Compass

In every conflict, there are clarifying moments of horror, episodes that cast into stark relief the reality of the forces at work and the complex obstacles to peace. The massacre of Al Houla, where more than a hundred civilians were murdered with savage intimacy, is such a moment in the Syria crisis – but not for the reason that you may think. It will not trigger an air war or an invasion; it will not lead to the forcible removal of the Assad regime by Western troops; and it will not tip the balance of choices among the regime’s supporters. Syria has now entered a cavern of civil conflict from which there is only the slightest of hope of escape – and achieving it requires a far more honest reckoning with the realities of power, and the West’s strategic priorities, than is currently on display in the Western debate over intervention in that country.

The Assad regime is a predatory, deeply illegitimate entity that will stop at nothing to retain power. It needs to go, one way or the other, sooner rather than later. To say this, however, is the easy part. There is little moral or strategic accomplishment in such a declaration – though you’d imagine otherwise from the bombast and bluster with which the end of the regime has been urged by Western politicians, diplomats and commentators. Far more difficult – and therefore carefully and comprehensively dodged by the self-appointed avatars of Western conscience – is constructing a credible way to transition power in Damascus to a broad-based government in the absence of the use of force.

From the criticism of Kofi Annan’s mission expressed by some commentators – and the damning with faint and cowardly praise heard from the very Security Council members who pleaded with him to take on the role as envoy – you’d imagine that the former United Nations Secretary-General and Nobel Peace Prize winner is the only thing that stands in the way of a blossoming democracy in Damascus. The truth is almost certainly the opposite. When the Security Council went to Annan 14 weeks ago and asked him to set aside his philanthropic activities in Africa to take on this perilous mission, nearly a year had gone by with the world condemning the crackdown in Syria – all to no effect. The world, including the United States, was out of options – and out of ideas – when it turned to Annan to create a process that would seek an end to the killing in Syria.

What Annan did by creating his six-point plan was, in reality, to pave the path for Assad’s exit. Either, on the one hand, Assad would be forced by intense, creative diplomatic pressure backing Annan’s diplomacy to accept and implement the six-point plan – and in that case, the only logical conclusion to a proposal that calls for a broad-based rule would be a new government in which Assad, by definition, would have no place. Or, on the other hand, Assad would maneuver and manipulate his way around the plan’s demands, and thereby unleash the kind of sectarian fighting that his minority clan will win only until the day it loses, and then gets destroyed. So far, both sides have played their predictable roles: Western powers unwilling to think beyond conventional ideas in their attempts to apply material pressure on the regime; and Assad, dogged and deeply delusional, maintaining his fantasy of an elected government in Damascus besieged by a jihadist-Western conspiracy.

If Assad is unlikely to change his stripes, it is high time for the West to engage the conflict on terms that reflect the complex requirements of a successful removal of Bashar al-Assad from power. What Assad recognizes, first of all, is that there is zero appetite in Western capitals, or the Middle East, for an armed intervention in Syria of the kind we saw in Iraq or Libya. He knows that Russia will continue to block the legal foundation for enforcement action in the Security Council as long as he’s offering them a better deal than the West is prepared to do. And he understands that as long as the West looks to the external opposition for coherent leadership of the transition he can sleep easy in his bed.

To achieve the fundamental aims of the international community in Syria – an end to the bloodshed and a transition to a broad-based, legitimate government – the West will have to reverse its approach on all three fronts. On the matter of military intervention, empty talk that does little to frighten Assad – and a great deal to alienate critical members of the Security Council, such as Russia and China – needs to stop. To shift its position, a Russian state that has little love for Assad and greatly fears the salafi-jihadist aftermath of a Syrian civil war requires genuine engagement on its core interests: stability in Syria and a say in the country’s future commensurate with the West’s. Finally, the external opposition has to be understood as incapable of achieving the organizational coherence or domestic legitimacy to lead the transition.

The answer, if there is one short of all-out war, is to focus on the pressure points at the top of the Alawite security structures, whose calculation of their balance of interests has not been sufficiently altered by the diplomacy of the past 14 months. Beneath the surface image of a brutally successful regime set on prosecuting a war on its people, there is in fact a highly dynamic situation, with fluid shifts in power within the country and among interests outside, making this a moment of opportunity. Rather than focusing on a transition process in the hands of the opposition, all efforts must now center on bringing the Russians along to create a united international message to the Alawite elites: Distance yourselves from Assad and his immediate circle of henchmen and you will be part of a transition that keeps the army, and other Alawite centers of power, at the table in the design of the new, multi-party, governance of Syria.

If the Annan plan “fails,” or “has failed,” as pundits are falling over themselves to declare, it will be because the Security Council powers, and the United States in particular, did not will its success. He is their envoy, appointed to carry out their mandate, and no ruler is better placed than Assad to call a Western bluff when he sees it. The pillars of his rule – those whose betrayal is the only sure path to Assad’s speedy end – will know when Annan’s diplomacy is backed by a united council determined to effect a change at the top. There are, in other words, today two ways to see the end of the Assad regime: either by giving the Annan mission the backing it needs to make clear to the people around Assad that their survival is incompatible with their leader’s continued hold on power; or by way of a vicious civil war that will see many more Houlas yet before Syria’s people have the prospect of living without fear in their own homes.

Diplomacy, more often than we’d wish, is a matter of limited, available alternatives. For Syria, there is no deus ex machina, no intervention force waiting to provide a clean removal of the regime in Damascus with the simplicity or speed than anyone would like. This is, at heart, a profoundly Syrian conflict of power and survival – it started in the streets and alleys of Syria, and it will end there. The real tipping point in Syria still awaits – the day when a small group of men around Assad’s command center look each other in the eye and conclude that a bullet to his head is the only way to save their own. What remains is one last chance to avoid an all-out civil war whose consequences are unpredictable except in one respect: that we will all look back on this time and ask ourselves why more wasn’t done to support and sustain the one diplomatic strategy designed to shift the elite’s allegiances, and negotiate the transition away from Assad’s ruinous rule to a new, legitimate, government in Syria.

PHOTO: Anti-government protesters hold signs as part of a funeral procession for Yaser Raqieh, whom protesters say was killed by forces loyal to Syria’s President Bashar al-Assad, near Hama, June 5, 2012. REUTERS/Handout

The death of an Englishman in Chongqing has acquired all the intrigue of a John le Carré novel with none of its charms. Despite the occasionally romantic descriptions of the disgraced leader Bo Xilai as a charismatic man of the people challenging the prerogatives of Beijing’s bureaucratic leadership, this is a story without heroes, in which no one’s hands are clean. For all the elements of murder, mystery and missing fortunes occupying the Western press, in China today the focus of the country’s political and economic leaders is on the cascading power struggle that is in progress and what it holds for the future management of the world’s second-largest economy.

