthe basis of opposition to the sort of technology-driven social changes outlined above. One seessuch signs already at the fringes of the environ-



18 NEW WORLD COMING

mental movements in many technologicallyadvanced countries. This is a trend likely togrow in intensity, and it has potential securityimplications in the form of eco-terrorism, a tasteof which we have already experienced both inNorth America and in Europe.

While some will rue the new machines, andwhile environmental concerns will doubtlesstake many forms, others will relish the personalempowerment that the new technology willprovide to those ready and able to embrace it.But this, too, poses a potential social challenge,and one with profound implications for demo-cratic political cultures. The growing sense ofpower that will accrue to many individuals, notto speak of societies and states, as their sensesare extended by technology could corrupt moralbalances and erode moral discipline. If thatwere to happen on an extensive basis, it couldundermine the very sources of the culturalsystem that has facilitated such individual em-powerment in the first place.28 It could threatenthe balance of healthy civic habits that havelong sustained democratic communities.

International borders will become moreporous, too. States will find it increas-

ingly difficult to prevent the flow of ideas,economic goods, and dangers into their territo-ries.29 At the interstate level, technologyportends a sharp leveling effect in the ability todo harm to others across territorial borders. Itwill no longer require a major investment inscientific and industrial infrastructure for smallstates and even reasonably well-heeled groupsand individuals, whether they be criminal syn-dicates or terrorists, to get their hands on verydangerous technologies.

As important, while all societies will beexposed to technology and its effects, not all so-cieties will master them equally. While theimplements of new innovations will be more

widely diffused, the benefits may be moreunevenly distributed than ever. Some countries,and groups within countries, will embrace tech-nological innovation, while many others will gothrough life in a technological environment thatis pre-1940s by Western standards. Thus, newtechnologies will divide the world as well asdraw it together.

This is extremely important for the longrun. All major technological-economic revolu-tions have tended to empower some groups anddiminish others. As we move ever deeper into atime of knowledge-based power, those nations,societies, and groups that excel at educationand human capital generally will find them-selves with daunting relative advantages overthose that do not. This is already obvious insome respects through the postwar examples ofHong Kong, Singapore, and Israel, small andnatural resource-poor places that have never-theless been able to generate considerablewealth and relative power. This is why educa-tion, as well as social capital and cohesion, willbe increasingly important components ofnational power in the future.

In this regard, the Internet may play apowerful role. On the one hand, the Internet hasconsiderable potential to spur greater literacy inmuch of world, and to bring knowledge tomillions who might otherwise not have the op-portunity to learn. That is all to the good. But aglobal Internet culture may also produce farmore half-educated people. The proverb that alittle knowledge can be a dangerous thing maybe trite, but that does not make it false. Whenone recalls that some of the most dangerousleaders, and followers, in the 20th century havebeen half-educated men—Stalin, Hitler, Mao,

28 Daniel Bell, The Cultural Contradictions of Capitalism

(New York: Basic Books, 1976).29 See Human Development Report 1999, United Nations

Development Program, pp. 29-30




and Pol Pot come readily to mind—the possi-bility begins to take on a worrisome dimension.

This is a potential problem not just at thelevel of national leadership, but at a level fardeeper in society. The Internet is already full ofinformation, but not necessarily of knowledge—and it is utterly unfiltered. For those who lack asolid basic educational grounding, it is difficultto distinguish accurate from false information,serious ideas from half-baked ones, practicalproposals from those both dangerous andfanciful. After all, any person, even a child, canuse the Internet to visit with “hate” groups, or beunwittingly influenced by many sundry forms ofunhealthy or just unusual propaganda from anyof the four corners of the earth. It is as easy to getthe Aryan Nation website up on a computer as itis to load Amazon.com. “Big ideas” hatchedanywhere on earth may rush around the worldfar more quickly than ever before—both goodand not so good “big ideas.” The potential for thegrowth of an international “know-nothing”populism cannot be ruled out just because theweb will also facilitate coordination amonggroups lobbying for peace and human rights.

Nor can it be assumed that essentially anti-modern forces will abjure using the Internet. Insome Muslim societies, religious fundamental-ists are often the first to seize upon moderntechniques of communication to spread theirmessages. The quasi-religious martial arts soci-eties of China, though mystical and anti-modernat heart, may do so as well if their leaders arguethat they need to use technology in order to“humanize” technology.

New technologies may also affect thebonding strength of national identities.

Through the Internet, Americans and othercitizens of technically sophisticated societieswill have far greater exposure to peoples ofother nations, and greater levels of interactionwith them.30 Tourism may become the world’s

largest industry by 2025, as interest in otherclimes and the ease of getting to them bothincrease, and the costs of doing so decline.Technology may also allow a near-universallanguage translation capability, resulting in thepotential for a far wider exchange of ideas. Inmany countries, this will likely create a greatersense of something like a global citizen, and itmay change dramatically how people identifythemselves and how they see their country’splace in the world. Americans, and other tradi-tionally patriotic nationals, could come todevelop strong associations both above thelevel of existing national identification—that ofthe “world citizen”—and below it, with ethnic,sectarian, or otherwise local communitysymbols. In other words, we may witness thebirth of the post-modern state, a phenomenonwith potentially huge implications for interna-tional politics.31

This is a crucial uncertainty because majorchanges in the global political order haveoccurred historically only under two conditions:when the nature of legitimate political unitschanges (for example, from empires to nation-states in the 19th and 20th centuries), and whennew values generate the redefinition of personalidentifications and loyalties. It is hard to sayhow much eroded the idea of the unitarynational state may be over the next quartercentury, but the splaying of political associa-tions both upward and downward from the levelof the state is already in evidence in Europe.Skeptics doubt the possibility of building aneconomy in order to build a state, and a state inorder to build a nation—which is the logic of a

30 See the special issue on the impact of the Internet in the

Indiana Journal of Global Studies, Spring 1998.31 See James Kurth, “The Post-Modern State,” The National

Interest, No. 28 (Summer 1992); and John Lewis Gaddis,

“Living in Candlestick Park,” The Atlantic Monthly, April

1999, pp. 65-74.



20 NEW WORLD COMING

federated Europe from the European elite pointof view. But what would never have worked inthe old world may work in the new; alreadymany Germans, Dutch, and Portugueseyounger than age 30 think of themselves asEuropean as much as they do German, Dutch,and Portuguese.32 And if it does work, it will doso largely because, thanks in part to new tech-nologies, the sinews of intersocialcommunications will break down existingcultural as well as economic borders in favor ofnew ones.33

Oddly enough, too, but still quite logical,existing national units are more likely to breakdown in circumstances where an overarchingtransnational edifice is in place, or is seen to becoming into being. Thus will forms of integra-tion and fragmentation coexist. The slogan ofthe Scottish National Party (SNP), forexample, in this past spring’s first election fora modern Scottish parliament, was “Scotlandindependent in Europe.” The SNP did not winthe day, but in the future it might; and roughlysimilar logic applies to places such as Corsica,Lombardy, Wallonia, Catalonia, and theBasque country.

We may also face, as a species, newethical and philosophical challenges

to human civilization itself thanks to theprospects of biotechnology. While biotechnol-ogy harbors tremendous potential for good, thepotential for permanent damage to humanityand the biosphere is also a reality. This tech-nology, for example, will allow for the creationof ever deadlier and harder to detect weaponsof potentially genocidal dimensions. Thelinkage between biotechnology and nanotech-nology methods poses dilemmas even moreprofound. For example, it will soon be possibleto connect human brain cells to silicon chips.34

It will also be possible to alter more precisely

human behavior through genetic engineer-ing.35

While such abilities hold out promisingtechniques for healing many mental andphysical illnesses, and for a very advancedform of robotics, it also suggests that the veryconstituency of humanity may change—notjust from altering the human genome throughgenetic engineering, but also from mixing itwith non-organic mechanics. When philoso-phers have spoken of the co-evolution of manand machine, until now they have spokenmetaphysically. Notions of “androids,”“cyborgs,” and “bionic” men and women havedwelled exclusively in the realm of sciencefiction. But at least the beginnings of such ca-pabilities could literally exist within thelifetime of today’s elementary school children.

The implications of such developmentsshould not be underestimated. Our understand-ing of all human social arrangements is based,ultimately, on an understanding of humannature. If that nature becomes subject to sig-nificant alteration through human artifice, thenall such arrangements are thrown into doubt.36

It almost goes without saying, too, that todelve into such matters raises the deepest ofethical issues: Can humanity trust itself with

32 But still not most, according to the European Commission’s

Eurobarometer 50, cited in Dominique Moisi, “Dreaming

of Europe,” Foreign Policy, Summer 1999, p. 49.33 See John Newhouse, “Europe’s Rising Regionalism,”

Foreign Affairs, Jan./Feb. 1997.34 Scientists have already grown brain cells from a rat on a

silicon chip, the result exhibiting certain characteristics of

each. A photograph may be found in Business Week’s

special Summer 1999 issue on innovation, p. 106.

35 This has already been achieved with mice. See “Social

Behavior Transformed With One New Gene,” Science

Daily, August 19, 1999, p. 1.36 Argued by Frances Fukuyama, “Second Thoughts: The Last

Man in a Bottle,” The National Interest, No. 56 (Summer

1999).




such capabilities? Should it? How can it knowbefore the fact? Who gets to decide?

There have always been technologicalpessimists among us, yet despite the

disruptions of several iterations of major tech-nological innovation over the past fewcenturies, the lives of the vast majority arelonger, healthier, happier, and more secure as aconsequence.37 Most likely, the new discover-ies and devices of the next quarter century willalso tend to enhance life in quality andquantity. Still, there is growing unease that weare upping the ante to the point that a singlemistake or a single act of sheer evil could leavea potentially fatal wound. So it may be thatmankind will come face to face with techno-logical choices that make us think twice beforewe plunge ahead. If so, then we will havereached a new and higher stage of civilizationin which man as a tool-making animal andman as a moral being will devise an explicitreconciliation between these two core facets ofhis nature.

Global Economics: “How Is WealthCreated?”

In its essence, economics comes down toa simple question: How is wealth

created, distributed, and used? But the answerto that question is anything but simple. Wehave moved far beyond undifferentiated sub-sistence means for making ends meet. Local,regional, national, and international economicdynamics have become extraordinarilycomplex, involving matters of matching re-sources, sophisticated production techniques,education and human capital, marketing,finance, trade, and the corpus of custom andlaw that binds all of these activities together.

As far as the next 25 years are concerned,most important in any consideration of U.S.

national security is the extent to which theglobal economic system will continue its pathtoward integration. That is because such inte-gration will affect the distribution ofeconomic, political, and, ultimately, militarypower in the world. Some countries willprosper more than others, and some alert de-veloping countries, such as China, mayprosper most of all.

Continued integration promises greaterwealth for most countries, including theUnited States, but it also promises a host ofnovel vulnerabilities. If integration stalls or isreversed, however, other problems will cometo the fore. Beyond the broad distribution ofwealth and power, political destabilizationcould arise from the tendency of knowledge-based economies to exacerbate divisionswithin and among states. Economic interde-pendence will create vulnerabilities for theU.S. economy. Capital markets and trade maywell be exploited by others for purposes atodds with U.S. interests. New economicpatterns may also affect national identities andthe capacities of states to govern.

Most observers believe that the inter-national economic system is in a

state of rapid transition, but they often disagreeabout where this transition is leading. That ispartly because outside the domains of profes-sional economists—and sometimes withinthem—prescriptive disagreements shape mostdiscussions of globalization. Nevertheless, areasonably objective picture of the new globaleconomy can be drawn. It requires first a graspof structural changes in the internationaleconomy having to do with its financial andproduction dimensions, and how worldeconomic cycles are being influenced as a

37 The optimist-pessimist debate goes on. See Virginia Postrel’s

The Future and Its Enemies (New York: Free Press, 1998),

which describes the contest as it takes the optimists’ side.



22 NEW WORLD COMING

result. It means understanding the connectionbetween trade and capital flows, especially inthe developing world. And it means understand-ing the various barriers to economic change.

A key to the changing global economic en-vironment is the explosion in the volume ofinternational capital flows. The basic data tellthe tale. In 1990, the first full year of the post-Berlin Wall epoch, developing countries

absorbed a little over $100 billion in total long-term capital flows. More than half of thesereflected official aid and assistance from gov-ernments or multilateral institutions such as theWorld Bank. By 1998, the contrast was stark.Total long-term capital flows to the developingworld increased to $275 billion. Of that amount,private capital flows both from internationalmarkets and foreign direct investment account-ed for over 80 percent.38

Perhaps as important as the increased capitalflows are the changes in the nature of the privateparties participating in the market, and how theyare doing so. There have been dramatic increas-es in the numbers and types of participants in themarket, the size of discrete transactions, thetypes of instruments and funds involved, and theoverall speed at which trading takes place. Large

commercial banks still play a major role inglobal capital flows, and in their volatility. Butthe sources of investment have expanded toinclude pension and insurance funds as well asindividual portfolios.39 In sum, the global finan-cial system has grown from a small core set ofplayers to a much larger and more disparate setof investors and creditors. This has created newvested interests across a wide range ofeconomic, financial, and political domains

worldwide who are wagering increasingly largersums for investment and short-term speculation.

Technology has been an important enablerin this development. Advances in informationtechnology have made it possible for financial

38 According to the World Bank, international capital markets

consist of bonds, loans, and portfolio equity flows.

Foreign direct investment consists of the sum of equity

capital, reinvestment of earnings, other long-term capital,

and short-term capital, as shown in the balance of

payments. Official flows consist of the sum of net flows of

long-term debt from official creditors such as multilateral

institutions and governments.39 According to the Organisation for Economic Co-operation

and Development (OECD), pension fund assets invested in

capital markets increased from $4.9 billion to $8.2 billion

between 1990 and 1995. OECD, The World in 2020:

Towards a New Global Age (Paris: OECD, 1997), p. 52.

Capital Flows to Developing Countries




institutions and individual investors alike tocollect, analyze, and act on information aboutmarkets with unprecedented speed. This trendwill grow because, as the technologies spread,others around the world will be able to partici-pate in global markets just as ever moreindividual and corporate investors in developedcountries like the United States do today.

Technology has had an even more profoundeffect on production itself. Technologicaladvances have changed the way companies arebeing run in terms of operation, size, andlocation. On the one hand, it is now possible—and will become increasingly so—for manybusinesses to be truly global. On the other hand,information technology facilitates the shapingof specific production to specific markets. Thisphenomenon, known as niche production, willexpand in coming years as the diffusion ofknowledge about production techniques, and ofsmart machines themselves, merges with a farmore specific and near-instantaneous knowl-edge of the market. This is true for old productareas, such as textiles, and for new productdomains that technology itself helps bring intobeing. In different ways, the globalizing ofbusiness organization, the expansion of interna-tional markets, and the advent of nicheproduction will force the restructuring of indus-trial and service sectors alike. It will also tend toimprove standards and quality, and to put apremium on achieving speed, efficiency, andknowledge-based processes at every level andfor every kind of business activity.

Information technology has also influencedinventory strategies, and these too have nationalsecurity implications. Inventories are expensiveto carry, and businesses prefer to maintainlighter loads in that regard. The problem is thatdisruptions in supply for whatever reason—notleast war—leave dependent countries vulnera-ble. For example, should China attempt to seize

Taiwan by force, and in the process cut theeconomic links between Taiwan and the UnitedStates, American industry might well find itselfshort of important economic components.

Then there is the Internet, which is revolu-tionizing traditional methods of marketing anddistribution. The Internet already provides anovel source of commercial advertisement—less for particular products than for classes ofproducts—and its influence in that domain willgrow exponentially over the next quartercentury.40 It also lowers the cost of entry to newmarkets, facilitating the expansion of smallerenterprises into international business. TheInternet is allowing markets to become trulyglobal, with fewer middlemen taking profit andslowing transaction times. Not only is the inter-national market becoming larger, it is alsobecoming less hierarchical, and that has signifi-cant implications for the structure of commerceand competition across both the service and in-dustrial sectors of the global economy.

The integration of the world economynow afoot is different from earlier

episodes of economic integration. First, the ratioof trade to global GDP, at least according tosome measures, is at historically high levels.41

States today benefit more from economic inter-action with other states than at any other timein the modern age, and they are also more de-pendent on those interactions to maintain

40 See Matthew Symonds, “The Net Imperative,” and “When

Companies Connect,” The Economist, June 26-July 2,

1999.41 Trade as a percentage of world GDP approached 15 percent

in 1992. Trade as a percentage of GDP in the pre-World

War I era was just over 9 percent. But see Benjamin J.

Cohen, “Phoenix Risen: The Resurrection of Global

Finance,” World Politics, January 1996, and Mark

Hallenberg, “Tax Competition in Wilhelmine Germany

and Its Implications for the European Union,” World

Politics, April 1996.



24 NEW WORLD COMING

levels of growth and consumption. An everlarger number of countries, including theUnited States, increasingly relies on importsfor consumer goods, export assembly, andtechnology inputs. In addition, the prosperityof domestic companies, financial institutions,and individuals is increasingly tied to thesuccess of overseas operations.

Second, trade is less dominated by theexchange of commodities and manufacturing,having spread to include the export ofservices. It also now encompasses a far widerrange of the world’s countries. This spreadingof international commerce has been particu-larly profound in the developing countries,the traditional suppliers of commodities tomore industrialized states, which haveemerged as important sources for a range ofmanufactured goods.42

Third, the cross-border reach of multina-tional corporations and other businessproduction networks has accelerated. Largecorporations can create truly global productionnetworks, seeking out the lowest productioncosts worldwide for major components as wellas whole products. U.S.-based corporations areincreasingly shifting their operations overseas,depending more on global markets for revenuesand production. More important, perhaps,multinational corporations are increasinglybecoming transnational corporations, the dif-ference being in the extent to which ownershipand the flow of revenues internal to the corpo-ration tend to coalesce at one hub as opposed tomany hubs around the world.

Fourth, stock markets have been createdthroughout the world, and many of them havealready become important engines of savingsand investment. The most significant long-term implication of these new equity marketslies in their capacity to allocate investment re-

sources according to market-based criteria. Inmany countries this is an important new phe-nomenon, serving to advance other economicand also political reforms.

Fifth, international and multilateral insti-tutions hold a prominence in today’seconomy unparalleled in the global economicsystems of the past. These institutions are re-sponsible for resolving trade disputes anddesigning national financial policies, amongother functions, and these functions willexpand as the global economy becomes in-creasingly integrated.

Sixth, expectations themselves are impor-tant. Large numbers of people in mostcountries are well aware of the economicbenefits of a more integrated world. Theyhave reason to pressure their governments toremove impediments, such as barriers to theinflow of capital, that stand between them andthe presumed benefits of global economic in-tegration.

Additionally, an increasingly integratedglobal economy is speeding the spread of inter-national best practices. When economies arelinked closely to world financial markets, gov-ernments cannot so easily maintain protectionistpolicies, and they must increasingly respect thediscipline of the market. This is a good thing notjust for bankers and financiers, but also forordinary people, who have suffered far morefrom bad government than from the herding in-stincts of international investors.

Taken together, these changes suggest animportant political implication. That so manypeople might be spared the miseries ofpoverty, and even become downright wealthy,opens up the possibility of more pluralist

42 For details, see OECD, The World in 2020, p. 37.




politics and less violence over more of theglobe. The wealthier a country is and thedeeper its integration into the globaleconomy, the stronger its incentives to avoidmajor conflicts with its neighbors. Of course,economic logic does not necessarily coincidewith political interests, and states have oftendone economically irrational things for polit-ical purposes. But such incentives do matter.

It would seem, then, that the prospect ofan increasingly integrated global

economy lies before us. The integrativeprocess, however, is not so simple. There areseveral reasons to doubt that global economicintegration will proceed rapidly or smoothly.It may not even proceed at all, and it mayeven retreat in some areas. Let us visit thepossibilities.

