Home The Washington Diplomat January 2009 Intelligence Report ForecastsTransforming Trends Ahead

Intelligence Report ForecastsTransforming Trends Ahead


Many warnings in a recent forecast by the National Intelligence Council of what the world will look like in 2025 — such as loose weapons of mass destruction and the decline of governments, along with the rise of dangerous non-state actors — are old hat in a world long past the Cold War’s demise and numbed by seven years of the war on terrorism. Such predictions of the death of the world order as we know it periodically rear their head, without producing an actual corpse.

Yet some observations in the report “Global Trends 2025: A Transformed World” are intriguing even to jaded foreign policy hands. “The multiplicity of actors on the international scene could add strength — in terms of filling gaps left by aging post-World War II institutions — or further fragment the international system and incapacitate international cooperation,” the authors write. “The players are changing, but so too are the scope and breadth of transnational issues important for continued global prosperity.”

So what does all this mean? Conflict, political power plays, arms races, economic boom for some, bust for others, dwindling strategic resources, and diminished but still unprecedented growth and globalization — in other words, “major discontinuities, shocks, and surprises.”

Changing Cash Flows The first forecast of the report is a stunning geographic shift in wealth. “In terms of size, speed, and directional flow, the transfer of global wealth and economic power now under way — roughly from West to East — is without precedent in modern history,” according to the report, the fourth in a series released every four years to inform U.S. policymakers, including the incoming Barack Obama administration.

Some growth projections estimate that by 2040, the so-called “BRIC” countries — Brazil, Russia, India and China — will equal the share of global domestic product held by the world’s seven current industrial powers. Indeed, the authors speculate that the recent financial crisis may accelerate current trends that point to a decline of Western-style liberal capitalism.

Two major factors account for the movement of the world’s money trail: windfall profits from oil and commodity prices in the Gulf States and Russia, along with the outsourcing of manufacturing and services to lower-cost Asian producers.

Yet a major basis for this wealth shift — the boon to resource-rich nations — is far from assured. Oil prices are sinking and other commodity prices are moderating as a result of the global economic downturn and more restrained resource consumption due to climate change. If such trends continue, BRIC growth may taper off or even contract.

The other reason for the global wealth transfer, outsourcing to Asia, appears more permanent. But with voters in the United States and other Western nations increasingly critical of the impact of free trade and specifically “off-shoring,” this factor is also far from certain.

Money Equals Power What is certain is that money and influence go hand in hand, and the wealth accumulation in BRIC countries will change — though perhaps not fundamentally alter — the geopolitical landscape, with a new multi-polar system emerging.

“The rising BRIC powers are unlikely to challenge the international system as did Germany and Japan in the 19th and 20th centuries, but because of their growing geopolitical and economic clout, they will have a high degree of freedom to customize their political and economic policies rather than fully adopting Western norms,” the report states. “They also are likely to want to preserve their policy freedom to maneuver, allowing others to carry the primary burden for dealing with such issues as terrorism, climate change, proliferation, and energy security.”

Specifically, the economic rise of powers such as China and Russia pose perhaps the most troubling development for Western nations in the coming decades. Over modern history, wealthy Western democracies have controlled the world through military strength and economic might. Russia and China’s rise implies an upcoming struggle with these nations over control of the global levers of power in such institutions as the United Nations and International Monetary Fund.

Not surprisingly, the report singles out China as an emerging giant, projecting it will have the world’s second largest economy by 2025 and will be a leading military power. But China’s dominance will be tested by the current slowdown in worldwide exports and the fact that the state-run capitalist model China relies on has a poor track record over the long haul.

To that end, the report’s authors voiced optimism over long-term prospects for democratization in China and Russia, “even though advances are likely to be slow and globalization is subjecting many recently democratized countries to increasing social and economic pressures with the potential to undermine liberal institutions.”

The prospects for democracy will hinge on other key variables, such as the expansion of China’s middle class, the potential diversification of Russia’s economy, along with the quality of each nation’s political leadership.

Turning to other regional powers, the report observes that Turkey, Indonesia and Iran could emerge as leaders in the “arc of instability” that ranges from sub-Saharan Africa and North Africa to the Middle East, the Balkans, the Caucasus, South and Central Asia, and parts of Southeast Asia.

Another intriguing observation is that although Latin American nations will become more wealthy overall, nations run by populist governments such as Bolivia and Venezuela will trail their peers — and as a whole, the continent will lag behind Asia and other regions in economic growth.

People Power, Planetary Push The massive shift in political and economic influence will be accompanied by another major geographic movement. The world population is expected to grow by 1.2 billion over the next 20 years, and perhaps the most striking observation in the Global Trends report is that 97 percent of these people will come from Asia, Africa and Latin America. And all of these people will want food and shelter, further straining the planet’s already strained resources.

The World Bank says the demand for food will rise 50 percent by 2030 with more mouths to feed and diets becoming Westernized as prosperity spreads East. Indeed, the U.N. Food and Agriculture Organization announced on Dec. 9 that with 40 million people being pushed into hunger in 2008 mostly due to soaring food prices, the number of undernourished people worldwide is already fast approaching the 1 billion mark.