A year of leadership change that should have been defined by a smooth, almost seamless transition is instead shaping up to be a turning point in the direction – and ownership – of the political economy of China. Two years of plotting, positioning and maneuvering on the part of tens of thousands of party officials have been thrown into disarray by Bo’s fall, with few now confident of where their allies and masters will find themselves at the conclusion of this upheaval. Combine this with the unresolved elite debate about the cause of China’s economic miracle – the process of reform and liberalization, on the one hand; or, on the other, the still-powerful grip of the state on the means of production – and what you have are all the elements of a perfect storm for the Chinese Communist Party.

Beneath the past month’s surface impression of a resilient party able to manage with speed – and unprecedented candor – the exit of one of its princelings, two visions of China’s future are battling it out more fiercely than ever, in Beijing and throughout the provincial capitals. On one side is a movement, often but inaccurately described as “neo-Maoist,” led by Bo Xilai’s faction and dedicated to maintaining the dominance of the party in the service of the masses left behind by the rapid growth in the major cities. On the other, closely identified with outgoing Premier Wen Jiabao, is the faction dedicated to accelerating economic and political reform designed to ensure long-term sustainable growth. What they share, rhetorically, is a commitment to addressing rapidly widening income inequality. What the factions share, equally, is a reputation for corruption and family privilege of immense proportions at their leadership levels.

What to date has distinguished China’s rise from, say, Russia’s, has been a generation-long elite social compact where the wider interests of the state enjoyed at least equal priority with the personal financial interests of those guiding it. The danger is that an oligarchy – however discreet, distinctive and still grounded in the party’s program – will tip the balance of decision making decisively toward an irreversibly corrupted political economy. It is one thing for technocratic managers faced with the immense challenge of guiding China toward a consumption-based economy to make errors of capital allocation in good faith. It is quite another if, for example, the 10th commercial airport in Shanghai is built because a princeling member of the leadership stands to gain a personal fortune from the investment.

To this pivotal question, the answer does not lie in which faction of the Politburo – Wen’s or Bo’s – prevails. Yes, China must continue to integrate itself carefully into the global economy. What will matter far more, however, is to prevent the capture of the state by leaders devoted more to their own and their families’ interests than those of the hundreds of millions of Chinese still living in poverty. In the meantime, the struggle for power is paralyzing decision making across a vast range of centers – even to the extent that some observers now believe it to be contributing to the economic slowdown in ways that are outside central control.

China’s leaders know what they don’t want – Western-style liberal democracy. They remain profoundly unresolved about they do want by way of a central organizing principle for their state. In the absence of decisive leadership, the vacuum is in danger of being filled by the acquisition of oligarchical power that will be extremely difficult to reverse.

A deeply consequential reordering of Chinese politics has begun – and the path to a new equilibrium will be defined by a struggle for personal power and privilege as the vision of the ultimate destination. For investors, diplomats and analysts accustomed to weighing endlessly the quantitative evidence of a hard or soft landing for China’s growth story, this is the “landing” that ultimately will matter.

PHOTO: China’s former Chongqing Municipality Communist Party Secretary Bo Xilai (C) stands with students as they pose for group photographs during an award ceremony for Chongqing primary and secondary schools speech contests in Chongqing, December 26, 2009. REUTERS/Stringer

Syria can set fire to Lebanon at the wave of a hand. Hezbollah can be ordered into battle with Israel at the command of a call from Tehran. Lebanon’s sectarian politics are a plaything of outsiders whose every whim determines the fate of the country. These are among the conventional wisdoms that have long held the fate of Lebanon hostage — assumptions as widely held within the country as outside it. But a closer look suggests that it is high time these preconceived notions are challenged — not because they lack a basis in reality, but because they are rooted as much in what the country’s enemies, from Damascus to Tehran, wish to be the dominant narrative as what the far more complex conditions on the ground merit.

Today, as Syria’s civil war gains speed and severity, and the crisis of Iran’s nuclear program escalates by the day, Beirut is holding its breath — too fearful and too scarred by a war-torn history to imagine anything but the worst-case scenario. And yet, the reality as acknowledged by a growing number of Lebanese observers is more complex. If Assad really could create the distraction he needs from renewed conflict in Lebanon with such ease, would he not already have done so? If Hezbollah is nothing but an arm of Iran’s forward defense, would it not have been the first agent called into action, as opposed to Tehran’s other alleged responses — from the plot to assassinate the Saudi envoy to Washington to the recent attacks on Israeli diplomats in Delhi, Bangkok and Tbilisi? As Tom Fletcher, the British ambassador to Lebanon, pointed out to me on a recent visit to Beirut, just as Sinn Fein and Hamas discovered in their time, Hezbollah’s role in the current government means that it is having to make compromises and shift from the comfortable politics of opposition.

What is true of Lebanon is true too — and far more consequentially so — when the conventional wisdom about the aims and motivations of the region’s other players are examined. At this moment of looming conflict with worldwide implications, it is time to give far greater scrutiny to the claims made by the principal protagonists about the merits of their policies — and the ways they diverge from the global interest in the security and stability of the region. This is most evidently the case with the threat of Iran’s nuclear program and the trade-off between war and containment that ultimately faces the international community.

Iran claims that it is pursuing a purely civilian interest in nuclear technology and that as signatory to the Non-Proliferation Treaty it is being held to an unjust double standard. The reality is that Iran has done little to reassure the outside world of the accuracy of this assertion and that much evidence exists to the contrary. As a repressive, deeply illegitimate regime, Tehran is using all the levers available to it, conventional and unconventional, to sustain its power and destabilize its enemies as it seeks to overwhelm its own popular uprising that began, but did not end, with the 2009 Green Movement.

Israel insists that Iran’s nuclear weapons program represents an existential threat from a regime that would seek its destruction. The reality is that this assumes the regime is not only homicidal, but suicidal. An Iranian nuclear deterrent would in reality represent a change in the regional balance of power away from Israel’s near-total military dominance over its neighbors, a prospect that it may find only slightly less concerning. That the question of Palestine is pushed further to the back burner of the global agenda is to Jerusalem a secondary, but not insignificant, benefit of the global focus on Iran.

Saudi Arabia and its Gulf Cooperation Council allies — cheerleaders as avid of a military confrontation with Iran as Israel these days — allege that Iran is the font of a rising, revolutionary “Shia crescent” that will upend the entire region. The reality is that the Gulf Arabs — with U.S. backing — have come to enjoy a dominance of the Persian Gulf unattainable in the days of the Shah and are using the very real threat from Iran to divert attention from their own domestic economic and political deficiencies. If Iran is able to stoke Shia rebellions in Bahrain and Saudi Arabia, it may have something to do with the fertile ground created by the policies of the regimes toward their minorities.

