NIC 2004-13

Report of the National Intelligence Council’s2020 Project

Based on consultations with nongovernmentalexperts around the world

December 2004

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ContentsPage

Executive Summary 9

Methodology 19

Introduction 25

The Contradictions of Globalization

An Expanding and Integrating Global EconomyThe Technology RevolutionLingering Social Inequalities

Fictional Scenario: Davos World

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293437

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Rising Powers: The Changing Geopolitical Landscape

Rising AsiaOther Rising States?The “Aging” PowersGrowing Demands for EnergyUS Unipolarity—How Long Can It Last?

Fictional Scenario: Pax Americana

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4851565963

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New Challenges to Governance

Halting Progress on DemocratizationIdentity Politics

Fictional Scenario: A New Caliphate

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7379

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Pervasive Insecurity

Transmuting International TerrorismIntensifying Internal ConflictsRising Powers: Tinder for Conflict?The WMD Factor

Fictional Scenario: Cycle of Fear

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939798

100

104

Policy Implications 111

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Graphics and Tables

China’s and India’s Per Capita GDPs Rising Against US 31

When China’s and India’s GDPs Would Exceed Today’s Rich Countries 32

Telescoping the Population of the World to 2020 48

China’s Rise 50

Projected Rise in Defense Spending, 2003–2025 51

Fossil Fuels Will Continue to Dominate in 2020 59

An Expanding European Union 60

Number of Religious Adherents, 1900–2025 80

Key Areas of Radical Islamic Activities Since 1992 82

EU: Estimated and Projected Muslim Population, 1985–2025 83

Global Trends in Internal Conflict, 1990-2003 101

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Special Topics

The 2020 Global Landscape 8

Mapping the Global Future 26

What Would an Asian Face on Globalization Look Like? 28

What Could Derail Globalization? 30

Biotechnology: Panacea and Weapon 36

The Status of Women in 2020 38

Risks to Chinese Economic Growth 52

India vs. China: Long-Term Prospects 53

Asia: The Cockpit for Global Change? 55

Global Aging and Migration 58

Could Europe Become A Superpower? 61

The Geopolitics of Gas 62

Eurasian Countries: Going Their Separate Ways? 74

Climate Change and Its Implications Through 2020 76

Latin America in 2020: Will Globalization Cause the Region to Split? 78

Organized Crime 96

Cyber Warfare? 97

How Can Sub-Saharan Africa Move Forward? 99

International Institutions in Crisis 102

The Rules of War: Entering “No Man’s Land” 103

Post-Combat Environments Pose the Biggest Challenge 104

Is the United States’ Technological Prowess at Risk? 112

How the World Sees the United States 114

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The 2020 Global Landscape

Relative Certainties Key Uncertainties

Globalization largely irreversible,likely to become less Westernized.

Whether globalization will pull in laggingeconomies; degree to which Asian countries setnew “rules of the game.”

World economy substantially larger. Extent of gaps between “haves” and “have-nots”;backsliding by fragile democracies; managing orcontaining financial crises.

Increasing number of global firmsfacilitate spread of new technologies.

Extent to which connectivity challengesgovernments.

Rise of Asia and advent of possiblenew economic middle-weights.

Whether rise of China/India occurs smoothly.

Aging populations in establishedpowers.

Ability of EU and Japan to adapt work forces,welfare systems, and integrate migrantpopulations; whether EU becomes a superpower.

Energy supplies “in the ground”sufficient to meet global demand.

Political instability in producer countries; supplydisruptions.

Growing power of nonstate actors. Willingness and ability of states and internationalinstitutions to accommodate these actors.

Political Islam remains a potent force. Impact of religiosity on unity of states and potentialfor conflict; growth of jihadist ideology.

Improved WMD capabilities of somestates.

More or fewer nuclear powers; ability of terroriststo acquire biological, chemical, radiological, ornuclear weapons.

Arc of instability spanning MiddleEast, Asia, Africa.

Precipitating events leading to overthrow ofregimes.

Great power conflict escalating intototal war unlikely.

Ability to manage flashpoints and competition forresources.

Environmental and ethical issueseven more to the fore.

Extent to which new technologies create or resolveethical dilemmas.

US will remain single most powerfulactor economically, technologically,militarily.

Whether other countries will more openlychallenge Washington; whether US loses S&Tedge.

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Executive Summary

At no time since the formation of the Western alliance system in 1949 have theshape and nature of international alignments been in such a state of flux. The endof the Cold War shifted the tectonic plates, but the repercussions from these momentousevents are still unfolding. Emerging powers in Asia, retrenchment in Eurasia, a roilingMiddle East, and transatlantic divisions are among the issues that have only come to ahead in recent years. The very magnitude and speed of change resulting from aglobalizing world—apart from its precise character—will be a defining feature of theworld out to 2020. Other significant characteristics include: the rise of new powers, newchallenges to governance, and a more pervasive sense of insecurity, including terrorism.As we map the future, the prospects for increasing global prosperity and the limitedlikelihood of great power conflict provide an overall favorable environment for copingwith what are otherwise daunting challenges. The role of the United States will be animportant variable in how the world is shaped, influencing the path that states andnonstate actors choose to follow.

New Global Players

The likely emergence of China and India, as well as others, as new major globalplayers—similar to the advent of a united Germany in the 19th century and apowerful United States in the early 20th century—will transform the geopoliticallandscape, with impacts potentially as dramatic as those in the previous twocenturies. In the same way that commentators refer to the 1900s as the “AmericanCentury,” the 21st century may be seen as the time when Asia, led by China and India,comes into its own. A combination of sustained high economic growth, expandingmilitary capabilities, and large populations will be at the root of the expected rapid rise ineconomic and political power for both countries.

• Most forecasts indicate that by 2020 China’s gross national product (GNP) willexceed that of individual Western economic powers except for the United States.India’s GNP will have overtaken or be on the threshold of overtaking Europeaneconomies.

• Because of the sheer size of China’s and India’s populations—projected by the USCensus Bureau to be 1.4 billion and almost 1.3 billion respectively by 2020—theirstandard of living need not approach Western levels for these countries to becomeimportant economic powers.

Barring an abrupt reversal of the process of globalization or any major upheavals inthese countries, the rise of these new powers is a virtual certainty. Yet how China andIndia exercise their growing power and whether they relate cooperatively orcompetitively to other powers in the international system are key uncertainties. Theeconomies of other developing countries, such as Brazil, could surpass all but thelargest European countries by 2020; Indonesia’s economy could also approach theeconomies of individual European countries by 2020.

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By most measures—market size, single currency, highly skilled work force, stabledemocratic governments, and unified trade bloc—an enlarged Europe will be able toincrease its weight on the international scene. Europe’s strength could be in providing amodel of global and regional governance to the rising powers. But aging populationsand shrinking work forces in most countries will have an important impact on thecontinent. Either European countries adapt their work forces, reform their socialwelfare, education, and tax systems, and accommodate growing immigrant populations(chiefly from Muslim countries), or they face a period of protracted economic stasis.

Japan faces a similar aging crisis that could crimp its longer run economic recovery, butit also will be challenged to evaluate its regional status and role. Tokyo may have tochoose between “balancing” against or “bandwagoning” with China. Meanwhile, thecrisis over North Korea is likely to come to a head sometime over the next 15 years.Asians’ lingering resentments and concerns over Korean unification and cross-TaiwanStrait tensions point to a complicated process for achieving regional equilibrium.

Russia has the potential to enhance its international role with others due to its positionas a major oil and gas exporter. However, Russia faces a severe demographic crisisresulting from low birth rates, poor medical care, and a potentially explosive AIDSsituation. To the south, it borders an unstable region in the Caucasus and Central Asia,the effects of which—Muslim extremism, terrorism, and endemic conflict—are likely tocontinue spilling over into Russia. While these social and political factors limit theextent to which Russia can be a major global player, Moscow is likely to be an importantpartner both for the established powers, the United States and Europe, and for therising powers of China and India.

With these and other new global actors, how we mentally map the world in 2020 willchange radically. The “arriviste” powers—China, India, and perhaps others such asBrazil and Indonesia—have the potential to render obsolete the old categories of Eastand West, North and South, aligned and nonaligned, developed and developing.Traditional geographic groupings will increasingly lose salience in international relations.A state-bound world and a world of mega-cities, linked by flows of telecommunications,trade and finance, will co-exist. Competition for allegiances will be more open, lessfixed than in the past.

Impact of Globalization

We see globalization—growing interconnectedness reflected in the expanded flows ofinformation, technology, capital, goods, services, and people throughout the world—asan overarching “mega-trend,” a force so ubiquitous that it will substantially shapeall the other major trends in the world of 2020. But the future of globalization is notfixed; states and nonstate actors—including both private companies and NGOs—willstruggle to shape its contours. Some aspects of globalization—such as the growingglobal interconnectedness stemming from the information technology (IT) revolution—almost certainly will be irreversible. Yet it is also possible, although unlikely, that theprocess of globalization could be slowed or even stopped, just as the era of globalization

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in the late 19th and early 20th centuries was reversed by catastrophic war and globaldepression.

Barring such a turn of events, the world economy is likely to continue growingimpressively: by 2020, it is projected to be about 80 percent larger than it was in2000, and average per capita income will be roughly 50 percent higher. Of course,there will be cyclical ups and downs and periodic financial or other crises, but this basicgrowth trajectory has powerful momentum behind it. Most countries around the world,both developed and developing, will benefit from gains in the world economy. Byhaving the fastest-growing consumer markets, more firms becoming world-classmultinationals, and greater S&T stature, Asia looks set to displace Western countries asthe focus for international economic dynamism—provided Asia’s rapid economic growthcontinues.

Yet the benefits of globalization won’t be global. Rising powers will see exploitingthe opportunities afforded by the emerging global marketplace as the best way to asserttheir great power status on the world stage. In contrast, some now in the “First World”may see the closing gap with China, India, and others as evidence of a relative decline,even though the older powers are likely to remain global leaders out to 2020. TheUnited States, too, will see its relative power position eroded, though it will remain in2020 the most important single country across all the dimensions of power. Those leftbehind in the developing world may resent China and India’s rise, especially if they feelsqueezed by their growing dominance in key sectors of the global marketplace. Andlarge pockets of poverty will persist even in “winner” countries.

The greatest benefits of globalization will accrue to countries and groups that canaccess and adopt new technologies. Indeed, a nation’s level of technologicalachievement generally will be defined in terms of its investment in integrating andapplying the new, globally available technologies—whether the technologies areacquired through a country’s own basic research or from technology leaders. Thegrowing two-way flow of high-tech brain power between the developing world and theWest, the increasing size of the information computer-literate work force in somedeveloping countries, and efforts by global corporations to diversify their high-techoperations will foster the spread of new technologies. High-tech breakthroughs—suchas in genetically modified organisms and increased food production—could provide asafety net eliminating the threat of starvation and ameliorating basic quality of life issuesfor poor countries. But the gap between the “haves” and “have-nots” will widen unlessthe “have-not” countries pursue policies that support application of new technologies—such as good governance, universal education, and market reforms.

Those countries that pursue such policies could leapfrog stages of development,skipping over phases that other high-tech leaders such as the United States and Europehad to traverse in order to advance. China and India are well positioned to becometechnology leaders, and even the poorest countries will be able to leverageprolific, cheap technologies to fuel—although at a slower rate—their owndevelopment.

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• The expected next revolution in high technology involving the convergence of nano-,bio-, information and materials technology could further bolster China and India’sprospects. Both countries are investing in basic research in these fields and are wellplaced to be leaders in a number of key fields. Europe risks slipping behind Asia insome of these technologies. The United States is still in a position to retain itsoverall lead, although it must increasingly compete with Asia to retain its edge andmay lose significant ground in some sectors.

More firms will become global, and those operating in the global arena will bemore diverse, both in size and origin, more Asian and less Western in orientation.Such corporations, encompassing the current, large multinationals, will beincreasingly outside the control of any one state and will be key agents of changein dispersing technology widely, further integrating the world economy, andpromoting economic progress in the developing world. Their ranks will include agrowing number based in such countries as China, India, or Brazil. While NorthAmerica, Japan, and Europe might collectively continue to dominate internationalpolitical and financial institutions, globalization will take on an increasingly non-Westerncharacter. By 2020, globalization could be equated in the popular mind with a risingAsia, replacing its current association with Americanization.

An expanding global economy will increase demand for many raw materials, such as oil.Total energy consumed probably will rise by about 50 percent in the next two decadescompared to a 34 percent expansion from 1980-2000, with a greater share provided bypetroleum. Most experts assess that with substantial investment in new capacity,overall energy supplies will be sufficient to meet global demands. But on the supplyside, many of the areas—the Caspian Sea, Venezuela, and West Africa—that are beingcounted on to provide increased output involve substantial political or economic risk.Traditional suppliers in the Middle East are also increasingly unstable. Thus sharperdemand-driven competition for resources, perhaps accompanied by a majordisruption of oil supplies, is among the key uncertainties.

• China, India, and other developing countries’ growing energy needs suggest agrowing preoccupation with energy, shaping their foreign policies.

• For Europe, an increasing preference for natural gas may reinforce regionalrelationships—such as with Russia or North Africa—given the interdependence ofpipeline delivery.

New Challenges to Governance

The nation-state will continue to be the dominant unit of the global order, buteconomic globalization and the dispersion of technologies, especiallyinformation technologies, will place enormous new strains on governments.Growing connectivity will be accompanied by the proliferation of virtual communities ofinterest, complicating the ability of states to govern. The Internet in particular will spur

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the creation of even more global movements, which may emerge as a robust force ininternational affairs.

Part of the pressure on governance will come from new forms of identity politicscentered on religious convictions. In a rapidly globalizing world experiencing populationshifts, religious identities provide followers with a ready-made community that serves asa “social safety net” in times of need—particularly important to migrants. In particular,political Islam will have a significant global impact leading to 2020, rallyingdisparate ethnic and national groups and perhaps even creating an authority thattranscends national boundaries. A combination of factors—youth bulges in manyArab states, poor economic prospects, the influence of religious education, and theIslamization of such institutions as trade unions, nongovernmental organizations, andpolitical parties—will ensure that political Islam remains a major force.

• Outside the Middle East, political Islam will continue to appeal to Muslim migrantswho are attracted to the more prosperous West for employment opportunities but donot feel at home in what they perceive as an alien and hostile culture.

Regimes that were able to manage the challenges of the 1990s could be overwhelmedby those of 2020. Contradictory forces will be at work: authoritarian regimes will facenew pressures to democratize, but fragile new democracies may lack the adaptivecapacity to survive and develop.

The so-called “third wave” of democratization may be partially reversed by2020—particularly among the states of the former Soviet Union and in SoutheastAsia, some of which never really embraced democracy. Yet democratization andgreater pluralism could gain ground in key Middle Eastern countries which thus far havebeen excluded from the process by repressive regimes.

With migration on the increase in several places around the world—from North Africaand the Middle East into Europe, Latin America and the Caribbean into the UnitedStates, and increasingly from Southeast Asia into the northern regions—more countrieswill be multi-ethnic and will face the challenge of integrating migrants into their societieswhile respecting their ethnic and religious identities.

Chinese leaders will face a dilemma over how much to accommodate pluralisticpressures to relax political controls or risk a popular backlash if they do not. Beijingmay pursue an “Asian way of democracy,” which could involve elections at the locallevel and a consultative mechanism on the national level, perhaps with the CommunistParty retaining control over the central government.

With the international system itself undergoing profound flux, some of theinstitutions that are charged with managing global problems may beoverwhelmed by them. Regionally based institutions will be particularly challenged tomeet the complex transnational threats posed by terrorism, organized crime, and WMDproliferation. Such post-World War II creations as the United Nations and the

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international financial institutions risk sliding into obsolescence unless they adjust to theprofound changes taking place in the global system, including the rise of new powers.

Pervasive Insecurity

We foresee a more pervasive sense of insecurity—which may be as much based onpsychological perceptions as physical threats—by 2020. Even as most of the worldgets richer, globalization will profoundly shake up the status quo—generatingenormous economic, cultural, and consequently political convulsions. With thegradual integration of China, India, and other emerging countries into the globaleconomy, hundreds of millions of working-age adults will become available foremployment in what is evolving into a more integrated world labor market.

• This enormous work force—a growing portion of which will be well educated—will bean attractive, competitive source of low-cost labor at the same time thattechnological innovation is expanding the range of globally mobile occupations.

• The transition will not be painless and will hit the middle classes of thedeveloped world in particular, bringing more rapid job turnover and requiringprofessional retooling. Outsourcing on a large scale would strengthen the anti-globalization movement. Where these pressures lead will depend on how politicalleaders respond, how flexible labor markets become, and whether overall economicgrowth is sufficiently robust to absorb a growing number of displaced workers.

Weak governments, lagging economies, religious extremism, and youth bulgeswill align to create a perfect storm for internal conflict in certain regions. Thenumber of internal conflicts is down significantly since the late 1980s and early 1990swhen the breakup of the Soviet Union and Communist regimes in Central Europeallowed suppressed ethnic and nationalistic strife to flare. Although a leveling off pointhas been reached where we can expect fewer such conflicts than during the lastdecade, the continued prevalence of troubled and institutionally weak states means thatsuch conflicts will continue to occur.

