Every Nation for Itself: What Happens When No One Leads the World

ALSO BY IAN BREMMER

The End of the Free Market: Who Wins the War Between States and Corporations?

The Fat Tail: The Power of Political Knowledge for Strategic Investing (with Preston Keat)

The J Curve: A New Way to Understand Why Nations Rise and Fall

Managing Strategic Surprise: Lessons from Risk Management and Risk Assessment (with Paul Bracken and David Gordon)

New States, New Politics: Building the Post-Soviet Nations (with Raymond Taras)

Nations and Politics in the Soviet Successor States (with Raymond Taras)

Soviet Nationalities Problems (with Norman Naimark)

EVERY NATION FOR ITSELF

Winners and Losers in a G-Zero World

IAN BREMMER

Portfolio / Penguin

PORTFOLIO / PENGUIN

Published by the Penguin Group

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Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P 2Y3 (a division of Pearson Penguin Canada Inc.)

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First published in 2012 by Portfolio / Penguin,

a member of Penguin Group (USA) Inc.

Copyright © Ian Bremmer, 2012

All rights reserved

Library of Congress Cataloging-in-Publication Data

Bremmer, Ian, 1969–

Every nation for itself : winners and losers in a G-zero world / Ian Bremmer.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-101-56051-8

1. Economic development. 2. International cooperation. 3. World politics. 4. Leadership. I. Title.

HD82.B6917 2012

330.9—dc23

2011052900

No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only authorized editions.

While the author has made every effort to provide accurate telephone numbers, Internet addresses, and other contact information at the time of publication, neither the publisher nor the author assumes any responsibility for errors, or for changes that occur after publication. Further, publisher does not have any control over and does not assume any responsibility for author or third-party Web sites or their content.

to ann and rob (and moose)

CONTENTS

INTRODUCTION

CHAPTER 1

What Is the G-Zero?

CHAPTER 2

The Road to the G-Zero

CHAPTER 3

The G-Zero Impact

CHAPTER 4

Winners and Losers

CHAPTER 5

What Comes Next?

CHAPTER 6

G-Zero America

ACKNOWLEDGMENTS

NOTES

INDEX

INTRODUCTION

G-Zero—\JEE-ZEER-oh\– n

A world order in which no single country or durable alliance of countries can meet the challenges of global leadership.

One beautiful Napa Valley evening in October 2011, I found myself in conversation with Paul Martin, the man who created the G20—the forum where nineteen countries plus the European Union bargain over solutions to pressing international challenges. I had just given a speech arguing that the G20 is an unworkable institution, liable to create as many problems as it solves.

As Canada’s finance minister from 1993 to 2002 and then prime minister from 2003 to 2006, Martin had irked his country’s allies by declaring that Western dominance of international financial institutions was on the wane. He argued that the world needed a club that welcomed new members from among the leading emerging powers. Officials in Washington, Western Europe, and Tokyo had politely ignored Martin’s idea—until the 2008 financial crisis forced them to admit he might have a point. Three years later, the G20 was a fixture of international politics.

Martin and I began a good-natured debate. I argued, as I had in my speech, that the G20 is more aspiration than organization, that twenty is too many, and that there is too little common ground for substantive progress on important issues except under the most extreme conditions. Martin countered that the G20 gives more countries than ever a stake in the success of the global economy and in resolving the world’s political and security challenges.

Then the conversation took an unexpected turn. Martin explained that his early advocacy for the G20 was based less on a vision of global governance than on what was best for Canada. His country had long been a member of the G7—a privileged position, to be sure, but within an increasingly irrelevant organization. By arguing for the acceptance of a trend he considered inevitable, Martin believed that Canada could exchange its first-class seat on a sinking ship for a secure spot on a bigger boat. And by leading the effort to build that boat he also hoped to win his country valuable new friends. Like every other delegation present, Canada had its own reasons for being there.

Later that evening, as I replayed our conversation in my mind, I found myself imagining an enormous poker table where each player guards his stack of chips, watches the nineteen others, and waits for an opportunity to play the hand he has been dealt. This is not a global order, but every nation for itself. And if the G7 no longer matters and the G20 doesn’t work, then what is this world we now live in?

***

For the first time in seven decades, we live in a world without global leadership. In the United States, endless partisan combat and mounting federal debt have stoked fears that America’s best days are done. Across the Atlantic, a debt crisis cripples confidence in Europe, its institutions, and its future. In Japan, recovery from a devastating earthquake, tsunami, and nuclear meltdown has proven far easier than ending more than two decades of political and economic malaise. A generation ago, these were the world’s powerhouses. With Canada, they made up the G7, the group of free-market democracies that powered the global economy. Today, they struggle just to find their footing.