Behind all these claims and pretexts, excuses and diversions lies the expectation that the United States, backed by Europe, will have to finish a war that Israel may start and the Gulf Arabs will quietly endorse. For this reason, if no other, it is incumbent upon the friends of Israel and the Gulf Arabs to engage them more creatively on their legitimate security concerns — acknowledging the very real challenge of containing a regime in Tehran that is an enemy to its own people as well as to the world’s interest in avoiding a nuclear arms race. These friends need to call their bluff on seeking support for agendas that are at best unique to their narrow interests and at worst destructive to the wider aim, which is to ensure that the challenge to Iran’s nuclear program doesn’t metastasize into a military conflict with little prospect of achieving longer-term security. This is not — or shouldn’t be — a matter of the West’s commitment to ensuring the security and stability of key allies in the face of a rising threat. It is — and must be — about applying the necessary judgment on the utility of force, and the potential for containment, when no good option exists.

Ten years after the war in Iraq was set in motion — an immensely costly war variously justified on the grounds of Saddam’s WMD, his support for Al Qaeda, the certain welcome of his long-oppressed people and the transformation of Iraq into a beacon of democracy — it is well worth re-examining the claims made by the region’s interested parties about the need for another war in the Persian Gulf. When it comes to the Middle East today, a bonfire of alibis is overdue. There is no time like the present to strike the match.

PHOTO: Demonstrators burn a poster of Syrian President Bashar al-Assad during a protest in Al Mazaa, Damascus, February 12, 2012.  REUTERS/Handout

The epic global shifts of 2011 transformed the political, economic, and social landscape from Shanghai to Sao Paolo, Washington to Cairo. No leader (not even Vladimir Putin) is safe from the vagaries of social unrest; no economy (not even China’s) is unaffected by contagion from an over-leveraged, under-managed euro zone. No country (not even the United States) is immune from the threat of asymmetric attacks—anything from a terrorist bomb to cyber-warfare.

Volatility will be the rule, not the exception in 2012. What I call the emerging Archipelago World of fragmenting power, capital, and ideas is inherently unstable— as vulnerable to old conflicts and new threats as it is open to the dynamic entrepreneurship of rising powers and corporations remaking the map of the world.

A 20-year period of one-world, one-way globalization is being replaced by an era of competitive sovereignty. The walls are going back up. Developed and developing states alike are vertically integrating political and economic interests across public and private sectors in a global race for growth, employment and security.

Having previously embraced interdependence as the motivation for horizontal integration across markets and regions, states as diverse as Canada, Finland, Saudi Arabia, Japan, Brazil, Turkey and the United Kingdom are now pursuing more national strategies for economic and political security. For investors, corporations, and governments doing diligence on their global exposures, acknowledging this new reality is an essential starting point. Forget stability and predictability. Abandon the notion of global solutions to global problems. Instead, develop deep, granular understanding of the distinct political and economic context of new markets. Seek cooperation and alliances of interest, beginning with the discreet interests of these states and their economies. Embrace complexity, and understand that the successful management of political and economic discontinuities will be the essence of stability in the 21st century.

Four themes are likely to dominate the environment in which global investors, companies and institutions will seek to limit the downside to risk and capture the upside to volatility in 2012.

A global reset

A new strategic landscape will take form amid a global reset marked by leadership change in China and national elections in the United States, Russia, and a halfdozen other pivotal powers. The systemic banking crisis in the euro zone will force Berlin and the European Central Bank to pick their poison—and either become a sovereign lender of last resort or see the 27-member ECB’s dreams of fiscal union evaporate. For the Middle East, the second year of the Arab Awakening will begin under a cloud of increasing peril and paranoia. The movement for more legitimate and accountable governments in the Arab world will be tested by the still-powerful forces of tyranny, corruption, and fundamentalism—a scenario that will further draw in Israel, Iran and Turkey as strategic arbiters of the region. For the global economy, 2012 will likely see continued disarray, with the gap between the debtor and creditor nations of the world likely widening.

War over a nuclear Iran

The Middle East, more than any other region, gives validity to the old joke that even paranoid schizophrenics have enemies. Add to the very real perils arising from deeply divergent interests of Arabs, Turks, Persians, and Israelis heightened paranoia about Iran’s nuclear program. Gulf countries are as concerned about Iran’s meddling in their internal affairs as they are about its nuclear ambitions. Combine this with Israel’s growing fear of Iran reaching a point of no return in its nuclear weapons program and the stage is set for a confrontation— whether planned or accidental— in 2012. Non-military options for halting Iran’s nuclear weapons program have not yet succeeded, nor have they failed. However exasperating the diplomatic track may seem, growing talk of a military option risks creating a logic all its own.

Nationalism, populism, and protectionism

A fragmenting map of the world provides, in even the best of times, an opening for the forces of populism and nationalism, and those movements are coalescing now —from China to the United States to South Africa. Factor in the cyclical deleveraging and austerity in the West, and it is only a matter of time before isolationist politics gain traction.

The best antidote to this lies not in another vacuous appeal to “global awareness,” but rather in setting out the case for why the national interest is best served through a mosaic of regional and global alliances. The countries and leaders now gaining stature on the national stages— from Turkey to Brazil—are those that understand that a sustainable economic strategy begins with delivering growth for the citizens of their own nation first. They see open markets and free trade not as ends in themselves, but as means to broadbased prosperity; they are making reforms to secure greater competitiveness and investment. Down this road lies a messier, more populist, more contingent phase of globalization with beggar-thy-neighbor policies—a spiral of currency wars, capital controls, and tariffs that could accelerate the current contraction through a wave of worldwide protectionism.

Cyber-attack on a global institution

Despite a dramatic increase in the capital and technology devoted to cyber-defense in the West, the threats from new sources of cyber-war are multiplying. The West reveled in the success of its Stuxnet and other forms of cyber-sabotage against the Iranian nuclear program, but it will soon have to face the consequences of the proliferation of these technologies. Governments, terrorists, and even solitary hackers are increasingly amassing the ability to launch a cyber-attack against a Western government or multinational. The real test of an effective cyber-defense will not be “Can you prevent an attack?” It will be, “Can you survive one?”

2012: The world of the state

The burgeoning role of the state in an age of sovereign crises and solutions will be a defining feature of the strategic landscape. The locus of political legitimacy has returned to the nation-state, and as economic and political power shifts to emerging markets, no solution that isn’t both global and national will be successful or sustainable. A new kind of Great Game will be played in 2012—winners will be those states and corporations seeking success irrespective of the traditional boundaries of geography, ideology, interest, or alliances.

PHOTO: A woman cleans chairs in front of logos of the World Economic Forum (WEF) on a podium at the congress center in the Swiss mountain resort of Davos January 24, 2012. REUTERS/Arnd Wiegmann

The year of the Arab Awakening is drawing to a close with an ominous air of peril and paranoia hanging over the Middle East. A movement of genuine promise for more legitimate and accountable government for the peoples of the Arab world is in danger of being overwhelmed by the forces of tyranny, corruption, fundamentalism and conflict. From Syria to Egypt to Libya, Palestine, Israel and Iran, resistance to peaceful change is manifesting itself in ways new and old – and all in the context of a global re-alignment of power that few in the region yet recognize. Preventing the four central challenges of the Middle East – Iran, the Arab Awakening, Energy Security, and the Israeli-Palestinian conflict – from turning into conflicts with global implications will be a task far more for the countries of the region themselves than at any time in recent memory. For this new reality the parties are almost completely unprepared.