Resistance to change can be strong, andresistance to rapid change stronger still.Global integration, to the extent that anysociety engages in it, necessarily increases itsexposure to market forces through the reduc-tion of trade and investment barriers and thederegulation of the domestic economy. Whilethe market tends over time to reallocate re-sources from less to more productiveendeavors, it also disrupts local communitiesand traditional patterns of commerce. Itrequires wrenching structural shifts within acountry’s industrial base and employmentprofile.43 Alterations in the patterns of wealthproduction, and consumption invariablydestabilize the location of social status andboth political and moral authority.44 Sincethose who have status and authority are gen-erally reluctant to part with it, someresistance to change is inevitable.

Resistance to the spread of globaleconomic integration can take many forms.One historic form is protectionism. Whereas

the benefits of international trade are general,the costs are frequently distributed morenarrowly among a country’s less competitiveindustrial sectors. As an industry feels thebrunt of international competition, politicalpressure is often generated to shelter it. In thedeveloped world, perceptions that competi-tion with the lower-wage developingeconomies will threaten traditional but rela-tively uncompetitive industries, and thuscause downward pressure on wages, are likelyto engender protectionist sentiment over thelong term.

Support for protectionism has also beendeveloping in the United States, which is notsurprising since free trade and globalizationare the main reasons for the decline of high-paying manufacturing jobs. Protectionistsentiment has manifested itself in proposalsto raise tariffs on imported steel and in oppo-sition to extending presidential fast-trackauthority in negotiating trade agreements. Allthis is occurring at a time of record employ-ment, high growth rates, and ebullienteconomic optimism. That poses a troublingquestion; as former Labor Secretary RobertReich put it: "If free trade inspires this muchantipathy now, when the economy is surging,

43 Some of these shifts are the function of oscillating exchange

rates, which make products either cheaper or more dear

without any reference to the objective productivity base of

the industry. See Dani Rodrik, “Has Globalization Gone

Too Far?” California Management Review, Spring 1997,

pp. 29-53.44 Mexico is lately a stellar example, from the banishing of

U.S.-educated technocrats from the upper echelons of

party politics to the largest student strike in 40 years. See

Sam Dillon, “Mexico’s Presidential Hopefuls Are All New

Breed,” New York Times, June 24, 1999; and Julia Preston,

“Student Strike in Capital Jarring All of Mexico,” New

York Times, June 25, 1999.



26 NEW WORLD COMING

what will happen when the economy slows,as it inevitably will?"45

Elements of protectionism can come in mul-tilateral as well as bilateral form. Regional tiesare expanding and serving as a basis foreconomic growth, particularly through group-ings such as Mercosur, the European Union, andNAFTA. So far, too, these groupings havetended to reduce trade barriers not only withintheir borders but also, with the exception ofagricultural products, to the world at large.Nevertheless, should these blocs turn into defacto regional cartels when times get rough,world growth would be threatened instead ofboosted. Competing regional trading blocs couldmute, not encourage, the integration of newmarkets and resources in the global economy asa whole.

We can already see examples of protec-tionist proclivities within regional tradingblocs. Tensions between the EU and theformer Soviet satellites in eastern and centralEurope owe much to this problem. EU agri-cultural goods are subsidized and thus bribedinto export to places like Poland and theCzech Republic, putting great pressure onPolish and Czech farmers. Meanwhile, manyeast European goods are effectively kept outof EU markets by tariffs and quotas thatspecifically target those east Europeanproducts that are competitive within EUmarkets. Obviously, in such a case trade islimited as a whole by what amounts to aregional cartel.

Culture, too, can be a source of resis-tance to economic integration.

Resistance to change is liable to be morevigorous to the extent that the cultural carrierof that change is thought to be alien and dan-gerous. The implements of modern technologyare overwhelmingly Western, and many equate

the emerging information society withAmerican culture. In some societies, and par-ticularly among younger generations, thisculture is widely embraced. In other societies,however, this pop global culture is muchresented, and it often divides generations in away that irritates and worries national elites.Such resentment is discernable not only amidobviously reactionary forces—say, theTaliban—but is also widely present in Europeand in other countries that Americans presumeto be their allies and friends.

Like it or not, we are entering an era ofglobal culture conflict, the contours of whichwill be shaped by the pattern of how differentcultures assimilate new technologies and availthemselves of emerging global economicpatterns. Experience and common sense teachthat it is frequently more difficult to acquirethe attitudes—the social software, so tospeak—that underlay a successful openeconomy than it is to acquire the capital andthe desire to build one. Just as hopes weredashed 35 years ago that “technologytransfer” would generate widespread sponta-neous indigenous economic growth in theThird World, so today it takes more than atechnical process for major social innovationto set roots and succeed.46 Culture matters. Aswith the diffusion of technology, parts of theworld are as likely to be pulled apart asbrought closer together in the process ofglobal economic integration.

Those peoples who do not benefit from amore integrated global economy are unlikely

45 See Robert B. Reich, “Trading Insecurities,” Financial

Times, May 20, 1999.46 Note Thomas Sowell, Migrations and Cultures: A World

View (New York: Basic Books, 1996); and Lawrence E.

Harrison, “The Cultural Roots of Poverty,” Wall Street

Journal, July 13, 1999.




to blame their own lack of social capital; theyare more likely to sense conspiracy and feelresentment. That, in turn, prompts thequestion: Can a world half-integrated throughWestern techniques and technologies and aworld half-alienated by them stand together inan era of dissolving borders? If the issuecomes to be not just one of “haves” and “havenots,” but “wants” and “want nots,” can thelatter successfully spoil the brew for theformer?

Adeterioration of the security situationin a given country or region would also

radically affect the economic prospects of thatarea—possibly of the whole world if the regionis large or important enough. It almost goeswithout saying that war obstructs commerce,destroys human capital and infrastructure, anddiverts investment from productive to destruc-tive sectors; capital withdraws to safer zones,undermining development and employment,thereby creating the conditions for still more in-stability and violence. Zones of the world that,for whatever reason, fail to stem the tide ofviolence, will fall ever farther behind in the 21st

century. The result will be even greater discrep-ancies between rich and poor, not just amongregions and countries, but also within them.Bouts of warfare between major powers wouldthreaten the entire global economic system.

A major disruption in global energymarkets could also have a profound impacton economic growth and integration world-wide. Developing economies will have alarge appetite for energy as they seek to jointhe new global economy. Asia’s energy con-sumption will likely increase over 250percent between 1996 and 2020.47 The avail-ability of abundant cheap oil from thePersian Gulf has been the major contributorto the sustained low prices of the past decade.If this supply is somehow threatened or

limited, then growth in developing countriescould be stymied. Many regimes in the de-veloping world might not survive theeconomic shocks resulting from an unstableoil market.

Still other discontinuities could affecteconomic integration. One, possibly anoffshoot of biotechnology gone awry, couldbe major unexpected epidemics; anothercould be the further massive spread of AIDSto countries such as India or China. Shouldthe world face the threat of pandemics, allbets would be off with respect to projectingeconomic growth rates. Human capital, popu-lation distributions, and the economicinterconnectedness of the planet itself couldall shift dramatically.

Clearly, then, further global economicintegration is not a certainty. Nor can

we assume the absence of a major systemiccrisis over the next 25 years. Another major“boom-bust” cycle in the developing world,such as was experienced in 1997-98, couldundermine political support for the market-based policies upon which the emergingglobal economy is based. But of all thedangers to the new economic arrangementswe see aborning, the most critical, at least forthe near term, concerns the health of the U.S.economy.

For the next five to ten years, the contin-ued strong performance of the U.S. economywill be crucial to avoiding a systemic crisis.In the aftermath of the financial crisis of1997-98, the United States is the only majoreconomy continuing to experience robusteconomic growth. A sharp downturn in theU.S. economy, were it to occur before thedemand for goods and services picked up sig-

47 International Energy Outlook 1999 (Washington, DC:

Energy Information Administration, 1999), p. 141.



28 NEW WORLD COMING

nificantly in Europe and Asia, would lead to aworld recession.48 That would radically altercurrent rosy projections of U.S. and global pros-perity.

How likely is a severe downturn? Few seriouseconomists believe that the United States canmaintain its current brisk rate of economicgrowth, with little or no inflation, over a 25-yearperiod. There will be downturns. The crucialquestion is how severe they will be, and that inturn raises the question of what might cause them.

Some experts believe that the current vulner-ability of the U.S. economy relates to theovervaluation of the U.S. stock market and unsus-tainable levels of consumer spending. Othersdisagree, believing that real gains in productivity,thanks to the cumulative impact of the informa-tion revolution, presage a surge of real growthsuch that the market may be undervalued. Otherssee vulnerabilities in the trade deficit on the onehand and the capacity of the United States overtime to attract sufficient overseas investment tofinance its national debt. If, for example, realeconomic reform in Japan led to greater Japaneseconsumer spending, that would reduce theamount of capital the United States could borrow.Conjoined to the further development of a eurobond market, the United States might have toraise interest rates to attract capital.49 That couldhave a serious recessionary impact that might alsoaffect world growth rates.

But a “hard landing” is not inevitable. TheU.S. current account deficit is only about 2percent of GNP, not an extreme number, andlower than was the case during much of the1980s. Moreover, the current period of highdeficits has also been a period of high investment.But if there is a “hard landing”—in which a de-preciated U.S. dollar results in a compression ofU.S. imports, lower foreign financing of the U.S.deficit, and higher domestic interest rates—its

impact on the rest of the world could be consider-able.

There is a related issue. The global economyas a whole is dependent on the willingness of theprivate capital markets to continue their primaryrole in circulating savings from capital rich coun-tries to capital poor ones. As it happens, themajority of the funds in those capital markets isnow either American money or foreign moneymanaged by American firms—although thatcould change fairly quickly. Thus, what happensin the U.S. economy will have an effect on thewillingness and the capacity of private capitalmarkets to function. Economic conditions in theworld’s major economies, and particularly theU.S. economy, will still matter most in determin-ing the size and nature of private capital flows.50

Some further volatility in capital markets islikely—how much, no one knows. But if therewere an extended retrenchment of capital fromdeveloping countries, prospects for economicgrowth in many individual countries and theglobal economy as a whole would be reduced.51

Without sustained economic growth, theprospects for political stability would dim inmany places. While growth cannot solve allproblems, it works well enough as a political pal-

48 Japan’s economy has already picked up. See Stephanie

Strom, “Japan Grows 1.9%, to Economists’ Disbelief,”

New York Times, June 11, 1999, p. C1.49 See C. Fred Bergsten, “America and Europe: Clash of

Titans?” Foreign Affairs, March/April 1999.50 Foreign direct investment is the exception to this. FDI flows

to developing countries dropped less than 5 percent

between the crisis years of 1997 and 1998. Global

Development Finance, p. 14.51 Capital flows to the developing world have been unevenly

distributed. Therefore, since most of the flows have been

concentrated in only a few large developing markets, it is

misleading to lump all developing countries together

insofar as the significance of global capital flows is con-

cerned.




liative much of the time. And of course, theproblem is circular: the more social and politicalinstability, the poorer the economic prospects, andthe poorer the economic prospects, the more po-litical and social instability—at least once peoplehave gotten a taste of what they are missing.

But what is most likely to happen?Continuing global economic integra-

tion, a slowing or stalling out of the recent pace ofchange, or even retrogression?

Barring a major disruption of the globaleconomic or political system, the major trends inglobal finance, manufacturing, transportation,telecommunications, and trade described abovewill not be reversed anytime soon. The cross-border web of global networks will deepen andwiden as strategic alliances and affiliates increasetheir share of production and profits.52 The inter-nationalization of production networks will alsocontinue. But the speed at which other parts of theglobe join the integrative process, and the inclu-siveness with which countries are transformed asa result, is likely to be uneven, and in many casesmuch slower than anticipated.

What will this imply for the global economicsystem of the next century? Savings in the devel-oped world will continue to finance growth in atleast some of the developing world—unlessmajor countries suck up too much of the world’sinvestment capital. The judgments of markets andkey market institutions, such as the major debtrating services, will remain critical in determiningthe size and sustainability of capital flows to all e-conomies, not just to large developing ones suchas Russia, Mexico, and Brazil. As important, theability of developing economies to gain access tothese funds will play a major role not only in howthey fare, but also in how advanced ones fare,because their fortunes are increasingly linked.

Further global economic integration alsomeans that there will be global economic growth,a remark that sounds rather banal but, on historicalreflection, is not. Annual economic growth inseveral non-OECD economies (Brazil, China, andIndia) could average between roughly 5 and 7percent. Today’s OECD countries will averageannual growth between 2 and 3 percent. Thus, thenon-OECD share of world GDP is likely to risefrom 44 percent to between 56 and 67 percent, de-pending on whether growth rates tend toward thehigher or lower end of growth predictions. Thanksto its very large population, projected moderate tohigh growth rates, and a particular method ofmaking economic comparisons, some have madethe surprising assertion that China’s economycould overtake that of the United States as the

world’s largest in absolute terms by 2020.53

52 For example, the National Association of Securities Dealers

announced in June that it would team up with the

Softbank Corporation to develop an electronic version of

its electronic Nasdaq Stock Market in Japan to trade both

U.S. and Japanese stocks. This will create literally a 24-

hour market, and it is only the first of many likely joint

enterprises of this sort. See Edward Wyatt, “Market

Place,” New York Times, June 16, 1999, p. C11.53 In order to make this projection, the OECD uses a metric for

comparing countries’ economies called the Purchasing

Power Parity (PPP) standard. PPP is used now for GDP

output comparisons by the CIA, the Department of

Commerce, the World Bank, and the IMF as well as by the

OECD. While this method avoids the distortions of using

exchange rates to compare economies, it introduces distor-

tions of its own. For details, see Murray Weidenbaum,

“China’s New Economic Scenario: The Future of Sino-

American Relations,” Orbis, Spring 1999, pp. 223-4.

More conventional measures suggest that China would

have to grow at an average of 12.4 percent per year for 25

years to equal the size of the U.S. economy—obviously an

impossibility. Finally, it almost goes without saying that

OECD and other professional institutional estimates of

economic growth have often proven fallible in the past.



30 NEW WORLD COMING

These general trends are hugely important.For at least the last century, global economicpower and influence have resided in the largecountries of western Europe, North America,and Japan. The global economic system in2025, however, will be multipolar. In both lowgrowth and high growth scenarios, China, India,and Brazil could become significant economiccenters and attractive export markets for OECDand non-OECD countries alike.54 This will rep-

resent a major realignment in the patterns ofglobal economic influence and power. Increasedtension is possible in consequence as thesestates try to assert their newfound influence invarious arenas. They are bound to want to influ-ence the rule-making processes in internationaleconomic regimes, processes that are dominatedtoday by the United States and its allies.

Coincident with these likely trends in theeconomic future will be ongoing

debates at the regional and international levelsconcerning the integration and regulation of this

increasingly complex and still volatile globaleconomic system. The volatility of today’scapital markets, well illustrated by recent crisesin Asia, Russia, and Brazil, has led to wide-spread demands for a “new financialarchitecture.” Such an architecture must meshpolicymakers’ demands for stability withmarket requirements for flexibility, and comingup with an acceptable formula has been tricky.55

We are therefore likely to witness a continuing

54 For the purposes of the graphic, Europe is defined as the 15

countries of the EU plus Iceland, Norway, and Sweden.

The high and low growth scenarios differ primarily with

respect to whether trade barriers and export taxes/subsi-

dies decline to 50 percent or to zero, whether fiscal

consolidation and labor market reforms take place, and

what increases occur in energy efficiency, oil prices, and

population growth. See OECD, The World in 2020, p. 63.55 A major new study from the Council on Foreign Relations

takes a stab at the problem. See Safeguarding Prosperity

in a Global Financial System: The Future International

Financial Architecture, Report of an Independent Task

Force (New York: Council on Foreign Relations,

September 1999).

An Emerging Multipolar Economic World

Source: OECD, The World in 2020, p. 92.




debate over how to keep international capitalflowing, while, at the same time, reducing thevolatility of those flows.

One school of thought likens infant interna-tional economic institutions to immaturenational ones. According to this argument, weshould expect several sharp fluctuations in in-ternational business cycles before the muchmore difficult task of coordinating policyamong many countries moves far forward. Afterall, the IMF was created at a time when mostexperts worried more about managing tradeflows than capital flows and currency fluctua-tions.56 But others oppose the notion ofregulating international capital flows fromabove.57 The more unfettered a market, themore liable it is to produce both extraordinarysuccesses and extraordinary excesses. The wayto tilt reality in the former direction, manyargue, is not solely through regulation, but byforcing actors to learn best practices, and byexposing them to the penalties of occasionallygetting it wrong.

This argument will not soon run its course.Future international financial crises are there-fore inevitable; but of what magnitude andduration we do not know. As for their location,the developing world is the most likely epicen-ter, for that is where banking systems andinternal regulatory regimes governing capitalflows are most fragile. Since the pain of disrup-tions can be severe, the temptation to restrictcapital movements will continue to exist. Wehave seen such a temptation at work inMalaysia’s application of capital controls in1998. Nevertheless, given the importance of at-tracting capital for economic development,attempts to limit the freedom of financialmarkets are unlikely to be applied to anythingbut short-term capital flows.

The volatility of capital markets has impor-tant security implications. First of all, thegrowing magnitude and nature of capital flowssuggests a potential for ever bigger global wavesin the movement of capital—bigger at their crestsand also bigger at their troughs.58 It is as thoughregional business cycles that were not harmo-nious in the past may become so in the future. Ifso, such waves can be large enough to capsizeentire governments and destabilize entireregions. Second, and even more important, thenature of future regulations on capital volatility,and how they evolve, will set the tone for howstates interact and for how technology and wealthare used. In other words, the process could shapethe results such that getting there—to a new in-ternational economic architecture—could benearly tantamount to being there—in a stablesecurity environment.

Adifferent approach to ameliorating thenegative effects of huge and sudden

flows in capital focuses on currency blocs.Some experts believe that by 2025 the worldwill be dominated by dollar and euro currencyzones, and that such zones may be an effectiveway to allow smaller economies to enjoy thebenefits of increasing global capital mobility

56 Such efforts may go hand in hand with debt reduction for the

developing world, for the size of that debt not only harms

those who owe, but ultimately also those who are owed.

See Bob Davis, “G-7 Moves to Revamp Financial

Systems,” Wall Street Journal, June 21, 1999, p. A23.57 Some even propose abolishing the IMF, whose task has

metastasized since the end of the era of fixed exchange

rates. This includes former Secretary of State and Treasury

George Shultz. See his testimony before the Joint

Economic Committee of the U.S. Congress, May 5, 1998. 58 This is not an entirely new development. The movement of

“hot money” in the 1930s raised similar problems. See

Harry Gelber, Sovereignty Through Interdependence

(London: Klewer Law International, 1997), especially

chapter 2.



32 NEW WORLD COMING

while avoiding some of its hazards.59 Throughthe course of the Mexican Peso crisis of 1995and the 1997-98 financial crisis, fixed exchangerates became increasingly associated withdamaging exchange-rate volatility. Whileeven large economies are not immune fromsuch volatility, the small size of many devel-oping economies’ financial markets—oftenno bigger than a regional bank in the UnitedStates—makes it harder for them to avoiddamage in a world of ever increasing capitalflows. Some developing countries may seekexchange-rate stability by creating currencyboards that fix the exchange rate to a givencurrency or basket of currencies. More radi-cally, however, they can join with othercountries to create a new currency (such asthe euro), or they can adopt the currency ofanother country, as Panama has done with theU.S. dollar.60

The widespread implementation of any ofthese options would likely signify the de factoreturn to a largely fixed exchange rate system.61

But there are problems. Should Argentinaformally adopt the U.S. dollar, for example, ashas been widely discussed in recent months, itwould make the U.S. Federal Reserve theultimate arbiter of Argentine monetary policyand reduce significantly the sovereign power ofthe Argentine state.62 The Federal Reservebristles at the former now, and the Argentinegovernment would no doubt bristle at the latterin the fullness of time.