Some internal conflicts, particularly those that involve ethnic groups straddling nationalboundaries, risk escalating into regional conflicts. At their most extreme, internalconflicts can result in failing or failed states, with expanses of territory and populationsdevoid of effective governmental control. Such territories can become sanctuaries fortransnational terrorists (such as al-Qa’ida in Afghanistan) or for criminals and drugcartels (such as in Colombia).

The likelihood of great power conflict escalating into total war in the next 15 yearsis lower than at any time in the past century, unlike during previous centurieswhen local conflicts sparked world wars. The rigidities of alliance systems beforeWorld War I and during the interwar period, as well as the two-bloc standoff during theCold War, virtually assured that small conflicts would be quickly generalized. Thegrowing dependence on global financial and trade networks will help deter interstate

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conflict but does not eliminate the possibility. Should conflict occur that involved one ormore of the great powers, the consequences would be significant. The absence ofeffective conflict resolution mechanisms in some regions, the rise of nationalism insome states, and the raw emotions and tensions on both sides of some issues—forexample, the Taiwan Strait or India/Pakistan issues—could lead to miscalculation.Moreover, advances in modern weaponry—longer ranges, precision delivery, and moredestructive conventional munitions—create circumstances encouraging the preemptiveuse of military force.

Current nuclear weapons states will continue to improve the survivability of theirdeterrent forces and almost certainly will improve the reliability, accuracy, and lethalityof their delivery systems as well as develop capabilities to penetrate missile defenses.The open demonstration of nuclear capabilities by any state would further discredit thecurrent nonproliferation regime, cause a possible shift in the balance of power, andincrease the risk of conflicts escalating into nuclear ones. Countries without nuclearweapons—especially in the Middle East and Northeast Asia—might decide toseek them as it becomes clear that their neighbors and regional rivals are doingso. Moreover, the assistance of proliferators will reduce the time required for additionalcountries to develop nuclear weapons.

Transmuting International Terrorism

The key factors that spawned international terrorism show no signs of abatingover the next 15 years. Facilitated by global communications, the revival of Muslimidentity will create a framework for the spread of radical Islamic ideology inside andoutside the Middle East, including Southeast Asia, Central Asia and Western Europe,where religious identity has traditionally not been as strong. This revival has beenaccompanied by a deepening solidarity among Muslims caught up in national orregional separatist struggles, such as Palestine, Chechnya, Iraq, Kashmir, Mindanao,and southern Thailand, and has emerged in response to government repression,corruption, and ineffectiveness. Informal networks of charitable foundations,madrassas, hawalas1, and other mechanisms will continue to proliferate and beexploited by radical elements; alienation among unemployed youths will swell the ranksof those vulnerable to terrorist recruitment.

We expect that by 2020 al-Qa’ida will be superceded by similarly inspired Islamicextremist groups, and there is a substantial risk that broad Islamic movements akin toal-Qa’ida will merge with local separatist movements. Information technology, allowingfor instant connectivity, communication, and learning, will enable the terrorist threat tobecome increasingly decentralized, evolving into an eclectic array of groups, cells, andindividuals that do not need a stationary headquarters to plan and carry out operations.Training materials, targeting guidance, weapons know-how, and fund-raising willbecome virtual (i.e., online).

1 Hawalas constitute an informal banking system.

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Terrorist attacks will continue to primarily employ conventional weapons, incorporatingnew twists and constantly adapting to counterterrorist efforts. Terrorists probably will bemost original not in the technologies or weapons they use but rather in their operationalconcepts—i.e., the scope, design, or support arrangements for attacks.

Strong terrorist interest in acquiring chemical, biological, radiological and nuclearweapons increases the risk of a major terrorist attack involving WMD. Our greatestconcern is that terrorists might acquire biological agents or, less likely, a nucleardevice, either of which could cause mass casualties. Bioterrorism appearsparticularly suited to the smaller, better-informed groups. We also expect that terroristswill attempt cyber attacks to disrupt critical information networks and, even more likely,to cause physical damage to information systems.

Possible Futures

In this era of great flux, we see several ways in which major global changes could takeshape in the next 15 years, from seriously challenging the nation-state system toestablishing a more robust and inclusive globalization. In the body of this paper wedevelop these concepts in four fictional scenarios which were extrapolated from the keytrends we discuss in this report. These scenarios are not meant as actual forecasts,but they describe possible worlds upon whose threshold we may be entering,depending on how trends interweave and play out:

• Davos World provides an illustration of how robust economic growth, led by Chinaand India, over the next 15 years could reshape the globalization process—giving ita more non-Western face and transforming the political playing field as well.

• Pax Americana takes a look at how US predominance may survive the radicalchanges to the global political landscape and serve to fashion a new and inclusiveglobal order.

• A New Caliphate provides an example of how a global movement fueled by radicalreligious identity politics could constitute a challenge to Western norms and valuesas the foundation of the global system.

• Cycle of Fear provides an example of how concerns about proliferation mightincrease to the point that large-scale intrusive security measures are taken toprevent outbreaks of deadly attacks, possibly introducing an Orwellian world.

Of course, these scenarios illustrate just a few of the possible futures that may developover the next 15 years, but the wide range of possibilities we can imagine suggests thatthis period will be characterized by increased flux, particularly in contrast to the relativestasis of the Cold War era. The scenarios are not mutually exclusive: we may see twoor three of these scenarios unfold in some combination or a wide range of otherscenarios.

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Policy Implications

The role of the United States will be an important shaper of the international order in2020. Washington may be increasingly confronted with the challenge of managing—atan acceptable cost to itself—relations with Europe, Asia, the Middle East, and othersabsent a single overarching threat on which to build consensus. Although thechallenges ahead will be daunting, the United States will retain enormousadvantages, playing a pivotal role across the broad range of issues—economic,technological, political, and military—that no other state will match by 2020.Some trends we probably can bank on include dramatically altered alliances andrelationships with Europe and Asia, both of which formed the bedrock of US power inthe post-World War II period. The EU, rather than NATO, will increasingly become theprimary institution for Europe, and the role which Europeans shape for themselves onthe world stage is most likely to be projected through it. Dealing with the US-Asiarelationship may arguably be more challenging for Washington because of the greaterflux resulting from the rise of two world-class economic and political giants yet to be fullyintegrated into the international order. Where US-Asia relations lead will result as muchor more from what the Asians work out among themselves as any action byWashington. One could envisage a range of possibilities from the US enhancing its roleas balancer between contending forces to Washington being seen as increasinglyirrelevant.

The US economy will become more vulnerable to fluctuations in the fortunes of othersas global commercial networking deepens. US dependence on foreign oil supplies alsomakes it more vulnerable as the competition for secure access grows and the risks ofsupply side disruptions increase.

While no single country looks within striking distance of rivaling US militarypower by 2020, more countries will be in a position to make the United States paya heavy price for any military action they oppose. The possession of chemical,biological, and/or nuclear weapons by Iran and North Korea and the possibleacquisition of such weapons by others by 2020 also increase the potential cost of anymilitary action by the US against them or their allies.

The success of the US-led counterterrorism campaign will hinge on the capabilities andresolve of individual countries to fight terrorism on their own soil. Counterterrorismefforts in the years ahead—against a more diverse set of terrorists who are connectedmore by ideology than by geography—will be a more elusive challenge than focusing ona centralized organization such as al-Qa’ida. A counterterrorism strategy thatapproaches the problem on multiple fronts offers the greatest chance ofcontaining—and ultimately reducing—the terrorist threat. The development ofmore open political systems and representation, broader economic opportunities, andempowerment of Muslim reformers would be viewed positively by the broad Muslimcommunities who do not support the radical agenda of Islamic extremists.

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Even if the numbers of extremists dwindle, however, the terrorist threat is likely toremain. The rapid dispersion of biological and other lethal forms of technologyincreases the potential for an individual not affiliated with any terrorist group to be ableto wreak widespread loss of life. Despite likely high-tech breakthroughs that will make iteasier to track and detect terrorists at work, the attacker will have an easier job than thedefender because the defender must prepare against a large array of possibilities.The United States probably will continue to be called on to help manage such conflictsas Palestine, North Korea, Taiwan, and Kashmir to ensure they do not get out of hand ifa peace settlement cannot be reached. However, the scenarios and trends we analyzein the paper suggest the possibility of harnessing the power of the new players incontributing to global security and relieving the US of some of the burden.

Over the next 15 years the increasing centrality of ethical issues, old and new,have the potential to divide worldwide publics and challenge US leadership.These issues include the environment and climate change, privacy, cloning andbiotechnology, human rights, international law regulating conflict, and the role ofmultilateral institutions. The United States increasingly will have to battle world publicopinion, which has dramatically shifted since the end of the Cold War. Some of thecurrent anti-Americanism is likely to lessen as globalization takes on more of a non-Western face. At the same time, the younger generation of leaders—unlike during thepost-World War II period—has no personal recollection of the United States as its“liberator” and is more likely to diverge with Washington’s thinking on a range of issues.

In helping to map out the global future, the United States will have many opportunities toextend its advantages, particularly in shaping a new international order that integratesdisparate regions and reconciles divergent interests.

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Methodology

To launch the NIC 2020 Project, in November 2003 we brought together some 25leading outside experts from a wide variety of disciplines and backgrounds to engage ina broad-gauged discussion with Intelligence Community analysts. We invited threeleading “futurists”—Ted Gordon of the UN’s Millennium Project; Jim Dewar, Director ofthe RAND Corporation’s Center for Longer Range Global Policy and the Future of theHuman Condition; and Ged Davis, former head of Shell International’s scenariosproject2—to discuss their most recent work and the methodologies they employed tothink about the future. Princeton University historian Harold James gave the keynoteaddress, offering lessons from prior periods of “globalization.”

We surveyed and studied various methodologies (see box on page 22) and reviewed anumber of recent “futures” studies. Besides convening a meeting of counterparts in theUK, Canada, Australia, and New Zealand to learn their thinking, we organized sixregional conferences in countries on four continents—one in the United Kingdom, SouthAfrica, Singapore, and Chile, two in Hungary—to solicit the views of foreign experts froma variety of backgrounds—academics, business people, government officials, membersof nongovernmental organizations and other institutions—who could speakauthoritatively on the key drivers of change and conceptualize broad regional themes.Our regional experts also contributed valuable insights on how the rest of the worldviews the United States. In addition to the conferences held overseas, which includedhundreds of foreign participants, we held a conference in the Washington, DC area onIndia.

We augmented these discussions with conferences and workshops that took a more in-depth view of specific issues of interest, including new technologies, the changingnature of warfare, identity politics, gender issues, climate change and many others (seebox on page 20 for a complete list of the conferences). Participants explored key trendsthat were presented by experts and then developed alternative scenarios for how thetrends might play out over the next 15 years. And we consulted numerous organizationsand individuals on the substantive aspects of this study, as well as on methodologiesand approaches for thinking about the future.

• The UN Millennium Project—an independent body that advises the UN on strategiesfor achieving the Millennium development goals—provided invaluable data on cross-cutting issues. We also consulted the Eurasia Group, Oxford Analytica, CENTRATechnologies, and the Stimson Center.

• Other individual scholars we consulted included Michael F. Oppenheimer, President,Global Scenarios, who facilitated several of our sessions and informed our thinkingon methodologies; Georgetown and now Princeton Professor John Ikenberry, whoorganized several seminars of academic experts over the course of more than a

2 Shell International Limited has for decades used scenarios to identify business risks and opportunities. Ged Davisled this effort for many years.

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year to examine various aspects of US preeminence and critique preliminary draftsof the report; Enid Schoettle, who was one of the architects of Global Trends 2015;Professor Barry B. Hughes, Graduate School of International Studies, University ofDenver, whose related statistical and scenario work is featured on our Web site;Anne Solomon, Senior Adviser on Technology Policy and Director of theBiotechnology and Public Policy Program at the Center for Strategic andInternational Studies in Washington, DC, who organized several stimulatingconferences on S&T topics; Elke Matthews, an independent contractor whoconducted substantial open-source research; Philip Jenkins, Distinguished Professorof History and Religious Studies, Pennsylvania State University, who providedinvaluable insights on global trends pertaining to religion; Nicholas Eberstadt, HenryWendt Chair in Political Economy, American Enterprise Institute, who provided uswith important perspectives on demographic issues; and Jeffrey Herbst, Chair,Department of Politics, Princeton University, who was instrumental in our analysis ofissues pertaining to Africa.

NIC 2020 Project Conferences and Workshops

Presentation by Joint Doctrine and Concepts Center (MoD/UK)—CIA Headquarters (September2003)Conference on Anti-Americanism—Wye Plantation (October 2003)Inaugural NIC 2020 Project Conference—Washington, DC (November 2003)Professor Ikenberry’s series of International Relations Roundtables—Georgetown University(November 2003-November 2004)Joint US-Commonwealth Intelligence Officials’ Conference —Washington, DC (December 2003)African Experts’ Roundtable—Washington, DC (January 2004)Middle East NIC 2020 Workshop—Wilton Park, UK (March 2004)Africa NIC 2020 Workshop—Johannesburg, South Africa (March 2004)Global Evolution of Dual-Use Biotechnology—Washington, DC (March 2004)Russia and Eurasia NIC 2020 Workshop—Budapest, Hungary (April 2004)Europe NIC 2020 Workshop—Budapest, Hungary (April 2004)Global Identity Roundtable Discussion—CIA Headquarters (May 2004)Asia NIC 2020 Workshop—Singapore (May 2004)Conference on The Changing Nature of Warfare—Center for Naval Analysis (May 2004)Latin America NIC 2020 Workshop—Santiago, Chile (June 2004)Technological Frontiers, Global Power, Wealth, and Conflict—Center for Strategic andInternational Studies (CSIS) (June 2004)Climate Change—University of Maryland (June 2004)NSA Tech 2020—Baltimore, Maryland (June 2004)Conference on Muslims in Europe—Oxford, England (July 2004)Women in 2020—Washington, DC (August 2004)Business Leader Roundtable Discussion—CIA Headquarters (September 2004)India and Geopolitics in 2020–Rosslyn, Virginia (September 2004)Stimson Center-sponsored roundtables on Scenarios—Washington, DC (Spring-Summer, 2004)Information and Communications, Technological and Social Cohesion and the Nation-State—Washington, DC (September 2004)Wrap-Up NIC 2020 Project Workshop—Virginia (October 2004)Consultation on Preliminary NIC 2020 Draft with UK experts and the International Institute ofStrategic Studies—London, England (October 2004)

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• The following organizations arranged the regional conferences for the project:Wilton Park, Central European University, Bard College, the South African Institutefor International Affairs, Adolfo Ibañez University, Nueva Mayoria, and the AsiaSociety. Timothy Sharp and Professor Ewan Anderson of Sharp Global SolutionsLtd arranged a conference in London of UK experts to critique a preliminary draft ofthe report.

• We also want to thank our colleagues in the US Intelligence Community, whoprovided us with useful data and shared their ideas about global trends.

Scenario Development ProcessWhile straight-line projections are useful in establishing a baseline and positing amainline scenario, they typically present a one-dimensional view of how the future mightunfold and tend to focus attention exclusively on the “prediction.” Scenarios offer amore dynamic view of possible futures and focus attention on the underlying interactionsthat may have particular policy significance. They are especially useful in thinking aboutthe future during times of great uncertainty, which we believe is the case for the next 15years. Scenarios help decisionmakers to break through conventional thinking and basicassumptions so that a broader range of possibilities can be considered—including newrisks and opportunities.

The six international workshops generated an enormous amount of data and analysis onthe key drivers that are likely to lead to regional change in the 2020 timeframe. The NIC2020 Project staff conducted additional research, drafted papers, and initiated follow-uproundtable discussions and conferences. We analyzed the findings from the regionalworkshops, highlighted key regional trends that had global implications, and looked atthe regional product in its totality to identify salient cross-regional trends. These keyfindings were set aside as the raw material for development of the global scenarios.

To jumpstart the global scenario development process, the NIC 2020 Project staffcreated a Scenario Steering Group (SSG)—a small aggregation of respected membersof the policy community, think tanks, and analysts from within the IntelligenceCommunity—to examine summaries of the data collected and consider scenarioconcepts that take into account the interaction between key drivers of global change.SSG examined the product of the international workshops and explored fledglingscenarios for plausibility and policy relevance.

We studied extensively key futures work developed in the public and private sectors thatemployed scenario techniques, identified the “best practices,” and then developed ourown unique approach, combining trend analysis and scenarios. Papers that influencedour work include those produced by Goldman Sachs, the UK Ministry of Defense, andShell International, Ltd. (see box on page 22).