This was confirmed during a visit last week to the Gulf where the collapse of trust between adversaries – as well as allies – was on stark display. Arab leaders expressed as much distrust of each other as they did of their ascendant rivals, the Persians and the Turks. The minimum demands of the Palestinians are as distant as ever from the maximum on offer from the Israeli government. And for a number of regional leaders buffeted by the extraordinary changes forced by popular movements from Syria to Tunisia, a key lesson appears to be lesser, not greater, openness to representative government. The Middle East, more than any other region of the world, gives validity to the old joke that even paranoid schizophrenics have enemies. But to the very real perils arising from deeply divergent interests among Arabs, Turks, Persians and Israelis is now added a degree of heightened paranoia that threatens to multiply the perils with consequences reaching far beyond the region itself.

Critical to understanding the new strategic landscape is an appreciation of the degree to which the United States – since Suez, the arbiter of war and peace in the Middle East – is on course for a long-term disentanglement from the cares and conflicts of the region. While its commitment to Israel certainly – and to its Arab allies less so – long has been more than just a matter of security, it is evident that a Middle East less critical as a source of oil will be one less able to claim the extraordinary expenditure of blood and treasure made by America over the past half-century. As a consequence of technological advances leading to new discoveries and new sources of oil and gas, the next oil shock will likely be one more defined by the growing irrelevance of the Middle East to the United States – however much the region’s ability to disrupt international oil markets will remain.

Energy Security. The estimates of the future U.S. dependence on non-North American sources of oil are as dramatic as they are under-appreciated. The share of U.S. oil imports from both OPEC more broadly and the Gulf, in particular, has collapsed since the 2007-09 financial crisis, replaced largely with Canadian and domestic crude. In 2008, the U.S. imported an average of 2.370 million barrels per day (bpd) from the Gulf and 5.954 million bpd from OPEC as a whole.  In 2010, the average was 1.711 million bpd from the Gulf and 4.906 million bpd from OPEC.

Critically, this is not simply attributable to a cyclical fall in U.S. import demand. Canada alone has exported an average of 2.240 million bpd to the U.S. this year, up from 1.935 million bpd in 2010 and now accounts for approximately double Saudi crude imports. Thus, if U.S. domestic tight oil production touches 2.9 million bpd, and oil sands production increases to 3.0 million bpd by 2020, it could cut OPEC imports by well over half in less than ten years. Conceivably, by 2030, OPEC imports could drop to zero if 2007 daily consumption proves to be a historic high and domestic and Canadian production is increased as projected. (The contrast with China, currently serving more than 50% of its demand through crude imports – a figure that may hit 70% by 2020 – has equally significant consequences for Beijing and its future relations with the Middle East).

Of course, even after departing Iraq and gradually reducing its dependence on Middle East oil, Washington will maintain a substantial force presence in the Middle East, and the capability rapidly to enlarge it as needed. However, the wider context of U.S. strategic repositioning towards Asia, Pentagon budget cuts, and public hostility in host states will challenge this force posture at a time of heightened tensions and uncertainty throughout the region. If the Middle East’s energy security game is in the midst of profound change with dramatic strategic consequences for the future U.S. commitment to the region, so are the dynamics of the region’s political and security challenges.

The Arab Awakening. To appreciate the depth of change in the politics of the Arab world over the past year, it is enough to look at non-Arab Turkey’s leadership role in the management of its current challenges – from Egypt to Libya to Israel and now Syria. Arab leaders are looking with fear and jealousy to the prospect of their region’s politics being dominated by three outsiders – Turkey, Iran and Israel. From Tripoli to Cairo to Damascus, hard-line resistance to genuine representative government is making a self-fulfilling prophecy of the darkest warnings of anarchy and Islamist ascendancy being the winners of the Arab Awakening. Even after the fall of governments in Egypt, Tunisia, Libya, and Yemen, critical momentum still eludes the broader push for change.

Among the monarchies and sheikdoms, the pace and depth of reform are reflective more of an attempt to do the minimum needed to assuage popular sentiment, rather than acknowledging the need for profound changes in the relationship between governed and governors. A bloody endgame in Syria is increasing fears of a sectarian civil war, drawing in outsiders in yet another intervention. An absence of political legitimacy is being joined by a power vacuum, within and among the countries of the region, suggesting that the focus of the regimes in the year ahead will be a defense of the realm at all costs.

Iran. The recent IAEA report on Iran’s nuclear program has triggered another round of speculation about an Israeli attack on suspected nuclear sites in Iran. The Iranian nuclear challenge has been a pre-eminent hard security focus in a period otherwise defined by economic crises and political convulsions. The U.S. commitment to the Libya campaign was circumscribed, in part, by the Pentagon’s priority monitoring of threats – both conventional and unconventional – emanating from Iran. Tehran, of course, maintains that its programme serves solely peaceful purposes, such as power generation and medical research. However, there are widespread concerns over possible military dimensions, particularly when viewed in conjunction with Tehran’s developing missile capability and alleged work on warhead technology.

Paranoia towards the actions of Iran is reaching a fever pitch in the Gulf and Israel. Gulf countries are as concerned about Iran’s meddling in their internal affairs as about its nuclear weapons program (that their own domestic policies towards their Shia minorities are giving Iran fertile ground to meddle in seems rather less appreciated by them). Combine this with Israel’s growing fear of Iran reaching a point of no-return in its nuclear weapons program (something they’ve been warning about since 2005 and one day of course will be true), and the stage is set for confrontation, either deliberate or accidental.

Looking to Iran’s domestic politics, many have questioned whether persistent elite infighting suggest any meaningful regime fragility – particularly in light of the Green Movement’s demonstration of deep and broad opposition to the regime. The reality is likely to be different – and less encouraging of change. A principal source of resilience for the regime has been its ability to apply effectively the lessons of the Shah – his rise as well as his fall. A proliferation of power centres – however much beset by rivalries between the President, the Supreme Leader, the clerical elites, the Revolutionary guards, and the military – share a fundamental fate in having everything to lose from a democratic Iran with an accountable and legitimate government, and everything to gain from sustaining the status quo.

Iran will therefore remain the wild card in the secular trend towards a West less dependent on – and less preoccupied with – the Middle East. Resolving the struggle between Iran’s strategic and tactical interest in a nuclear deterrent and Israel’s in maintaining the existing nuclear balance of power in the region is the one question that won’t be left to the region itself.