The debate over currency blocs has onlyjust begun, and it will probably not end formany years. That is because, at base, interna-tional monetary policy involves a relationshipamong three factors—capital mobility, the exis-tence of independent monetary policies, and aninclination to fixed or at least stable exchangerates—that seems impervious to permanent set-

tlement. While it is too soon to say how thecurrency bloc debate will turn out, it is not toosoon to conclude that it will be a major arena ofpolicy discussion and experimentation over thenext quarter century.

What will be the implications for U.S.national security of global economic

shifts? As noted above, these can be summedup by reference to four basic phenomena:greater disparities; increased interdependence;the exploitation of both trade and privatecapital markets for parochial purposes; andchallenges to the identity of nations and henceto the capacities of states to rule them.

The harnessing of ideas, knowledge, andglobal resources has the capacity to increaseworld economic output tremendously, but withit will also come greater disparities in wealthand income. Such disparaties will appearamong countries, with significant implicationsfor relative national power.63

Knowledge-based economies will alsocontinue to create internal divergences in whichthe wealthy, well-educated, and well-placedwill tend to get richer while the poor will tendto stay poor or get poorer. Middle classes, suchas they are, will tend to split.64 This trend is dis-cernable already in those countries in thevanguard of knowledge-based economies. For

59 See Zanny Minton Beddoes, “From the EMU to AMU? The

Case for Regional Currencies,” Foreign Affairs,

July/August 1999, pp. 8-13.60 “Global Financial Survey,” The Economist, January 30,

1999, p. S15.61 Ibid.62 Argentina has already made the Federal Reserve the de facto

arbiter of Argentine monetary policy.63 The key conclusion of the United Nations Human

Development Report, 1999.64 See Peter F. Drucker, “The Age of Social Transformation,”

Atlantic Monthly, November 1994.




roughly twenty years, nearly 60 percent of theU.S. population has experienced falling realwages.65 It is also in keeping with recent trendsin economic history, where disparities in percapita income within developed countriesoutpaced those in both economies in transitionand in developing countries.66

Internationally, the pockets of povertyamid wealth will also be more closely inter-

laced than is the case today. Some regions ofthe world are still almost entirely devoid of theaccoutrements of the information revolution;the huge and densely populated area within acircle drawn at a radius of 1,600 miles aroundKabul is a good example. That will almost cer-tainly change over the next 25 years. Once theworld is fully “wired” together, skilled laborwill be far more mobile, both literally and interms of who people can choose to work forfrom computer stations in their home regions.

Economic disparities will be more visible tomore people, which could be a new source offrustration and social tension.

Second, interdependence will characterizerelatively open economies, including theUnited States. Those U.S. companies, in-vestors, and consumers that depend onoverseas production, imports, and revenueswill be implicated by all those events overseas

65 For a brief discussion of recent trends, see Laura D’Andrea

Tyson, “Wages and Panic Buttons,” New York Times,

August 3, 1999.66 As defined by the United Nations, developed countries

include Canada, the United States, the EU, Iceland, Israel,

Malta, Norway, Switzerland, Australia, New Zealand, and

Japan. Economies in transition include Russia,

Southeastern Europe, the Baltics, the Czech Republic,

Hungary, Poland, and the CIS. Developing countries

include all other countries in Africa, Latin America and

the Caribbean, and Asia, including China.

Per-Capita Income Disparities



34 NEW WORLD COMING

that affect major companies, affiliates, andsuppliers. The key point is that a globalizedeconomy renders all participating states morevulnerable to exogenous shocks and disrup-tions, whatever their sources. The channels oftransmission for such shocks are simplygrowing faster than our understanding ofthem.

Very much related, as multinational cor-porations become increasingly international incharacter, the link between the corporationand its country of origin will be rendered moreambiguous. National governments, includingthat of the United States, will be increasinglysubject to competing interests with constituen-cies that represent cross-border interests andalliances. Such competing interests couldinvolve sensitive technology: transnationalcompanies will seek minimal restriction insourcing, selling, and licensing technologyworldwide, but the U.S. and other govern-ments will maintain an interest in controllingand regulating dual-use technology formilitary-security reasons. An already difficultproblem may get worse.

Even more portentous, as global anddomestic infrastructures become indispens-able to modern life, their disruption can haveliterally life-threatening consequences. Suchinfrastructures, including crucial transporta-tion, health, sanitation, and financial systems,are bound to become targets of the disgrun-tled, the envious, and the evil—individuals,groups, and potentially hostile countries alike.They will be very difficult targets to defend.Cyberwar, the attempt to shut down sophisti-cated systems with sophisticated means, is aserious threat, well worth worrying about.67

Complex systems can also be disabled byprimitive explosives detonated at the “right”time and place. And if we turn to genetic en-gineering to enhance yields from cereal and

other crops, we make those crops uniformlyvulnerable to deliberate attempts to ruinthem—as well as to the lucky insect, fungal,or bacterial pest.68

Athird national security problemconcerns the potential exploitation of

the new scale and nature of private capitalmarkets. The transformation of internationalfinancial markets allows governments as wellas companies to raise money in different waysand from different sources than was the casewhen governments and commercial bankssupplied the lion’s share of such financing.Since the end of the Cold War, importantstates have taken advantage of this new envi-ronment. Russia, for example, has raisedconsiderable sums through private capitalmarkets, transfers that have been facilitated byU.S. policy and international lending institu-tions such as the International Monetary Fund.It is unclear whether the money has helpedadvance fundamental reform in Russia; somebelieve that it may have hindered reform byrendering it less urgent. Worse, since money isfungible, it is possible that funds raised frombond offerings in the United States can beused in ways that violate the spirit of U.S.laws.

Even if such activities are not technicallyillegal, they can be politically sensitive.Clearly, we are entering an era in which major

67 The White House, “Protecting America’s Critical

Infrastructures: PDD 63,” May 22, 1998; Critical

Infrastructure Assurance Office, White Paper on Critical

Infrastructure Protection, May 1998; and the Marsh

Commission Report itself, called the President’s

Commission on Critical Infrastructure Protection, Critical

Foundations: Protecting America’s Infrastructures

(Washington, DC: GPO, October 1997).68 For an edifying fright, see Paul Rogers, Simon Whitby, and

Malcolm Dando, “Biological Warfare against Crops,”

Scientific American, June 1999, pp. 70-5.




“private” financial transactions have major po-litical implications.69 China has issued some134 bonds in global markets since 1980,totaling some $26 billion. Of this $26 billion,$10.5 was dollar-denominated, and of thesenearly 60 percent was offered by just threeentities, all of which may be implicated eitherin espionage directed against the United Statesor in military activities inimical to U.S.national security interests.70

The Russian and Chinese governmentshave made extensive use of the private marketmainly because that is where most of themoney is. They have done so, as well, becauseborrowing from such sources is often less ex-pensive overall, for there are no underlyingtrade transactions or projects involved to befinanced. This, in turn, makes it easier todivert funds for non-productive or even nefar-ious purposes. Until fairly recently, the use ofprivate capital markets also made it easier toavoid conditionality, transparency, investmentdiscipline, or the provision of collateralcompared to using government-to-governmentfunds or large commercial banks. Moreover, itis easier to recruit new sources of funding,such as insurance companies, pension funds,and securities firms.

The use of private financial markets alsoenables the cultivation of powerful politicalconstituencies in both recipient and investorcountries. Many experts have argued that the“bailout” packages put together for Mexico,Korea, and Russia have encouraged creditors,investors, and some private sector borrowersto think that if they stumble, the governmentsof the affected states, along with assorted mul-tilateral institutions, will also bail them outwith public funds and politically motivatedloan forgiveness packages.

The use of private capital markets in theUnited States for purposes at variance withU.S. economic or security interests willcontinue. What is less clear is how to deal withsuch problems without placing new restric-tions on capital flows.

Finally, global economic integrationmay bear important implications for

the nature of states and the state system itself.Here, too, there is disagreement as to whatthose implications might be.

Some believe that the internationalizationof economic life will affect the very founda-tion of political identity. Commercialorganizations are becoming global, it isargued, and so are the science and technologybases of those operations and their associatedlabor markets. If people’s livelihoods becomeincreasingly international in source, it followsthat their sense of emotional attachment to thestate will wane. This will be particularly thecase where there is no obvious physical or ide-ological threat at the state level over anextended period. The implications for civil-military relations, broadly construed, canhardly be overstated: unless they feel them-selves directly at risk, citizens will not risk

69 More accurately, perhaps, re-entering such an era, for the

same phenomenon was common before the present

century. The manner in which Benjamin Disraeli obtained

the Suez Canal for Great Britain from the penurious

Khedive Ismail is a picturesque case in point, but only one

of many.70 Figures are taken from “The National Security Dimensions

of the Global Capital Markets,” remarks of Roger W.

Robinson before the Alaskan World Affairs Council, May

7, 1999; and “Can We Prevent U.S. Credit Flows From

Fueling Russian Proliferation,” remarks of Roger W.

Robinson before the Non-Proliferation Policy Education

Center, May 19, 1999



36 NEW WORLD COMING

their lives for a state with which they feel littleor no emotional bond.71

While emotional bonds to the state mayerode, demands made upon the state mayincrease in an era of great economic and socialdislocation. This will put many states in aserious bind, with simultaneously less le-gitimacy from which to draw and lesspower to influence increasingly salientglobal economic issues. This condition, itis averred, will come to define the verycrucible of national security policies inmost advanced countries: greater socialdemands and expectations with respect tomajor economic stresses, combined with lessstate influence over the issues at hand. Manystates, it is suggested, will not be able tosurvive such conditions, at least not as they arepresently constituted.

How convincing is this view? Parts of itcertainly make sense. It is true, for example,that most states’ control over economic powerand policy has been reduced from that of theCold War era. Six reasons come to mind.72

First, while governments still matter ineconomic policy, the private sector now domi-nates more than ever the sources of economicgrowth, employment, and technological inno-vation. As governments rely more on privatefinancing and market perceptions, their abilityto manage fiscal policy without imposingpenalties on the cost and availability of capitaldecreases. Second, the adoption of internation-al standards that augur for liberalized andimproved regulatory regimes translates intoless capacity for states to manipulate nationaleconomic policy. Third, the pressures ofeconomic and political decentralization couldpush many national governments toward thefurther empowerment of local governments.Fourth, increased economic dependence on

others makes it harder for governments to plan,predict, and control their financial futures.

Fifth, interest groups operating acrossborders, often in broad coalitions, can influencethe strategies of private sector entities as well asthe policies of governments. Already suchprivate activities—those of the SorosFoundation, Amnesty International, DoctorsWithout Frontiers, Alert International, andmany others—dwarf the organizational and fi-nancial capacities of many of the states inwhich they operate. Such activity could growsharply if government regulatory regimescannot keep pace with business activities, asmay well be the case in many countries. Cross-border uses of mass action to police businessactivities may grow in rough proportion to thedecline in governmental capabilities. The po-tential exists for millions of individualdecisions to shape the future without the medi-ation of existing political institutions.73 Sixth,most governments will experience continuedpressures to reduce budgets, improve the trans-parency of decision-making, and developpolicies that leverage private sector resources.All else equal, this will make it harder for gov-ernments to assist directly in incomeredistribution and provide social safety nets tovulnerable segments of their populations.

But will this mean that most states—andeven great powers—will necessarily be con-strained from implementing policies thatmaterially interfere with this growing web ofeconomic interdependence? No, it will not.Pressures against state authority and control

71 See Peter F. Drucker, “The Global Economy and the Nation-

State,” Foreign Affairs, Sept./Oct. 1997, pp. 159-71.72 See Saskia Sassen, Losing Control? Sovereignty in an Age of

Globalization (New York: Columbia University Press,

1996).73 Noted in Jean-Marie Guéhenno, “The Impact of

Globalization on Strategy,” Survival, Winter 1998/99.




may be taken for granted, but states will fighthard to retain their role as the ultimate arbitra-tor of sovereign economic policies. They havedone so many times in the past, and usuallysuccessfully. This suggests that the struggle fornew forms of national maintenance and controlwill become the key to renewed state power.

The evidence thus far in our own erasuggests that at least some states have a goodchance to manage the process of economicchange effectively.74 One reason is that soci-eties need them to succeed. The state is, afterall, an expression of political community, withall its historical and emotional associations, aswell as a vehicle of economic functionality.Those states that rule over coherent nationsenjoy a store of symbolic capital against whichthey can draw. It is thus misleading to read intoa reduction of state prerogatives over economicissues a reduced role of the state overall, or toassume that the core principle of state sover-eignty is necessarily put at risk by increasingglobal economic integration. What does seemunarguable, however, is that if economic issuesbecome more important, those states thatmanage to master the processes of change willsee their relative international power increaseover those that do not. National power is not thesame as state power, the latter being that shareof the former that governments learn to collect,manage, and deploy. The formula for translat-ing national power into state power is changing,but it is not beyond mastery.

In a way, too, the state’s role in shaping itsdomestic environment to achieve market basedeconomic growth is even more vital in an in-creasingly integrated global economy than ithas been in the past. The state will be responsi-ble for maintaining appropriate fiscal andmonetary policies, establishing coherent andmarket based regulatory regimes, maintainingsocial policies that ensure the effective educa-

tion of its population, and developing anadequate physical infrastructure. Increasinglycaught between local social forces, internation-al business interests, and perceived nationalinterests, states will retain their legitimacy bydelivering on their citizens’ expectations forsecurity and economic prosperity. As impor-tant, those dislocated by new global marketforces will inevitably turn to the state for help,and the state, if it expresses a true nationalcommunity, will want to respond. All of thissuggests that the role of the state may be differ-ent in future, but not necessarily smaller, fromwhat it is today.

It also suggests that a greater polarizationof state power will probably result from theuneven capacities of states to manage andcontrol economic change. Regional powerbalances may shift and some states might betempted to push their new advantages. Othersmay elect to use force preemptively againstthose seen to be rising above the pack. Thus,while some vectors suggest that globaleconomic integration will bring the worldcloser together, others suggest that it will bedriven farther apart.

Much is at stake in the argument overhow the state will react to global

economic integration, and much needs sortingout. It is usually assumed in the West thatdemocracy and free-market economics aremutually supportive. But the state is the onlysecure locus of democracy as we know it. Sowhat does it mean to say that the future willbeget a world in which states are increasinglybeholden to other authorities—that of the

74 See Linda Weiss, The Myth of the Powerless State (Ithaca,

NY: Cornell University Press, 1998). Weiss analyzes in

detail several case studies, including South Korea, Taiwan,

Japan, Sweden, and Germany, and concludes that states

can learn to reimpose effective governance over economic

policy.



38 NEW WORLD COMING

market, that of transnational organizations—and at the same time to celebrate theanticipated expansion and solidification ofdemocracy that the triumph of market econom-ics ought to support? Could it be that theliberalization of commerce on the global levelwill undermine and not support the spread ofdemocracy—that one devoutly held Westernprinciple would work at cross-purposes withanother, equally cherished one? Quite possibly,yes.

There is plenty that we do not know aboutthe global economic future, that we cannotknow, and that we will not know in time tomake a policy difference. Clearly, what peoplethink and do over the next 25 years will deter-mine the answers to most of the questionsraised here. Ultimately, these thoughts will bepolitical as well as economic in nature, and sowill the acts that produce the world stretchedout ahead of us. And that brings us to the keyquestions of society and politics.

The Socio-Political Future: “How Willthe World Be Governed?”

Individuals have historically granted theirallegiance to the state in return for

domestic peace, economic well-being, andsecurity from external threats. Sometimes theyhave done so in the context of a national politi-cal community, where the state is an organicexpression of social life among kindred people.More often these days, states are composed ofmore than one ethnic, social, and religiousgroup, leaving the essential social contract ofgovernment to rely either on more abstract con-tractual arrangements, such as those exemplifiedby the U.S. Constitution, or on more coercivemeans of implementation. Sometimes theysurvive mainly by the weight of habit.

The point is that there is nothing immutableabout the present arrangements wherein certainpeoples are ruled within certain fixed territorialunits. It was not always so in the past, and itmay not be so in the future. The ties that bind in-dividual or group loyalty to a state can changeand even unravel, and the next 25 years portenda good deal of unraveling.

As illustrated above, new technologies willchange the way that people do business, onmany levels. In some cases, those changes willenhance international cooperation and regionalintegration; in others, they will divide statesand peoples. Many states will lose much oftheir control over many economic decisions,limiting the means by which they can providedomestic economic growth or domestic peaceand security. Violence may increase as disaf-fected individuals and groups within statesattack the agents of change. And the territorialborders of states will not as easily keep dangersat bay as they once did, given the technologicaladvances in weaponry and the global characterof potential threats. In all cases, the changesahead have the potential to undermine the au-thority of states, and the political identities andloyalties of citizens over the next quartercentury will be put through a series of unan-nounced, and sometimes undetected, tests.

Many observers think that several stateswill not pass such tests. Some suggest that theprinciple of state sovereignty itself, and ofthe state system, is wasting away.75 The sov-ereign state as the key actor in internationalpolitics is said to be undermined by all of thefollowing: globalization, defined as techno-logical connectivity coupled withtransnational economic integration; frag-mented nationalism and a return to tribalism;

75 Wolfgang H. Reinicke, “Global Public Policy,” Foreign

Affairs, Nov./Dec. 1997, p. 137.




ecological pressures; international terrorism;an "outbreak" of stable peace; and morebesides. Of all these, clearly, globalization isthe most widely discussed and debated.

For some, globalization is basically goodnot only because it encourages globaleconomic growth, but because it may be avehicle to transcend the system of state sover-eignty, seen to be the font of the war-systemthat plagues humanity. Globalization thusrepresents for some the withering away of thestate by the advent of other means. But othersoppose the sovereignty-eroding elements ofglobalization on ideological grounds. Some doso because the state is the only reliable locus ofpolitical accountability, others because global-ization is destructive of local community andcommunity control, and still others becausethey believe that the market theology behindglobalization is being used by the corporaterich to grow still richer at nearly everyoneelse’s expense.76

Evocative as these arguments may be tosome, and as ideologically attractive as theyare to others, the contention that the state isabout to be overwhelmed as the main orga-nizational principle of global politics is notconvincing. The state—whether as multina-tional empire, nation-state, or any of severalother kinds of political entities thatpreceded them both—has never been atcomplete equipoise with other social forces.Its role has ebbed and flowed before otherchallenges many times over the years.Indeed, the centralized state of the 20th

century is an historic anomaly, and thosewho foresee the end of the system of sover-eign states too often take as their model ofthe state a highly centralized and fixedentity that does not rest comfortably withhistorical realities.77 For all the challengesahead, the principle of sovereignty, as

vouchsafed within the territorial state, willremain the key organizing principle of inter-national politics for the next quarter centuryand probably for long after that as well.

That said, the challenges ahead are manyand varied, and they go right to the heart ofthe core relationships between states, andamong the state, the nation, and the individ-ual citizen. Even as many states facediminished control and authority over theirpopulations, demands on the state are rising.What will this mean for global politics?

One challenge is demographic innature. Populations are growing in

many developing countries. At the sametime, the populations of nearly all devel-oped countries—and some developingcountries, too, such as China—are rapidlyaging.78

As a result of demographic change,many states will have very different socialbalances in 25 years than they do today. Laborshortages will bring a rising demand for immi-grant workers to older and wealthier societies,accentuating social and cultural tensions. Still,the bulk of the dependent population world-

76 Critics of different persuasions include John Gray, False

Dawn: The Delusions of Global Capitalism (London:

Granta, 1998); William Greider, One World, Ready or Not:

The Manic Logic of Global Capitalism (New York: Simon

& Schuster, 1997); and Zygmunt Bauman, Globalization:

The Human Consequences (New York: Columbia

University Press, 1998).77 Note Peter F. Drucker, “The Rise, Fall and Return of

Pluralism,” Wall Street Journal, June 1, 1999.78 While today’s ratio of working taxpayers to non-working

pensioners in the developed world is 3:1, in thirty years,

absent reform, the ratio could fall to 1.5:1 or even lower,

costing an additional 9-16 percent of GDP to finance

benefits for the elderly. Peter G. Peterson, “Gray Dawn:

The Global Aging Crisis,” Foreign Affairs, Jan./Feb. 1999,

p. 46.