Not to worry, say those who herald the rise of the rest.¹ As established powers sink into late middle age, a new generation of emerging states will create a rising tide that lifts all nations. According to a much-talked-about report published by London-based Standard Chartered Bank in November 2010, the global economy has entered a new ‘super-cycle’ driven by the industrialization and urbanization of emerging markets and global trade.² New technologies and America’s emergence lifted the global economy between 1870 and the onset of World War I. America’s leadership, Europe’s reconstruction, cheap oil, and the rise of Asian exports drove growth from the end of World War II into the 1970s. And we can count on increasingly dynamic markets in China, India, Brazil, Turkey, and other emerging nations to fuel the world’s economic engine for many years to come. Americans and Europeans can take comfort, we’re told, that other states will do a larger share of the heavy lifting as our own economic engines rattle forward at a slower pace.

But in a world where so many challenges transcend borders—from the stability of the global economy and climate change to cyberattacks, terrorism, and the security of food and water—the need for international cooperation has never been greater. Cooperation demands leadership. Leaders have the leverage to coordinate multinational responses to transnational problems. They have the wealth and power to persuade governments to take actions they wouldn’t otherwise pursue. They pick up the checks that others can’t afford and provide services no one else will pay for. On issue after issue, they set the international agenda. These are responsibilities that America is increasingly unwilling, and incapable, of assuming. At the same time, the rising powers aren’t yet ready to take up the slack, because their governments must focus on managing the next critical stages of their own economic development.

Nor are we likely to see leadership from global institutions. At the height of the financial crisis in November 2008, political leaders of the world’s most influential established and emerging countries gathered in Washington under the banner of the G20. The forum helped limit the damage, but the sense of collective crisis soon lifted, cooperation quickly evaporated, and G20 summits have since produced virtually nothing of substance. Institutions like the UN Security Council, the International Monetary Fund, and the World Bank are unlikely to provide real leadership because they no longer reflect the world’s true balance of political and economic power.

If not the West, the rest, or the institutions where they come together, who will lead? The answer is no one—neither the once-dominant G7 nor the unworkable G20. We have entered the G-Zero.

This book is not about the decline of the West. America and Europe have overcome adversity before and are well equipped over the long run to do it again. Nor is this a book about the rise of China and other emerging-market players. Their governments stand on the verge of tremendous tests at home. Not all of them will continue to rise, and it will take longer than most expect for those that emerge to prove their staying power. Rather, this book details a world in tumultuous transition, one that is especially vulnerable to crises that appear suddenly and from unexpected directions. Nature still hates a vacuum, and the G-Zero won’t last forever. But over the next decade and perhaps longer, a world without leaders will undermine our ability to keep the peace, to expand opportunity, to reverse the impact of climate change, and to feed growing populations. The effects will be felt in every region of the world—and even in cyberspace.

The pages that follow will define this world and anticipate the turmoil to come. Chapter 1 explains what the G-Zero is. Chapter 2 details how we got here, from the rise of American power and Western-dominated institutions following World War II to the geopolitical and economic upheaval of the past few years. Chapter 3 takes on the G-Zero’s impact on the world around us: politics, business, information, communication, security, food, air, and water. Chapter 4 looks at the ability of countries, companies, and institutions to navigate the risks and opportunities created by the G-Zero world—and separates the era’s winners from its losers. Chapter 5 asks what comes next, and offers predictions on the international order that grows out of the G-Zero. The sixth and final chapter provides ideas on how Americans can shape—and help lead—that new world.

The world has entered a period of transition and remarkable upheaval. For those who would lead nations and institutions through this volatile moment, the G-Zero will demand more than great power or deep pockets. It will require agility, adaptability, and the skill to manage crises—especially those that come from unexpected directions.

CHAPTER ONE

What Is the G-Zero?

It is better to be alone than in bad company.

—George Washington

On December 17, 2009, Denmark’s Queen Margrethe celebrated a much-anticipated climate summit with a gala dinner in Copenhagen’s Christiansborg Palace. Leaders and distinguished guests from around the world enjoyed salt cod puree, scallops, dessert, and a musical performance by the Band of the Royal Life Guards. If the queen’s life guards weren’t enough to inadvertently underscore the theme of climate change, the event also included recordings of Frank Sinatra singing Here’s That Rainy Day and of George Harrison performing Here Comes the Sun. Queen Margrethe managed to ignore diplomatic niceties that should have seated her next to the evening’s longest-serving visiting dignitary—Zimbabwe’s President Robert Mugabe, a man better known for brutalizing opponents, stoking racial violence, and gutting his country’s economy than for his charming dinner conversation or commitment to reversing global warming. We know that some people don’t want to sit next to others, explained a Danish protocol officer to a reporter. It’s like a family dinner. You don’t want Uncle Louis sitting next to Uncle Ernie.¹

Queen Margrethe’s dodge gave the summit its first and only success.

A week after the conference closed, Xinhua, China’s state-run news agency, published a story alleging that Chinese premier Wen Jiabao had learned during the dinner that U.S. president Barack Obama had invited friends and allies for a clandestine meeting later that evening to discuss negotiating strategy—and that China’s delegation had not been included.² It remains unclear whether such a meeting was scheduled or if Wen got bad information. It’s possible the entire story was concocted by the Chinese government to justify Wen’s absence from a key meeting the next day and his delegation’s refusal to agree on a final deal. Whatever the truth, Wen withdrew to his suite at the Radisson Blu Hotel—and the summit went nowhere.