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Scenario and Futures Work That Influenced Our Thinking

Our consultations with Ged Davis, formerly the leader of Shell International’s scenario-building effort, affirmed our intent to develop scenarios for policymakers. Shell buildsglobal scenarios every three years to help its leaders make better decisions.Following initial research, Shell’s team spends about a year conductinginterviews and holding workshops to develop and finalize the scenarios, seekingthroughout the process to ensure a balance between unconventional thinking andplausibility. We used a similar approach. We also benefited from consultationswith other organizations that do futures work:

The Joint Doctrine and Concepts Centre, an integral part of the UK Ministry ofDefense, undertook an ambitious attempt to develop a coherent view of how the worldmight develop over the next 30 years in ways that could alter the UK’s security. Theproject—Strategic Trends—was designed to assist the MOD in gaining a strategicunderstanding of future threats, risks, challenges, and opportunities.

Meta-Analysis of Published Material on Drivers and Trends, produced by the UKDefense Evaluation and Research Agency, reviewed over 50 futures studies.

The RAND Corporation—as part of a parallel, NIC-sponsored effort to update its 2001monograph The Global Revolution: Bio/Nano/Materials Trends and Their Synergies withIT by 2015—provided substantive guidance by delineating technology trends and theirinteraction; identifying applications that will transform the future; commentingextensively on drafts; and providing thought-provoking, technology-driven scenarioconcepts.

Peter Schwartz, Chairman, Global Business Network and author of InevitableSurprises, provided us with invaluable insights on the nature of surprise, including theuse of drivers, the interpretation of insights across disciplines, and the application ofscenario work to the private sector.

Toffler Associates contributed ideas at several points, including in association with theNSA Tech 2020 project (see below). In addition, Drs. Alvin and Heidi Tofflerparticipated in our capstone conference, sharing their insights on understanding thefuture based on their vast experience in the field.

The National Security Agency’s project—Tech 2020—also helped identify keytechnology convergences expected to impact society between now and 2020. We haveincorporated valuable insights from this project and are grateful to NSA for stimulating arewarding Intelligence Community dialogue on future trends.

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After scenario concepts were explored, critiqued, and debated within the SSG and withother groups that the NIC engaged, eight global scenarios that held particular promisewere developed. The NIC then held a wrap-up workshop with a broader group ofexperts to examine the eight scenarios, discuss the merits and weaknesses of each,and ultimately narrow the number of scenarios included in the final publication to four.The scenarios depicted in this publication were selected for their relevance topolicymakers and because they cause us to question key assumptions about thefuture—but they do not attempt to predict it. Nor are they mutually exclusive.

Interactive ToolsSignificantly, the NIC 2020 Project also employs information technology and analytictools unavailable in earlier NIC efforts. Its global sweep and scope required that weengage in a continuing, worldwide dialogue about the future. With the help of CENTRATechnologies, we created an interactive, password-protected Web site to serve as arepository for discussion papers and workshop summaries. The site also provided alink to massive quantities of basic data for reference and analysis. It containedinteractive tools to keep our foreign and domestic experts engaged and created “hands-on” computer simulations that allowed novice and expert alike to develop their ownscenarios.3 Much of this supporting material involving the Empirical Web-boxesScenario capability has now been transferred to the open, unclassified NIC Web sitewith publication of this report.

3 To access these new innovations log on to the NIC website: www.cia.gov/nic.

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Introduction

The international order is in the midst ofprofound change: at no time since theformation of the Western alliance systemin 1949 have the shape and nature ofinternational alignments been in such astate of flux as they have during the pastdecade. As a result, the world of 2020will differ markedly from the world of2004, and in the intervening years theUnited States will face majorinternational challenges that differsignificantly from those we face today.The very magnitude and speed ofchange resulting from a globalizingworld—regardless of its precisecharacter—will be a defining feature ofthe world out to 2020. Other significantcharacteristics include:

• The contradictions of globalization.

• Rising powers: the changinggeopolitical landscape.

• New challenges to governance.

• A more pervasive sense of insecurity.

As with previous upheavals, the seeds ofmajor change have been laid in thetrends apparent today. Underlying thebroad characteristics listed above are anumber of specific trends that overlapand play off each other:

• The expanding global economy.

• The accelerating pace of scientificchange and the dispersion of dual-use technologies.

• Lingering social inequalities.

• Emerging powers.

• The global aging phenomenon.

• Halting democratization.

• A spreading radical Islamic ideology.

• The potential for catastrophicterrorism.

• The proliferation of weapons of massdestruction.

• Increased pressures on internationalinstitutions.

As we survey the next 15 years, the roleof the United States will be an importantvariable in how the world is shaped,influencing the path that states andnonstate actors choose to follow. Inaddition to the pivotal role of the UnitedStates, international bodies includinginternational organizations, multinationalcorporations, nongovernmentalorganizations (NGOs) and others canmitigate distinctly negative trends, suchas greater insecurity, and advancepositive trends.

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The Contradictions of Globalization

Whereas in Global Trends 2015 weviewed globalization—growinginterconnectedness reflected in theexpanded flows of information,technology, capital, goods, services, andpeople throughout the world—as amongan array of key drivers, we now view itmore as a “mega-trend”—a force soubiquitous that it will substantially shapeall of the other major trends in the world of2020.

“[By 2020] globalization is likelyto take on much more of a ‘non-Western’ face…”

The reach of globalization wassubstantially broadened during the last 20years by Chinese and Indian economicliberalization, the collapse of the SovietUnion, and the worldwide informationtechnology revolution. Through the next15 years, it will sustain world economicgrowth, raise world living standards, andsubstantially deepen global interdepen-dence. At the same time, it will profoundlyshake up the status quo almosteverywhere—generating enormouseconomic, cultural, and consequentlypolitical convulsions.

Certain aspects of globalization, such asthe growing global inter-connectednessstemming from the information technologyrevolution, are likely to be irreversible.Real-time communication, which hastransformed politics almost everywhere, isa phenomenon that even repressive

governments would find difficult toexpunge.

• It will be difficult, too, to turn off thephenomenon of entrenched economicinterdependence, although the pace ofglobal economic expansion may ebband flow. Interdependence haswidened the effective reach ofmultinational business, enablingsmaller firms as well as largemultinationals to market acrossborders and bringing heretofore non-traded services into the internationalarena.

Yet the process of globalization, powerfulas it is, could be substantially slowed oreven reversed, just as the era ofglobalization in the late 19th and early 20th

centuries was reversed by catastrophicwar and global depression. Somefeatures that we associate with theglobalization of the 1990s—such aseconomic and political liberalization—areprone to “fits and starts” and probably willdepend on progress in multilateralnegotiations, improvements in nationalgovernance, and the reduction ofconflicts. The freer flow of people acrossnational borders will continue to facesocial and political obstacles even whenthere is a pressing need for migrantworkers.

“India and China probably will beamong the economicheavyweights or ‘haves.’”

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What Would An Asian Face on Globalization Look Like?

Rising Asia will continue to reshape globalization, giving it less of a “Made in the USA” characterand more of an Asian look and feel. At the same time, Asia will alter the rules of the globalizingprocess. By having the fastest-growing consumer markets, more firms becoming world-classmultinationals, and greater S&T stature, Asia looks set to displace Western countries as thefocus for international economic dynamism—provided Asia’s rapid economic growth continues.

Asian finance ministers have considered establishing an Asian monetary fund that wouldoperate along different lines from IMF, attaching fewer strings on currency swaps and givingAsian decision-makers more leeway from the “Washington macro-economic consensus.”

• In terms of capital flows, rising Asia may still accumulate large currency reserves—currently$850 billion in Japan, $500 billion in China, $190 billion in Korea, and $120 billion in India,or collectively three-quarters of global reserves—but the percentage held in dollars will fall.A basket of reserve currencies including the yen, renminbi, and possibly rupee probably willbecome standard practice.

• Interest-rate decisions taken by Asian central bankers will impact other global financialmarkets, including New York and London, and the returns from Asian stock markets arelikely to become an increasing global benchmark for portfolio managers.

As governments devote more resources to basic research and development, rising Asia willcontinue to attract applied technology from around the world, including cutting-edge technology,which should boost their high performance sectors. We already anticipate (as stated in the text)that the Asian giants may use the power of their markets to set industry standards, rather thanadopting those promoted by Western nations or international standards bodies. Theinternational intellectual property rights regime will be profoundly molded by IPR regulatory andlaw enforcement practices in East and South Asia.

Increased labor force participation in the global economy, especially by China, India, andIndonesia, will have enormous effects, possibly spurring internal and regional migrations. Eitherway it will have a large impact, determining the relative size of the world’s greatest new “mega-cities” and, perhaps, act as a key variable for political stability/instability for decades to come.To the degree that these vast internal migrations spill over national borders—currently, only aminiscule fraction of China’s 100 million internal migrants end up abroad—they could havemajor repercussions for other regions, including Europe and North America.

An expanded Asian-centric cultural identity may be the most profound effect of a rising Asia.Asians have already begun to reduce the percentage of students who travel to Europe andNorth America with Japan and—most striking—China becoming educational magnets. A new,more Asian cultural identity is likely to be rapidly packaged and distributed as incomes rise andcommunications networks spread. Korean pop singers are already the rage in Japan, Japaneseanime have many fans in China, and Chinese kung-fu movies and Bollywood song-and-danceepics are viewed throughout Asia. Even Hollywood has begun to reflect these Asianinfluences—an effect that is likely to accelerate through 2020.

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Moreover, the character of globalizationprobably will change just as capitalismchanged over the course of the 19th and20th centuries. While today’s mostadvanced nations—especially the UnitedStates—will remain important forcesdriving capital, technology and goods,globalization is likely to take on muchmore of a “non-Western face” over thenext 15 years.

• Most of the increase in worldpopulation and consumer demandthrough 2020 will take place in today’sdeveloping nations—especially China,India, and Indonesia—andmultinational companies from today’sadvanced nations will adapt their“profiles” and business practices to thedemands of these cultures.

• Able to disperse technology widelyand promote economic progress in thedeveloping world, corporations alreadyare seeking to be “good citizens” byallowing the retention of non-Westernpractices in the workplaces in whichthey operate. Corporations are in theposition to make globalization morepalatable to people concerned aboutpreserving unique cultures.

• New or expanding corporations fromcountries lifted up by globalization willmake their presence felt globallythrough trade and investments abroad.

• Countries that have benefited and arenow in position to weigh in will seekmore power in international bodies andgreater influence on the “rules of thegame.”

• In our interactions, many foreignexperts have noted that while popularopinion in their countries favors the

material benefits of globalization,citizens are opposed to its perceived“Americanization,” which they see asthreatening to their cultural andreligious values. The conflation ofglobalization with US values has inturn fueled anti-Americanism in someparts of the world.

“…the world economy isprojected to be about 80 percentlarger in 2020 than it was in2000, and average per capitaincome to be roughly 50 percenthigher.”

Currently, about two-thirds of the world’spopulation live in countries that areconnected to the global economy. Evenby 2020, however, the benefits ofglobalization won’t be global. Over thenext 15 years, gaps will widen betweenthose countries benefiting fromglobalization—economically,technologically, and socially—and thoseunderdeveloped nations or pockets withinnations that are left behind. Indeed, wesee the next 15 years as a period in whichthe perceptions of the contradictions anduncertainties of a globalized world comeeven more to the fore than is the casetoday.

An Expanding and Integrating GlobalEconomyThe world economy is projected to beabout 80 percent larger in 2020 than itwas in 2000 and average per capitaincome to be roughly 50 percent higher.Large parts of the world will enjoyunprecedented prosperity, and anumerically large middle class will becreated for the first time in some formerlypoor countries. The social structures in

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What Could Derail Globalization?

The process of globalization, powerful as it is, could be substantially slowed or evenstopped. Short of a major global conflict, which we regard as improbable, anotherlarge-scale development that we believe could stop globalization would be a pandemic.However, other catastrophic developments, such as terrorist attacks, could slow itsspeed.

Some experts believe it is only a matter of time before a new pandemic appears, suchas the 1918–1919 influenza virus that killed an estimated 20 million worldwide. Such apandemic in megacities of the developing world with poor health-care systems—in Sub-Saharan Africa, China, India, Bangladesh or Pakistan—would be devastating and couldspread rapidly throughout the world. Globalization would be endangered if the death tollrose into the millions in several major countries and the spread of the disease put a haltto global travel and trade during an extended period, prompting governments to expendenormous resources on overwhelmed health sectors. On the positive side of the ledger,the response to SARS showed that international surveillance and control mechanismsare becoming more adept at containing diseases, and new developments inbiotechnologies hold the promise of continued improvement.

A slow-down could result from a pervasive sense of economic and physicalinsecurity that led governments to put controls on the flow of capital, goods, people,and technology that stalled economic growth. Such a situation could come about inresponse to terrorist attacks killing tens or even hundreds of thousands in several UScities or in Europe or to widespread cyber attacks on information technology. Bordercontrols and restrictions on technology exchanges would increase economic transactioncosts and hinder innovation and economic growth. Other developments that couldstimulate similar restrictive policies include a popular backlash against globalizationprompted, perhaps, by white collar rejection of outsourcing in the wealthy countriesand/or resistance in poor countries whose peoples saw themselves as victims ofglobalization.

those developing countries will betransformed as growth creates a greatermiddle class. Over a long time frame,there is the potential, so long as theexpansion continues, for moretraditionally poor countries to be pulledcloser into the globalization circle.

Most forecasts to 2020 and beyondcontinue to show higher annual growth fordeveloping countries than for high-incomeones. Countries such as China and India

will be in a position to achieve highereconomic growth than Europe and Japan,whose aging work forces may inhibit theirgrowth. Given its enormous population—and assuming a reasonable degree ofreal currency appreciation—the dollarvalue of China’s gross national product(GNP) may be the second largest in theworld by 2020. For similar reasons, thevalue of India’s output could match that ofa large European country. Theeconomies of other developing countries,

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such as Brazil and Indonesia, couldsurpass all but the largest Europeaneconomies by 2020.4

• Even with all their dynamic growth,Asia’s “giants” and others are not likelyto compare qualitatively to theeconomies of the US or even some ofthe other rich countries. They willhave some dynamic, world-classsectors, but more of their populationswill work on farms, their capital stockswill be less sophisticated, and theirfinancial systems are likely to be lessefficient than those of other wealthycountries.

4 Dreaming with the BRICS, Goldman Sachs study,October 2003.

Continued Economic Turbulence.Sustained high-growth rates havehistorical precedents. China already hashad about two decades of 7 percent andhigher growth rates, and Japan, SouthKorea, and Taiwan have managed in thepast to achieve annual rates averagingaround 10 percent for a long period.

Fast-developing countries havehistorically suffered sudden setbacks,however, and economic turbulence isincreasingly likely to spill over and upsetbroader international relations. Manyemerging markets—such as Mexico inthe mid-1990s and Asian countries in thelate 1990s—suffered negative effectsfrom the abrupt reversals of capitalmovements, and China and India may

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encounter similar problems. The scale ofthe potential reversals would beunprecedented, and it is unclear whethercurrent international financialmechanisms would be in a position toforestall wider economic disruption.

“Competitive pressures will forcecompanies based in the advancedeconomies to ‘outsource’ manyblue- and white-collar jobs.”

With the gradual integration of China,India, and other developing countries intothe global economy, hundreds of millionsof working-age adults will join what isbecoming, through trade and investmentflows, a more interrelated world labor

market. World patterns of production,trade, employment, and wages will betransformed.

• This enormous work force—a growingportion of which will be welleducated—will be an attractive,competitive source of low-cost labor atthe same time that technologicalinnovation is expanding the range ofglobally mobile occupations.

• Competition from these workers willincrease job “churning,” necessitateprofessional retooling, and restrainwage growth in some occupations.

Where these labor market pressures leadwill depend on how political leaders and

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policymakers respond. Against thebackdrop of a global economic recession,such resources could unleashwidespread protectionist sentiments. Aslong as sufficiently robust economicgrowth and labor market flexibility aresustained, however, intense internationalcompetition is unlikely to cause net job“loss” in the advanced economies.

• The large number of new servicesector jobs that will be created in Indiaand elsewhere in the developingworld, for example, will likely exceedthe supply of workers with thosespecific skills in the advancedeconomies.

• Job turnover in advanced economieswill continue to be driven more bytechnological change and thevicissitudes of domestic rather thaninternational competition.

Mobility and Laggards. Although theliving standards of many people indeveloping and underdeveloped countrieswill rise over the next 15 years, per capitaincomes in most countries will notcompare to those of Western nations by2020. There will continue to be largenumbers of poor even in the rapidlyemerging economies, and the proportionof those in the middle stratum is likely tobe significantly less than is the case fortoday’s developed nations. Expertsestimate it could take China another 30years beyond 2020 for per capitaincomes to reach current rates indeveloped economies.

• Even if, as one study estimates,China’s middle class could make upas much as 40 percent of itspopulation by 2020—double what it is

now—it would be still well below the60 percent level for the US. And percapita income for China’s middle classwould be substantially less thanequivalents in the West.

• In India, there are now estimated to besome 300 million middle-incomeearners making $2,000-$4,000 a year.Both the number of middle earnersand their income levels are likely torise rapidly, but their incomes willcontinue to be substantially belowaverages in the US and other richcountries even by 2020.

• However, a $3,000 annual income isconsidered sufficient to spur carpurchases in Asia; thus rapidly risingincome levels for a growing middleclass will combine to mean a hugeconsumption explosion, which isalready evident.