40 NEW WORLD COMING

wide will remain children rather than the aged.If these young people are educated and able tofind productive employment, economies willbenefit; if not, social unrest could follow.

As suggested above, the policies requiredfor economic growth, especially amid highpopulation growth, may result in significantdislocation within a state and directly challengelong-held political or social values. Economic

growth will frequently be accompanied bygrowing disparities in income and wealth, andthose with economic and political influencewill find that influence under siege. This isbound to generate significant social and politi-cal strains within both developed anddeveloping states. It may also lead to increasedcorruption, including among justice andsecurity officials, which would undermine ef-fective government. Rapid urbanization willaccelerate in many developing countries, aswell, severely straining many states’ ability to

provide basic social services, particularlyhealth care, sanitation, and education.

If these tensions and dislocations are suffi-ciently severe and prolonged, some states couldunravel. It was no coincidence that the Asiancrisis of 1997-98 was soon followed not onlyby the collapse of the Suharto government inIndonesia, but by increased strains on unity.Malaysia, too, suffered a political crisis that

nearly led to mass upheaval—and still may.Even such major states as China, India,Pakistan, South Africa, the DemocraticRepublic of Congo, Kenya, and Mexico—all ofwhich have large and growing populations—are not immune from partial or even completecollapse.79

79 See Secretary of Defense William S. Cohen, Annual Report

to the President and the Congress, 1999; Edward Warner,

Assistant Secretary of Defense for Strategy and Threat

Reduction, Testimony to the House National Security

Committee, January 29, 1998; and 1998 Strategic

Assessment: Engaging Power for Peace (Washington, DC:

National Defense University, 1998), pp. 15-6.

Population Growth in the Developing World

Source: U.S. Bureau of the Census, International Data Base.




But there is also good news. An inte-grated global information network

may presage the expansion of political plural-ism.

Consider in this regard the collapse of theSoviet Union. There are many ways to accountfor that collapse—not least the effectiveness ofthe U.S. strategy of containment over severaladministrations. But the inability of a closed

political system to accommodate itself toeconomic imperatives based on openness, theflow of information, and new market demandswas a major complementary factor. If this wastrue for an age of television and relatively prim-itive personal computers, the age of the Internetmay doom nearly all closed political systems tothe ash heap of history. In short, vast new pres-sures for democratization are likely to be feltand, where those pressures succeed, it willmake states more responsive to the needs oftheir citizens. In most cases, at least, thatsuggests both better and more legitimate gover-nance.

The steady progress in Asia, Africa, andLatin America in mass education and literacyalso comes into play here. After all, the diffu-sion of information technology can only carrysocial clout to the extent that people can read

and write. As one scholar has put it with refer-ence to the Muslim world, “The combination ofmass education and mass communications istransforming the Muslim majority world. . . .Multiple means of communication make theunilateral control of information and opinionmuch more difficult than it was in prior erasand foster, albeit inadvertently, a civil societyof dissent. . . .The result is the collapse of hier-archical notions . . . and the emergence of a new

common public space.” The emergence of acivil society is a precondition for genuinedemocracy, and by “multiplying the possibili-ties for creating communities and networksamong them,” civil society tends to advancedemocracy’s way.80

One must be careful here, for literacy doesnot guarantee democracy, and mass educationand authoritarian political styles can co-existfor a long time. Nevertheless, seen together, thespread of mass communications, broadprogress in education and literary, improvingeconomic well being, and the growth of politi-cal liberalism on a global scale have potentially

Population 60 Years and Over

80 Dale Eichelman, “The Coming Transformation of theMuslim World,” The 1999 Templeton Lecture on Religionand World Affairs, Foreign Policy Research Institute, June9, 1999.



42 NEW WORLD COMING

huge implications. Economic logic may alsojoin with and magnify an important socialimpact of 20th century technology. Citizens ofthe advanced states are increasingly lesswilling to fight or support messy wars partlybecause technology has made life much lessrisky and frail than it once was. Since life isno longer so “cheap,” casualties have becomefar more expensive.81 The spread of suchcharacteristics to more of the world couldhave a similar effect, the sum being to makewar less frequent and bloody. Some evenbelieve that, for this and other reasons, majorwar will soon become obsolete.82

Acombination of increasing wealth,personal security, education, and

more widespread democracy may indeedherald a new era, not one created by grandtreaties and the solemn inauguration of multi-lateral institutions, but one that grows fromindividual hearts and minds. But even if peaceand democracy do not triumph worldwide—and it is not very likely that they will in thenext 25 years—autocrats and dictators willfind it more difficult to control their citizenryfor a new reason as well as for older ones.Beyond the inability of authoritarian govern-ments to control the flow of informationwithin their borders, individuals and groupswill be able to act internationally without ref-erence to the state in a way and at a levelheretofore unimaginable. Mass action acrossborders is already establishing new interna-tional norms, and there is a good prospect thatnon-governmental organizations and grass-roots interest groups will have influenceacross even those frontiers guarded by au-thoritarians.83

In democratic states, such developmentsmay promote stability by facilitating greatercitizen participation in the political and civic

life of the state. Possibly, however, such devel-opments can have less than sanguine effects.Democracy can have an illiberal and even ademagogic side, and new democracies seemprone to aggressive behavior. Pressure fordemocracy in heterogeneous states can alsoportend their fragmentation into smaller unitsthat better reflect cultural, ethnic, or religiousidentities. Sometimes this fragmentation willoccur without violence, but often enough it willnot—and when it does not, catalytic regionalcrises could follow in its wake. Pressures fordemocracy in Indonesia contributed to seces-sionist movements in East Timor, Aceh, IrianJaya, and the South Molucca Islands. Pressurefor democracy in China, too, will likely stokeindependence movements in Tibet and inXinxiang province. Not only will there likelybe a wider economic polarization betweenhaves and have-nots, but also a wider polariza-tion of legitimacy between democraticallygoverned polities and authoritarian ones.

States unable to provide economic well-being, political liberty, or domestic security

81 A point nicely put, with some supporting data, in Janna

Malamud Smith, “Now That Risk Has Become Our

Reward,” New York Times, July 25, 1999 (Week in

Review), p. 15. This does not mean that citizens of

advanced societies are casualty averse in any absolute

sense. The data show that most Americans will accept

high casualties if they can be justified on the basis of

threats to key interests. See John Mueller, “The Common

Sense,” The National Interest, No. 47 (Spring 1997).82 See, for example, John Mueller, Retreat from Doomsday:

The Obsolescence of Major War (New York: Basic Books,

1989), and Michael Mandelbaum, “Is Major War

Obsolete?” Survival, Winter 1998-99.83 A brief but vivid account, with some examples, is Barbara

Crossette, “The Internet Changes Dictatorship’s Rules,”

New York Times, August 1, 1999 (Week in Review), pp. 1,

16. See also Akita Iriye, Cultural Internationalism and

World Order (Baltimore, MD: Johns Hopkins University

Press, 1997).




for their citizens may also be subject to sig-nificant emigration, particularly of their mosteducated citizens. Advanced states may needmore technically educated workers, too, thecombination giving rise to unprecedentedlevels of emigration among educated elitesfrom those states that do not work to thosethat do. This will make successful states morediverse and cosmopolitan, and others moreprone to failure.

Clearly, then, there are forces at workstraining the mythic fabric that links

society to the state. Other strains may rendthe link between the individual and theanchors of authority in society itself.

During periods of great tumult, peoplefrequently turn to religion or ideology toexplain change and to gain some psychologi-cal security from its disruptions. As notedabove, the dislocations of the IndustrialRevolution helped produce the socialist ide-ologies of the 19th and 20th centuries. On alesser scale, the dislocations of the post-World War II era in Western societies createdparallel social and political perturbations inmany countries: the undermining of urbaneconomies; rising divorce, suicide, and crimerates; and a significant decline in voting andother forms of political participation.84 Itmakes sense, then, to ask what similar reac-tions we might expect from the tumult in ourcollective future, and what those reactionsmight mean for state cohesion and effective-ness.

Since different societies begin from dif-ferent circumstances, their reactions to rapidchange will surely differ. Many in the Westthink that its notion of modernity, where thesacred is privatized and secular values pre-dominate, is a model that other societies mustinvariably follow. But this is not so. The re-

placement for an enfeebled Iranian royalregime in the 1970s did not come from radicalleftist groups, but from the pre-modern Shi`areligious community. So, too, we have seen aturn to pre-modern forms in much of theMuslim world, among some Jews within andoutside of Israel, and within India in the formof Hindu nationalism. Pressures toward secu-larization inherent in the Western technologythat will flood much of the world over thenext 25 years will not necessarily overcometraditional ways, but might instead reinvigo-rate them. One consequence of psychologicaldislocation in individuals may be to drivethem closer to their own social mores, and tothe extent that the state is seen as a legitimateexpression of those mores, closer to the stateas well.

In short, some states may elect not to joinin rapid technological innovation or an inte-grated global economy. Among such stateshistory will not have ended, and the world ofcontending “isms” will remain very muchalive. There is a chance, too, that those statesmight ally to oppose these developments.Geopolitics could become, in essence, a formof culture politics.85 The conflicts one mightexpect from such culture politics would notexactly fit the definition of a religious war,but there could be some striking similarities.

Even if secularization does make manyinroads, the vistas along the path will not bethe same in all cases. Every culture thataccepts, or cannot resist, a synthesis of theold and the new, or between the West and therest, will find its own way to cope withconflict. What seems clear, as well, is that in-

84 Fukuyama, The Great Disruption.85 This possibility is, of course, consonant with Samuel

Huntington’s The Clash of Civilizations and the Remaking

of World Order (New York: Simon & Schuster, 1996).



44 NEW WORLD COMING

dividuals in societies will have more optionsas individuals than before. They will havegreater access to other ways of thinking, theywill know more about other cultures than didpreceding generations, and they will havegreater opportunity to experience them first-hand. Hence, it seems likely that in morecases than ever before, an individual’s or agroup’s identification with the state may besuperseded by other forms of associationsbeyond the state, as well as within it in theform of ethnic, religious, ideological, or tribalbased organizations.

It also stands to reason that states lackinga secular cultural and historical heritage willbe particularly vulnerable to the increasedporosity of cultural boundaries. Most modernWestern polities are culturally as well as po-litically pluralist. Most traditional,non-secular cultures tend not to be either.

What are we to make of all this? Themost persuasive conclusion that

emerges from looking at the pressures liableto be brought to bear on states, and on howstates of different capacities may respond tothose pressures, is that we will have a mosaicof consequences—as we have always had.States will differ in various ways, in theirpower and influence, their histories, and thedegree to which their citizens give them theirallegiance. They will differ in their economicdevelopment, strength of social and politicalinstitutions, and demographic profile. Theywill differ, too, in the extent to which thenational identities in their midst predisposethem to exist as nation-states, as multination-al empires, or as stateless nations within anevolving international system.

The role and characteristics of states inthe next century will depend on how theyrespond to the challenges that will confront

all countries. Some will be able to seize tech-nological and economic opportunities, whileothers will find themselves threatened. Somewill be able to establish the regulatoryregimes and the social and political infra-structure necessary for economic growth, andsome will be able to introduce political insti-tutions that are responsive to the newdemands of their citizens. But others will not.Some will wish to resist change but fail, gar-nering the worst of all worlds. And perhapsmost important, only some will find the lead-ership they need to guide them through an eraof considerable uncertainty.

The result will be that some states willsucceed in meeting the multiple challenges ofglobal economic integration—we know thisbecause some have already found formulas todo so.86 Some states will survive, but havesuch serious difficulties that their citizensturn to other groups (ethnic, cultural) to giveallegiance and seek shelter, which will furtherundercut the state’s authority and capacity torespond to challenges. Some states will disap-pear, and new ones will be formed on thebasis of ethnic, national, or religious identi-ties. Some states will fail, and in failing fallinto social and political chaos, exportingrefugees, famine, disease, and violence acrossneighboring borders.

The ideal of universal human rightswill also challenge the traditional

concept of state sovereignty. A small army ofcertain NGOs is carrying forward the old ideathat state sovereignty is more a menace to in-dividual human rights than a protector ofthem, and this idea is gradually being armed

86 See again Weiss’ The Myth of the Powerless State; and “The

Thing That Won’t Go Away,” The Economist, July 31,

1999, pp. 8-10.




institutionally, most significantly in theproposal to create an International CriminalCourt. The contentious case of AugustoPinochet, too, has illustrated the “sponta-neous” evolution of international law towardviews that undermine sovereignty in favor ofundifferentiated human rights criteria. Andwhile the legal spillover of the NATO militarycampaign against Serbia on behalf of theKosovar Albanians is still evolving, it may es-tablish a powerful precedent in validating theascendancy of the right to self-determinationover that of sovereignty within the UnitedNations Charter, which, famously, includesboth.87 Whatever the full range of its motiva-tions, the campaign in Kosovo was theclearest example in modern times of a majorpower or alliance intervening militarily intothe internal affairs of another sovereign state,avowedly on behalf of minority rights.

Honest people disagree over whether thisis a benign legacy or not. There are those whobelieve that a minimally decent world ordercannot arise so long as depredations such asthose of Kosovo can go on with impunityanywhere in the world. They applaud theerosion of sovereignty over such questions, aswell as others.88 There are other observers,however, who point out that international sta-bility depends on respect for the prerogativesof the state. And many object to Americansassuming the right to decide unilaterallywhen some other country’s behavior exceedsAmerica’s self-defined moral standards.89

Moreover, others worry that the denaturing ofsovereignty begs the question of who gets todecide when a depredation is internationallyactionable—in other words, who gets to saywhat is and is not a “just war”? Nor is it at allclear what line of democratic accountabilityat the transnational level will substitute forthat of the state.90 Can a host of international

civil servants, professional human rights lob-byists and lawyers, and aid organizationtrustees—formally accountable to no one—really be trusted to know what is best in everycase, or any case?

This is a question recently born as far asthe history of international relations goes. Itwill mature rapidly over the next 25 years, aswill several others. For example, it maybecome necessary to design some sort of legalpersonality for political entities that are lessthan states but more than mere groups of in-dividuals—such as Kosovo and the Kurdishareas of northern Iraq. If we are to see moreefforts by minorities to establish zones ofautonomy for themselves, as seems likely,then how will an increasingly salient numberof non-national institutions, such as the WorldBank, the International Criminal Court(should one come into being), or UNESCO,deal with such ambiguous entities?

In any event, there is little doubt thattransnational actors of other sorts will grow innumber over the next 25 years. Some will rep-resent positive responses to technological,economic, and political challenges (multina-tional corporations, non-governmentalorganizations) and others negative responses(drug cartels, terrorist networks, and criminal

87 Chapter 1, Article 1, paragraph 2, as opposed to Chapter 1,

Article 2, paragraph 7.88 See Marianne Heiberg, ed., Subduing Sovereignty:

Sovereignty and the Right to Intervene (London: Pinter,

1994). 89 See Samuel Huntington, “The Lonely Superpower,” Foreign

Affairs, March/April 1999; and David Sanger, “America

Finds It’s Lonely At the Top,” New York Times, July 18,

1999 (Week in Review), p. 1.90 Some of these issues are discussed in David Rieff, “The

Precarious Triumph of Human Rights,” New York Times

Magazine, August 8, 1999.



46 NEW WORLD COMING

cells). In some cases, these latter groups willtake on certain aspects of statehood, control-ling territory, levying taxes, even raisingarmies.

States will also find themselves in need ofcooperation with other states, if they are toseize the opportunities presented by globalchanges and respond to the dangers. Of thiswe may be sure. What we do not know iswhether and how regional groupings ofvarious sorts may emerge, and with whatkinds of responsibilities and authorities. Wedo not know whether the United Nations andother global political institutions willcontinue to exist as creatures of states, orwhether they will be empowered to act incertain areas in place of states. We do notknow whether regional or global regimes willbe established to prevent the spread of dan-gerous technologies and weapons, and if theywill have the authority and ability to enforcetheir mandates.

This is a lot not to know, and there isyet more. At the risk of seeming

quaint, it behooves us to note a final uncer-tainty. Not all of what befalls the world ofstates over the next quarter century will be afunction of how leaderships and populationsadjust to the challenges of new technologiesor accelerating global economic integration.The beginning of wisdom is perhaps to recog-nize that what counts is not only what ischanging, but also what is not. There is stillthe old-fashioned problem of geopolitics, andnowhere does this problem look clearer—andmore dangerous—than in the Pacific rim,where the triangular relationship betweenChinese, Koreans, and Japanese holds the keyto peace or war.

Within the logic of geopolitics is the un-predictability of personality and the

happenstance of illness and death amongleaders. Not every historian is convinced, butmost believe that had it not been for thehypnotic political skills of Adolph Hitler,World War II would never have happened.While Hitler is the 20th century’s mostobvious example of evil enthroned, historybears other examples from this century andother centuries, too. It is not possible to ruleout the rise of “crazy states”91 with psycho-logically aberrant or evil leaders in the future,and the shock to the system that such a leadercan produce should never be underestimated.In the future, it may be that, with weapons ofmass destruction more widely available, eventhe unglued leader of a relatively small statewill exceed the threshold of danger to thesystem as a whole.

The Military-Security Domain: “HowWill Societies Protect Themselves?”

The military-security environment ofthe next 25 years will be shaped by a

unique and substantially unfamiliar set of po-litical, economic, technological, social, andcultural forces described elsewhere in thisstudy. As in the past, conflict will be drivenby perturbations in the political order, socialdislocation, passionately held beliefs,economic competition, and cultural division.In this section, however, the purely militaryand security dimensions of the future arebrought into focus. Societies will still need toprotect themselves in 2025, and they willhave to do so against an unprecedented rangeof threats and actors.

As with most periods of rapid change,both the actors and the means by which

91 Yehezkel Dror, Crazy States: A Counterconventional Strategy

(Lexington, MA: Heath Lexington Books, 1971).




violence is used in pursuit of political goalsmay shift abruptly. Non-state actors, individ-uals as well as groups, will gain power andinfluence, and many will have at theirdisposal alarming means of destruction.Many states may see the coherence ofnational identification lose its grip at the indi-vidual level, with critical implications fortheir ability to mobilize and fight, as well asfor the structure of their civil-military rela-tions.

Even in a world in which major wars areless frequent, and in which growing prosperi-ty adds incentive for the peaceful resolutionof disputes, there will still be enough unset-tling change to touch off any number of wars,internal upheavals, incidents of terrorism, andgeneral mayhem. The end of the Cold War didnot mean the end of all conflict and, with adecade to ponder the emerging evidence, nosentient person can doubt the potential lethal-ity of future conflict.

We explore these trends and patterns inthree parts. First, we look at what sorts ofstates, groups, or individuals will incline touse force. Second, we look at what kinds ofmilitary capabilities are likely to be on theloose for such use. And third, we look at theenvironment likely to be formed by the con-junction of the two.

Interstate wars will not disappear overthe next 25 years.92 Developed nations

will be loath to fight each other, but as provenin 1914, neither the bonds of interdependencenor a taste for affluence can guarantee peaceand stability indefinitely. Major powers—Russia and China are two obviousexamples—may wish to extend their regionalinfluence by force or the threat of force.Conflicts among old adversaries maycontinue, such as between India and

Pakistan.93 Misperception or miscalculationwill remain possibilities and both may be ex-acerbated by the introduction of new militarytechnologies. Conflicts could arise out ofefforts to right perceived wrongs or to gain s-trategic advantage, and wars will still befought over disputed borders, resources, andirredentist claims. The history of the 1930sremains instructive, too, for the reversion toassertive nationalism by leaders faced withunsettled social and economic conditions isnot beyond imagination. Conventional war—ships, tanks, and planes—will remain themost relevant modus operandi for most ofthese conflicts.