Besides food, the world will also be a thirstier place. The report projects the number of “cropland or freshwater scarce” nations to grow from 21 currently to 36 countries — with about 1.4 billion people — by 2025. No surprise, the region that will be hardest hit by climate change, resource depletion and political instability is sub-Saharan Africa, where three of every four “youth-bulge” countries will be located.

Conversely, developed nations will face a very different demographic crisis: a shrinking working-age population, although the report notes that “technology, the role of immigration, public health improvements, and laws encouraging greater female participation in the economy are some of the measures that could change the trajectory of current trends.”

But another major challenge for both developing and developed nations will be energy, which will not be solved by 2025, the report speculates, pointing out that technology improvements take an average of 25 years to be adopted and are unlikely to entirely replace conventional energy infrastructure. “Even with a favorable policy and funding environment for biofuels, clean coal, or hydrogen, the transition to new fuels will be slow,” the authors write.

But a big shift in energy sourcing is likely to continue. The report predicts that fossil fuel production by non-OPEC (Organization of the Petroleum Exporting Countries) nations — already in decline — won’t keep pace with demand. “Countries capable of significantly expanding production will dwindle; oil and gas production will be concentrated in unstable areas,” the report says. “As a result of this and other factors, the world will be in the midst of a fundamental energy transition away from oil toward natural gas and coal and other alternatives.”

Such a major shift will have clear geopolitical implications. “A transition — particularly an abrupt one — out of fossil fuels would have major repercussions for energy producers in the Middle East and Eurasia, potentially causing permanent decline of some states as global and regional powers,” according to the report.

Indeed, the race for natural resources could re-emerge as the primary source of violent conflict in the 21st century, the authors speculate (also see People of World Influence). “Perceptions of energy scarcity will drive countries to take actions to assure their future access to energy supplies,” the report observes. “In the worst case, this could result in interstate conflicts if government leaders deem assured access to energy resources, for example, to be essential for maintaining domestic stability and the survival of their regimes.”

America: Declining But Still in Demand So where does the United States stand in all this? The report joins a chorus of other warnings that predict a relative decline in America’s global status, even militarily, while its soft powers become increasingly valued. Americans will also look inward, focusing less on foreign problems and more on domestic concerns, although the country is likely to remain the single most powerful actor in the world.

The report also forecasts that despite rising anti-Americanism, the world will continue to look to the United States to balance power in Asia and the Middle East and to take the lead on the world’s toughest transnational problems, such as climate change. “At the same time, the multiplicity of influential actors and distrust of vast power means less room for the U.S. to call the shots without the support of strong partnerships.”

Yet all those influential actors may also conversely weaken already cumbersome multilateral institutions such as the United Nations, which will find it harder to obtain consensus on global challenges as they become more inclusive of emerging powers with non-Western agendas. As a result, the report says multilateral institutions that controlled chaos in the post-World War II era will be less powerful.

And although the role of nongovernmental organizations (NGOs) will grow, they will be compromised by the weakening of such institutions that have been their key partners in the past.

The report’s authors also see a potentially key role in 2025 for religious networks, which “may play a more powerful role on many transnational issues such as the environment and inequalities than secular groupings.”

Skeletons in the Closet Refreshingly, talk of terrorism in 2025 is muted in the report. Although the authors acknowledge that terrorism will be alive and well, they speculate that its appeal could wane with economic growth and greater political liberalization in the Middle East, removing two key drivers of extremism’s appeal.

Yet countries such as Pakistan, Afghanistan and Yemen will continue to struggle with large disaffected youth populations and poor economic prospects, providing fertile ground for radical terrorist movements. Likewise, other Middle Eastern countries could become breeding grounds for terrorist recruiting if they fail to development an alternative economic driver to oil.

The report also cautions that although terrorist groups such as al-Qaeda may wane in both size and popularity, they may make up for it in lethality by gaining access to weapons of mass destruction through rogue nations and unstable governments.

On that note, the report addresses the potential impact of Iran acquiring nuclear weapons. Although this acquisition is not inevitable, “the prospect of a nuclear-armed Iran spawning a nuclear arms race in the greater Middle East will bring new security challenges to an already conflict-prone region, particularly in conjunction with the proliferation of long-range missile systems,” the report says.

And as neighboring countries seek their own nuclear deterrent, in addition to a conventional arms build-up, “it is not clear that the type of stable deterrent relationship that existed between the great powers for most of the Cold War would emerge naturally in the Middle East with a nuclear-weapons capable Iran.”

But not all is gloom and doom. Interestingly, the authors predict that “ideological conflicts akin to the Cold War are unlikely to take root in a world in which most states will be preoccupied with the pragmatic challenges of globalization and shifting global power alignments.”

The report also points out that the next two decades will still be a historically unprecedented age of prosperity, although — as all good soothsayers warn — “this is a story with no clear outcome.”

About the Author

Mark Hilpert is a contributing writer for The Washington Diplomat.