Widening income and regional disparitieswill not be incompatible with a growingmiddle class and increasing overallwealth. In India, although much of thewest and south may have a large middleclass by 2020, a number of regions suchas Bihar, Uttar Pradesh, and Orissa willremain underdeveloped.

Moreover, countries not connected to theworld economy will continue to suffer.Even the most optimistic forecasts admitthat economic growth fueled byglobalization will leave many countries inpoverty over the next 15 years.

• Scenarios developed by the WorldBank indicate, for example, that Sub-Saharan Africa will be far behind evenunder the most optimistic scenario.The region currently has the largest

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share of people living on less than $1per day.

If the growing problem of abject povertyand bad governance in troubled states inSub-Saharan Africa, Eurasia, the MiddleEast, and Latin America persists, theseareas will become more fertile groundsfor terrorism, organized crime, andpandemic disease. Forced migration alsois likely to be an important dimension ofany downward spiral. The internationalcommunity is likely to face choices aboutwhether, how, and at what cost tointervene.

“…the greatest benefits ofglobalization will accrue tocountries and groups that canaccess and adopt newtechnologies.”

The Technology RevolutionThe trend toward rapid, global diffusion oftechnology will continue, although thestepped-up technology revolution will notbenefit everyone equally.

• Among the drivers of the growingavailability of technology will be thegrowing two-way flow of high-techbrain power between developingcountries and Western countries, theincreasing size of the technologicallyliterate workforce in some developingcountries, and efforts by multinationalcorporations to diversify their high-tech operations.

New technology applications will fosterdramatic improvements in humanknowledge and individual well-being.Such benefits include medicalbreakthroughs that begin to cure or

mitigate some common diseases andstretch lifespans, applications thatimprove food and potable waterproduction, and expansion of wirelesscommunications and language translationtechnologies that will facilitatetransnational business, commercial, andeven social and political relationships.

Moreover, future technology trends will bemarked not only by acceleratingadvancements in individual technologiesbut also by a force-multiplyingconvergence of the technologies—information, biological, materials, andnanotechnologies—that have thepotential to revolutionize all dimensions oflife. Materials enabled withnanotechnology’s sensors and facilitatedby information technology will producemyriad devices that will enhance healthand alter business practices and models.Such materials will provide newknowledge about environment, improvesecurity, and reduce privacy. Suchinteractions of these technology trends—coupled with agile manufacturingmethods and equipment as well asenergy, water, and transportationtechnologies—will help China’s andIndia’s prospects for joining the “FirstWorld.” Both countries are investing inbasic research in these fields and are wellplaced to be leaders in a number of keyfields. Europe risks slipping behind Asiain creating some of these technologies.The United States is still in a position toretain its overall lead, although it mustincreasingly compete with Asia and maylose significant ground in some sectors.

To Adaptive Nations Go Technology ‘sSpoils. The gulf between “haves” and“have-nots” may widen as the greatestbenefits of globalization accrue tocountries and groups that can access and

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adopt new technologies. Indeed, anation’s level of technologicalachievement generally will be defined interms of its investment in integrating andapplying the new, globally availabletechnologies—whether the technologiesare acquired through a country’s ownbasic research or from technologyleaders. Nations that remain behind inadopting technologies are likely to bethose that have failed to pursue policiesthat support application of newtechnologies—such as good governance,universal education, and marketreforms—and not solely because they arepoor.

Those that employ such policies canleapfrog stages of development, skippingover phases that other high-tech leaderssuch as the United States and Europehad to traverse in order to advance.China and India are well positioned toachieve such breakthroughs. Yet, eventhe poorest countries will be able toleverage prolific, cheap technologies tofuel—although at a slower rate—theirown development.

• As nations like China and India surgeforward in funding critical science andengineering education, research, andother infrastructure investments, theywill make considerable strides inmanufacturing and marketing a fullrange of technology applications—from software and pharmaceuticals towireless sensors and smart-materialsproducts.

Rapid technological advances outside theUnited States could enable othercountries to set the rules for design,standards, and implementation, and formolding privacy, information security, andintellectual property rights (IPR).

• Indeed, international IPR enforcementis on course for dramatic change.Countries like China and India will,because of the purchasing power oftheir huge markets, be able to shapethe implementation of sometechnologies and step on theintellectual property rights of others.The attractiveness of these largemarkets will tempt multinational firmsto overlook IPR indiscretions that onlyminimally affect their bottom lines.Additionally, as many of the expectedadvancements in technology areanticipated to be in medicine, therewill be increasing pressure from ahumanitarian and moral perspective to“release” the property rights “for thegood of mankind.”

Nations also will face serious challengesin oversight, control, and prohibition ofsensitive technologies. With the sametechnology, such as sensors, computing,communication, and materials,increasingly being developed for a rangeof applications in both everyday,commercial settings and in critical militaryapplications the monitoring and control ofthe export of technological componentswill become more difficult. Moreover,joint ventures, globalized markets and thegrowing proportion of private sectorcapital in basic R&D will underminenation-state efforts to keep tabs onsensitive technologies.

• Questions concerning a country’sethical practices in the technologyrealm—such as with geneticallymodified foods, data privacy,biological material research,concealable sensors, and biometricdevices—may become an increasinglyimportant factor in international tradepolicy and foreign relations.

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Biotechnology: Panacea and Weapon

The biotechnological revolution is at a relatively early stage, and major advances in thebiological sciences coupled with information technology will continue to punctuate the21st century. Research will continue to foster important discoveries in innovativemedical and public health technologies, environmental remediation, agriculture,biodefense, and related fields.

On the positive side, biotechnology could be a “leveling” agent between developed anddeveloping nations, spreading dramatic economic and healthcare enhancements to theneediest areas of the world.

• Possible breakthroughs in biomedicine such as an antiviral barrier will reduce thespread of HIV/AIDS, helping to resolve the ongoing humanitarian crisis in Sub-Saharan Africa and diminishing the potentially serious drag on economic growth indeveloping countries like India and China. Biotechnology research and innovationsderived from continued US investments in Homeland Security—such as newtherapies that might block a pathogen’s ability to enter the body—may eventuallyhave revolutionary healthcare applications that extend beyond protecting the USfrom a terrorist attack.

• More developing countries probably will invest in indigenous biotechnologydevelopments, while competitive market pressures increasingly will induce firms andresearch institutions to seek technically capable partners in developing countries.

However, even as the dispersion of biotechnology promises a means of improving thequality of life, it also poses a major security concern. As biotechnology informationbecomes more widely available, the number of people who can potentially misuse suchinformation and wreak widespread loss of life will increase. An attacker would appear tohave an easier job—because of the large array of possibilities available—than thedefender, who must prepare against them all. Moreover, as biotechnology advancesbecome more ubiquitous, stopping the progress of offensive BW programs will becomeincreasingly difficult. Over the next 10 to 20 years there is a risk that advances inbiotechnology will augment not only defensive measures but also offensive biologicalwarfare (BW) agent development and allow the creation of advanced biological agentsdesigned to target specific systems—human, animal, or crop.

Lastly, some biotechnology techniques that may facilitate major improvements in healthalso will spur serious ethical and privacy concerns over such matters as comprehensivegenetic profiling; stem cell research; and the possibility of discovering DNA signaturesthat indicate predisposition for disease, certain cognitive abilities, or anti-socialbehavior.

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At the same time, technology will be asource of tension in 2020: fromcompetition over creating and attractingthe most critical component oftechnological advancement—people—toresistance among some cultural orpolitical groups to the perceived privacy-robbing or homogenizing effects ofpervasive technology.

Lingering Social InequalitiesEven with the potential for technologicalbreakthroughs and the dispersion of newtechnologies, which could help reduceinequalities, significant social welfaredisparities within the developing andbetween developing and OECD countrieswill remain until 2020.

Over the next 15 years, illiteracy rates ofpeople 15 years and older will fall,according to UNESCO, but they will stillbe 17 times higher in poor anddeveloping countries than those inOECD5 countries. Moreover, illiteracyrates among women will be almost twiceas high as those among men. Between1950 and 1980 life expectancy betweenthe more- and less-developed nationsbegan to converge markedly; thisprobably will continue to be the case formany developing countries, including themost populous. However, by US CensusBureau projections, over 40 countries—including many African countries, CentralAsian states, and Russia—are projected

5 The OECD, Organization for Economic Cooperationand Development, an outgrowth of the Marshall Plan-era Organization for European Economic Cooperation,boasts 30 members from among developed andemerging-market nations and active relationships with70 others around the world.

to have a lower life expectancy in 2010than they did in 1990.

Even if effective HIV/AIDS preventionmeasures are adopted in variouscountries, the social and economic impactof the millions already infected with thedisease will play out over the next 15years.

• The rapid rise in adult deaths causedby AIDS has left an unprecedentednumber of orphans in Africa. Today insome African countries one in tenchildren is an orphan, and thesituation is certain to worsen.

The debilitation and death of millions ofpeople resulting from the AIDS pandemicwill have a growing impact on theeconomies of the hardest-hit countries,particularly those in Sub-Saharan Africa,where more than 20 million are believedto have died from HIV/AIDS since theearly 1980s. Studies show thathousehold incomes drop by 50 to 80percent when key earners becomeinfected. In “second wave” HIV/AIDScountries—Nigeria, Ethiopia, Russia,India, China, Brazil, Ukraine, and theCentral Asian states—the disease willcontinue to spread beyond traditionalhigh-risk groups into the generalpopulation. As HIV/AIDS spreads, it hasthe potential to derail the economicprospects of many up-and-comingeconomic powers.

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The Status of Women in 2020

By 2020, women will have gained more rights and freedoms—in terms of education,political participation, and work force equality—in most parts of the world, but UN andWorld Health Organization data suggest that the gender gap will not have been closedeven in the developed countries and still will be wide in developing regions. Althoughwomen’s share in the global work force will continue to rise, wage gaps and regionaldisparities will persist.

• Although the difference between women’s and men’s earnings narrowed during thepast 10 years, women continue to receive less pay than men. For example, a UNstudy in 2002 showed that in 27 of 39 countries surveyed—both in OECD anddeveloping countries—women’s wages were 20 to 50 percent less than men’s forwork in manufacturing.

Certain factors will tend to work against gender equality while others will have a positiveimpact.

Factors Impeding EqualityIn regions where high youth bulges intersect with historical patterns of patriarchal bias,the added pressure on infrastructure will mean intensified competition for limited publicresources and an increased probability that females will not receive equal treatment.For instance, if schools cannot educate all, boys are likely to be given first priority. Yetviews are changing among the younger generation. In the Middle East, for example,many younger Muslims recognize the importance of educated wives as potentialcontributors to family income.

In countries such as China and India, where there is a pervasive “son preference”reinforced by government population control policies, women face increased risk notonly of female infanticide but also of kidnapping and smuggling from surroundingregions for the disproportionately greater number of unattached males. Thus far, thepreference for male children in China has led to an estimated shortfall of 30 millionwomen.

Such statistics suggest that the global female trafficking industry, which already earnsan estimated $4 billion every year, is likely to expand, making it the second mostprofitable criminal activity behind global drug trafficking.

The feminization of HIV/AIDS is another worrisome trend. Findings from the July 2004Global AIDS conference held in Bangkok reveal that the percentage of HIV-infectedwomen is rising on every continent and in every major region in the world exceptWestern Europe and Australia. Young women comprise 75 percent of those betweenthe ages of 15 to 24 who are infected with HIV globally.

(Continued on next page…)

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(continued…) The Status of Women in 2020

Factors Contributing to EqualityA broader reform agenda that includes good governance and low unemploymentlevels is essential to raising the status of women in many countries. Internationaldevelopment experts emphasize that while good governance need not fit a Westerndemocratic mold, it must deliver stability through inclusiveness and accountability.Reducing unemployment levels is crucial because countries already unable to provideemployment for male job-seekers are not likely to improve employment opportunities forwomen.

The spread of information and communication technologies (ICT) offers greatpromise. According to World Bank analysis, increases in the level of ICT infrastructuretend to improve gender equality in education and employment. ICT also will enablewomen to form social and political networks. For regions suffering political oppression,particularly in the Middle East, these networks could become a 21st century counterpartto the 1980s’ Solidarity Movement against the Communist regime in Poland.

Women in developing regions often turn to nongovernmental organizations (NGOs)to provide basic services. NGOs could become even more important to the status ofwomen by 2020 as women in developing countries face increased threats and acquireIT networking capabilities.

The current trend toward decentralization and devolution of power in most states willafford women increased opportunities for political participation. Despite onlymodest gains in the number of female officeholders at the national level—womencurrently are heads of state in only eight countries—female participation in local andprovincial politics is steadily rising and will especially benefit rural women removed fromthe political center of a country.

Other BenefitsThe stakes for achieving gender parity are high and not just for women. A growing bodyof empirical literature suggests that gender equality in education promotes economicgrowth and reduces child mortality and malnutrition. At the Millennium Summit, UNleaders pledged to achieve gender equity in primary and secondary education by theyear 2005 in every country of the world.

• By 2005, the 45 countries that are not on course to meet the UN targets are likely tosuffer 1 to 3 percent lower GDP per capita growth as a result.

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Fictional Scenario: Davos World

This scenario provides an illustrationof how robust economic growth overthe next 15 years could reshape theglobalization process—giving it amore non-Western face. It is depictedin the form of a hypothetical letterfrom the head of the World EconomicForum to a former US FederalReserve chairman on the eve of theannual Davos meeting in 2020.Under this scenario, the Asian giantsas well as other developing statescontinue to outpace most “Western”economies, and their huge, consumer-driven domestic markets become amajor focus for global business andtechnology. Many boats are lifted, butsome founder. Africa does better thanone might think, while some medium-sized emerging countries aresqueezed. Western powers, includingthe United States, have to contendwith job insecurity despite the manybenefits to be derived from anexpanding global economy. Althoughbenefiting from energy priceincreases, the Middle East lags behindand threatens the future ofglobalization. In addition, growingtensions over Taiwan may be on theverge of triggering an economicmeltdown. At the end of the scenario,we identify some lessons to be drawnfrom our fictional account, includingthe need for more management byleaders lest globalization slip off therails.

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Rising Powers: The ChangingGeopolitical Landscape

The likely emergence of China and Indiaas new major global players—similar tothe rise of Germany in the 19th centuryand the United States in the early 20th

century—will transform the geopoliticallandscape, with impacts potentially asdramatic as those of the previous twocenturies. In the same way thatcommentators refer to the 1900s as the“American Century,” the early 21st centurymay be seen as the time when some inthe developing world, led by China andIndia, come into their own.

• The population of the region thatserved as the locus for most 20th-century history—Europe and Russia—will decline dramatically in relativeterms; almost all population growthwill occur in developing nations thatuntil recently have occupied places onthe fringes of the global economy (seegraphic on page 48).6

• The “arriviste” powers—China, India,and perhaps others such as Brazil andIndonesia—could usher in a new setof international alignments, potentiallymarking a definitive break with someof the post-World War II institutionsand practices.

• Only an abrupt reversal of the processof globalization or a major upheaval inthese countries would prevent theirrise. Yet how China and India

6 CIA, Long-Term Global Demographic Trends:Reshaping the Geopolitical Landscape, July 2001.

exercise their growing power andwhether they relate cooperatively orcompetitively to other powers in theinternational system are keyuncertainties.

A combination of sustained higheconomic growth, expanding militarycapabilities, active promotion of hightechnologies, and large populations willbe at the root of the expected rapid rise ineconomic and political power for bothcountries.

• Because of the sheer size of China’sand India’s populations—projected bythe US Census Bureau to be 1.4billion and almost 1.3 billionrespectively by 2020—their standardof living need not approach Westernlevels for these countries to becomeimportant economic powers.

• China, for example, is now the thirdlargest producer of manufacturedgoods, its share having risen from fourto 12 percent in the past decade. Itshould easily surpass Japan in a fewyears, not only in share ofmanufacturing but also of the world’sexports. Competition from “the Chinaprice” already powerfully restrainsmanufactures prices worldwide.

• India currently lags behind China (seebox on page 53) on most economicmeasures, but most economistsbelieve it also will sustain high levelsof economic growth.

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At the same time, other changes arelikely to shape the new landscape. Theseinclude the possible economic rise ofother states—such as Brazil, SouthAfrica, Indonesia, and even Russia—which may reinforce the growing role ofChina and India even though bythemselves these other countries wouldhave more limited geopolitical impact.Finally, we do not discount the possibilityof a stronger, more united Europe and amore internationally activist Japan,although Europe, Japan, and Russia willbe hard pressed to deal with agingpopulations.

The growing demand for energy will drivemany of these likely changes on thegeopolitical landscape. China’s andIndia’s perceived need to secure accessto energy supplies will propel thesecountries to become more global ratherthan just regional powers, while Europeand Russia’s co-dependency is likely tobe strengthened.

Rising AsiaChina’s desire to gain “great power”status on the world stage will be reflectedin its greater economic leverage over

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countries in the region and elsewhere aswell as its steps to strengthen its military.East Asian states are adapting to theadvent of a more powerful China byforging closer economic and political tieswith Beijing, potentially accommodatingthemselves to its preferences, particularlyon sensitive issues like Taiwan.