Violence within states, on the other hand,could reach unprecedented levels. Generatedby ethnic, tribal, and religious cleavages, andexacerbated by economic fragmentation anddemographic shifts, such violence will formby far the most common type of conflict inthe next quarter century. Brutish, nasty, notnecessarily short, and potentially genocidal inscope, these conflicts—mostly but notentirely in non-Western domains—couldresult in major disruptions, killing hundredsof thousands of people each year.94

Undisciplined tribal or ethnic based paramili-tary groups will often be the primary agentsof such conflicts, which will involve soldiersand civilians alike. They may also take place

92 See the arguments in “Is Major War Obsolete: An

Exchange,” Survival, Summer 1999, pp. 139-52.93 As noted below, a war involving India, Pakistan, and

possibly Iran is not so very unlikely, but analysts differ

over whether such powers should be defined as “major.”94 Not that the toll from such wars is vastly different now from

Cold War times, despite a common perception to the

contrary. See Yahya Sadowski, The Myth of Global Chaos

(Washington, DC: Brookings INstitutino Press, 1998), p.

121; and Shashi Tharoor, “The Future of Civil Conflict,”

World Policy Journal, Spring 1999, pp. 1-11.



48 NEW WORLD COMING

in urban areas or in other terrain that tends toneutralize the current technological advantagesof modern militaries.

While such conflicts need not disrupt thecore strategic interests of major powers, theywill do so if they trigger larger interstate con-flicts, grossly violate internationally acceptednorms, or create massive flows of refugees,disease, and environmental degradation. Thelatter is particularly likely since such conflictsoften generate humanitarian disasters that arehard to ignore in an age of mass communica-tions. Yet major powers cannot intervene forhumanitarian purposes without also interveningin the underlying politics that create suchtroubles in the first place. The Somalias,Bosnias, Rwandas, Kosovos, and Haitis of theworld will not disappear, and neither will thedilemmas they pose.

There will also be a greater probabilityof a far more insidious kind of violence

in the next millennium: catastrophic terror-ism.95 While terrorism itself is nothing new, thenature of terrorism and the means available totomorrow’s terrorists are changing.

Future terrorists will probably be even lesshierarchically organized, and yet better net-worked, than they are today. Their diffusenature will make them more anonymous, yettheir ability to coordinate mass effects on aglobal basis will increase. Teamed with statesin a regional contingency, they could becomethe “ultimate fifth column.”96 Terrorism willappeal to many weak states as an attractiveasymmetric option to blunt the influence ofmajor powers. Hence, state-sponsored terroristattacks are at least as likely, if not more so, thanattacks by independent, unaffiliated terroristgroups. Still, there will be a greater incidenceof ad hoc cells and individuals, often moved byreligious zeal, seemingly irrational cultish

beliefs, or seething resentment. Terrorists cannow exploit technologies that were once thesole preserve of major states and pose attacksagainst large domestic population centers.

The growing resentment against Westernculture and values in some parts of the world—as well as the fact that others often perceive theUnited States as exercising its power with arro-gance and self-absorption—is breeding abacklash that can take many forms. Terrorism,

95 Government studies on this topic include: Combating

Proliferation of Weapons of Mass Destruction, Report of

the Commission to Assess the Organization of the Federal

Government to Combat the Proliferation of Weapons of

Mass Destruction, July 14, 1999; “Executive Summary,”

Report of the Commission to Assess the Ballistic Missile

Threat to the United States, July 15, 1998; Transforming

Defense: National Security in the 21st Century, Report of

the National Defense Panel, December 1997; and W.

Cohen, Proliferation: Threat and Response, OSD Report

to Congress, November 1997. Major private research

studies include: Fred C. Iklé, Homeland Defense

(Washington, DC: CSIS, 1999); and William Webster, et

al., Wild Atom: Nuclear Terrorism (Washington, DC:

CSIS, 1998). Key periodical literature includes: Fred C.

Iklé, “The Problem of the Next Lenin,” The National

Interest, No. 46, Spring 1997; and Walter Laqueur, “The

New Face of Terrorism,” The Washington Quarterly,

Autumn 1998. Recent books include: Joshua Lederberg,

ed., Biological Weapons: Limiting the Threat (Cambridge,

MA: MIT Press, 1999); Richard Danzig and Pamela

Berkowsky, Biological Weapons—Limiting the Threat

(Cambridge, MA: MIT Press, 1999); Jessica Stern, The

Ultimate Terrorists (Cambridge, MA: Harvard University

Press, 1999); Richard A. Falkenrath, et al., America’s

Achilles’ Heel (Cambridge, MA: MIT Press, 1998); Philip

B. Heyman, Terrorism and America: A Commonsense

Strategy for a Democratic Society (Cambridge: MIT Press,

1998); Ken Alibeck with Stephen Handelman, Biohazard:

The Chilling True Story of the Largest Covert Biological

Weapons Program in the World (New York: Random

House, 1999), and Bruce Hoffman, Inside Terrorism (New

York: Columbia University Press, 1998).96 Hoffman, Inside Terrorism, p. 196.




however, appears to be the most potentiallylethal of such forms. Therefore, the UnitedStates should assume that it will be a target ofterrorist attacks against its homeland usingweapons of mass destruction.97 The UnitedStates will be vulnerable to such strikes.

If that were not a sobering enoughprospect, most advanced conventional

military weapons and systems will also bemore broadly distributed between now and2025. Domestic political and economic incen-tives will lead to the development and sales ofadvanced aircraft, modern ground fightingvehicles, and new naval systems throughout theworld. Only cutting-edge systems will remainclosely held.

It is not even clear whether the major armsexporters will cooperate to prevent the sales ofsuch weapons systems to states and othergroups that pose major potential threats toregional stability and peace. A minimal exportcontrol regime already in operation, theWassenaar Arrangement, could be enhanced,but this depends on the positive evolution of theinternational political climate. It also dependsto some degree on the ability of the exportingstates to find alternatives to legacy industriesstill heavily in the business of manufacturingweapons.

Conventional weapons systems will be char-acterized by an increasing emphasis on speed,stealth, lethality, accuracy, range, and networkedoperations. The era of Industrial Age platformsoperating with impunity in the open may becomeoutdated, as long-range precision capabilitiesproliferate in all dimensions of warfare (air, sea,and land).98 There will be a greater premium onhighly integrated and rapidly deployable forces.The age-old interaction of capabilities andcounter-measures will continue, of course, andphysics probably favors detection and the

ultimate demise of stealthy systems and largeplatforms. But “ultimate” can mean a long time,and, as opponents try to defeat existing U.S. tech-nologies, new technologies and ways ofemploying these weapons will abet the continua-tion of current U.S. advantages. The widespreadadoption of MEMs into U.S. military technology,for example, may provide significant new quali-tative advantages over a broad range ofcapability. New intelligence capabilities derivedfrom biotechnology, including the use of insectsfor selected purposes, may also be at hand.

Nonetheless, many states will pursuestrategies to acquire today’s modern weapons.These weapons will no longer be cutting-edgetechnology by the 2015-2025 timeframe, butthey may be widely available and, in local wars,could prove decisive.99 Just as likely, the rela-tively rapid spread of modern conventionalweapons could destabilize several troublezones and make regional wars both more likelyand far more destructive.100 The acquisition ofsuch weapons will probably be pursued withalacrity by military regimes and other regimes

97 See Ian O. Lesser, Bruce Hoffman, John Arquilla, David

Ronfeldt, and Michele Zanini, Countering the New

Terrorism (Santa Monica, CA: RAND, 1999); and Zalmay

Khalilzad, David Shlapak, and Ann Flanagan, “Overview

of the Future Security Environment,” Sources of Conflict

in the 21st Century: Regional Futures and U.S. Strategy,

Zalmay Khalilzad and Ian O. Lesser, eds. (Santa Monica,

CA: RAND, 1998).98 See Michael G. Vickers, Warfare in 2020: A Primer

(Washington, DC: Center for Strategic and Budgetary

Assessments, 1996).99 Obtaining equipment is one thing, assimilating it intelligent-

ly is another. See Chris C. Demchak, Military

Organizations, Complex Machines: Modernization in the

U.S. Armed Services (Ithaca, NY: Cornell University

Press, 1991).100 See John Weltman, World Politics and the Evolution of War

(Baltimore, MD: Johns Hopkins University Press, 1995).



50 NEW WORLD COMING

for whom robust military capabilities play amajor role in internal security.

While the market for 20th century conven-tional weapons will remain brisk, someimportant states will choose acquisition strate-gies to compete asymmetrically against majorpowers. These potential adversaries will investin relatively inexpensive systems intended todeny the United States the advantages that nat-urally accrue with technological superiority.Weapons of mass destruction would serve thispurpose.101 Developing such weapons does notrequire a large industrial base or extensive sci-entific research support as it once did. Theinternational norms against the spread of theseweapons are being challenged, and the globalexport control regimes covering nuclear,chemical, and biological weapons will not ef-fectively keep them from state and non-stateactors that are determined to acquire them.102

Some countries will supply these weapons, orcomponents for them, for commercial and po-litical purposes. Problems will also exist inensuring the security of these weapons andweapons components in individual countries.

The extent to which nuclear, biologi-cal, and chemical weapons will be

developed and used will depend on a varietyof factors. Nuclear materials and technologyare available, but the cost of producingnuclear weapons is high, as are the risks ofdetection. The development and use of radio-logical weapons would be easier and cheaper.By pairing conventional explosives with ra-dioactive materials like plutonium, such aweapon could generate both a major explo-sion and contaminate a large surrounding areafor an extended period.

Chemical weapons are much easier toproduce than nuclear and radiologicalweapons, but they are harder to store and use

effectively. Their effectiveness is subject touncontrollable climatic elements and thelethality of chemical weapons per unit ofweight is generally low.103 This makeschemical weapons generally suitable for usein attacking conventional armies concentratedin the field, or against small groups of sur-prised or immobile civilian populations. Butsuch weapons are unlikely to be a preferredtool for terrorizing entire cities.

Biological weapons are the most likelychoice of means for disaffected states andgroups of the 21st century. They are nearly aseasy to develop as chemical weapons, they arefar more lethal, and they are likely to becomeeasier to deliver.104 At present, many biologi-cal agents require special technical expertise todistribute them effectively, such as droneaircraft that are capable of dispersing agents inthe right concentrations at the right altitudes andunder the right meteorological conditions. Thisis not simple, as extensive but unimpressiveIraqi efforts in the 1990s have shown. On theother hand, given enough time, perfectingmethods of dispersal will take far less technicalsophistication than that required to build anuclear bomb.

Moreover, bio-weapons can be produced atsmall, dual-use facilities, and then reproduced

101 Cohen, “Preparing for a Grave New World.”102 SECDEF address at the Conference on Terrorism, Weapons

of Mass Destruction, and U.S. Strategy, University of

Georgia, April 28, 1997; SECDEF News Conference,

Release of OSD Report on WMD Proliferation, November

25, 1997; SECDEF Annual Report to the President and the

Congress, March 1998, p. 26; and Acting CIA Director

George Tenet, Testimony to the Senate Armed Services

Committee, February 5, 1997.103 There are some exceptions, VX being the most important.104 Weight for weight, microbial agents such as anthrax are

thousands of times more potent than nerve gasses such as

sarin. Lederberg, p. 286.




in mass quantities using technologies and pro-cedures common to micro-breweries andcivilian pharmaceutical labs. A bio-weaponarsenal can be acquired for as little as $10,000-$100,000.105 Several countries are pursuingbiological agents, and some are getting helpfrom outside their borders. Biological weaponsexperts formerly employed by the Soviet Unionhave testified that the extent of the Sovietprogram was massive, but that control of thephysical and intellectual assets of the formerprogram is virtually nonexistent. Accordingly,a variety of improved toxins and biologicalagents are becoming more widely available.Technological developments in genetics andbiotechnology portend even more sinisteradvances with the design and deployment ofgenetically engineered pathogens that couldthwart most antibiotics and vaccines, andreadily outcycle our detection, antidote devel-opment, and distribution timelines. These couldinclude genetically-altered smallpox.106

Given such circumstances, the preventionof the proliferation of biological weaponsthrough treaties and a regime of export controlsis unlikely to be effective. A BiologicalWeapons Convention (officially, the Conventionon the Prohibition of the Development,Production and Stockpiling of Bacteriological[Biological] Toxin Weapons and on TheirDestruction) has been signed and ratified by 140countries. But since the treaty was open to sig-nature in April 1972, the number of countriesknown to have or suspected of having biologicalweapons has doubled.107 The BWC has no en-forcement or inspection mechanism, althoughnegotiations are underway to provide for them.

U.S. deterrence policy will remain effec-tive against acknowledged nuclear states, andthe deliberate use of these weapons willremain a low probability. But as other statesacquire nuclear weapons, that probability will

likely increase. Whether states take such a stepwill be a function of many factors, primarilyrelated to the threats they see within their ownregion. The literal costs of developing nuclearweapons, the political costs associated withtheir use, and the difficulty of hiding their de-velopment, make them less likely to emerge asa primary instrument of state policy. Still,given their vast destructive power, the UnitedStates will continue to deal with the threatposed by nuclear weapons throughout the next25 years. There will be no abolition, and eventhe existence of the Non-Proliferation Treatyand wide ratification of test ban treaties willnot significantly reduce the problem.

Non-state actors will also use theseweapons in direct attacks. Such attacks exposethe Achilles’ heel of the modern world. Allopen societies are vulnerable to extensive psy-chological and physical harm from weapons ofmass destruction. The potential for covertdelivery of these sinister products will be high,much higher than during the last half century.Covert threats are more likely than overt onessince they avoid easy attribution and hencelikely reprisal. The immense lethality, portability,and accessibility of WMD will be major sourcesof concern over the whole of the next quartercentury.

Missile threats will also continue to pro-liferate. While the regime of missile

producers, known as the Missile TechnologyControl Regime (MTCR), will survive and may

105 Falkenrath et al., p. 112.106 See Richard Preston, “The Demon in the Freezer,” The New

Yorker, July 12, 1999, pp. 44-61.107 J.D. Holum, Remarks for the Fourth Review Conference of

the Biological Weapons Convention (Geneva: U.S. Arms

Control and Disarmament Agency, November 26, 1996).

See also Robert P. Kadlec, Allan P. Zelicoff, and Ann M.

Vrtas, “Biological Weapons Control: Prospects and

Implications for the Future,” in Lederberg, pp. 95-111.



52 NEW WORLD COMING

be strengthened, it is becoming increasingly easyfor states not party to the MTCR to master thetechnology necessary for such production. If Iran,Iraq, North Korea, Pakistan, and India can foil thebest efforts of the MTCR, the prospect is that evenless technologically sophisticated states may beable to do so in future.

Ballistic and cruise missiles are liable to bethe long-range weapons of choice, given their ca-pabilities to threaten land and sea targets fromafar. The accuracy and lethality of such systemswill increase significantly between now and 2025,even for the delivery of conventional ordnance.108

The competition between missile developmentsand defensive systems will be a key operationalchallenge over the next several decades. Large-scale missile attacks will be able to overwhelmdefensive systems, despite considerable improve-ments to them. American bases abroad willbecome vulnerable to these weapons.109

Additionally, a number of new lethal and non-lethal technologies will be developed and fielded,including microwave, directed energy, andchemical/biological agents that could give smallpowers the ability to thwart power projection op-erations by any major power.

In addition to “traditional” weapons of massdestruction, new forms of Strategic InformationWarfare (SIW) will be developed and perhapsused as a new form of offensive warfare. SIWinvolves cyber-attacks against major nationalcommand systems and military-related operatingsystems.110 Bytes will not replace bullets andbombs in conflict, but those who cannot matchthe conventional strength of major powers willhave strong incentives for such asymmetricattacks. Given that the commercial world, notgovernments, is developing these technologies,and that military telecommunications are heavilydependent on commercial access, the potentialexists for serious disruption of routine militaryoperations in both peacetime and war. TheUnited States and its allies are particularly vul-

nerable to such methods since our economiesand military forces are heavily, and increasingly,reliant on advanced information technologies.While countermeasures can be developed, thisnew form of warfare will be an important part ofthe military landscape for some time.

In addition to weapons of mass destruction,there is a new concept—the “weapon of massdisruption”—to which modern societies, ratherthan their militaries, are increasingly vulnera-ble.111 As noted above, the computational andinformation processing capacities generated bythe computer revolution are critical to modern fi-nancial, banking, energy, telecommunications,medical, and transportation networks. The health,welfare, and prosperity of the citizens of the de-veloped world depend upon this infrastructure.But that infrastructure is an enticing target to dis-affected states and terrorists, who can achievealmost as much damage with a keyboard as witha bomb. Imagine, for example, a well-planned

108 Center for Counterproliferation Research, The NBC Threat

in 2025 (Washington, DC: National Defense University,

1997).109 See Paul Bracken, “America’s Maginot Line,” The Atlantic

Monthly, December 1998, pp. 85-93; and Paul Kugler,

Changes Ahead: Future Directions for the U.S. Overseas

Military Presence (Santa Monica, CA: RAND, 1998).110 See Frank J. Cilluffo, et al., Cybercrime, Cyberterrorism,

Cyberwarfare….Averting an Electronic Waterloo

(Washington, DC: CSIS, 1998); and Roger C. Molander,

Peter A. Wilson and Robert H. Anderson, "U.S. Strategic

Vulnerabilities: Threats Against Society," in Zalmay M.

Khalilzad and John P. White, Strategic Appraisal: The

Changing Role of Information in Warfare (Washington,

DC: RAND, 1999), pp. 253-80.111 Including the United States. See Preparing for the 21st

Century, Commission on the Roles and Capabilities of the

United States Intelligence Community, 1996, p. 27;

Organisation for Economic Cooperation and Development,

21st Century Technologies—Promises and Perils of a

Dynamic Future (Paris: OECD, 1998), pp. 14-5; and

Walter B. Wriston, “Bits, Bytes, and Diplomacy,” Foreign

Affairs, September/October 1997, p. 172.




attack against the air-traffic control network onthe east coast of the United States as more than200 commercial aircraft are trying to land in rainand fog on any given weekday morning.

Numerous incidents of computer penetrationhave already occurred, often mounted byteenagers using relatively unsophisticatedsystems. Better educated or well-financed“automata assassins” could do far more damage,especially if they are abetted by insider person-nel. A plethora of new tactics and techniques to“infovade” critical systems now exist. Modernhacker techniques such as “sniffers,” logicbombs, mutating viruses, and Trojan horses, areincreasingly common. The innate complexityand connected nature of information-basedsystems generate opportunities for hackers, ter-rorists, or antagonistic states to cause mischiefand harm. Our increased reliance on these infor-mation systems ensures that disruption to themwill create serious dislocations within oursociety. No nation in the world is more vulnera-ble in this regard, or has more to lose, than theUnited States.

Outer space, as well as cyberspace, willbecome a warfare environment. Space-

based systems are increasingly critical to bothinternational commerce and military capabilities.By the early 21st century, such systems will offersuch an invaluable advantage that continuedaccess to space will be considered synonymouswith national security. Space access will becomeas important as access to the open seas was formajor powers in the 18th, 19th, and 20th centuries.Not surprisingly, therefore, there are complica-tions ahead.

The benefits to global commerce derivedfrom space have vastly increased investment inspace technology and expertise, a trend that willno doubt continue. The national security implica-tions of such investments are dramatic.112 Withmore than $100 billion invested today, the UnitedStates has a clear economic interest in ensuring

its own continued access to space.113 But thenumber of states and groups capable of exploit-ing space as an environment is expanding as aresult of commercialization. More than two-thirds of today’s 600 satellites are foreign-owned,and of the more than 1,500 new vehicles that willbe launched over the next decade, most will beinternationally owned or operated by variousconsortia. This raises a major intelligence chal-lenge, for, as space systems proliferate, it will bemore difficult to determine their capabilities andwho has access to their data.

Since satellites are the ultimate pre-posi-tioned asset and, because they are so central tomilitary operations, what happens in space willbe critical.114 Most likely, weapons will bedeployed in space. Some systems may becapable of direct fires from space againsttargets on earth. It is possible that internationaltreaties will ban such weapons, as is the casetoday for weapons of mass destruction, butthat is not assured. What is clear is that spacewill become permanently manned.