Much of what we think we know about the following day’s closed-door negotiations comes from a secret recording, two 1.2-gigabyte sound files created by accident and obtained by the German newsmagazine Der Spiegel.³ On December 18, two dozen heads of state gathered in the Arne Jacobsen conference room in Copenhagen’s Bella Center to hash out differences on a common approach to climate change. More than a hundred other world leaders waited outside the room for the principals to produce an agreement. China’s premier remained at the Radisson.

Instead of bargaining with his fellow head of state Wen Jiabao, the president of the United States found himself negotiating with He Yafei, a Chinese deputy foreign minister well known for his exceptional command of English and his willingness to use it to advance his country’s worldview—with sometimes provocative arguments. German chancellor Angela Merkel and French president Nicolas Sarkozy pressed China and India to commit to binding targets on the reduction of greenhouse gas emissions. China and India announced they could not support a document that imposed specific numerical targets, even on the Americans and Europeans. Norwegian prime minister Jens Stoltenberg asked Indian officials how they could renounce the very plan they had proposed just a few hours earlier. President Mohamed Nasheed of the Maldives, an island chain that lies in the Indian Ocean about seven feet above sea level, demanded that the Chinese delegation explain how it could ask his country to go extinct. Sarkozy accused the Chinese of hypocrisy, He Yafei lectured the group on environmental damage from the Industrial Revolution, several NGOs accused Western officials of blocking a deal, and a few journalists accused Obama of selling out Europe by letting China off the hook. Not to be ignored, Venezuelan president Hugo Chávez called Obama the devil. A gathering that then–British prime minister Gordon Brown had hyped as the most important conference since the Second World War ended in acrimony and conflicting accounts of what had happened, and with no progress toward any meaningful agreement.

But here’s the key takeaway: The summit didn’t collapse because China was snubbed, India is irresolute, the Europeans are stubborn, or Obama is lord of the underworld. It failed because (a) there was not nearly enough common ground among the leading established and emerging players to reach a deal that would have required sacrifice from all sides, and (b) no single country or bloc of countries had the clout to impose a solution.

This argument perfectly illustrates the G-Zero and where it comes from. Rising powers like China, India, Brazil, and South Africa claim that 150 years of industrialization in the West have inflicted nearly all the damage that now has climate scientists in a panic. They insist that Americans and Europeans have no right to expect developing countries to sharply limit their growth to clean up the rich world’s mess. They have a point. The established powers counter that developing states will do most of the environmental damage in decades to come. They add that climate change is a global problem, one that can’t be solved without substantial help from developing countries, even if America and Europe cut emissions to zero. They have a point, too. The urgent issue is that, as with so many of today’s political and economic questions, the world needs established and emerging powers to agree to share both benefits and burdens. Doing nothing will make matters much worse.

This is the G-Zero challenge. To prevent conflict, grow the world economy, manage our energy needs, implement farsighted trade and investment policies, counter transnational threats to public health, and meet many other tests, the world needs leaders who are willing and able to shoulder burdens and enforce compromise. To be sure, many countries are now strong enough to prevent the international community from taking action, but none has the political and economic muscle to remake the status quo. No one is driving the bus.

AMERICA AND THE COST OF LEADERSHIP

America was hardly the first modern nation to use its global power to reinforce international peace and maintain the flow of commerce. England, later Britain, was already one of the world’s most formidable naval powers by the beginning of the eighteenth century, and the final defeat of Napoleon in 1815 left it in a dominant position for nearly a century. Throughout this period, Britain acted as the primary provider of global public goods—services that profit nearly everyone and for which no one wants to pay. For example, Britain helped keep the peace by working to maintain a balance of force among the great powers of Europe. It promoted an increasingly open world economy, in part by using its unparalleled naval power to protect international sea lanes. It enabled capital flows and maintained the gold standard. The British pound served as the world’s primary reserve currency.

The rise of Germany and the United States in the late nineteenth century began to undermine Britain’s dominance, and the breakdown of Europe’s concert of nations gave way to the First World War. But it was World War II that permanently crippled Britain’s ability to continue in this role. The United States, which suffered much less damage from the two conflicts than its enemies or its allies, proved ready, willing, and able to take on global leadership. For the next several decades, it did exactly that.

With the end of the Cold War, the United States looked set for an extended run as the world’s sole superpower. Yet, as has become abundantly clear in recent years, America’s debt is on the rise. The country’s increasingly heavy financial burden is not simply a product of George W. Bush–era spending inspired by the multifront war on terror or of the Obama administration’s expansionary response to the financial crisis of 2008–2009. America’s debt problem—arguably, its debt crisis—is a slow-motion emergency that has been developing in plain sight for decades under presidents and congressional majorities of both parties. In an especially vivid study on this subject, scholar Michael Mandelbaum has detailed how U.S. lawmakers balanced the federal budget in just five of the forty-seven years before financial markets