• Japan, Taiwan, and various SoutheastAsian nations, however, also may tryto appeal to each other and the UnitedStates to counterbalance China’sgrowing influence.

China will continue to strengthen itsmilitary through developing and acquiringmodern weapons, including advancedfighter aircraft, sophisticated submarines,and increasing numbers of ballisticmissiles. China will overtake Russia andothers as the second largest defensespender after the United States over thenext two decades and will be, by anymeasure, a first-rate military power.

Economic setbacks and crises ofconfidence could slow China’semergence as a full-scale great power,however. Beijing’s failure to maintain itseconomic growth would itself have aglobal impact.

• Chinese Government failure to satisfypopular needs for job creation couldtrigger political unrest.

• Faced with a rapidly aging societybeginning in the 2020s, China may behard pressed to deal with all theissues linked to such seriousdemographic problems. It is unlikelyto have developed by then the samecoping mechanisms—such assophisticated pension and health-caresystems—characteristic of Westernsocieties.

• If China’s economy takes a downwardturn, regional security would weaken,resulting in heightened prospects forpolitical instability, crime, narcoticstrafficking, and illegal migration.

“Economic setbacks and crises ofconfidence could slow China’semergence as a full-scale greatpower…. ”

The rise of India also will presentstrategic complications for the region.Like China, India will be an economicmagnet for the region, and its rise willhave an impact not only in Asia but alsoto the north—Central Asia, Iran, and othercountries of the Middle East. India seeksto bolster regional cooperation both forstrategic reasons and because of itsdesire to increase its leverage with theWest, including in such organizations asthe World Trade Organization (WTO).

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As India’s economy grows, governmentsin Southeast Asia—Malaysia,Singapore, Thailand, and othercountries—may move closer to India tohelp build a potential geopoliticalcounterweight to China. At the sametime, India will seek to strengthen its tieswith countries in the region withoutexcluding China.

• Chinese-Indian bilateral trade isexpected to rise rapidly from itscurrent small base of $7.6 billion,according to Goldman Sachs andother experts.

Just like China, India may stumble andexperience political and economicvolatility with pressure on resources—

land, water, and energy supplies—intensifying as it modernizes. Forexample, India will face stark choices asits population increases and its surfaceand ground water become even morepolluted.

Other Rising States?Brazil, Indonesia, Russia, and SouthAfrica also are poised to achieveeconomic growth, although they areunlikely to exercise the same politicalclout as China or India. Their growthundoubtedly will benefit their neighbors,but they appear unlikely to becomesuch economic engines that they willbe able to alter the flow of economicpower within and through their

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Risks to Chinese Economic Growth

Whether China’s rise occurs smoothly is a key uncertainty. In 2003, the RANDCorporation identified and assessed eight major risks to the continued rapid growth ofChina’s economy over the next decade. Its “Fault Lines in China’s Economic Terrain”highlighted:

• Fragility of the financial system and state-owned enterprises

• Economic effects of corruption

• Water resources and pollution

• Possible shrinkage of foreign direct investment

• HIV/AIDS and epidemic diseases

• Unemployment, poverty, and social unrest

• Energy consumption and prices

• Taiwan and other potential conflicts

RAND’s estimates of the negative growth impact of these adverse developmentsoccurring separately on a one-at-a-time basis range from a low of between 0.3 and0.8 percentage points for the effects of poverty, social unrest, and unemployment to ahigh of between 1.8 and 2.2 percentage points for epidemic disease.

• The study assessed the probability that none of these developments would occurbefore 2015 as low and noted that they would be more likely to occur in clustersrather than individually – financial distress, for example, would also worsencorruption, compound unemployment, poverty, and social unrest, and reduce foreigndirect investment.

• RAND assessed the probability of all of these adverse developments occurringbefore 2015 as very low but estimated that should they all occur their cumulativeeffect would be to reduce Chinese economic growth by between 7.4 and 10.7percentage points—effectively wiping out growth during that time frame.

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India vs. China: Long-Term Prospects

India lags economically behind China, according to most measures such as overall GDP,amount of foreign investment (today a small fraction of China’s), and per capita income. Inrecent years, India’s growth rate has lagged China’s by about 20 percent. Nevertheless,some experts believe that India might overtake China as the fastest growing economy in theworld. India has several factors working for it:

• Its working-age population will continue to increase well into the 2020s, whereas, due tothe one-child policy, China’s will diminish and age quite rapidly.

• India has well-entrenched democratic institutions, making it somewhat less vulnerable topolitical instability, whereas China faces the continuous challenge of reconciling anincreasingly urban and middle-class population with an essentially authoritarian politicalsystem.

• India possesses working capital markets and world-class firms in some important high-tech sectors, which China has yet to achieve.

On the other hand, while India has clearly evolved beyond what the Indians themselvesreferred to as the 2-3 percent “Hindu growth rate,” the legacy of a stifling bureaucracy stillremains. The country is not yet attractive for foreign investment and faces strong politicalchallenges as it continues down the path of economic reform. India is also faced with theburden of having a much larger proportion of its population in desperate poverty. Inaddition, some observers see communal tensions just below the surface, citing the overalldecline of secularism, growth of regional and caste-based political parties, and the 2002“pogrom” against the Muslim minority in Gujarat as evidence of a worsening trend.

Several factors could weaken China’s prospects for economic growth, especially the risks topolitical stability and the challenges facing China’s financial sector as it moves toward afuller market orientation. China might find its own path toward an “Asian democracy” thatmay not involve major instability or disruption to its economic growth—but there are a largenumber of unknowns.

In many other respects, both China and India still resemble other developing states in theproblems each must overcome, including the large numbers, particularly in rural areas, whohave not enjoyed major benefits from economic growth. Both also face a potentially seriousHIV/AIDS epidemic that could seriously affect economic prospects if not brought undercontrol. According to recent UN data, India has overtaken South Africa as the country withthe largest number of HIV-infected people.

The bottom line: India would be hard-pressed to accelerate economic growth rates to levelsabove those reached by China in the past decade. But China’s ability to sustain its currentpace is probably more at risk than is India’s; should China’s growth slow by severalpercentage points, India could emerge as the world’s fastest-growing economy as we headtowards 2020.

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regions—a key element in Beijing andNew Delhi’s political and economicrise.

Experts acknowledge that Brazil is apivotal state with a vibrant democracy, adiversified economy and anentrepreneurial population, a largenational patrimony, and solid economicinstitutions. Brazil’s success or failure inbalancing pro-growth economic measureswith an ambitious social agenda thatreduces poverty and income inequalitywill have a profound impact on region-wide economic performance andgovernance during the next 15 years.Luring foreign direct investment andadvancing regional stability and equitableintegration—including trade andeconomic infrastructure—probably willremain axioms of Brazilian foreign policy.Brazil is a natural partner both for theUnited States and Europe and for risingpowers China and India and has thepotential to enhance its leverage as a netexporter of oil.

Experts assess that over the course ofthe next decade and a half Indonesiamay revert to high growth of 6 to 7percent, which along with its expectedincrease in its relatively large populationfrom 226 to around 250 million wouldmake it one of the largest developingeconomies. Such high growth wouldpresume an improved investmentenvironment, including intellectualproperty rights protection and opennessto foreign investment. With slower growthits economy would be unable to absorbthe unemployed or under-employed laborforce, thus heightening the risk of greater

political instability. Indonesia is anamalgam of divergent ethnic and religiousgroups. Although an Indonesian nationalidentity has been forged in the fivedecades since independence, thegovernment is still beset by stubbornsecessionist movements.

Russia’s energy resources will give aboost to economic growth, but Russiafaces a severe demographic challengeresulting from low birth rates, poormedical care, and a potentially explosiveAIDS situation. US Census Bureauprojections show the working-agepopulation likely to shrink dramatically by2020. Russia’s present trajectory awayfrom pluralism toward bureaucraticauthoritarianism also decreases thechances it will be able to attract foreigninvestment outside the energy sector,limiting prospects for diversifying itseconomy. The problems along itssouthern borders—including Islamicextremism, terrorism, weak states withpoor governance, and conflict—are likelyto get worse over the next 15 years.Inside Russia, the autonomous republicsin North Caucasus risk failure and willremain a source of endemic tension andconflict. While these social and politicalfactors limit the extent to which Russiacan be a major global player, in thecomplex world of 2020 Russia could bean important, if troubled, partner both forthe established powers, such as theUnited States and Europe, and the risingpowers of China and India. The potentialalso exists for Russia to enhance itsleverage with others as a result of itsposition as a major oil and gas exporter.

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Asia: The Cockpit for Global Change?

According to the regional experts we consulted, Asia will exemplify most of the trendsthat we see as shaping the world over the next 15 years. Northeast and Southeast Asiawill progress along divergent paths—the countries of the North will become wealthierand more powerful, while at least some states in the South may lag economically andwill continue to face deep ethnic and religious cleavages. As Northeast Asia acts as apolitical and economic center of gravity for the countries of the South, parts ofSoutheast Asia will be a source of transnational threats—terrorism and organizedcrime—to the countries of the North. The North/South divisions are likely to be reflectedin a cultural split between non-Muslim Northeast Asia, which will adapt to the continuingspread of globalization, and Southeast Asia, where Islamic fundamentalism mayincreasingly make inroads in such states as Indonesia, Malaysia, and parts of ThePhilippines. The diversion of investment towards China and India also could spurSoutheast Asia to implement plans for a single economic community and investmentarea by 2020.

The experts also felt that demographic factors will play a key role in shaping regionaldevelopments. China and other countries in Northeast Asia, including South Korea, willexperience a slowing of population growth and a “graying” of their peoples over the next15 years. China also will have to face the consequences of a gender imbalance causedby its one-child policy. In Southeast Asian countries such as The Philippines andIndonesia, rising populations will challenge the capacity of governments to provide basicservices. Population and poverty pressures will spur migration within the region and toNortheast Asia. High population concentrations and increasing ease of travel willfacilitate the spread of infectious diseases, risking the outbreak of pandemics.

The regional experts felt that the possibility of major inter-state conflict remains higher inAsia than in other regions. In their view, the Korean Peninsula and Taiwan Strait crisesare likely to come to a head by 2020, risking conflict with global repercussions. At thesame time, violence within Southeast Asian states—in the form of separatistinsurgencies and terrorism—could intensify. China also could face sustained armedunrest from separatist movements along its western borders.

Finally, the roles of and interaction between the region’s major powers—China, Japan,and the US—will undergo significant change by 2020. The United States and Chinahave strong incentives to avoid confrontation, but rising nationalism in China and fearsin the US of China as an emerging strategic competitor could fuel an increasinglyantagonistic relationship. Japan’s relationship with the US and China will be shaped byChina’s rise and the nature of any settlement on the Korean Peninsula and overTaiwan.

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“Russia’s energy resources willgive a boost to economic growth,but Russia faces a severedemographic challenge…[withits] working-age population likelyto shrink dramatically.”

South Africa will continue to bechallenged by AIDS and widespreadcrime and poverty, but prospects for itseconomy—the largest in the region—lookpromising. According to some forecasts,South Africa’s economy is projected togrow over the next decade in the 4- to5-percent range if reformist policies areimplemented. Experts disagree overwhether South Africa can be an enginefor more than southern Africa or willinstead forge closer relationships withmiddling or up-and-coming powers onother continents. South African expertsadept at scenario-building and gamingsee the country’s future as lying withpartnerships formed outside the region.

The “Aging” PowersJapan’s economic interests in Asia haveshifted from Southeast Asia towardNortheast Asia—especially China and theChina-Japan-Korea triangle—over thepast two decades and experts believe theaging of Japan’s work force will reinforcedependence on outbound investment andgreater economic integration withNortheast Asia, especially China7. At thesame time, Japanese concerns regardingregional stability are likely to grow owingto the ongoing crisis over North Korea,continuing tensions between China and

7 Asia’s Shifting Strategic Landscape, Foreign PolicyResearch Institute, 26 November 2003.

Taiwan and the challenge of integratingrising China and India without majordisruption. If anything, growing Chineseeconomic power is likely to spurincreased activism by Japan on the worldstage.

Opinion polls indicate growing publicsupport for Japan becoming a more“normal” country with a proactive foreignpolicy. Experts see various trajectoriesthat Japan could follow depending onsuch factors as the extent of China’sgrowing strength, a resurgence or lack ofcontinued vitality in Japan’s economy, thelevel of US influence in the region andhow developments in Korea and Taiwanplay out. At some point, for example,Japan may have to choose between“balancing” against or “bandwagoning”with China.

“…Europe’s strength may be inproviding… a model of global andregional governance to the risingpowers…”

By most measures—market size, singlecurrency, highly skilled work force, stabledemocratic governments, unified tradebloc, and GDP—an enlarged Europe willhave the ability to increase its weight onthe international scene. Its crossroadslocation and the growing diversity of itspopulation—particularly in pulling in newmembers—provides it with a uniqueability to forge strong bonds both to thesouth with the Muslim world and Africaand to the east with Russia and Eurasia.

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The extent to which Europe enhances itsclout on the world stage depends on itsability to achieve greater politicalcohesion. In the short term, taking in tennew east European members probablywill be a “drag” on the deepening ofEuropean Union (EU) institutionsnecessary for the development of acohesive and shared “strategic vision” forthe EU’s foreign and security policy.

• Unlike the expansion when Ireland,Spain, Portugal and Greece joined theCommon Market in the 1970s andearly 1980s, Brussels has a fraction ofthe structural funds available forquickly bringing up the CentralEuropeans to the economic levels ofthe rest of the EU.

• Possible Turkish membershippresents both challenges—because ofTurkey’s size and religious andcultural differences—as well asopportunities, provided that mutualacceptance and agreement can beachieved. In working through theproblems, a path might be found thatcan help Europe to accommodate andintegrate its growing Muslimpopulation.

Defense spending by individual Europeancountries, including the UK, France, andGermany is likely to fall further behindChina and other countries over the next15 years. Collectively these countries willoutspend all others except the US andpossibly China8. EU member states

8 Strategic Trends, Joint Doctrine and ConceptsCentre, March 2003.

historically have had difficulties incoordinating and rationalizing defensespending in such a way as to boostcapabilities despite progress on a greaterEU security and defense role. Whetherthe EU will develop an army is an openquestion, in part because its creationcould duplicate or displace NATO forces.

While its military forces have littlecapacity for power projection, Europe’sstrength may be in providing, through itscommitment to multilateralism, a model ofglobal and regional governance to therising powers, particularly if they aresearching for a “Western” alternative tostrong reliance on the United States. Forexample, an EU-China alliance, thoughstill unlikely, is no longer unthinkable.

Aging populations and shrinking workforces in most countries will have animportant impact on the continent,creating a serious but not insurmountableeconomic and political challenge.Europe’s total fertility rate is about 1.4—well below the 2.1 replacement level.Over the next 15 years, West Europeaneconomies will need to find severalmillion workers to fill positions vacated byretiring workers. Either Europeancountries adapt their work forces, reformtheir social welfare, education, and taxsystems, and accommodate growingimmigrant populations (chiefly fromMuslim countries) or they face a period ofprotracted economic stasis that couldthreaten the huge successes made increating a more United Europe.

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Global Aging and Migration

According to US Census Bureau projections, about half of the world’s population lives incountries or territories whose fertility rates are not sufficient to replace their currentpopulations. This includes not only Europe, Russia, and Japan, where the problem isparticularly severe, but also most parts of developed regions such as Australia, NewZealand, North America, and East Asian countries like Singapore, Hong Kong, Taiwan,and South Korea. Certain countries in the developing world, including Arab and Muslimstates such as Turkey, Algeria, Tunisia, and Lebanon, also are dropping below the levelof 2.1 children per woman necessary to maintain long-term population stability.9

China is a special case where the transition to an aging population—nearly 400 millionChinese will be over 65 by 2020—is particularly abrupt and the emergence of a seriousgender imbalance could have increasing political, social, and even internationalrepercussions. An unfunded nationwide pension arrangement means many Chinesemay have to continue to work into old age.

Migration has the potential to help solve the problem of a declining work force in Europeand, to a lesser degree, Russia and Japan and probably will become a more importantfeature of the world of 2020, even if many of the migrants do not have legal status.Recipient countries face the challenge of integrating new immigrants so as to minimizepotential social conflict.

• Remittances from migrant workers are increasingly important to developingeconomies. Some economists believe remittances are greater than foreign directinvestment in most poor countries and in some cases are more valuable thanexports.

However, today one-half of Nigerian-born medical doctors and PhDs reside in theUnited States. Most experts do not expect the current, pronounced trend of “braindrain” from the Middle East and Africa to diminish. Indeed, it could increase with theexpected growth of employment opportunities, particularly in Europe.

9 Nicholas Eberstadt, “Four Surprises in Global Demography,” Foreign Policy Research Institute’s Watch on theWest, Vol 5, Number 5, July 2004.

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Growing Demands for EnergyGrowing demands for energy—especially by the rising powers—through2020 will have substantial impacts ongeopolitical relations. The single mostimportant factor affecting the demandfor energy will be global economicgrowth, particularly that of China andIndia.