Space will also enter into competitiveplanning and strategies in ways that arebarely conceived today. Future adversaries

112 See Lt. Gen. Patrick M. Hughes, Director, Defense

Intelligence Agency, “Global Threats and Challenges to

the United States and Its Interests Abroad,” Statement for

the Senate Select Committee on Intelligence, February 5,

1997. 113 Institute for National and Strategic Studies, Strategic

Assessment 1999 (Washington, DC: National Defense

University, 1999)114 See Thomas T. Bell, Weaponization of Space:

Understanding Strategic and Technological Inevitabilities,

Occasional Paper No. 6 (Air University, Maxwell Air

Force Base: Center for Strategy and Technology, Air War

College, January 1999); Dana J. Johnson, Scott Pace, and

C. Bryan Gabbard, Space Emerging Options for National

Power (Santa Monica, CA: RAND, 1998); and

Christopher Lay, “Can We Control Space?” presentation to

Electronics Industry Association, October 1997.



54 NEW WORLD COMING

will realize that assured access to informationis a key component of U.S. military strategyand, specifically, to the sort of military oper-ations envisioned by the Joint Chiefs ofStaff.115 Thus, negating U.S. conventional su-periority through the denial or negation ofinformation sources based in space is anobvious and lucrative strategy for some coun-tries or groups to employ.

All of this suggests that information superi-ority will be relative. While the United States willretain relative superiority in C4ISR (command,control, communications, computers, intelli-gence, surveillance, and reconnaissance) systemsdevelopment and integration, the nature of infor-mation technologies and their ubiquity in thecommercial market place make any presump-tions about assured information superiorityunwise. Globally, military forces will rely onhighly networked, space-based and ground-basedintelligence and reconnaissance systems, butbackup systems will be available to protectagainst successful anti-space operations. Due tothe wide availability of commercial sources ofspace-supported information, by 2025 the UnitedStates will no longer enjoy a monopoly in space-based C4ISR. It will, however, maintain apreponderant edge, using its technical systems toproduce timely and usable information.116

What do these developments portendfor the strategic environment of the

future? Most essentially, they mean that bothconventional and nuclear deterrence willremain a priority in the coming century, butwill be harder to achieve than ever before. Thepredictability of deterrence cannot be assumedbased on Cold War experience for severalreasons.

First, the convenience of focusing on asingle antagonist has been eclipsed, along withthe comforting knowledge that deterrence was

essentially a bilateral interaction between twosuperpowers with shared vulnerabilities andknown capabilities. Such conditions no longerexist, nor will they in future. A wide diffusionof actors and destructive capabilities willinstead characterize the context of deterrence.Exactly who is being deterred, exactly whichvalue hierarchies and decision systems need tobe affected, what relative costs and benefits areat issue, and what behaviors are supposed to beshaped by deterrence, will all be very problem-atic questions.117 Rogue irrationality and thepotential for misperception or ignoranceremain possibilities, as well. In short, Cold Warconcepts will have to be revised, adapted, or insome cases abandoned in the face of new cir-cumstances.

Of crucial importance, too, the deterrenceproblem is also likely to be inverted and thrownback at the United States by many actors and inseveral forms. It is one thing for the United Statesto deter others by threatening use of nuclearweapons or massive force, and to make suchthreats not only credible to others but also ac-ceptable to Americans. But it is an entirelydifferent matter to avoid being deterred by threatsto use weapons of mass destruction against theUnited States, against U.S. forces abroad, oragainst U.S. allies. While the United States willremain superior to all rivals in measurablemilitary capabilities over the next 25 years, thereare ways that “bronze” technology in the handsof a potential adversary can blunt “gold” technol-ogy in our own hands. If more countries acquireweapons of mass destruction, and the ability to

115 U.S. Department of Defense, Joint Chiefs of Staff, Joint

Vision 2010 (Washington, DC: USGPO, 1996).116 See Roger C. Molander, Peter A. Wilson, David A.

Mussington, and Richard F. Mesic, Strategic Information

Warfare Rising (Washington, DC: RAND, 1998).117 Keith Payne, Deterrence in the Second Nuclear Age

(Lexington: University of Kentucky Press, 1996).




deliver those weapons in a wide variety ofvenues, the flexibility and credibility of U.S.regional security policies could be sharplylimited despite overall U.S. military superiori-ty. This is the problem of inverted deterrence.

We should also expect to be bothstrategically and tactically surprised

despite our prowess in the information revolu-tion. History is in many ways little more than acavalcade of such surprises. As suggestedabove, no amount of technology will ensureperfect intelligence about the capabilities or in-tentions of every possible opponent.Generating knowledge and insight from rawdata requires the analytical capacity of thehuman mind, and human intelligence willremain a key component of any first-rate intel-ligence operation. We should remain humbleabout the ability to predict events or the reac-tions of adversaries to our own initiatives. Therange of variables is endless, and our potentialenemies will be both intelligent and adaptive.They will try to deny or distort any informationthat we may process into useful intelligence. Ifhistory is any measure, specific predictions willnever unfold exactly as foretold.

One underlying reason for this is cultural.Strategic surprise is abetted by mirror imaging—viewing future opponents as having similarvalues or beliefs to one’s own when they in factdo not. Some leaders and societies are motivatedby values and goals that are different if not anti-thetical to our own, and their resort to extremeviolence—often against civilian populations—will doubtless surprise and shock us in the futureas it has in the past. We may not comprehendeither the stakes or the commitments that someopponents may make in using such violence.Since conflicts frequently occur from miscalcu-lations borne of ignorance or misperceptionabout opposing views, knowledge of foreigncultures is a necessary component of strategic

intelligence and a bulwark against catastrophicsurprise in the future. Antagonists who share ourstrategic culture and values, who have similarpolitical institutions, and who maintain the samesense of proportionality or rationality about theirinterests and the means employed to securethem, are not our likeliest adversaries in thefuture. To assume otherwise, as one strategisthas noted, reflects "an a priori detachment fromthe well-springs of conflict and violence in themodern world."118

While new actors and new weaponswill change the character of conflict

in the next century, the essence of war willremain the same. States, groups within states,and extra-national organizations will still relyon force and the threat of force to pursue avariety of political, economic, and militaryaims. Asymmetries in both capabilities and ob-jectives will be exploited in the onset,prosecution, and termination of conflict. Sincehuman emotions will still infuse warfare,conflict will not be limited to purely rationalgoals, nor can we count on rough proportional-ity between ends and means. Fear, uncertainty,risk, and ambiguity will still characterizeconflict despite the advent of unprecedentedlevels of information technology.119 That isbecause, not least, clever and determined ad-versaries will find new methods of deceptionand denial to thwart superior U.S. technical ca-pabilities—such as burying communicationscables so that U.S. intelligence assets cannot“hear” from space. Ultimately, as in the past,the character and conduct of future conflictwill be influenced by who is fighting whom,how, and over what. Surprise will remain a

118 Lawrence Freedman, "The Revolution in Strategic Affairs,"

Adelphi Papers 318, 1998, p. 77.119 See Barry Watts, Clausewitzian Friction and Future War,

McNair Paper 52 (Washington, DC: National Defense

University, October, 1996).



56 NEW WORLD COMING

risk, not because technology will fail us, butbecause our judgments may not anticipate thefull range of strategic contingencies.120

Nevertheless, presuming continued invest-ment at roughly today’s resource levels, nostate will acquire the strategic mobility and ex-peditionary capabilities that currently providethe United States with global reach and sus-tained combat power. But U.S. militarysuperiority will continue to rest on the perfor-mance of educated and well-trained militaryforces and appropriate military doctrines aswell as modern equipment. While technologyis a crucial enabler, it is only one component ofmilitary capability.121 Military power is morethan the sum of the various armed services orthe size of the defense budget. Continuednational support for the military and thepreservation of the political will to pursuenational interests will remain necessary ingre-dients of success.

The United States will also retain its tradi-tional advantage in high technology, but theblurring of man, machines, and informationsystems will accelerate.122 As has always beenthe case, having new devices is one thing, andintegrating them into the human subculture ofthe military is another. American commercialsuccesses should also keep the United Statesthe leader in command and intelligence systemdevelopment, systems integration, and infor-mation management.

At the same time, however, America’s coali-tion partners will lag behind American collectiveachievements in high technology and the inte-gration of advanced computational capabilitiesinto advanced military systems. This will lead towidening gaps in compatibility and interoper-ability that will affect the ability of allies tooperate with the United States in an integratedfashion. In addition to technologically-driven

gaps, potential challenges to alliance relation-ships could also arise from burden sharing andrisk sharing disputes. As always, unequalburdens and risks will make creating coalitionsof the willing more difficult.

Nor will the causes of war change in theiressence. Men have always fought for reasonsthat some other men could not understand.That will still be the case. New forms of ideo-logical struggle cannot be ruled out, andneither will religion disappear. Such motiva-tions will generate intense passions and willensure that tomorrow’s conflicts are not foughtsolely according to American definitions andrules of conflict. War will not be like a videogame, and although American forces may facesome contingencies with dispassion, wecannot count on our adversaries taking thesame attitude.123

Clearly, there are new challenges in ourfuture, especially for a U.S. military

strategy that has relied on forward-based andforward-deployed forces as a key component ofthat strategy. The permanent stationing of U.S.forces abroad will become more difficult tosustain. The political cost of such bases withinAmerican alliances will likely rise, as will thevulnerability of such forces to attack with bal-

120 See “Making Intelligence Smarter: The Future of U.S.

Intelligence,” Report of an Independent Task Force,

Council on Foreign Relations, February 1996.121 For eloquent testimony to this point, see Stephen Ambrose,

Citizen Soldiers (New York: Simon & Schuster, 1997).122 But this will not happen automatically, and there are bu-

reaucratic impediments to its progress. See Andrew

Krepinevich, “Emerging Threats, Revolutionary

Capabilities, and Military Transformation,” Testimony

before the Senate Armed Services Committee on

Emerging Threats and Capabilities, March 5, 1999.

123.See Robert H. Scales, Future Conflict (Carlisle, PA: U.S.

Army War College, 1999).




listic missiles, cruise missiles, terrorism, andweapons of mass destruction. The latter cir-cumstance may erode support for such basesfrom the home front. Taken together, the pres-sures against the permanent forward basing ofU.S. military forces have profound implica-tions for U.S. strategy, power projectioncapabilities, and alliance relationships.

The future strategic environment will there-fore be one of considerable turbulence. Stabilitymay simply not be achievable at small cost—orat any cost—and riding out the storm at anchoris not an option. The international system will beso fluid and complex that even to think intelli-gently about military issues will mean taking anintegrated view of political, social, technologi-cal, and economic developments. Only a broad

definition of national security is appropriate tosuch a circumstance.

In short, we have entered an age in whichmany of the fundamental assumptions thatsteered us through the chilly waters of the ColdWar require rethinking. In the decade since thefall of the Berlin Wall a start has been made, buta start is not good enough. The very facts ofmilitary reality are changing, and that bearsserious and concentrated reflection. The reflex-ive habits of mind and action that were thefoundation for U.S. Cold War strategy andforce structures may not be appropriate for thecoming era. How the United States and otherstates respond to these changing dynamics willdetermine the relative peace and security of thenext century.



58 NEW WORLD COMING

II: A World Astir

If nothing else, the intellectual investmentrepresented by the preceding section

proves that the world is a vast and complicatedplace about which our knowledge is limited andour powers of forecasting uncertain. But it offersmore than that. A composite picture of globaldynamics suggests a plausible range of influ-

ences that will affect regions and countries. Itsuggests, too, that regions will not be as self-contained in 2025 as they are today.

Nevertheless, global dynamics are notwholly determinative, and they are not uniformacross the globe. That is why a regional analysis,

undertaken below in five sections, is still neces-sary to capture the shape of the world ahead.

Greater Europe

During the past century, Europe has hada very significant impact on U.S.

national security. The United States fought twoworld wars and sustained a 40-year Cold Warwith the Soviet Union to prevent Europe from

being dominated by a power with interestsinimical to its own. In so doing, the UnitedStates expended enormous financial andmilitary resources and risked its own survivalas a state.


European Union manages to transform itselfinto a federal state with a unitary foreign andsecurity policy, or whether a failed effort to doso leads to re-nationalized security policies.128

Second, Russia’s post-communist future couldmire Europe in pressing security concerns ifthat future produces either chaos and disinte-gration or a reborn authoritarianism prone toimperial ambition. A third source of troublecould come from the states located betweenwestern Europe and Russia, where theprospects of economic and political reformvary markedly.



Greater Europe—which includes the coun-tries of western Europe, eastern and centralEurope, and Russia—will retain lasting impor-tance for U.S. security interests in the nextquarter century for an array of reasons.124

Greater Europe will have a population of ap-proximately 761 million by 2025.125 Aneconomically integrated European Unionwould have an economy slightly larger thanthat of the United States.126 This region willremain an important center of internationaltrade and finance, a pivot of scientific and tech-nological innovation, a region capable ofdeploying sophisticated military capabilities,and a significant actor in global politics.

Europe’s importance to the United Statesalso rests on cultural factors. Most Americanstrace their historical and cultural roots toEurope, and will continue to do so throughoutmost of the early 21st century. More important,America’s political institutions and philoso-phies are essentially European, and the regionwill remain the largest and strongest communi-ty of states sharing the basic democratic valuesthat undergird U.S. political culture. It is alsothe region of the world most tightly bound tothe United States by an unprecedented array ofeconomic, cultural, and political ties.127

For all these reasons, Greater Europe’s evo-lution in the 21st century and its relationshipwith the United States will be as important toU.S. national security interests as it has everbeen. But there is yet another reason why thisregion is liable to be important: it could becomea major source of trouble—trouble that couldtake three intersecting forms.

First, the evolution of west European insti-tutions over the next quarter century will likelyspark economic competition, diverging politi-cal interests, and serious tensions with theUnited States. This will be so whether the

124 In this study we use “western Europe,” not “Western

Europe,” and the same goes for eastern and central

Europe. We have a specific reason for so doing.

Capitalization of these terms, which settled into a pattern

during early Cold War times, indicated a political/ideolog-

ical disposition: West meant democratic and East meant

Communist. This made sense, for through capitalization

English usage gave us the ability to distinguish between

the merely geographical and the abstract. Today, obvious-

ly, this distinction no longer applies—although we still use

the cultural phrase the West, as distinct from the geo-

graphical term the west, to indicate the domain of

free-market democratic countries whose intellectual

origins are to be found in the Renaissance and the

Enlightenment.125 U.S. Bureau of the Census figures and projections, 1999.126 1996 base GDP figures by country are drawn from 1998

World Development Indicators (Washington, DC: The

World Bank, 1998), pp. 180-2. For growth rates used to

derive 2025 figures, see OECD, The World in 2020, p. 92.

It is worth noting that these OECD statistics were

compiled before the 1997-98 Asia crisis. But at the time of

this writing, there is no inclusive post-crisis data set from

which to draw.127 See Paul S. Schroeder, “The New World Order?”

Washington Quarterly, Spring 1994; and Daniel Deudney

and G. John Ikenberry, “The Logic of the West,” World

Policy Journal, Winter 1994.128 See generally Robert Blackwill, ed., The Future of

Transatlantic Relations: Report of an Independent Task

Force (New York: Council on Foreign Relations, February

1999).



60 NEW WORLD COMING

In the coming decades, three criticalmacro-social, economic, and political

forces will strongly affect the states of GreaterEurope. First will be changing demographicpatterns and the resulting need for new socialpolicies.

With the exception of Turkey, no state inEurope today even maintains a population re-placement rate, and this trend is unlikely to

change through 2025. Aging populations strainexisting pension provisions as the number ofworkers paying into the system declinesrelative to the number of retirees.129 Fears ofpolitically unsettling migrations from the EU’speriphery are likely to yield immigrationpolicies far more restrictive than those in oper-ation today, closing off one available means ofcountering prevailing demographic trends. It isnot even clear that unrestricted immigrationwithin the EU will last 25 years, due in part todifferent historical and cultural dispositionstoward immigration.

East of the European Union, a similar de-mographic story yields a different set ofpossible outcomes. Russia’s population willboth age—25 percent of the population will be

over 60 by 2025—and shrink from approxi-mately 148 million in 1995 to approximately139 million in 2025 largely due to low birthrates and acute health and environmentalcrises.130 Russia’s aging population willincrease pressures for social spending, butproblems of unemployment and a non-func-tional tax collection system will make it hard toraise adequate funds. Worse, Russia’s direeconomic conditions will probably stymie the

adoption of anything more than stopgapmeasures across the range of social policy.Moscow’s inability to address such problemswill add to those social tensions, reducingfurther the legitimacy of the central govern-ment.

In the states of eastern and central Europe,the critical challenge will be two-fold: whethergovernments can rebuild the social safety netsthat were destroyed after the fall of the Berlin

129 Sheetal K. Chand and Albert Jaeger, IMF Occasional Paper

147: Aging Populations and Public Pension Schemes

(Washington, DC: International Monetary Fund, 1996),

p. 12.130 All population figures, here and below, are drawn from the

U.S. Census Bureau’s International Database.




Wall; and whether societies can maintain theirnascent democratic political cultures in the faceof episodic economic stress.

Second, economic growth rates will be amajor factor in the region’s prospects. Theachievement of a common EU foreign andsecurity policy, as well as the success of theeuro, will require a growth rate at the upper endof the current OECD forecast range—anaverage of 2.5 percent or better over 25years.131 Lower growth rates could limit theEuropean Union to the creation of commoneconomic, fiscal, and monetary policies, and itcould possibly doom the euro. These lowergrowth rates could also place at risk the abilityof current members or EU aspirants to attainthe economic targets required by the Union—acondition states may be unwilling to resolvethrough difficult structural adjustments.

For the west Europeans, it will be especial-ly critical whether they find a way to reconciletheir deeply embedded views on welfare withthe new macroeconomic orthodoxy sweepingthe world. The future of the euro may well be atstake. Some believe that the initial fall in theeuro’s value over the first six months of 1999was mainly the result of an expectation thatU.S. interest rates would rise. Others, however,have seen a structural cause in the relationshipbetween the size of Europe’s welfare functionand the foreign exchange value of its currency.Expensive welfare states tend to have lowgrowth economies, which leads central bankersto lower interest rates in order to stimulate theeconomy. That creates trade surpluses, but italso devalues the currency, making efforts to re-structure the EU’s approach to welfare crucialto the future economic success of the EuropeanUnion.

Economic growth rates will also have amajor impact elsewhere on the continent. The

relationship between improving economicprospects and the institutionalization of demo-cratic governance is to some extent circular.Economic prosperity cannot guarantee politicalstability—but it helps. So whether in Russia orRomania or Latvia or Poland, good times willmake it easier for reformers to gain support fortheir future visions, and lean times will make itharder. The level of integration between easternand central Europe, including Russia, with therest of the world will also play an importantrole in the area’s prospects. If global economicdynamics are essentially healthy, there will be agreater impetus to adopt international bestpractices, and that will spur positive policiesfor the region. If international economicdynamism stumbles, such incentives will beweaker and their positive impact smaller.

Third, political leadership will play a vitalrole in determining the region’s future. For theEuropean Union, bold leaders reared mostly inthe post-Cold War period could build on theirexperience with a common European currencyand the unimpeded movement of goods andpersons across state boundaries to create acommon foreign and security policy. Absentsuch leadership, states in the European Unionmay be unwilling to yield sovereignty to asupra-national body.

While Russia’s political system willprobably not achieve a fully institutionalizeddemocracy, strong leadership committed to de-mocratic ideals will be crucial to preventdisastrous backsliding. Such leadership wouldenable the central government to retain somemeasure of control over newly empoweredregions. It could also help to ensure continuedaid and investment from the OECD countriesand international financial institutions to whatwill remain a precarious economic and political

131 OECD, The World in 2020, p. 92.



62 NEW WORLD COMING

system. Without a democratically orientedleadership, Russia may disintegrate, or a strongauthoritarian leadership may emerge in itsstead.