The Israeli-Palestinian Conflict. For this perennial crisis of the Middle East, the next year is likely to prove as fraught as ever. With the effective departure of the United States from the negotiations between the two parties, internal as well as external pressure for a final settlement is at a low point. Real perils from Hamas to Hezbollah to Iran combine with a deeply rooted paranoia about the irreducible hostility of Arabs – and now Turks – to the existence of the Jewish state to strengthen hard-liners in Jerusalem. For Israel, moreover, the Arab Awakening has been a profoundly disorienting experience, leading it to appear as skeptical of the promise of a democratic evolution in its neighborhood as the Saudi monarchy – as strange bedfellows as one otherwise could imagine.

Allies in Egypt and Jordan are now poised to demand greater progress on the peace process, and Islamist movements in the ascendancy across the region are likely to settle for far less. For the Palestinians and their erstwhile supporters among Arab states, the upheavals have reduced, rather than expanded, the room for direct negotiations. The Palestinian leadership, disabused about the prospect of any serious effort by Washington to pressure Israel on settlements, is more vulnerable than ever to popular revolt among its own citizens. The rise of a non-violent resistance movement among Palestinians in the West Bank and Gaza is poised to pose profound challenges to both Ramallah and Jerusalem.

Whatever the near-term developments in Palestine, the broader Arab Awakening and the Iranian nuclear challenge, the long-term strategic balance of the Middle East is destined to be defined by the rise in the relative power of Turkey and Iran. Paranoia and peril will have to be separated in this respect more than any other. Their rise will be driven by strategic aims for power and influence with deep domestic support that can’t easily be dismissed as passing pursuits by particular governments in Ankara or Tehran. This is a development that is equally unwelcome to the United States, to Israel, and to the Gulf countries allied over the past quarter-century around a status quo that is gone forever. An era far less susceptible to the hard and soft power of the United States – in any way increasingly reoriented towards Asia – will require a more patient and judicious approach by all players if conflict is to be averted and a new, peaceful, order is to emerge.

Nowhere will the burden of new strategic thinking fall heavier than in Washington. In a recent essay on the legacy of George Kennan, the architect of U.S. containment policy towards the Soviet Union, Henry Kissinger wrote that “Kennan served a country that had not yet learned the distinction between the conversion and the evolution of an adversary — if indeed it ever will. Conversion entails inducing an adversary to break with its past in one comprehensive act or gesture. Evolution involves a gradual process, a willingness to pursue one’s ultimate foreign policy goal in imperfect stages.”

The terrible price paid in blood and treasure for the Wars of 9/11 in Afghanistan and Iraq, combined with the effects of an economic crisis that now threatens a decade of stagnation in the U.S., may well make America appreciate the virtues of evolution, and accept that our ultimate goals can only be met in imperfect stages. The alternative policy of forced conversion of adversaries, based more on paranoia than true peril, is likely only to be achieved at the price of conflicts with potentially calamitous consequences – for the Middle East as well as for America itself.

An Egyptian army soldier stands as people queue outside a polling station in Cairo November 28, 2011. REUTERS/Goran Tomasevic.

For both leaders and citizens of the G20 countries, this week’s summit in Cannes is about as welcome as a visit to an undertaker. Euro-zoned out, as most of us are by now, seeing presidents and prime ministers assemble at a moment of global crisis to issue bland communiqués and even blander group photos will tempt many to reach for their “Occupy Wall Street” signs and pitch their tents in the nearest town square. This would, however, be a mistake. For all its unwieldiness and amorphous sense of purpose, the G20 represents the beginnings of an understanding – as necessary as it is reluctant – that a global economy with new growth sources must have a new structure of governance.

Founded in the late 1990s in the aftermath of the Asia crisis, the G20 found its purpose at the 2008 Washington Summit when its members had gone through the experience of the Lehman collapse, and feared for their economic lives. Their minds concentrated by the threat of a cascading systemic crisis throughout the global banking system, G20 political and economic leaders coordinated stimulus programs and ensured that central banks injected vast amounts of liquidity into the global economy. Rising out of the ashes of the much-derided G7 meetings, this was a grouping that accounted for more than 80% of global output and two-thirds of the world’s population – and was yet able to take effective economic action.

With the likes of Indonesia, Turkey, South Africa and Saudi Arabia finally joining with China, Brazil and India at the grown-up’s table set by the Americans and the Europeans, this forum for economic cooperation has the potential – uniquely among global gatherings – to harness the power and interests of rising and rich countries alike. What keeps its strength potential rather than actual, however, is a stark fact: in many Western capitals the G20 is still seen more as a symptom of disorder in the global system than a solution entirely fitting for a new world of fragmenting capital, power, and ideas.

Before the G20 can become the force for effective coordinated action to address challenges both economic and political, the old powers need to get over their outdated sense of privilege. Rather than appearing as reluctant joiners of a coalition of the un-willing, they must understand that the price of a new global growth era is one of shared power, and shared rule-setting, among developed and developing countries. Preaching must be replaced with genuine partnering; lecturing with hard-headed, realistic dialogue that recognizes the position earned by those countries whose successful management of their economies earned them a position of virtual lender and investor of last resort to embattled Western countries.

And yet, we’re far from this realization at present. You’d have thought that the U.S. debt-ceiling debacle and the Eurozone’s endless cycle of half-measures declared and quarter-measures taken would have impressed upon Western leaders the urgency of finding new solutions to their economic difficulties, and the modesty to recognize the need for help in implementing them. You’d be wrong. Instead, they responded to a recent proposal from a number of emerging market countries to increase the firepower of IMF with a mixture of fear and arrogance. Seeing the power of their global foreign exchange reserves and sovereign wealth funds to serve as a definitive boost to Europe’s failed attempts to regain the confidence of markets, the rising powers had suggested allowing surplus countries to make ad hoc bilateral loans to the IMF, or contribute to a special purpose vehicle designed to support sovereign bond purchases.

There are technical reasons why each of these solutions would be problematic even under the most benign circumstances. However, the response from the old guard of the G20, including the U.S., UK, Australia and others, was that the IMF had enough resources on its own, and that the Eurozone should be sorting out its own problems. So what explains this reluctance? At its core, it’s about a jealous hoarding of powers at the centers of global governance, such as the IMF and the World Bank, with only the slightest shifts in voting power granted to date; and in political terms, it’s about long-held aspirations for a Western-designed multilateralism to convince national leaders everywhere to subsume sovereign interests for global ones – timed nicely for when the new powers are able to assert their interests independently on the global stage. Well, in today’s shifting global environment, neither will do.

First, as the response to the latest EU package to deal with the widening sovereign and banking crisis demonstrated, markets and businesses simply do not have the confidence that the Eurozone on its own – or the IMF without deepened resources – can change the calculus of risk around the twin challenges of debt and deficits in Europe. Nor, for that matter, is it credible that the resources currently available to the IMF would suffice in the event of a serious run on Italian and Spanish sovereign credits. And yet as the Chinese government is making abundantly clear these days, for the emerging powers to put their hard-won reserves at risk for the sake of far richer European societies, they need to have a greater say in the management of global governance.