• Despite the trend toward moreefficient energy use, total energyconsumed probably will rise by about50 percent in the next two decadescompared to a 34 percent expansionfrom 1980–2000, with an increasingshare provided by petroleum.

• Renewable energy sources such ashydrogen, solar, and wind energyprobably will account for only about 8percent of the energy supply in 2020.While Russia, China, and India allplan expansions of their nuclearpower sector, nuclear powerprobably will decline globally inabsolute terms in the next decade.

The International Energy Agencyassesses that with substantialinvestment in new capacity, overallenergy supplies will be sufficient to meetgrowing global demand. Continued

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Could Europe Become A Superpower?

According to the regional experts we consulted, Europe’s future international role dependsgreatly on whether it undertakes major structural economic and social reforms to deal with itsaging work-force problem. The demographic picture will require a concerted, multidimensionalapproach including:

• More legal immigration and better integration of workers likely to be coming mainlyfrom North Africa and the Middle East. Even if more guest workers are not allowed in,Western Europe will have to integrate a growing Muslim population. Barring increased legalentry may only lead to more illegal migrants who will be harder to integrate, posing a long-term problem. It is possible to imagine European nations successfully adapting their workforces and social welfare systems to these new realities; it is harder to see a country—Germany, for example—successfully assimilating millions of new Muslim migrant workers ina short period of time.

• Increased flexibility in the workplace, such as encouraging young women to take afew years off to start families in return for guarantees of reentry. Encouraging the“younger elderly” (50-65 year olds) to work longer or return to the work force also would helpease labor shortages.

The experts felt that the current welfare state is unsustainable and the lack of any economicrevitalization could lead to the splintering or, at worst, disintegration of the European Union,undermining its ambitions to play a heavyweight international role.

The experts believe that the EU’s economic growth rate is dragged down by Germany and itsrestrictive labor laws. Structural reforms there—and in France and Italy to lesser extents—remain key to whether the EU as a whole can break out of its slow-growth pattern. A total breakfrom the post-World War II welfare state model may not be necessary, as shown in Sweden’ssuccessful example of providing more flexibility for businesses while conserving many workerrights. Experts are dubious that the present political leadership is prepared to make even thispartial break, believing a looming budgetary crisis in the next five years would be the more likelytrigger for reform.

If no changes were implemented Europe could experience a further overall slowdown, andindividual countries might go their own way, particularly on foreign policy, even if they remainednominal members. In such a scenario, enlargement is likely to stop with current members,making accession unlikely for Turkey and the Balkan countries, not to mention long-termpossibilities such as Russia or Ukraine. Doing just enough to keep growth rates at one or twopercent may result in some expansion, but Europe probably would not be able to play a majorinternational role commensurate with its size.

In addition to the need for increased economic growth and social and welfare reform, manyexperts believe the EU has to continue streamlining the complicated decision-making processthat hinders collective action. A federal Europe—unlikely in the 2020 timeframe—is notnecessary to enable it to play a weightier international role so long as it can begin to mobilizeresources and fuse divergent views into collective policy goals. Experts believe an economic“leap forward”—stirring renewed confidence and enthusiasm in the European project—couldtrigger such enhanced international action.

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limited access of the international oilcompanies to major fields could restrainthis investment, however, and many ofthe areas—the Caspian Sea, Venezuela,West Africa and South China Sea—thatare being counted on to provideincreased output involve substantialpolitical or economic risk. Traditionalsuppliers in the Middle East are alsoincreasingly unstable. Thus sharperdemand-driven competition for resources,perhaps accompanied by a majordisruption of oil supplies, is among thekey uncertainties.

China and India, which lack adequatedomestic energy resources, will have toensure continued access to outsidesuppliers; thus, the need for energy willbe a major factor in shaping their foreignand defense policies, including expandingnaval power.

• Experts believe China will need toboost its energy consumption byabout 150 percent and India will needto nearly double its consumption by2020 to maintain a steady rate ofeconomic growth.

• Beijing’s growing energy requirementsare likely to prompt China to increaseits activist role in the world—in theMiddle East, Africa, Latin America,and Eurasia. In trying to maximizeand diversify its energy supplies,China worries about being vulnerableto pressure from the United Stateswhich Chinese officials see as havingan aggressive energy policy that canbe used against Beijing.

• For more than ten years Chineseofficials have openly asserted thatproduction from Chinese firms

The Geopolitics of Gas. Both oil andgas suppliers will have greater leveragethan today, but the relationship betweengas suppliers and consumers is likely tobe particularly strong because of therestrictions on delivery mechanisms.Gas, unlike oil, is not yet a fungiblesource of energy, and theinterdependency of pipeline delivery—producers must be connected toconsumers, and typically neither grouphas many alternatives—reinforcesregional alliances.

• More than 95 percent of gas producedand three quarters of gas traded isdistributed via pipelines directly fromsupplier to consumer, and gas-to-liquids technology is unlikely tochange these ratios substantially by2020.

• Europe will have access to supplies inRussia and North Africa while Chinawill be able to draw from easternRussia, Indonesia, and potentiallyhuge deposits in Australia. TheUnited States will look almostexclusively to Canada and otherwestern hemisphere suppliers.

investing overseas is more securethan imports purchased on theinternational market. Chinese firmsare being directed to invest in projectsin the Caspian region, Russia, theMiddle East, and South America inorder to secure more reliable access.

Europe’s energy needs are unlikely togrow to the same extent as those of thedeveloping world, in part because ofEurope’s expected lower economicgrowth and more efficient use of energy.

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Europe’s increasing preference fornatural gas, combined with depletingreserves in the North Sea, will give anadded boost to political efforts alreadyunder way to strengthen ties with Russiaand North Africa, as gas requires a higherlevel of political commitment by bothsides in designing and constructing thenecessary infrastructure. According to astudy by the European Commission, theUnion’s share of energy from foreignsources will rise from about half in 2000to two-thirds by 2020. Gas use willincrease most rapidly due toenvironmental concerns and the phasingout of much of the EU’s nuclear energycapacity.

“…many of the areas… beingcounted on to provide increased[energy] output involve substantialpolitical or economic risk.… Thussharper demand-drivencompetition… perhaps accompaniedby a major disruption of oil supplies,is among the key uncertainties.”

Deliveries from the Yamal-Europepipeline and the Blue Stream pipeline willhelp Russia increase its gas sales to theEU and Turkey by more than 40 percentover 2000 levels in the first decade of the21st century; as a result, Russia’s share oftotal European demand will rise from 27percent in 2000 to 31 percent in 2010.Russia, moreover, as the largest energysupplier outside of OPEC, will be wellpositioned to marshal its oil and gasreserves to support domestic and foreignpolicy objectives. Algeria has the world’seighth largest gas reserves and also isseeking to increase its exports to Europeby 50 percent by the end of the decade.

US Unipolarity—How Long Can ItLast?A world with a single superpower isunique in modern times. Despite the risein anti-Americanism, most major powerstoday believe countermeasures such asbalancing are not likely to work in asituation in which the US controls somany of the levers of power. Moreover,US policies are not perceived assufficiently threatening to warrant such astep.

• Growing numbers of people aroundthe world, especially in the MiddleEast and the broader Muslim world,believe the US is bent on regionaldomination—or direct political andeconomic domination of other statesand their resources. In the future,growing distrust could promptgovernments to take a more hostileapproach, including resistance tosupport for US interests inmultinational forums and developmentof asymmetric military capabilities as ahedge against the US.

“There are few policy-relevanttheories to indicate how states arelikely to deal with a situation inwhich the US continues to be thesingle most powerful actoreconomically, militarily, andtechnologically.”

Most countries are likely to experimentwith a variety of different tactics fromvarious degrees of resistance toengagement in an effort to influence howUS power is exercised. We expect thatcountries will pursue strategies designedto exclude or isolate the US—perhaps

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temporarily—in order to force or cajolethe US into playing by others’ rules.Many countries increasingly believe thatthe surest way to gain leverage overWashington is by threatening to withholdcooperation. In other forms of bargaining,foreign governments will try to find waysto “bandwagon” or connect their policyagendas to those of the US—for exampleon the war on terrorism—and therebyfend off US opposition to other policies.

Fictional Scenario: Pax Americana

The scenario portrayed below looks athow US predominance may surviveradical changes to the global politicallandscape, with Washingtonremaining the central pivot forinternational politics. It is depicted asthe diary entry by a fictitious UNSecretary-General in 2020. Underthis scenario, key alliances andrelationships with Europe and Asiaundergo change. US-Europeancooperation is renewed, including onthe Middle East. There are newsecurity arrangements in Asia, but theUnited States still does the heavylifting. The scenario also suggeststhat Washington has to struggle toassert leadership in an increasinglydiverse, complex, and fast-pacedworld. At the end of the scenario, weidentify lessons learned from how thescenario played out.

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New Challenges to Governance

The nation-state will continue to be thedominant unit of the global order, buteconomic globalization and the dispersionof technologies, especially informationtechnologies, will place enormous strainson governments. Regimes that were ableto manage the challenges of the 1990scould be overwhelmed by those of 2020.Contradictory forces will be at work:authoritarian regimes will face newpressures to democratize, but fragile newdemocracies may lack the adaptivecapacity to survive and develop.

• With migration on the increase inseveral places around the world—from North Africa and the Middle Eastinto Europe, Latin America and theCaribbean into the United States, andincreasingly from Southeast Asia intothe northern regions—more countrieswill be multi-ethnic and multi-religiousand will face the challenge ofintegrating migrants into their societieswhile respecting their ethnic andreligious identities.

Halting Progress on DemocratizationGlobal economic growth has the potentialto spur democratization, but backslidingby many countries that were consideredpart of the “third wave” of democratizationis a distinct possibility. In particular, by2020 democratization may be partiallyreversed among the states of the formerSoviet Union and in Southeast Asia,some of which never really embraceddemocracy. Russia and most of theCentral Asian regimes appear to be

slipping back toward authoritarianism,and global economic growth probably willnot on its own reverse such a trend. Thedevelopment of more diversifiedeconomies in these countries—by nomeans inevitable—would be crucial infostering the growth of a middle class,which in turn would spur democratization.

• Beset already by severe economicinequalities, aging Central Asian rulersmust contend with unruly and largeyouth populations lacking broadeconomic opportunities. CentralAsian governments are likely tosuppress dissent and revert toauthoritarianism to maintain order,risking growing insurgencies.

“…backsliding by many countriesthat were considered part of the‘third wave’ of democratization isa distinct possibility.”

Chinese leaders will face a dilemma overhow much to accommodate pluralisticpressure and relax political controls orrisk a popular backlash if they do not.Beijing also has to weigh in the balanceits ambition to be a major global player,which would be enhanced if its rulersmoved towards political reform.

China may pursue an “Asian way” ofdemocracy that might involve elections atthe local level and a consultativemechanism on the national level, perhaps

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Eurasian Countries: Going Their Separate Ways?

The regional experts who attended our conference felt that Russia’s political development sincethe fall of Communism has been complicated by the continuing search for a post-Soviet nationalidentity. Putin has increasingly appealed to Russian nationalism—and, occasionally,xenophobia—to define Russian identity. His successors may well define Russian identity byhighlighting Russia’s imperial past and its domination over its neighbors even as they rejectcommunist ideology.

In the view of the experts, Central Asian states are weak, with considerable potential forreligious and ethnic conflict over the next 15 years. Religious and ethnic movements couldhave a destabilizing impact across the region. Eurasia is likely to become more differentiateddespite the fact that demographic counterforces—such as a dearth of manpower in Russia andwestern Eurasia and an oversupply in Central Asia—could help pull the region together.Moreover, Russia and the Central Asians are likely to cooperate in developing transportationcorridors for energy supplies.

The participants assessed that among the resource-rich countries, Russia has the bestprospects for expanding its economy beyond resource extraction and becoming more integratedinto the world economy. To diversify its economy, Russia would need to undertake structuralchanges and institute the rule of law, which could in turn encourage foreign direct investmentoutside of the energy sector. Knowing that Europe probably would want to forge a “specialrelationship” with a Russia that is stronger economically, Moscow probably would be moretolerant of former Soviet states moving closer to Europe. If Russia fails to diversify its economy,it could well experience the petro-state phenomenon of unbalanced economic development,huge income inequality, capital flight, and increased social problems.

Regional experts were less confident about the potential for significant economic diversificationin the other resource-rich countries in Central Asia and the South Caucasus over the next 15years—in particular, Kazakhstan, Turkmenistan, and Azerbaijan. For countries with morelimited natural resources, such as Ukraine, Georgia, Kyrgyztan, Tajikistan and Uzbekistan, thechallenge will be to develop effective project and service industries, requiring better governance.

Central Asian countries—Kazakhstan, Krgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—face the stiff challenge of keeping the social peace in a context of high population growth, arelatively young population, limited economic prospects, and growing radical Islamic influence.Allowing more emigration could help alleviate these pressures in Central Asian countries.Russia would benefit from migration as a means of compensating for its loss of approximatelyone million people a year through 2020. Russia, however, has little experience in integratingmigrants from other cultures; Russian nationalism is on the increase as a result of growingethnic unrest domestically, and our experts believe any efforts to expand immigration policieswould be exploited by nationalist politicians.

Ironically, the experts foresaw more unity if economic conditions worsen globally and Eurasia isisolated. In that case, a stagnant Russia would be looked to by the others to maintain orderalong the southern rim as some Central Asian countries—Turkmenistan, Tajikistan, andKyrgyzstan—faced potential collapse.

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with the Communist Party retainingcontrol over the central government.

• Younger Chinese leaders who arealready exerting influence as mayorsand regional officials have beentrained in Western-style universitiesand have a good understanding ofinternational standards of governance.

• Most of the experts at our regionalconference, however, believe presentand future leaders are agnostic on theissue of democracy and are moreinterested in developing what theyperceive to be the most effectivemodel of governance.

Democratic progress could gain ground inkey Middle Eastern countries, which thusfar have been excluded from the processby repressive regimes. Success inestablishing a working democracy in Iraqand Afghanistan—and democraticconsolidation in Indonesia—would set anexample for other Muslim and Arabstates, creating pressures for change.

However, a 2001 Freedom House studyshowed a dramatic and expanding gap inthe levels of freedom and democracybetween Islamic countries and the rest ofthe world. The lack of economic growthin the Middle East outside the energysector is one of the primary underlyingfactors for the slow pace. Many regionalexperts are not hopeful that thegenerational turnover in several of theregimes will by itself spur democraticreform.

• The extent to which radical Islamgrows and how regimes respond to itspressures will also have long-termrepercussions for democratization and

the growth of civil society institutions,although radicals may use the ballotbox to gain power.

• An extended period of high oil priceswould allow regimes to put offeconomic and fiscal reform.

High-Tech Pressures on Governance.Today individual PC users have morecapacity at their fingertips than NASA hadwith the computers used in its first moonlaunches. The trend toward even morecapacity, speed, affordability, and mobilitywill have enormous political implications:myriad individuals and small groups—many of whom had not been previouslyso empowered—will not only connect withone another but will plan, mobilize, andaccomplish tasks with potentially moresatisfying and efficient results than theirgovernments can deliver. This almostcertainly will affect individuals’relationships with and views of theirgovernments and will put pressure onsome governments for moreresponsiveness.

• China is experiencing among thefastest rates of increase of Internetand mobile phone users in the world,according to the InternationalTelecommunications Union, and is theleading market for broadbandcommunication.

• Reports of growing investment bymany Middle Eastern governments indeveloping high-speed informationinfrastructures, although they are notyet widely available to the populationnor well-connected to the larger world,show obvious potential for the spreadof democratic—and undemocratic—ideas.

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Climate Change and Its Implications Through 2020

Policies regarding climate change are likely to feature significantly in multilateralrelations, and the United States, in particular, is likely to face significant bilateralpressure to change its domestic environmental policies and to be a leader in globalenvironmental efforts. There is a strong consensus in the scientific community that thegreenhouse effect is real and that average surface temperatures have risen over thelast century, but uncertainty exists about causation and possible remedies. Experts in aNIC-sponsored conference judged that concerns about greenhouse gases, of whichChina and India are large producers, will increase steadily through 2020. There arelikely to be numerous weather-related events that, correctly or not, will be linked toglobal warming. Any of these events could lead to widespread calls for the UnitedStates, as the largest producer of greenhouse gases, to take dramatic steps to reduceits consumption of fossil fuels.

Policymakers will face a dilemma: an environmental regime based solely on economicincentives will probably not produce needed technological advances because firms willbe hesitant to invest in research when there is great uncertainty about potential profits.On the other hand, a regime based on government regulation will tend to be costly andinflexible. The numerous obstacles to multilateral action include resistance from OPECcountries that depend on fossil fuel revenues, the developing world’s view that climatechange is a problem created by the industrial world and one they cannot address giventheir economic constraints, and the need for significant technological innovation tomaximize energy efficiency.