The danger posed by poor or divided lead-ership elsewhere in Europe will be a freezing ofnational futures in limbo between the democra-tic West and the problematics of Russia. TheCzech Republic, Poland, and several otherstates “in the middle,” so to speak, have deepWestern cultural roots, whether through theimpact of religion, history, geographicalpropinquity, or all three. Others, to one extentor another, do not. At the outer edge of the ColdWar, all these societies are being pulled towardthe West, but not equally or with similar results.The quality of political leadership over the next25 years will be critical to determining whichof these societies find the will and way tochange themselves into the states they nowwish to be, and which will not. The result willmark a new cultural and political boundary forthe future.

What follows is an analysis of a range ofplausible alternative futures for GreaterEurope. It begins by depicting a regionenjoying relative stability and prosperity andassays the conditions conducive to such goodfortune. It next turns to less positive alterna-tives from the U.S. point of view, similarlyseeking to isolate likely causal factors.

In one view of the region’s future, theEuropean Union would continue to be at

the forefront of many of the positive trendshighlighted in the discussion of globaldynamics. It will continue to be the prototypi-cal case of a group of states, committed tomarket-based liberal democracy, that relinquishincreasing degrees of sovereignty to achievegreater economic success. That effort, in turn,would result in the EU assuming a more signif-

icant leadership role within the internationalarena.

If the political integration and economicexpansion of the EU go as planned, it couldhelp to institutionalize democratic governanceand market economies in at least some neigh-boring countries to the south and east. Asimportant, it would finally put to rest any lin-gering fears that the major European countrieswould ever again go to war with each other.Many believe that it would also create a like-minded and similarly powerful partner for theUnited States with which to share the burden ofglobal leadership.

By 2025, a mature European Union couldbe a successful economic, monetary, and tradeunion, with a common justice and legal struc-ture. It would pursue a common foreign andsecurity policy under the leadership of itsSecretary-General of the European Council andHigh Representative for the Common Foreignand Security Policy. It would assume primaryresponsibility for Europe’s own security, basedon a unified headquarters and staff for an all-European defense force. It would most likelyinclude some twenty states, with new memberscoming from central and eastern Europe. Thereis no more than a fifty-fifty chance, however,that Turkey will become a member of the EUduring this period.

Uncertain is whether the EU will invite theBaltic States or Ukraine to join, given theirproximity and historical ties to Russia.Economically, the Baltic States will probablymeet the criteria, but Ukraine probably will not.Russian opposition will be a significantobstacle, especially as the EU accrues seriousmilitary-strategic functions. If the EU takes inthe Baltic States and Ukraine, it risks a signifi-cant further deterioration of its relationship




with Russia. If it does not take them in, it per-petuates a series of unsettled relationships.

Whatever its precise size, a matureEuropean Union would be a global

political, economic, and technological force.Annual growth rates averaging over 2.5 percent,and concomitant productivity gains, would drivea successful euro and rival U.S. GDP growth.132

If this occurs, the euro would become a mainreserve currency and unit of internationalexchange. Unless the euro appreciated toorapidly against the dollar, this would further EUcompetitiveness in international trade andfinance. Such economic success would provide asound basis for addressing social welfareproblems brought on by aging populations.

The EU would be responsible for thedefense of its members and capable of re-sponding effectively to regional securitythreats. It would have developed the ability toconduct multi-divisional peace enforcement,peacekeeping, and humanitarian assistance op-erations within Europe. Most EU states wouldhave small, professional militaries. Their forcestructures would be bifurcated between high-readiness forces available for such missions aspeacekeeping and larger national defenseforces requiring significant reconstitution to beeffective. Because of the newness of theEuropean Union’s common security policiesand stronger military capabilities, its policieswould probably have a regional focus aimed toprevent the spilling over of instabilities andchaos on its periphery.

In such a world, NATO’s future would beuncertain. It is hard to see how a truly integratedand independent European defense force couldcoexist with NATO, as it is presently constituted.NATO could remain formally the ultimate guar-antor of European security, based on Article 5 ofthe North Atlantic Treaty. But in this case,

NATO’s operational military command struc-tures would gradually disappear. The U.S.military presence would probably diminishsharply, though the United States might stillremain engaged in peacetime through periodicdeployments. The political entry to Europe thatU.S. leadership of NATO provides today woulddiminish.

Even if the EU were to build a unified andindependent military structure, a significantmilitary technology gap would exist betweenthe United States and its European allies. TheUnited States would continue to spend more ondefense than its EU associates combined. Theestablishment of a single, integrated Europeandefense industry could increase European self-sufficiency in defense, but only if the Europeanswere prepared to expand their defense spendingand procure their arms and equipment almostexclusively from this industry.

Over the period through 2025, Russia isunlikely to achieve a fully institutional-

ized democracy. The time is not at hand forcorruption-free political and economic institu-tions, investment-fueled economic development,and a foreign policy oriented toward full integra-tion with the democratic world. But Russiacould evolve in such a way as to be neither agreat democratic success nor a great threat toEurope. That is a condition well described aseither status quo-plus or status quo-minus.

While still facing enormous problems,Russia in a condition of status quo-plus wouldhave acquired a post-sclerotic leadership

132 The OECD under a high-growth scenario predicts long-

term U.S. GDP growth rates to be 2.6 percent per annum.

A weighted average of high-growth estimates for current

EU members and for the newly admitted states envisioned

by this paper yields a GDP growth rate for the European

Union of 2.6 percent, as well. See OECD, The World in

2020, p. 92.



64 NEW WORLD COMING

capable of some political and psychologicaldynamism. It will also have created a governingpolitical party able to accomplish institutionalreform. An active and reasonably popular pres-ident, supported by his party in the Duma,would finally be in a position to firmly estab-lish the rule of law, privatize land, and enact taxlegislation that could give the government astable expectation of essential resources. As aresult, Russia’s increasingly autonomousregions would likely be drawn back toward thecenter. This is not beyond possibility over a 25-year period, and it could occur far more quicklythan that. Even under such conditions, however,Russia could not grow economically at morethan 2 percent a year. But at least the malaise sopervasive today would lift, and a new post-Communist generation could begin to inheritsocial and economic power in an environmentdotted with islands of hope and progress.

Why would growth be so slow even if amore propitious political environment werecreated? Because Russia faces an enormousproblem in renewing and diversifying its indus-trial and commodity base after 70 years ofdistorted markets and under-investment. It isalso likely to continue to suffer chronic unem-ployment, pervasive corruption, and massivetax evasion even under the best of circum-stances. In such an environment, statusquo-minus is just as likely as status quo-plus. Inthis case, Russia’s share of global GDP wouldcontract and growth would stall, with occasion-al periods of severe economic contraction,between now and 2025. This would hamperRussia’s ability to attract private foreign invest-ment, causing continued reliance on assistancefrom international lenders such as the IMF.

In this view of Russia’s future, mostly un-treated health and environmental problemswould grow very serious. The spread of Multi-Drug Resistant Tuberculosis (MDRTB) and

HIV/AIDS would debilitate the work force,lower national morale, and cost large sums ofscarce capital to control, if not resolve. Healthrisks owing to environmental conditions willgrow. Thousands of former biological, chemical,and nuclear weapons sites will exist, but littlemoney will be available for remediation.Chemicals and toxins in the soil and water leftover from industrial processes now abandonedwill have direct and possibly serious effects onthe health of Russians as well as many north andeast Europeans.

The result of the combination of economic,health, and environmental trends could be anincrease in Russia’s existing political and socialstrains. In some regions, such strains couldspark backlashes against the country’s formalbut largely dysfunctional experiment in democ-racy.

Given Russia’s importance to Europe, themajor European countries as well as the UnitedStates are likely to persevere in their efforts tohelp Russia develop institutionalized democra-cy, a more robust civil society, and a moreeffective economy. But even extensive externalaid is likely to achieve little more than a roughpreservation of the status quo—whether plus orminus—and it could end up holding off justenough pain in Russia to delay real reform.

Under most any circumstance, the Russiangovernment’s control of its national borderswill be problematic. Central authority couldwell be limited to matters of national defensepolicy, monetary policy, and the coordinationof inter-regional transportation and communi-cations. Political violence within Russia andalong its periphery will likely attract and subse-quently coexist with widespread, highlyentrepreneurial criminal syndicates that maydevelop strong economic and political ties toregional and local elites. These dynamics, in




combination with the lack of financial re-sources available to maintain the quality andprofessionalism of its military and nuclearforces, will cause continuing concern withinEurope and the United States. “Loose nukes”and “loose bugs” are obvious problems, but sois the lack of effective oversight for the manystill functioning Chernobyl-design nuclearenergy plants.

Some of Russia’s regions could becomepolitical power centers in their own right, per-forming most vital public functions. In theevent that Moscow cannot exert effectivecontrol over its own federation, regional eliteswill play a major role in the selection ofmilitary commanders and their staffs. Regionalleaders would most likely develop their ownforeign policies as well, seeking closer ties towealthier neighboring powers and other poten-tial allies. The Far East regions may gravitatetoward Korea and Japan, and those in CentralAsia (such as Tatarstan) may move closer totheir Muslim neighbors, particularly Turkey,Iran, Pakistan, and Uzbekistan. The regionsclosest to Europe would most likely seekcloser ties to the European Union and toGermany in particular, but also with the Balticstates, Ukraine, and other Slavic states(Bulgaria, and even Belarus) that may be doingbetter than Russia. The question of Russia’sstability and national cohesion will have amajor impact on the security calculus of all thestates on Russia’s periphery. Russia will havebecome the “sick man” of early 21st centuryEurasia—sick enough to worry everyone, butneither so deathly ill nor so imperially healthyas to pose the kind of threat to the rest ofEurope that could decisively throw it off track.

In this view of Greater Europe’s future,most of the states between the European

Union and Russia would improve economical-ly and politically—in absolute terms—from

where they are today. The OECD expects anaverage economic growth rate over this periodof 4.9 percent.133 Such growth, if it occurs,will likely be facilitated by continued invest-ment by EU countries, the United States, andother global economic players who willcontinue to view the future of a market ofabout 194 million people as an important in-vestment priority. Free from Communismonly about five years, their combined GDP in1996 amounted to about $423 billion—around2 percent of the global share.134 In the coming25 years, this region will very likely increaseits global standing in GDP and othereconomic terms.

Politically, most of central and easternEurope will benefit from the positive trends ofdeepening democracy and expanded interna-tional commerce, even if many states do notachieve full global competitiveness. Many, ifnot most, central and eastern European stateswill have mature democratic systems by 2025.There will be regular fair elections, the insti-tutionalization of the rule of law, democraticand civilian control over military institutions,respect for civil liberties, and a willingness topursue peaceful solutions to territorialdisputes and irredentist claims. Even if someare not full members, most of the these stateswill be linked politically with both theEuropean Union and NATO.

At the same time, the situation in theBalkans will remain tenuous even in therosiest of futures. Only Slovenia and Greecehave a good chance to escape economic stag-nation and political instability, because theyare relatively stable democracies and haveenough highly educated people to succeed in

133 OECD, The World in 2020, p. 92.134 World Development Indicators (Washington, DC: The

World Bank, 1998), pp. 180-2.



66 NEW WORLD COMING

an age of economic integration.135 Bulgaria,Romania, Serbia, and Croatia face greaterchallenges but may still succeed. But else-where, Balkan countries will continue toexperience economic dislocations and morethan occasional bad government, complete withcorruption, manipulation of state finances, sup-pression of the media, and a lack of eliteconcern for pressing national problems.

No enduring settlements to the conflicts inBosnia or Kosovo are likely to emerge from theU.S. and NATO-brokered agreements thatended the wars there. As a result, ethnictensions and the security fears that go withthem will remain, regularly threatening to eruptinto outright conflict. Moreover, with Bosniaand Kosovo stuck in a state of suspended polit-ical animation, problems in Macedonia,Montenegro, and Albania will become morelikely. As a result, it is highly improbable thatany of these countries will be integrated intowestern Europe’s political and economic insti-tutions within the next quarter century.

Amore dour future for Greater Europe isalso possible. It would turn on three

basic elements of potential bad fortune. Thefirst is that the European Union collapses,leading to the rise of re-nationalized economicand possibly security policies. The second isthat the Russian state disintegrates altogether oracquires a revanchist authoritarian leadership.The third is that the lands between the EU andRussia fall into a pattern of economic failure,governmental ennui, internal violence, andcross-border wars sufficient to generate asteady stream of strategic and humanitariancrises for most of the next 25 years. Any one ofthese developments could encourage the othertwo.

A collapse of the European Union couldresult from a failure to sustain annual economic

growth at rates of at least 2 percent. Such slowgrowth could arise from a loss of confidence,growing disillusionment among politicalleaders and their citizens, and likely popular re-sistance to further funding any joint policies. Acollapse could occur, as well, as a result ofshifts in leadership with a concurrent reluc-tance to yield national sovereignty over criticalpolitical and economic policies. The unwilling-ness of a population to endure the pain ofmeeting economic targets, or of undertakingstructural changes to address failures in thesocial safety net, might also serve as occasionfor leadership changes.

Another possibility is the specter that a co-alescing governmental authority at the EU levelmight be essentially undemocratic. Currently,the European parliament does not have bindingauthority over national member governments,but the EU bureaucracy in Brussels does inselected policy areas. Already the creation of aEuropean central bank and currency has greatlydiminished the power of national legislatures toaffect crucial pocketbook issues such as interestrates and money supply, which in turn dimin-ishes the significance of citizens’ votes forthose legislatures. Unless EU political institu-tions manage to keep pace with economic andsecurity ones, a significant popular and elitebacklash against integration could ensue, espe-cially in times of economic adversity.

More than that could go wrong, as well, inthe form of external pressures on young EU in-stitutions. Conflict in North Africa could resultin the movement of large numbers of migrantsto southern Europe and points north, upsettingpolitical equilibria and fracturing common im-migration and social policies. A significantsecurity threat from Europe’s periphery, from

135 We use the term Balkans here in a strictly geographical

sense.




Russia or the Balkans, might empower a strongpreference for NATO—which is to say,American—leadership, and sharply diminishinterest in pan-European solutions and institu-tions.

Regardless of the precipitating events, theimplications of lost European confidence in theinevitability of a federated Europe would besignificant. Outside Europe, the euro wouldlose value as demand waned for holdingEuropean assets. Lower growth rates and aweaker euro would limit domestic consump-tion, while higher interest rates would dampeninvestment. In the face of this loss of confi-dence and resulting economic effects, and withno alternative plan in place, the EU could beginto unravel. Germany would probably reassertits national interests politically, economically,and possibly even militarily both within andoutside Europe. France might move sharply tothe right as it finds that it can no longer use in-ternational processes and institutions to limitGermany’s return to independent major powerstatus. The far right would probably prospermore generally, too, in countries such as Spain,Portugal, Italy, and Austria. Additionally, theUnited Kingdom might attempt to separateitself from Europe and focus instead on itsspecial relationship with North America andthe wider English-speaking Commonwealth.

If any of these events occurred singly or incombination, competition among Europeanstates would most likely become the norm, withsignificant undertones of national chauvinismand regional and global economic protection-ism. Elements of the re-nationalization ofEuropean defense would soon emerge, if not onthe scale of the pre-World War II period, thenmuch more vigorously than in the post-WorldWar II period.

While such a situation might increase theimportance of the U.S. dollar, of NATO, and ofthe U.S. role in Europe, many negative conse-quences would flow as well. The collapse of theeuro could send major shocks through the in-ternational financial system. A failure of theEuropean Union would also send a signal, andat worst deal a mortal blow, to other morenascent regional organizations trying to achievefree trade and other common arrangements.The United States might be forced to undertakemuch of NATO’s financial burden. Tensionsbetween a Europe perceived to be shirking itsfinancial responsibilities and a United Statesbeing asked to contribute more to Europeandefense would strain the trans-Atlantic linkdespite a U.S. willingness to pay and do more.Alliance coherence would be harder tomaintain during the transition period as oldnational biases and animosities resurfaced.

The second concern at the more dourend of our continuum is two-fold:

either the collapse of the Russian state or therise of a new authoritarianism. Both could bedisastrous, albeit in different ways.

Russia’s disintegration would have seriousconsequences. Unemployment in Russia wouldreach severe levels. Corruption and inadequatetax collection efforts would leave insufficientfunds for even basic social services. Economicgrowth would plummet to negative rates oversustained periods. The magnitude of its socialand economic problems would probably be sogreat, and the decentralized power of theregions so comparatively strong, that Russia’scentral government might essentially disappear.Regional and ethnic tensions, compounded bysharp economic disparities, would fuel erup-tions of conflict and the mass migration ofcivilians fleeing instability and violence.Military forces, including tactical nuclearweapons, might come under the control of local



68 NEW WORLD COMING

military commanders and political warlords.The last Russian civil war and collapse, from1917 to 1921, was horrible. A future one mightbe even worse, and not just for Russians.

A significant Eurasian power vacuumwould flow from a Russian collapse, encourag-ing states with ties to various Russian regions,such as Iran, Turkey, and Japan, to seek meansof furthering their own interests in the face ofRussian weakness. Faced with Russian disinte-gration and the unlikely possibility of restoringRussian central authority, the European Unionand NATO might draw the Baltic States andUkraine into their organizations, in effect re-dividing Europe in order to prevent the spilloverof Russian instability into other areas of Europe.Diplomatically and economically, the UnitedStates and other countries would have to negoti-ate with multiple entities and factions withclaims to statehood, and deal simultaneouslywith massive economic dislocations. Finally,the dangers associated with wildly diffusedcontrol over nuclear weapons, fissile materials,and biological agents would present a securitycrisis of the first order.

The resurrection of an imperial Russia, onthe other hand, however much it strains theimagination to credit the possibility, wouldpose other dangers. It would feature centralizedcontrols and a new leadership that would tapinto rekindled nationalist sentiments and nos-talgia for Russia’s great power prerogatives.Political structures and the creation ofeconomic dynamics designed to provide forbasic human and social needs would be gov-ernmental priorities, but at the expense ofdemocratic values.

Authoritarian control in Russia could resultin greater internal stability, if it were to succeedin maintaining near full-employment and inproviding essential welfare needs. It might be

able to crack down successfully on corruptionand organized crime. But this is not clear. Sucha regime might be such an international pariahthat it could not successfully connect to the in-ternational economy, making its economicprospects dire. If the government were not ableto solve the unemployment problem or ensuredomestic security, it is hard to see how any such“solution” could produce stability. Such a“solution” would also be likely to generate sep-aratist movements in non-Slavic areas of theRussian Federation, particularly in theCaucasus.

This would be particularly true given that apost-“democratic” Russia would probably beresentful of those who tried to help the Yeltsinregime. In such a scenario, the already wide-spread belief that Western aid was part of a plotto keep Russia weak and to invade its geo-graphical spheres of traditional influencewould likely become accepted truth. Not onlywould such a Russia be a nuclear power, itmight also elect to emphasize military spendingas a means to national industrial regeneration.After all, what remains of the old Sovietmilitary-industrial complex is today virtuallythe only Russian economic sector still breath-ing, if barely so. It would be a natural focus ofinvestment and political patronage for a new,and nationalistic, authoritarian Russian regime.

While such a regime could not crediblythreaten Europe as a whole with conventionalmilitary force, it could nevertheless poseobvious new threats to Russia’s closest neigh-bors. Russia could turn Peronist, or it couldturn fascist, and the difference in the implica-tions for the world at large is not trivial. A weakcorporatist regime would be unlikely to do verymuch harm outside Russia’s borders, but a formof Russian national socialism, emboldened by arevived form of pan-Slavism, could doenormous harm over all of Eurasia and beyond.




In either event, Russia would cast a signifi-cant political shadow over the region in a waythat it does not do now, and in a way that neithermuddling along or disintegration wouldproduce. An authoritarian Russia could pose aneffective challenge to the West and act to rein-force its image as a power whose geostrategicinterests and calculations must be taken intoconsideration. If this future develops, the UnitedStates will have lost its investment in fosteringliberal democracy and in creating the economicpreconditions of a free-market system in Russia.The apparently conclusive failure of democracyin Russia might even trigger a reconsiderationof the presumed universality of core Americanprinciples and beliefs—with unknown conse-quences for our own future.