Second, to bemoan, as many in the West now do, the meddlesome role of national politics – within the EU and more broadly in global politics – is to mistake an opportunity for a threat. The countries and leaders now rising – from Turkey to Brazil – are those who’ve understood that a sustainable economic strategy begins with delivering inclusive growth for the citizens of their own nation first. Seeing open markets and free trade not as end in itself, but a means to broad-based prosperity, they are making reforms to secure greater competitiveness and innovation. A thriving G20 world is one that builds from the ground up, with each nation contributing to a global system out of a deeply individual – and profoundly democratic – interest in prosperity at home and influence abroad. This is as natural to the rising powers today, as it was to Europe and the U.S. when they assembled the current global architecture 60 years ago from positions of strength and confidence to benefit themselves first, and the broader world second.

Between nostalgia for a vanished world of Western rule-setting and an imagined world of a G-2 US-China duopoly lies the reality of a collection of pivotal powers whose sovereign interests require cooperation on global issues while driving greater public-private integration of interests within their borders. Down this road lies, to be sure, a more messy, more populist, more contingent phase of globalization with protectionism and beggar-thy-neighbor policies as the greatest threats. But what it lacks in predictability or elite control it is likely to gain in resilience and responsiveness to the genuine demands of a new and growing global constituency distributed across multiple countries and regions. For the West, the lesson of the Arab Awakening lies, above all, in the importance of accountability and legitimacy of government – at the national as well as global level. It is a lesson that needs recalling among Europeans and Americans at a time when an economic crisis is posing existential questions about their societies’ ability to provide either growth or equality.

For the established powers, the choice is not between maintaining an outdated oligarchy of power and giving up its privileges prematurely. It is between embracing the G20 as the legitimate management committee of an Archipelago World defined by a proliferation of economic and political power centers, on the one hand; and, on the other, resisting it and seeing themselves even less able to influence the global rules of the 21^st century. You don’t need much of a crystal ball to decide which option offers the best hope for the West to influence the global architecture of the 21st century.

By Nader Mousavizadeh
The opinions expressed are his own.

The question of who will fill the global power vacuum has never before been felt as acutely as it is today – or in as many different arenas of politics and economics simultaneously. Last week, at the annual conference convened by the global advisory firm Oxford Analytica (where I serve as CEO), Robert Rubin joined Martin Wolf in a conversation about the perilous state of the global economy. Listening to the two wise men of global finance set out the steps necessary for Europe and the U.S. to escape the sovereign debt trap, there was a palpable sense of nostalgia for a time when concerted, timely, effective global leadership – in any sphere, by any one country or group of countries – was imaginable. There was also little doubt that the U.S. would not be returning to its pre-eminent leadership position any time soon – or that many countries would even welcome it.

Today, after a week’s geopolitical drama driven by the Palestinian bid for statehood at the UN, it is evident that the global power vacuum is not limited to economics and the Eurozone alone.  Rather, the world is facing a vacuum of leadership in each of the economic, diplomatic and strategic arenas – and what’s filling this vacuum is a mixture of the good, the bad, and the highly unpredictable.  Years from now, this may yet be seen as a period of global creative destruction – a transition away from a false and iniquitous stability towards a more sustainable, diversely founded equilibrium of global interests.  In the meantime, the process of filling the vacuum is likely to be volatile, dangerous, and deeply disorienting.

First, the vacuum in global economic leadership. The absence of concerted action is most acutely displayed in the Eurozone’s response to an economic crisis that as of the past few weeks is beginning to threaten a global contagion, with serious implications for emerging markets too. With each passing day, and every claim that Greece is not insolvent and that it – and the Eurozone – would not be better off long-term with a Greek default and exit, policymakers are running down their credibility on the far more consequential matter of whether they’ve properly understood the risks to the Italian and Spanish financial systems.  This is how contagion happens.

A widening chasm of credibility – between markets and policymakers, and between the politics of European unity and the economics of fiscal fragmentation – has its roots in part in the admirable German commitment to the European project as a political and economic enterprise. The problem, however, is that absent economic confidence-building measures of sufficient size to reassure markets, the vacuum is being filled by investors aggressively repricing assets for an ever-darker horizon.

Far more dangerous to global economic prospects is the risk of the current vacuum being filled by a backlash against globalization and free markets.  It remains a case of dog that didn’t bark – the absence of stronger populist movements in both creditor and debtor European countries during this deepening crisis. That doesn’t mean the dog will stay silent forever, and its bark may bring with it a spiral of currency wars, capital controls and tariffs that will only accelerate the current contraction through a wave of world-wide protectionism.

Second, the vacuum in global diplomatic leadership. The Palestinian decision to defy the U.S. and Israel and press ahead with its claim for statehood at the U.N. saw a key diplomatic vacuum being filled by a party more used to being observer than protagonist in one of the central geopolitical disputes in the world. A decades-long peace process owned by the United States – and supported, on U.S. terms, by the other members of the Quartet, the EU, Russia and the U.N. – was recognized as effectively dead for the past two years, giving the Palestinians a chance to step in with a direct claim to the international community. And it is just one measure of the bankruptcy of the old peace process that the U.S. and its allies over the coming weeks will be expending vast political (and, if history is any guide, financial capital) to prevent a key strategic aim, Palestinian statehood, from coming to pass at this juncture.

That the realization of the Palestinian aspirations for statehood requires more than a vote at the UN is obvious to all.  What is equally clear, however, is that a new dynamic has been launched with greater resonance and legitimacy both in the region and around the world.  Just ask yourself if the new Quartet announcement (however limited in impact) of a one-year time table for talks leading to a settlement would have happened absent Palestinian leader Abbas’s persistence in staking his claim.  Joining him in filling the vacuum have been three other forces: first, the Arab Awakening and its example of young Arabs seeking and winning the beginnings of legitimate and accountable government; second, a competent and responsible Palestinian leadership in the West Bank focused on economic growth and stability that no one credibly can claim is focused on prolonging the conflict; third, and far more troublingly, the rise of Hamas in Gaza.

Unsettling, uncertain, and vulnerable to excesses as this new dynamic may be, it’s what happens when vacuums are allowed to emerge. The U.S. and its allies have only themselves to thank for the unenviable task of now having to argue—even as they embrace the Arab Awakening transforming the region–that the Palestinians don’t deserve statehood. And yet this dynamic may provide the best chance for the U.S. and its allies to recognize a peaceful Palestinian neighbor reconciled to the existence of Israel within internationally recognized borders.  To be sure, in the short term, a Palestinian aspiration endorsed by newly free Arab countries and their empowered citizens will resonate more powerfully than one advanced by the likes of Iran, Hamas and Hezbollah.  In the longer-term, however, it holds out the opportunity for Israel to agree a peace of peoples, not just with the Palestinians, but also with the broader Arab neighborhood.