Among reasons for optimism, participants noted that the world is ready and eager forUS leadership and that new multilateral institutions are not needed to address thisissue. Indeed, crafting a policy to limit carbon emissions would be simplified by the factthat three political entities—the United States, the European Union, and China—account for over half of all CO2 emitted into the atmosphere. An agreement thatincluded these three plus the Russian Federation, Japan, and India would cover two-thirds of all carbon emissions.

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• Some states will seek to control theInternet and its contents, but they willface increasing challenges as newnetworks offer multiple means ofcommunicating.

Growing connectivity also will beaccompanied by the proliferation oftransnational virtual communities ofinterest, a trend which may complicatethe ability of state and global institutionsto generate internal consensus andenforce decisions and could evenchallenge their authority and legitimacy.Groups based on common religious,cultural, ethnic or other affiliations may betorn between their national loyalties andother identities. The potential isconsiderable for such groups to drivenational and even global politicaldecisionmaking on a wide range of issuesnormally the purview of governments.

The Internet in particular will spur thecreation of global movements, which mayemerge even more as a robust force ininternational affairs. For example,technology-enabled diasporacommunications in native languagescould lead to the preservation oflanguage and culture in the face ofwidespread emigration and culturalchange as well as the generation ofpolitical and economic power.

Populist themes are likely to emerge asa potent political and social force,especially as globalization risks

aggravating social divisions alongeconomic and ethnic lines. In parts ofLatin America particularly, the failure ofelites to adapt to the evolving demands offree markets and democracy probably willfuel a revival in populism and driveindigenous movements, which so farhave sought change through democraticmeans, to consider more drastic meansfor seeking what they consider their “fairshare” of political power and wealth.

• However, as with religion, populismwill not necessarily be inimical topolitical development and can serve tobroaden participation in the politicalprocess. Few experts fear a generalbacksliding to the rule of militaryjuntas in Latin America.

The Latin American countries that areadapting to challenges most effectivelyare building sturdier and more capabledemocratic institutions to implement moreinclusive and responsive policies andenhance citizen and investor confidence.A sense of economic progress and hopefor its continuance appears essential tothe long-term credibility of democraticsystems.

Rising nationalism and a trend towardpopulism also will present a challenge togovernments in Asia. Many, such asLaos, Cambodia, and Burma, are unableto deliver on expanding popular demandsand risk becoming state failures.

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Latin America in 2020: Will Globalization Cause the Region to Split?

The experts we consulted in Latin America contended that global changes over the next15 years could deepen divisions and serve to split Latin America apart in economic,investment, and trade policy terms. As the Southern Cone, particularly Brazil and Chile,reach out to new partners in Asia and Europe, Central America and Mexico, along withAndean countries, could lag behind and remain dependent on the US and Canada astheir preferred trade partners and aid providers.

For Latin Americans, government ineffectiveness, in part, prevented many countriesfrom realizing the full measure of economic and social benefits from greater integrationinto the global economy in the past decade. Instead, the gap between rich and thepoor, the represented and the excluded, has grown. Over the next 15 years, the effectsof continued economic growth and global integration are likely to be uneven andfragmentary. Indeed, regional experts foresee an increasing risk of the rise ofcharismatic, self-styled populist leaders, historically common in the region, who wouldplay on popular concerns over inequities between “haves” and “have-nots” in theweakest states in Central America and Andean countries, along with parts of Mexico. Inthe most profoundly weak of these governments, particularly where the criminalizationof the society, and even the state, is most apparent, the leaders could have anautocratic bent and be more stridently anti-American.

The experts made the following observations on regional prospects in other areas:

• Identity politics. Increasing portions of the population are identifying themselves asindigenous peoples and will demand not only a voice but, potentially, a new socialcontract. Many reject globalization as it has played out in the region, viewing it as anhomogenizing force that undermines their unique cultures and as a US-imposed,neo-liberal economic model whose inequitably distributed fruits are rooted in theexploitation of labor and the environment.

• Information technology. The universalization of the Internet, both as a massmedia and means of inter-personal communication, will help educate, connect,mobilize, and empower those traditionally excluded.

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• Experts note that a new generation ofleaders is emerging in Africa from theprivate sector; these leaders are muchmore comfortable with democracythan their predecessors and mightprovide a strong internal dynamic fordemocracy in the future.

Identity PoliticsPart of the pressure on governance willcome from new forms of identity politicscentered on religious convictions andethnic affiliation. Over the next 15 years,religious identity is likely to become anincreasingly important factor in howpeople define themselves. The trendtoward identity politics is linked toincreased mobility, growing diversity ofhostile groups within states, and thediffusion of modern communicationstechnologies.

• The primacy of ethnic and religiousidentities will provide followers with aready-made community that serves asa “social safety net” in times of need—particularly important to migrants.Such communities also providenetworks that can lead to jobopportunities.

“Over the next 15 years, religiousidentity is likely to become anincreasingly important factor inhow people define themselves.”

While we do not have comprehensivedata on the number of people who havejoined a religious faith or converted fromone faith to another in recent years,trends seem to point toward growingnumbers of converts and a deepeningreligious commitment by many religiousadherents.

• For example, Christianity, Buddhism,and other religions and practices arespreading in such countries as Chinaas Marxism declines, and theproportion of evangelical converts intraditionally heavily Catholic LatinAmerica is rising.

• By 2020, China and Nigeria will havesome of the largest Christiancommunities in the world, a shift thatwill reshape the traditionally Western-based Christian institutions, givingthem more of an African or Asian or,more broadly, a developing worldface.

• Western Europe stands apart fromthis growing global “religiosity” exceptfor the migrant communities fromAfrica and the Middle East. Many ofthe churches’ traditional functions—education, social services, etc.—arenow performed by the state. A morepervasive, insistent secularism,however, might not foster the culturalacceptance of new Muslim immigrantswho view as discriminatory the ban insome West European countriesagainst displays of religiousadherence.

Many religious adherents—whetherHindu nationalists, Christian evangelicalsin Latin America, Jewish fundamentalistsin Israel, or Muslim radicals—arebecoming “activists.” They have aworldview that advocates change ofsociety, a tendency toward making sharpManichaean distinctions between goodand evil, and a religious belief system thatconnects local conflicts to a largerstruggle.

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Such religious-based movements havebeen common in times of social andpolitical turmoil in the past and haveoftentimes been a force for positivechange. For example, scholars see thegrowth of evangelism in Latin America asproviding the uprooted, raciallydisadvantaged and often poorest groups,including women, “with a social networkthat would otherwise be lacking…providing members with skills they needto survive in a rapidly developingsociety...(and helping) to promote thedevelopment of civil society in theregion.”10

At the same time, the desire by activistgroups to change society often leads tomore social and political turmoil, some ofit violent. In particular, there are likely tobe frictions in mixed communities as theactivists attempt to gain converts amongother religious groups or olderestablished religious institutions. Inkeeping with the intense religiousconvictions of many of these movements,activists define their identities inopposition to “outsiders,” which can fosterstrife.

Radical Islam. Most of the regions thatwill experience gains in religious“activists” also have youth bulges, whichexperts have correlated with highnumbers of radical adherents, includingMuslim extremists.11

• Youth bulges are expected to beespecially acute in most Middle

10 Philip Jenkins, consultations with the NationalIntelligence Council, August 4, 2004.11 We define Muslim extremists as a subset of Islamicactivists. They are committed to restructuring politicalsociety in accordance with their vision of Islamic lawand are willing to use violence.

Eastern and West African countriesuntil at least 2005-2010, and theeffects will linger long after.

• In the Middle East, radical Islam’sincreasing hold reflects the politicaland economic alienation of manyyoung Muslims from theirunresponsive and unrepresentativegovernments and related failure ofmany predominantly Muslim states toreap significant economic gains fromglobalization.

The spread of radical Islam will have asignificant global impact leading to 2020,rallying disparate ethnic and nationalgroups and perhaps even creating anauthority that transcends nationalboundaries. Part of the appeal of radicalIslam involves its call for a return byMuslims to earlier roots when Islamiccivilization was at the forefront of globalchange. The collective feelings ofalienation and estrangement whichradical Islam draws upon are unlikely todissipate until the Muslim world againappears to be more fully integrated intothe world economy.

“Radical Islam will have asignificant global impact…rallying disparate ethnic andnational groups and perhaps evencreating an authority thattranscends national boundaries.”

Radical Islam will continue to appeal tomany Muslim migrants who are attractedto the more prosperous West foremployment opportunities but do not feelat home in what they perceive as an alienculture.

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Studies show that Muslim immigrants arebeing integrated as West Europeancountries become more inclusive, butmany second- and third-generationimmigrants are drawn to radical Islam asthey encounter obstacles to fullintegration and barriers to what theyconsider to be normal religious practices.

Differences over religion and ethnicityalso will contribute to future conflict, and,if unchecked, will be a cause of regionalstrife. Regions where frictions riskdeveloping into wider civil conflict include

Southeast Asia, where the historicChristian-Muslim faultlines cut acrossseveral countries, including West Africa,The Philippines, and Indonesia.

• Schisms within religions, howeverhistoric and longlasting, also couldlead to conflict in this era of increasedreligious identity. A Shia-dominatedIraq is likely to encourage greateractivism by Shia minorities in otherMiddle Eastern nations, such as SaudiArabia and Pakistan.

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Fictional Scenario: A New Caliphate

The fictional scenario portrayed belowprovides an example of how a globalmovement fueled by radical religiousidentity could emerge. Under thisscenario, a new Caliphate is proclaimedand manages to advance a powerfulcounter ideology that has widespreadappeal. It is depicted in the form of ahypothetical letter from a fictionalgrandson of Bin Ladin to a familyrelative in 2020. He recounts thestruggles of the Caliph in trying towrest control from traditional regimesand the conflict and confusion which

ensue both within the Muslim worldand outside between Muslims and theUnited States, Europe, Russia andChina. While the Caliph’s success inmobilizing support varies, places faroutside the Muslim core in the MiddleEast—in Africa and Asia—areconvulsed as a result of his appeals.The scenario ends before the Caliph isable to establish both spiritual andtemporal authority over a territory—which historically has been the case forprevious Caliphates. At the end of thescenario, we identify lessons to bedrawn.

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Pervasive Insecurity

We foresee a more pervasive sense ofinsecurity, which may be as much basedon psychological perceptions asphysical threats, by 2020. Thepsychological aspects, which we haveaddressed earlier in this paper, includeconcerns over job security as well asfears revolving around migration amongboth host populations and migrants.

Terrorism and internal conflicts couldinterrupt the process of globalization bysignificantly increasing the securitycosts associated with internationalcommerce, encouraging restrictiveborder control policies, and adverselyaffecting trade patterns and financialmarkets. Although far less likely thaninternal conflicts, conflict among greatpowers would create risks to worldsecurity. The potential for theproliferation of weapons of massdestruction (WMD) will add to thepervasive sense of insecurity.

Transmuting International TerrorismThe key factors that spawnedinternational terrorism show no signs ofabating over the next 15 years. Expertsassess that the majority of internationalterrorist groups will continue to identifywith radical Islam. The revival of Muslimidentity will create a framework for thespread of radical Islamic ideology bothinside and outside the Middle East,including Western Europe, SoutheastAsia and Central Asia.

• This revival has been accompaniedby a deepening solidarity among

Muslims caught up in national orregional separatist struggles, suchas Palestine, Chechnya, Iraq,Kashmir, Mindanao, or southernThailand and has emerged inresponse to government repression,corruption, and ineffectiveness.

• A radical takeover in a Muslimcountry in the Middle East could spurthe spread of terrorism in the regionand give confidence to others that anew Caliphate is not just a dream.

• Informal networks of charitablefoundations, madrasas, hawalas,12

and other mechanisms will continueto proliferate and be exploited byradical elements.

• Alienation among unemployedyouths will swell the ranks of thosevulnerable to terrorist recruitment.

“Our greatest concern is that[terrorist groups] might acquirebiological agents, or less likely, anuclear device, either of whichcould cause mass casualties.”

There are indications that the Islamicradicals’ professed desire to create atransnational insurgency, that is, a driveby Muslim extremists to overthrow anumber of allegedly apostate secular

12 Hawalas constitute an informal banking system.

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governments with predominately Muslimsubjects, will have an appeal to manyMuslims.

• Anti-globalization and opposition toUS policies could cement a greaterbody of terrorist sympathizers,financiers, and collaborators.

“…We expect that by 2020al-Qa’ida will have beensuperceded by similarly inspiredbut more diffuse Islamicextremist groups.”

A Dispersed Set of Actors. Pressurefrom the global counterterrorism effort,together with the impact of advances ininformation technology, will cause theterrorist threat to become increasinglydecentralized, evolving into an eclecticarray of groups, cells, and individuals.While taking advantage of sanctuariesaround the world to train, terrorists willnot need a stationary headquarters toplan and carry out operations. Trainingmaterials, targeting guidance, weaponsknow-how, and fund-raising willincreasingly become virtual (i.e., online).

The core al-Qa’ida membershipprobably will continue to dwindle, butother groups inspired by al-Qa’ida,regionally based groups, and individualslabeled simply as jihadists—united by acommon hatred of moderate regimesand the West—are likely to conductterrorist attacks. The al-Qa’idamembership that was distinguished byhaving trained in Afghanistan willgradually dissipate, to be replaced inpart by the dispersion of theexperienced survivors of the conflict inIraq. We expect that by 2020 al-Qa’idawill have been superceded by similarly

inspired but more diffuse Islamicextremist groups, all of which willoppose the spread of many aspects ofglobalization into traditional Islamicsocieties.

• Iraq and other possible conflicts inthe future could provide recruitment,training grounds, technical skills andlanguage proficiency for a new classof terrorists who are “profession-alized” and for whom politicalviolence becomes an end in itself.

• Foreign jihadists—individuals readyto fight anywhere they believeMuslim lands are under attack bywhat they see as “infidel invaders”—enjoy a growing sense of supportfrom Muslims who are notnecessarily supporters of terrorism.

Even if the number of extremistsdwindles, however, the terrorist threat islikely to remain. Through the Internetand other wireless communicationstechnologies, individuals with ill intentwill be able to rally adherents quickly ona broader, even global, scale and do soobscurely. The rapid dispersion of bio-and other lethal forms of technologyincreases the potential for an individualnot affiliated with any terrorist group tobe able to inflict widespread loss of life.

Weapons, Tactics, and Targets.In the past, terrorist organizations reliedon state sponsors for training, weapons,logistical support, travel documents, andmoney in support of their operations. Ina globalized world, groups such asHizballah are increasingly self-sufficientin meeting these needs and may act in astate-like manner to preserve “plausibledeniability” by supplying other groups,working through third parties to meet

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their objectives, and even engaginggovernments diplomatically.

Most terrorist attacks will continue toemploy primarily conventional weapons,incorporating new twists to keepcounterterrorist planners off balance.Terrorists probably will be most originalnot in the technologies or weapons theyemploy but rather in their operationalconcepts—i.e., the scope, design, orsupport arrangements for attacks.

• One such concept that is likely tocontinue is a large number ofsimultaneous attacks, possibly inwidely separated locations.

While vehicle-borne improvisedexplosive devices will remain popular asasymmetric weapons, terrorists arelikely to move up the technology ladderto employ advanced explosives andunmanned aerial vehicles.

“Terrorist use of biologicalagents is therefore likely, andthe range of options will grow.”

The religious zeal of extremist Muslimterrorists increases their desire toperpetrate attacks resulting in highcasualties. Historically, religiouslyinspired terrorism has been mostdestructive because such groups arebound by few constraints.

The most worrisome trend has been anintensified search by some terroristgroups to obtain weapons of massdestruction. Our greatest concern isthat these groups might acquirebiological agents or less likely, a nucleardevice, either of which could causemass casualties.

• Bioterrorism appears particularlysuited to the smaller, better-informedgroups. Indeed, the bioterrorist’slaboratory could well be the size of ahousehold kitchen, and the weaponbuilt there could be smaller than atoaster. Terrorist use of biologicalagents is therefore likely, and therange of options will grow. Becausethe recognition of anthrax, smallpoxor other diseases is typicallydelayed, under a “nightmarescenario” an attack could be wellunder way before authorities wouldbe cognizant of it.

• The use of radiological dispersaldevices can be effective in creatingpanic because of the public’smisconception of the capacity ofsuch attacks to kill large numbers ofpeople.

With advances in the design ofsimplified nuclear weapons, terroristswill continue to seek to acquire fissilematerial in order to construct a nuclearweapon. Concurrently, they can beexpected to continue attempting topurchase or steal a weapon, particularlyin Russia or Pakistan. Given thepossibility that terrorists could acquirenuclear weapons, the use of suchweapons by extremists before 2020cannot be ruled out.

We expect that terrorists also will try toacquire and develop the capabilities toconduct cyber attacks to cause physicaldamage to computer systems and todisrupt critical information networks.

The United States and its interestsabroad will remain prime terroristtargets, but more terrorist attacks might

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Organized Crime

Changing geostrategic patterns will shape global organized criminal activity over thenext 15 years. Organized crime is likely to thrive in resource-rich states undergoingsignificant political and economic transformation, such as India, China, Russia, Nigeria,and Brazil as well as Cuba, if it sees the end of its one-party system. Some of theformer states of the Soviet Union and the Warsaw Pact also will remain vulnerable tohigh levels of organized crime.