Finally, the third misfortune that mightplague Europe in the 21st century

concerns those very diverse lands in betweenthe European Union and Russia. The Balkanshave furnished a nearly non-stop political andhumanitarian crisis since the early 1990s, andthings might get even worse despite the EU’s re-doubled determination to funnel major amountsof aid to the region. Albania, Macedonia,Montenegro, Bosnia, and Serbia are ripe forfurther violence and chaos. Belarus, Moldova,and especially Ukraine are new states withunproven track records and many problems.Romania has made only sporadic progressdespite the end of the Ceaucesçu regime, andboth Slovakia and Bulgaria have struggled hardto get even a little ahead of where they were in1989. Ethnic and border questions aplentyremain unresolved, and the quality of futureleadership is unknown.

If the global economy falters, all of thesecountries would be hit hard. If NATO acquires areluctance to intervene in such domains after theexperiences of Bosnia and Kosovo, the potentialfor on-going violence and cross border wars can

only rise. Obviously, too, the specter of re-na-tionalized security policies in western Europeseeking agents and allies to the east—repeatingthe patterns of the interwar years—will notmake things any easier. Nor will a Russia in thethroes of collapse, exporting refugees, crimi-nals, drugs, and weapons westward.

Amid the various possibilities sketchedout above, the most dramatic changes

are probably the least likely. The EU will neithercollapse nor achieve a fully unified foreign andsecurity policy. Habit and hope will prevent theformer, while British reluctance, differences ofinterest, and an unwillingness to buy the militaryassets necessary to undergird such a policy willbrake the latter. Hence, a rebalanced NATO islikely to remain the premier institution ofAtlantic relations and the main instrument ofU.S. power in Europe. The political andeconomic profile of the EU is likely to rise,however, and insofar as there are differences inU.S. and European perspectives, it will make thepolitical management of trans-Atlantic relationsa more challenging task.136 Similarly, in all like-lihood, Russia will muddle through. In centraland eastern Europe, what is today a very mixedpicture will likely change in its particulars, butremain mixed in its overall circumstances.

American policies will clearly be impor-tant to Greater Europe over the next

quarter century. Keeping the trans-Atlantic linkalive even as Europe bears more responsibilityfor its own security will require tact and forbear-ance on all sides. It will be worth a major effort,for Greater Europe will remain very important tothe United States. U.S. political leadershipthrough NATO has been a vehicle to organize thecontinent’s overall security and to mollify jeal-

136 See Peter W. Rodman, Drifting Apart? Trends in U.S.-

European Relations (Washington, DC: The Nixon Center,

1999).



70 NEW WORLD COMING

ousies and historical fears among the Europeanmembers. American military forces in Europehave been instrumental to these purposes.Determining the extent and nature of the U.S.military presence in Europe will therefore be oneof the key issues for the United States and itsallies over the next 25 years. The general tenor ofthe U.S.-EU relationship will determine whetherthis and other critical alliance issues are managedin a relatively cooperative or a more adversarialmanner.

U.S.-European cooperation will also becrucial in the case of Russia, which will dependupon the continued willingness of internationalinstitutions to provide financial and other kindsof assistance. Without it, the potential foreconomic collapse will loom larger and makethe emergence of an undemocratic future morelikely. On the other hand, overly vigorous U.S.involvement in the management of Russia’sproblems may risk provoking a backlash. Acareful balance will be critical.

American policy will also be critical to thefuture of the countries of eastern and centralEurope. If the United States remains economi-cally engaged, it could help offset thein-between status that these states are liable tohave with the EU for many years ahead. And ifthe United States remains culturally and politi-cally engaged, it will continue to buttress theevolving democratic political cultures in manyof these countries. The American example, aswell as that of the EU states, is crucial to theirevolution as democracies. It is all the more im-portant, then, that U.S. policy deal with states intheir own right, rather than cast them as strategicadjuncts of Russia to the one side and its NATOpartners to the other.

The range of futures for Greater Europe iswide indeed, but even the most positive

view that one could reasonably take of the future

is far from ideal. Russia will not be robustly de-mocratic and prosperous, a unified EuropeanUnion will present challenges as well as oppor-tunities, and eastern and central Europe willcompose a patchwork of successes and failures.The alternatives, on the other hand, providewarning as to how bad things could get—andthis is in the part of the world that most closelyshares U.S. values and civilization, and that is asadvanced economically and politically as anyother continent. It is a sobering visage.

East Asia

East Asia—here defined as includingNortheast Asia, Southeast Asia,

Australasia, and all their oceanic appendages—contains not only upwards of a third of theworld’s population, but also what is widely takento be the most likely future politico-military near-peer competitor for the United States (China),two of its most critical allies (Japan and SouthKorea), and one of its most intractable problems(North Korea). The region’s importance to theUnited States will grow between now and 2025,whether due to its successes and strengths, or tothe problems it could generate from weaknessand strife. Asia, and particularly Northeast Asia,is the region of the world most likely to witness amajor war. It is the only region in which signifi-cant territorial disputes among major powersexist, in which the use of military force wouldalter the regional balance, and in which an alter-ation of the regional balance would invariablyaffect the world as a whole.

Recent trends suggest that East Asiaembodies vast potential for economic growth,peaceful development, and scientific as well ascultural achievement in the decades ahead. In thelast quarter of the 20th century we have wit-nessed a stunning, if lately stunted, economicperformance there. With it has come significantsocial change, much of it tumultuous but most of




it positive. There have been notable improve-ments in education and basic health care, as wellas more equal opportunity for citizens of mostnations irrespective of gender or ethnic origin.We have also seen the transformation of some ofthe region’s erstwhile dictatorships into fledg-ling democracies, and, not least, East Asia hasmanaged to avoid major interstate violence.137

In short, we have witnessed strikingly suc-cessful modernization over most of a vast region,and we have seen it take place mainly on its owncultural terms—while influenced by those of the

West. This is a major datum, for aside from a fewisolated examples (Turkey, Japan, Finland,Israel), no cultural area as vast as East Asia hasheretofore replicated the sharp growth of livingstandards occasioned by the IndustrialRevolution. The last four decades of East Asianhistory prove that economic modernity comes inmore than one cultural form.

137 The Vietnamese invasion and occupation of Cambodia

(1979-89), and the Sino-Vietnamese border war of 1979

are the partial and somewhat peculiar exceptions.



72 NEW WORLD COMING

These accomplishments represent only aforetaste of the harvest of prosperity and intellec-tual and cultural achievements that could arise inEast Asia by 2025. By then the region may wellbe the largest and most powerful economicgrouping in the world.138 East Asian economiesmay grow at an annual average of about 6percent over the next two decades, more rapidlythan any other area.139 If so, the region’s shareof global GDP could increase to slightly less

than one-third, with Europe, the next largestregional economy, accounting for about one-fifth. Significant Asian trade and investmentamong the countries in the region as well aswith the United States, Europe, the Near East,and Latin America would be assured. East Asiais also likely to be the largest source of capitalfor international markets.

At the same time, energy consumption indeveloping Asia will surpass that of North

America by 2020. Almost half the world’s in-crement in energy consumption will come fromdeveloping Asia.

No doubt, the proven facility of East Asianpeoples to adapt and develop science-driventechnologies will lie at the heart of the region’seconomic dynamism—if it comes to pass. If theinformation revolution continues its long marchthrough the economic institutions of the world,

138 Population expansion will in part drive the absolute size of

East Asian economies. The populations of the five largest

states in the region in 2025 will have changed from 1999

roughly as follows: China from 1.2 to 1.4 billion;

Indonesia from 213 to 288 million; Japan from 126 down

to about 120 million; the Philippines from roughly 80 to

121 million; and Vietnam from 76 to about 104 million

people. East Asia’s population as a whole in 2025 will be

4.84 times the size of that of North America, and 6.56

times the size of the European Union’s.139 OECD, The World in 2020, p. 92.

Source: International Energy Outlook 1996, Washington, DOE, EIA-0484(96), May 1996, p. 92, andInternational Energy Outlook 1997, April 1997, DOE/EIA-484(97), Reference Case, p. 119.

Increased Demand for Oil in Asia Will Outpace World




and if an essentially liberal global economicorder is maintained, then it is clear that ex-tremely lucrative cutting-edge technology ofvirtually every kind will be available in EastAsia. Japan is likely to be a leading global in-novator and manufacturer of technologies suchas micro-electromechanical systems (MEMS),artificial intelligence (AI), robotics, and com-puters. Japan’s commercial space industry willprovide launch capability to many states andprivate licensees worldwide. Korea and Taiwanwill continue to produce world-class communi-cations and information technology, in somecases challenging U.S. and Japanese technolog-ical superiority and marketing success.

Australia, New Zealand, Singapore, thePhilippines, Thailand, Vietnam, Indonesia, andMalaysia may also play major secondary rolesin the region’s technology-driven growth byproviding a mix of raw materials, humancapital, financial services, affordable labor, andmajor expanding local markets. Rural areas aswell as the cities and major towns of the regionwill be even more deeply linked electronicallythan they are today, providing an importanteconomic multiplier effect. As these economiesgrow, they will be able to afford infrastructuresthat provide wide access to regional and globalcommunication grids and media resources. As aresult, expectations regarding quality of life areliable to rise steadily. First in cities and later inrural areas, people will aspire to better publicservices, education, environmental quality,crime control, medical care, and job-training.In addition, greater access to media and infor-mation will whet appetites for political newsand participation. In short, new and expandingmiddle classes will want what such classesalways want: economic stability and a piece ofthe political action.

Greater information linkages within theregion will also encourage labor migrations

from less developed and urbanized countries ofthe region to more rapidly developing ones.140

Such labor migrations could also boost the ed-ucational levels of the migrants, allowing themin turn to raise the labor and educational stan-dards of their home countries.

Barring major political upheaval andeconomic collapse, China will compete withU.S. firms in space launches, and have severalworld-class high-technology firms engaging ina wide range of corporate partnerships world-wide. China will also most likely bewell-linked into the global communicationsgrid, and will be in a position to use surveil-lance, communications, and positioningtechnologies for commercial and military ap-plications. Also, under almost any imaginablepolitical regime, China is likely to pursuebiotechnology for commercial, medical, andmilitary purposes.

Along with economic and technologicaldynamism, East Asia over the next 25 yearscould become a zone of relatively peaceful re-lations, characterized by predominatelydemocratic governments well connected to arange of global economic and political institu-tions. The Association of Southeast Asian

140 By 2025 more than half of the region’s population will live

in cities, up from 35 percent in 1999. The graying of East

Asian populations is a major phenomenon to be coped

with in the next 25 years. Between 1995 and 2025, the

numbers of 15-64 year olds per person 65 years and older

will have fallen as follows: China, from 11 to 6; Japan,

from 5 to 2; Indonesia, from 14 to 8; South Korea, from

12 to 4; North Korea, from 14 to 6; Australia/New

Zealand, from 6 to 4; Malaysia, from 14 to 8; and the

Philippines, from 17 to 10. For more detail and some

likely social implications, see Nick Eberstadt, “Asia

Tomorrow, Gray and Male,” The National Interest, No. 53

(Fall 1998), pp. 56-65. On Japan specifically, see Milton

Ezrati, Kawari: How Japan’s Economic and Cultural

Transformation Will Alter the Balance of Power Among

Nations (Reading, MA: Perseus Books, 1999).



74 NEW WORLD COMING

Nations (ASEAN), the ASEAN RegionalForum (ARF), and the Asia-Pacific EconomicCooperation (APEC) forum will have maturedand expanded their functions. Multilateral insti-tutions could arise to address new transnationalissues. It is possible, too, that East Asia will atleast begin to develop security and arms controlarrangements comparable to those in Europe.

Problems and tensions will persist. Themutual suspicions bequeathed by some hardhistory will not disappear. Not every state willbe a democracy, and very destructive weaponswill be available to ambitious leaders withouttheir countries having to first establish a largeor sophisticated industrial and scientific infra-structure. Economic competition could getnasty between similarly endowed nations.Vested political leaderships with a lot to losefrom rapid change could fail occasionally torise to enlightened levels, and the socialstresses of modernization could still over-whelm some of them even if they areenlightened.

But there is a good prospect that, with somuch more to lose, governments in the regionwill find ways to bound their difficulties shortof war and beggar-thy-neighbor economicpolicies—as has been the case in westernEurope for the past half century. Presumably,too, such an evolution in East Asia would beencouraged by timely help from the UnitedStates and other major global players with aninterest in the region’s peace and prosperity—again, just as Europe’s postwar success is partlyexplained by U.S. policy during the Cold War.

Finally in this view of East Asia’s future,a growth in living standards, higher educa-tional levels supporting a technologicallydriven economy, and the relative openness ofgovernments required to sustain an entrepre-neurially-minded business culture, would all

conduce to positive changes in the social atti-tudes of younger generations. This does notimply that economic modernization points toone set and one set only of attitudinalpatterns—i.e., Western ones. But many tradi-tional East Asian attitudes—the emphasis oncommunity and extended family as opposedto the individual; toward social hierarchiesexpressed through traditional occupational,age, and gender roles; toward educational in-stitutions; toward paternalist social authorityvested in government—would probablychange. Thus, East Asian cultures could cometo accept, on indigenous cultural terms,values more harmonious with representativedemocracy and greater personal liberty thanhas heretofore been the case.

If East Asia develops in such a fashion, orsomething like it, nearly everyone in the

region and beyond it will be better off, and U.S.national security concerns with East Asia willprobably be modest. But there is no guaranteethat it will develop so benignly. Plenty of thingscould go wrong, and some of them probablywill.

An optimistic appraisal of East Asia’sfuture is predicated in large part on an assump-tion: that the rising tide of economicdevelopment, buoyed by both a dynamisminfused by major technological innovations anda more integrated international economy, willbring benign political and social developmentsin its wake. There are plenty of examples inhuman history, however, of parochial politicalinterests—if not sheer irrationality, ideologicalrigidity, and myopic leadership—foiling suchscenarios. After all, if enabling globaleconomic patterns and a skilled populationwith an affinity for science and technologywere all that really mattered, then it would beimpossible to explain the Japanese economicdoldrums of the past eight years. Sclerotic in-




stitutions and poor executive decisions clearlymatter.

So what could go wrong for East Asia overthe next quarter century? Three things come tomind: economic meltdown, major upheaval inChina, and a serious spiraling downward ofgeopolitical stability among China, Japan, andKorea. Let us take them in turn.

Alarge-scale Asian or global recessioncould occur, leading to widespread

unemployment, social instability, increasingnationalism and protectionism, and heightenedpolitical repression in several East Asian coun-tries. To see how the latter could occur, all oneneed do is examine the case of Indonesia. AsIndonesia’s economy began its free fall in late1997, the wheels were set in spin for the fall ofits government, murderous attacks on its ethnicChinese minority, and the rise or reanimation ofseveral secessionist movements.

In contemplating the social and politicalvolatility that could issue from an economicdownturn in East Asia, one must start not fromtheoretical speculations but from the actual sit-uation extant today. Despite recent signs ofrecovery, large parts of the region remain indisastrous shape following the financial crisisof 1997, with falling incomes and sharplyrising poverty levels. Meanwhile, the rapidsocial change and attendant dislocations causedby earlier bouts of globalization, urbanization,and rising educational and economic expecta-tions continue to flow through the affectedsocieties. Seen against the dashed hopes ofrecent years, another cycle of boom and bustcould touch off significant violence and a sharpbacklash against enemies of the region, per-ceived or real, between now and 2025. That, inturn, would amount to a huge waste of humanpotential. Lives preoccupied by fearful, embat-tled conditions rather than engaged in scientific,

commercial, and cultural pursuits would trans-late at the least into fewer gains from trade,fewer investment opportunities, and fewer EastAsian children nurtured to contribute positivelyto global knowledge and culture.

Widespread East Asian economic troublecould also lead to virulent anti-Americanism. Abacklash against the United States could bebased on claims of U.S. insensitivity to EastAsian suffering or to U.S. “cultural imperial-ism,” particularly as expressed through U.S.influence over International Monetary Fund(IMF) and World Bank policies. U.S. publicopinion, in turn, could move increasingly againstliberalized trade in view of mounting U.S. tradedeficits and losses of American jobs, as EastAsians once again try to export their way out oftheir economic problems. U.S. protectionismwould worsen any regional or incipient globaleconomic recession many times over, leading toa vicious downward spiral.141 Protectionist sen-timents, were they to be deep and long lastingenough, could also encourage isolationistimpulses, and lead the United States to disen-gage from East Asia.

How likely is that possibility? An answermay start from the simple observation that theAsian economic crisis that began in July 1997 isstill under the analytical knife. Some argue thatstructural defects in East Asian economiescaused the crash, and that once bloated to a suf-ficient level, the bubble economies of the regioninevitably had to burst. Others argue that theherd instincts and poor risk management ofWestern speculators and financiers were princi-pally to blame. And still others believe that theinternational economic policies of the U.S. gov-ernment were insufficiently attentive to thelimits of East Asian institutions, and that IMF

141 See Peter Schwartz and Peter Leyden, “The Long Boom: A

History of the Future, 1980-2020,” Wired, July 1997.



76 NEW WORLD COMING

policies made things worse than they otherwisewould have been. Depending on which explana-tion one accepts, divergent explanations for whysome countries were not hit as hard as others,and why some have recovered faster than others,follow in turn. Proposals over how to regulate in-ternational financial exchanges and reform theIMF also invariably raise contentious debate, allof which shows that there is no consensus aboutwhat went wrong or how to prevent it from hap-pening again. Since the urgency of reform haswaned as many countries have managed to setthemselves aright, even without fixing most oftheir structural flaws, it could very well happenagain.

But of all the potential problems thatcould throw East Asia for a proverbial

loop, none is as portentous or controversial asthe future of China. China is so huge, evenrelative to its Japanese and Korean neighbors,that it is bound to affect East Asia’s future. IfChinese authoritarianism decompresses as percapita income reaches around $7,000, (as severalobservers have predicted), and the politicalsystem moves toward bounded pluralism even ifnot genuine democracy, optimism about EastAsia’s future would receive a major boost.142 IfChina undergoes major political reform after theterminal but essentially peaceful crisis of thecommunist system, leading to the creation of aparliamentary system no less democratic thanthat in Taiwan, then so much the better still.

Under either scenario, with its state-ownedenterprises and its banking system successfully,if painfully, reformed, China’s GDP could be thelargest in the world in absolute terms in 2025.143

China’s share of global GDP could shoot upfrom about 8 percent in the late 1990s to about14 percent. China would also be a major sourceof international financial liquidity. With depen-dencies and economic interests around the

globe, China would conduct itself as a majorworld power, with active policies outside ofAsia.

Such a China would not necessarily have ir-reconcilable conflicts of interest with the UnitedStates or other major powers. Presumably, evena China energized by broad, rekindled national-ist sentiment would be constrained by its manycrucial linkages with international economic andpolitical institutions. China will require anenormous amount of energy, more than twicewhat it consumed in the late 1990s when itburned one of every three tons of coal world-wide. Even with better-developed hydroelectric,coal, and domestic oil resources as principalsources, China’s requirements for imported oilwill rise from a projected 1.4 million barrels aday in 2000 to 5.2 million barrels a day by2020.144 The parade of supertankers streamingto Chinese ports would be vulnerable to inter-diction in a crisis. China would share with othermajor oil importers in East Asia, such as Japan,a strong interest in keeping oil flowing from keysources and keeping strategic sea-lanes open.Beijing might also foster positive economic, po-litical, and security relationships with key oilproducers around the globe, especially inCentral Asia, Russia, and the Near East. Thatmay lead China to fashion policies toward theseregions similar to those of the west Europeancountries; namely, a policy aimed at appeasingmajor regional actors in search of preferred com-mercial status.

142 For example, Minxin Pei, “Is China Democratizing?”

Foreign Affairs, Jan./Feb. 1998, and Henry Rowen,

“China: A Short March to Democracy?” The National

Interest, No. 45 (Fall 1996).143 See note 53 for references and detail.144 International Energy Outlook 1999 (Washington, DC:

Energy Information Administration, 1999), Tables A4, D1.


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