Third, the vacuum in global strategic leadership. At this year’s annual meetings of the UN and the World Bank and IMF, the atmosphere of dread on the part of Western policymakers about their economic prospects is matched only by their insistence that the emerging markets shouldn’t expect to escape contagion. While this increasingly appears to be the case, there is little appreciation – even in the face of this dire crisis for the West – for the fact that if the BRIC countries are to help bail out the richer countries, there needs to be a more fundamental reordering of power and influence on the global stage.

There is a reason Security Council seats are distributed as anachronistically as they are, and that voting power at the IMF and World Bank remains absurdly weighted towards European powers: they reflect the political and economic power of the founding era.  But if China, say, is to leverage its $3 trillion in FX reserves to support a wider global economic stabilization vehicle, it will naturally ask for commensurate influence.  To the call from World Bank President Robert Zoellick that China be a “responsible stakeholder,” the answer from China increasingly will be: sure, but in what? An international system designed sixty years ago for the perpetuation of a certain power balance and the advantage of a certain set of countries not including China? Not so much.  But a “responsible stakeholder” in a newly rebalanced set of institutions reflecting the burdens, the power, and capital of the 21^st century – to that the Chinese are far more likely to respond positively.

In the meantime, rising powers like Brazil and Turkey are casting off decades of weakness and stepping into strategic vacuums left by failed Western-led strategies  – in arenas as diverse as development, climate change and the Iranian nuclear challenge.  In this strategic no-man’s land – between a past U.S.-dominated playing field and something far messier and crowded – will their initiatives always succeed? Of course not.  These issues are hard – as the Copenhagen Climate talks and the Brazilian-Turkish initiative on the Tehran reactor demonstrated. Power is not only shifting East and South from the North Atlantic.  Increasingly, it is leaking out of the international system – with new actors and new technologies taking their own place in the vacuum, making solutions ever more elusive, and complex to negotiate.

The crisis of credibility afflicting established global institutions and powers has been exacerbated by what David Miliband has called a new transparency driven by technology that makes political hypocrisy – local and global – far harder to sustain. A bonfire of orthodoxies is under way – in every global arena from what stability in the Arab world means, to the price of prosperity in Europe, and to the sustainability of U.S. imperial commitments, at home and abroad.

Power, like nature, abhors a vacuum.  But a vacuum threatening to become a strategic void at a critical juncture in global economic and political affairs is not likely to last, or be filled in an orderly, peaceful manner.  A global race is on for concerted action, and everyone will lose if the vacuum is left to fill itself.

By Nader Mousavizadeh
The opinions expressed are his own.

Last week, China quietly launched the aircraft carrier Varyag from the port of Dalian. The ship is expected to be deployed to Hainan province in close proximity to the strategic regions of Taiwan and the South China Sea. Amidst an atmosphere of existential gloom triggered by the debt-ceiling debacle and the deeper economic crisis, the reaction in the United States was dominated by the fear of a rising, militarist China challenging America’s global superiority. What few in the United States bothered to mention, however, is that the new Chinese carrier was built from an unfinished Ukrainian hull purchased in 1998 – and is the first and only aircraft carrier China has ever had. The United States, meanwhile, has eleven.

The real problem with the U.S. response was not, however, that it exaggerated the Chinese threat. It is that it greatly overestimates the benefits, to America, of the country’s continuing quest for global supremacy – politically, economically and militarily. To lament America’s decline from a dominant position of unaffordable and unsustainable strategic burdens is, in fact, to mistake an opportunity for a threat. For all of the past decade’s concerns around the world about the reach and military assertiveness of U.S. unilateralism, it seems increasingly clear that its principal casualty has been the U.S. itself. America is choking on the edifice of empire and the sooner it’s dismantled, the easier will be America’s return to a leading – not the leading – position as a dynamic, innovative economy.

Consider briefly what the past decade’s economic policies, military interventions and strategic priorities have brought the country: a Great Recession, debts that are fundamentally irrecoverable, a credit crisis, a housing collapse, and two wars with immense costs in lives and treasure. A country that employs more than one million people within its intelligence community, and still is surprised by the Arab Spring, is not being efficient with its resources. Waste and corruption are endemic to any enterprise of this size – and the U.S. military-industrial complex has been no exception.

Six numbers tell the story of empire’s price in stark terms: federal deficits, gross debt, military spending, infrastructure investment, income inequality and now endemic joblessness:

• Seen over a ten-year span, federal revenue has largely stayed constant, rising from $2.02 trillion in 2001 to $2.17 trillion in FY 2011. Expenditures, meanwhile, more than doubled from $1.85 trillion to $3.82 trillion producing a deficit this year of $1.65 trillion.

• Over the same period, gross U.S. debt has ballooned to over $14 trillion (roughly 100% of GDP) with net debt standing today at $9 trillion (of which 50% is held by non-U.S. entities).

• Defense expenditure over the same period has risen from approximately $300 billion in the year prior to 9/11 to $700 billion in FY 2011, and the figure is hundreds of billions higher if military spending outside the Defense Department is included. The total costs (estimated and very likely low-balled) of the Wars of 9/11 in Afghanistan and Iraq now stands at some $1.5 trillion, financed of course entirely by deficit spending.  The result is that the U.S. now spends more on its defense budget than all other countries combined.

• The U.S., which once led the world in infrastructure development, now spends just 2.0% of GDP in such investments, as opposed to 5% in the EU and 9% in China. Of the 30 largest infrastructure projects globally, half are in developing economies and just five are in the U.S.  A single Chinese project (the $150 billion North-South water diversion plan) involves more than double in total investment ($65 billion) of all five current U.S. projects.

• Looking at the U.S. gini coefficient, the most commonly used measure of inequality, no country in the developed world today has a greater gap between rich and poor.  U.S. inequality is currently at levels not seen since the first decade of the 20th century – and greater even than in 1929.

• Finally, last week’s payroll report for July showed that nearly fourteen million Americans are now out of work, and more than six million of them have been jobless for more than six months. For more than two years, the unemployment rate has been close to or above nine per cent – and if you include those people who’ve given up looking for work it’s nearly double that.

If this is what global dominance looks like, who needs it?

Not that such a recognition appears anywhere on the horizon when listening to U.S. politicians or policy-makers – from either side of the political spectrum. Instead, reactions appear divided between those on the far right who appear to wish for perpetual hegemony while blithely defaulting on the full faith and credit of the U.S.; and those on the left who are hoping that the present crisis could trigger a second “Sputnik moment” – one that will shock America into redoubling its efforts to achieve global leadership through responsible policy-making. What this hope – fanciful as it seems today – assumes is that restoring the country to its pre-eminent global position is actually a good thing for America. It isn’t.

A nation that thinks it can do anything will do everything – deploy its military to wars of questionable strategic value at a vast cost in lives and treasure; issue IOUs in the trillions to finance consumption; turn the advantage of international reserve currency status into a curse by spending far beyond what creditors are likely to tolerate in the long term; and sustain the fiction of entitlements that no serious observer thinks will be honored.

A victim of strategic gluttony, America has gorged itself for the past two decades on unbridled consumption and military expenditure. And now, like an aging prize-fighter mounting the scales in advance of a major bout only to find that he’s disqualified on grounds of weight, the U.S. will need go on a crash diet.

None of this is to ignore the unique threats and responsibilities that the United States faces today – largely, though not completely, as a consequence of its hegemonic status. 9/11 was an attack on the country that required a strong and sustained global response. Nor is it to discount the future need for the U.S. to help provide essential global public goods – in trade, economy, and security.  It is rather to say that even those challenges will be met more successfully by a rebooted and re-sized America that engages with the world as a strategic partner, and not as patron.

From Brazil to Indonesia, Turkey to South Africa, the rising pivotal powers are not looking to replace U.S. hegemony with Chinese dependency.  In fact, as they focus on strategies of inclusive growth that sustain accountability and legitimacy, the mobile networked younger generations of these countries will continue to look to America as a model in many respects.  A new partnership with a right-sized America disciplined by limitations and constraints is there to be forged – if only U.S. political leaders are willing to rethink the value of empire.

In an Archipelago World defined by the fragmentation of power, capital and ideas where the winners will be those states able to vertically integrate public and private interests, America’s present global posture is more a curse than a blessing. Competitiveness, growth, innovation, and influence are today more a function of intellectual capital and a high-tech infrastructure built to navigate a resource-constrained future. And if you’re asking yourself who will stand up for the victims of aggression and human rights abuses around the world, an exhausted, over-extended, deeply indebted America “leading from behind” it is not.

Rid of the burdens of empire, mentally and physically, the United States will remain a singular country in the world – with its openness, ingenuity, diversity, rule of law, moral purpose and ability to renew itself. An object lesson in the paradox of power, the decline of the American Empire may well be the best thing that can happen to the American Republic – and the sooner the better.

By Nader Mousavizadeh
The opinions expressed are his own.

Ten years after the attacks of September 11^th, the brief moment of global solidarity that followed when we were “all Americans,” in the words of Le Monde, seems as improbable as it is distant. Barring a global catastrophe, the world is unlikely to unite again as it did on that day – and not just because of the conduct and course of the wars of 9/11 in Afghanistan and Iraq. A deeper – and more radical – shift is at work in the politics of the global economy. A fragmentation of power, capital and ideas is creating a new map of the world – with lasting implications for investors and policymakers alike.

The evidence is everywhere. Europe beginning to roll back key aspects of the free market even as it manages yet another bail-out of Greece; the failure of the Copenhagen climate change negotiations; a Doha trade round dead in all but name; the emergence of new global governance structures, such as G-20; the flows of macro-finance investments between emerging markets combining state and business interests; China’s “going out” strategy upending traditional vectors of global capital and influence; an Arab Awakening as much defined by its diversity as its aspiration for accountability and legitimate government; the resurgence of nationalist, populist movements across rich and poor parts of the world; a proliferation of hybrid economic and political systems defying old categories of left and right, liberal and authoritarian.

Conventional thinking holds that all this is a threat to an otherwise well-ordered global order – or that it reflects a zero-sum shift from West to East, U.S. to China, democracies to dictatorships.  For large parts of the world, of course, the existing global order seemed less well-ordered than designed to perpetuate – by any means necessary – dated power structures of the mid-20^th century.  Equally, to see this merely as reflecting an all-embracing power shift to the East (as observers both Eastern and Western do) ignores the fact that pivotal powers such as Turkey, Brazil, Indonesia and Nigeria are charting distinct paths aimed above all at economic independence and national power – beyond ideological labels.

Instead, what we’re seeing is an emerging world of sovereign states vertically integrating national interests across the public and private sectors – and then going out strategically to compete for resources, growth and job creation. Having previously understood global interdependence as a reason for horizontal integration across markets and regions, states as diverse as Finland, Saudi Arabia, Japan and Mexico are now pursuing distinct, often bilateral, strategies for economic and political security. This is the new dynamic of global competition – one with implications as profound as they can seem contradictory.

From South-east Asia to West Africa, commodity states are leveraging their economies to the Chinese demand driver without wishing to replace Washington’s dominance with Beijing’s.  Across the Middle East, citizens are deploying technology and new-found communications tools to demand consent in how they’re governed without losing their ability to see their values and traditions reflected in the fabric of their societies.  In Latin America, state-owned corporations are working hand-in-hand with governments to pursue inclusive growth of a kind that holds promise beyond what was achieved by structural adjustment programs imposed by Western-dominated multilateral institutions.

There is an undeniable logic here. After all, it was never credible that climate change threatened each country or region in the same way – or to the same degree; that an overleveraged West threatened the global economy as much as it did its own dominance over rising powers; that the attempts of rogue states acquiring weapons of mass destruction represent an equal threat to states large and small, West and East. And now the narrative has been broken.  Where you stand really is a function of where you sit – for states and people alike.

Today, after a six-month period of sovereign debt crises, tsunamis, nuclear disasters, revolutions, uprisings, and military interventions (and the list could go on), it would be natural to see this emerging order as inherently unstable. Volatility may seem like the new norm, but we’re more likely seeing a turbulent transition to a more resilient, and more diverse, global economy governed by national interests. The old stability was as much an illusion in Mubarak’s Egypt as it is in a global economy structured for the benefit of a few dominant, but deeply indebted, powers.

For the West, negotiating this new mosaic of power will require a mix of pragmatism, modesty, innovation, and strategic patience.  It means, at times, partnering with Chinese investments in Africa instead of trying to convince its leaders that they have more to gain from yet more conditional aid.  It means, at other times, accepting that an Egyptian government more legitimate and accountable in the eyes of its people will chart a course less pliable to Western demands. It means looking at a successful, modernizing Muslim country like Turkey and understanding that there is far more to gain by engaging with its growing influence than in lecturing it on the character of its politics, as long it remains a constitutional democracy.

Above all, it means focusing on management of the structural drivers of global growth and development – including energy, commodities, inflation and, yes, climate change – in ways that address the ways they affect different countries in different ways.  The locus of legitimacy has returned to the nation-state, and as new powers gain the economic and political power to assert their interests, no solution that isn’t both global and national will be successful or sustainable.

A multi-speed global economy – with diverging long-term growth profiles – will increasingly be mirrored by a multi-dimensional global politics. This is a Great Game worthy of the name and the winners will be those states and corporations increasingly seeking their own success irrespective of traditional boundaries of geography, ideology, interest and alliances.

Welcome to the Archipelago World.