• States that transition to one-party systems—such as any new Islamic-run state—willbe vulnerable to corruption and attendant organized crime, particularly if theirideology calls for substantial government involvement in the economy.

• Changing patterns of migration may introduce some types of organized crime intocountries that have not previously experienced it. Ethnic-based organized crimegroups typically prey on members of their own diasporas and use them to gainfootholds in new regions.

Some organized crime syndicates will form loose alliances with one another. They willattempt to corrupt leaders of unstable, economically fragile, or failing states, insinuatethemselves into troubled banks and businesses, exploit information technologies, andcooperate with insurgent movements to control substantial geographic areas.

Organized crime groups usually do not want to see governments toppled but thrive incountries where governments are weak, vulnerable to corruption, and unable orunwilling to consistently enforce the rule of law.

• Criminal syndicates, particularly drug trafficking syndicates, may take virtual controlof regions within failing states to which the central government cannot extend its writ.

If governments in countries with WMD capabilities lose control of their inventories, therisk of organized crime trafficking in nuclear, biological, or chemical weapons willincrease between now and 2020.

We expect that the relationship between terrorists and organized criminals will remainprimarily a matter of business, i.e., that terrorists will turn to criminals who can provideforged documents, smuggled weapons, or clandestine travel assistance when theterrorists cannot procure these goods and services on their own. Organized criminalgroups, however, are unlikely to form long-term strategic alliances with terrorists.Organized crime is motivated by the desire to make money and tends to regard anyactivity beyond that required to effect profit as bad for business. For their part, terroristleaders are concerned that ties to non-ideological partners will increase the chance ofsuccessful police penetration or that profits will seduce the faithful.

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Over the next 15 years, a growing rangeof actors, including terrorists, may acquireand develop capabilities to conduct bothphysical and cyber attacks against nodesof the world’s information infrastructure,including the Internet, telecommunica-tions networks, and computer systemsthat control critical industrial processessuch as electricity grids, refineries, andflood control mechanisms. Terroristsalready have specified the US informationinfrastructure as a target and currentlyare capable of physical attacks that wouldcause at least brief, isolated disruptions.The ability to respond to such attacks willrequire critical technology to close thegap between attacker and defender.

A key cyber battlefield of the future will bethe information on computer systemsthemselves, which is far more valuableand vulnerable than physical systems.New technologies on the horizon providecapabilities for accessing data, eitherthrough wireless intercept, intrusion intoInternet-connected systems, or throughdirect access by insiders.

be aimed at Middle Eastern regimes andat Western Europe.

Intensifying Internal ConflictsLagging economies, ethnic affiliations,intense religious convictions, and youthbulges will align to create a “perfectstorm,” creating conditions likely to spawninternal conflict. The governing capacityof states, however, will determinewhether and to what extent conflictsactually occur. Those states unable bothto satisfy the expectations of theirpeoples and to resolve or quell conflictingdemands among them are likely to

encounter the most severe and mostfrequent outbreaks of violence. For themost part, those states most susceptibleto violence are in a great arc of instabilityfrom Sub-Saharan Africa, through NorthAfrica, into the Middle East, the Balkans,the Caucasus and South and CentralAsia and through parts of Southeast Asia.Countries in these regions are generallythose “behind” the globalization curve.

• The number of internal conflicts isdown significantly since the late 1980sand early 1990s, when the breakup ofthe Soviet Union and Communistregimes in Central Europe allowedsuppressed ethnic and nationaliststrife to flare. Although a leveling offpoint has been reached, the continuedprevalence of troubled andinstitutionally weak states createsconditions for such conflicts to occurin the future.

“Lagging economies, ethnicaffiliations, intense religiousconvictions, and youth bulges willalign to create a ‘perfect storm’[for] internal conflict.”

Internal conflicts are often particularlyvicious, long-lasting, and difficult toterminate. Many of these conflictsgenerate internal displacements andexternal refugee flows, destabilizingneighboring countries.

• Sub-Saharan Africa will continue to beparticularly at risk for major new orworsening humanitarian emergenciesstemming from conflict. Genocidalconflicts aimed at annihilating all orpart of a racial, religious, or ethnicgroup, and conflicts caused by othercrimes against humanity—such as

Cyber Warfare?

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forced, large-scale expulsions ofpopulations—are particularly likely togenerate migration and massive,intractable humanitarian needs.

“Africa in 2020 … willincreasingly resemble apatchwork quilt with significantdifferences in economic andpolitical performance.”

Some internal conflicts, particularly thosethat involve ethnic groups straddlingnational boundaries, risk escalating intoregional conflicts. At their most extreme,internal conflicts can produce a failing orfailed state, with expanses of territory andpopulations devoid of effectivegovernmental control. In such instances,those territories can become sanctuariesfor transnational terrorists (like al-Qa’idain Afghanistan) or for criminals and drugcartels (such as in Colombia).

Rising Powers: Tinder for Conflict?The likelihood of great power conflictescalating into total war in the next 15years is lower than at any time in the pastcentury, unlike during previous centurieswhen local conflicts sparked world wars.The rigidities of alliance systems beforeWorld War I and during the interwarperiod, as well as the two-bloc standoffduring the Cold War, virtually assuredthat small conflicts would be quicklygeneralized. Now, however, even ifconflict would break out over Taiwan orbetween India and Pakistan, outsidepowers as well as the primary actorswould want to limit its extent.Additionally, the growing dependence onglobal financial and trade networksincreasingly will act as a deterrent toconflict among the great powers—the US,Europe, China, India, Japan and Russia.

This does not eliminate the possibility ofgreat power conflict, however. Theabsence of effective conflict resolutionmechanisms in some regions, the rise ofnationalism in some states, and the rawemotions on both sides of key issuesincrease the chances for miscalculation.

• Although a military confrontationbetween China and Taiwan wouldderail Beijing’s efforts to gainacceptance as a regional and globalpower, we cannot discount such apossibility. Events such as Taiwan’sproclamation of independence couldlead Beijing to take steps it otherwisemight want to avoid, just as China’smilitary buildup enabling it to bringoverwhelming force against Taiwanincreases the risk of military conflict.

• India and Pakistan appear tounderstand the likely prices to be paidby triggering a conflict. Butnationalistic feelings run high and arenot likely to abate. Under plausiblescenarios Pakistan might use nuclearweapons to counter success by thelarger Indian conventional forces,particularly given Pakistan’s lack ofstrategic depth.

“Advances in modernweaponry—longer ranges,precision delivery, and moredestructive conventionalmunitions—create circumstancesencouraging the preemptive useof military force.”

Should conflict occur that involved one ormore of the great powers, theconsequences would be significant.Advances in modern weaponry—longer

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How Can Sub-Saharan Africa Move Forward?

Most of the regional experts we consulted believe the most likely scenario for Africa in 2020is that it will increasingly resemble a patchwork quilt with significant differences in economicand political performance.

Africa’s capacity to benefit from the positive elements of globalization will depend on theextent to which individual countries can bring an end to conflict, improve governance, rein incorruption, and establish the rule of law. If progress is achieved in these areas, anexpansion of foreign investment, which currently is mostly confined to the oil sector, ispossible. Our regional experts felt that if African leaders used such investment to help theireconomies grow—opening avenues to wealth other than through the power of the state—they might be able to mitigate the myriad other problems facing their countries, with theprospect of prosperity decreasing the level of conflict.

Expanded development of existing or new sources of wealth will remain key. Althoughmineral and natural resources are not evenly distributed among its countries, Sub-SaharanAfrica is well endowed with them and has the potential not only to be self-sufficient in food,but to become a major exporter of agricultural, animal, and fish products. The lowering orelimination of tariff barriers and agricultural subsidies in the European Union and the UnitedStates, combined with the demand for raw materials from the burgeoning Chinese andIndian economies, could provide major stimulus to African economies and overcomedecades of depressed commodity prices.

African experts have agreed that economic reform and good governance are essential forhigh economic growth and also have concluded that African countries must take theinitiative in negotiating new aid and trade relationships that heretofore were essentiallydictated by the international financial institutions and the developed world. The NewPartnership for Africa’s Development (NEPAD), with its peer review mechanism, providesone mechanism for bringing about this economic transformation, if its members individuallyand collectively honor their commitments.

Over the next 15 years, democratic reform will remain slow and imperfect in many countriesdue to a host of social and economic problems, but it is highly unlikely that democracy willbe challenged as the norm in Africa. African leaders face alliances of international anddomestic nongovernmental organizations that sometimes want to supplant certain stateservices, criminal networks that operate freely across borders, and Islamic groups bent onestablishing safehavens. Some states may fail but in others the overall quality ofdemocracy probably will increase. An emerging generation of leaders includes many fromthe private sector, who are more comfortable with democracy than their predecessors andwho could provide a strong political dynamic for democracy in the future.

Leadership will remain the ultimate wild card, which, even in the least promisingcircumstances, could make a huge, positive difference. Although countries with poorleadership will find it harder not to fail, those with good leadership that promotes order,institutions, and conflict resolution will at least have a chance of progressing.

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ranges, precision delivery, and moredestructive conventional munitions—create circumstances encouraging thepreemptive use of military force. Theincreased range of new missile andaircraft delivery systems providessanctuary to their possessors.

Until strategic defenses become asstrong as strategic offenses, there will begreat premiums associated with the abilityto expand conflicts geographically inorder to deny an attacker sanctuary.Moreover, a number of recent high-technology conflicts have demonstratedthat the outcomes of early battles ofmajor conflicts most often determine thesuccess of entire campaigns. Underthese circumstances, military expertsbelieve preemption is likely to appearnecessary for strategic success.

The WMD FactorNuclear Weapons. Over the next 15years, a number of countries will continueto pursue their nuclear, chemical, andbiological weapons programs and insome cases will enhance theircapabilities. Current nuclear weaponsstates will continue to improve thesurvivability of their deterrent forces andalmost certainly will improve the reliability,accuracy, and lethality of their deliverysystems as well as develop capabilities topenetrate missile defenses. The opendemonstration of nuclear capabilities byany state would further discredit thecurrent nonproliferation regime, cause apossible shift in the balance of power,and increase the risk of conflictsescalating into nuclear ones.

• Countries without nuclear weapons,especially in the Middle East andNortheast Asia, may decide to seekthem as it becomes clear that their

neighbors and regional rivals alreadyare doing so.

• The assistance of proliferators,including former private entrepreneurssuch as the A.Q. Khan network, willreduce the time required for additionalcountries to develop nuclear weapons.

“Countries without nuclearweapons … may decide to seekthem as it becomes clear that theirneighbors and regional rivals arealready doing so.”

Chemical and Biological Weapons.Developments in CW and BW agents andthe proliferation of related expertise willpose a substantial threat, particularly fromterrorists, as we have noted.

• Given the goal of some terroristgroups to use weapons that can beemployed surreptitiously and generatedramatic impact, we expect to seeterrorist use of some readily availablebiological and chemical weapons.

Countries will continue to integrate bothCW and BW production capabilities intoapparently legitimate commercialinfrastructures, further concealing themfrom scrutiny, and BW/CW programs willbe less reliant on foreign suppliers.

• Major advances in the biologicalsciences and information technologyprobably will accelerate the pace ofBW agent development, increasingthe potential for agents that are moredifficult to detect or to defend against.Through 2020 some countries willcontinue to try to develop chemicalagents designed to circumvent the

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Chemical Weapons Conventionverification regime.

“Developments in CW and BWagents and the proliferation ofrelated expertise will pose asubstantial threat, particularlyfrom terrorists...”

Delivery Systems. Security will remainat risk from increasingly advanced andlethal ballistic and cruise missiles andunmanned aerial vehicles (UAVs). Statesalmost certainly will continue to increasethe range, reliability, and accuracy of themissile systems in their inventories. By

2020 several countries of concernprobably will have acquired Land-AttackCruise Missiles (LACMs) capable ofthreatening the US Homeland if broughtcloser to US shores. Both North Koreaand Iran probably will have an ICBMcapability well before 2020 and will beworking on improvements to enhancesuch capabilities, although new regimesin either country could rethink theseobjectives. Several other countries arelikely to develop space launch vehicles(SLVs) by 2020 to put domestic satellitesin orbit and to enhance national prestige.An SLV is a key stepping-stone toward anICBM: it could be used as a booster in anICBM development.

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International Institutions in Crisis

Increased pressures on international institutions will incapacitate many, unless and untilthey can be radically adapted to accommodate new actors and new priorities.Regionally based institutions will be particularly challenged to meet the complextransnational threats posed by economic upheavals, terrorism, organized crime, andWMD proliferation. Such post-World War II creations as the United Nations andinternational financial institutions risk sliding into obsolescence unless they take intoconsideration the growing power of the rising powers.

• Both supporters and opponents of multilateralism agree that Rwanda, Bosnia, andSomalia demonstrated the ineffectiveness, lack of preparation, and weaknesses ofglobal and regional institutions to deal with what are likely to be the more commontypes of conflict in the future.

The problem of state failure—which is a source or incubator for a number oftransnational threats—argues for better coordination between institutions, including theinternational financial ones and regional security bodies.

Building a global consensus on how and when to intervene is likely to be the biggesthurdle to greater effectiveness but essential in many experts’ eyes if multilateralinstitutions are to live up to their potential and promise. Many states, especially theemerging powers, continue to worry about setting precedents for outside interventionthat can be used against them. Nevertheless, most problems, such as failing states,can only be effectively dealt with through early recognition and preventive measures.

Other issues that are likely to emerge on the international agenda will add to thepressures on the collective international order as well as on individual countries. These“new” issues could become the staples of international diplomacy much as human rightsdid in the 1970s and 1980s. Ethical issues linked to biotechnological discoveries suchas cloning, GMOs, and access to biomedicines could become the source of hot debatesamong countries and regions. As technology increases the capabilities of states totrack terrorists, concerns about privacy and extraterritoriality may increasingly surfaceamong publics worldwide. Similarly, debates over environmental issues connected withtempering climate change risk scrambling the international order, pitting the US againstits traditional European allies, as well as developed countries against the developingworld, unless more global cooperation is achieved. Rising powers may see in theethical and environmental debates an attempt by the rich countries to slow down theirprogress by imposing “Western” standards or values. Institutional reform mightincreasingly surface as an issue. Many in the developing world believe power ininternational bodies is too much a snapshot of the post-World War II world rather thanthe current one.

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The Rules of War: Entering “No Man’s Land”

With most armed conflict taking unconventional or irregular forms—such ashumanitarian interventions and operations designed to root out terrorist home bases—rather than conventional state-to-state warfare, the principles covering resort to, anduse of, military force will increasingly be called into question. Both the international lawenshrining territorial sovereignty and the Geneva Conventions governing the conduct ofwar were developed before transnational security threats like those of the twenty-firstcentury were envisioned.

In the late 1990s, the outcry over former Serbian President Milosevic’s treatment ofKosovars spurred greater acceptance of the principle of international humanitarianinterventions, providing support to those in the “just war” tradition who have arguedsince the founding of the UN and before that the international community has a “duty tointervene” in order to prevent human rights atrocities. This principle, however,continues to be vigorously contested by countries worried about harm to the principle ofnational sovereignty.

The legal status and rights of prisoners taken during military operations and suspectedof involvement in terrorism will be a subject of controversy—as with many capturedduring Operation ENDURING FREEDOM in Afghanistan. A debate over the degree towhich religious leaders and others who are perceived as abetting or inciting violenceshould be considered international terrorists is also likely to come to the fore.

The Iraq war has raised questions about what kind of status, if any, to accord to theincreasing number of contractors used by the US military to provide security, man POWdetention centers, and interrogate POWs or detainees.

Protection for nongovernmental organizations (NGOs) in conflict situations is anotherissue that has become more complicated as some charitable work—such as Wahabimissionaries funding terrorist causes—has received criticism and enforcement action atthe same time that Western and other NGOs have become “soft targets” in conflictsituations.

The role of the United States in trying to set norms is itself an issue and probably willcomplicate efforts by the global community to come to an agreement on a new set ofrules. Containing and limiting the scale and savagery of conflicts will be aggravated bythe absence of clear rules.

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“Such post-World War IIcreations as the UN andinternational financialinstitutions risk sliding intoobsolescence unless they takeinto consideration the growingpower of the developing world.”

Post-Combat Environments Pose theBiggest Challenge

For the United States particularly, if thepast decades are any guide waging andwinning a conventional war is unlikely tobe much of a challenge over the next 15years in light of our overarchingcapabilities to conduct such a war.However, the international community’sefforts to prevent outbreaks and ensurethat conflicts are not a prelude to newones could remain elusive.

• Nation-building is at best animperfect concept, but more so withthe growing importance of cultural,ethnic, and religious identities.

• Africa’s effort to build a regionalpeacekeeping force shows somepromise, but Sub-Saharan Africa willstruggle with attracting sufficientresources and political will.

• The enormous costs in resourcesand time for meaningful nation-building or post-conflict/failed statestability operations are likely to be aserious constraint on such coalitionor international commitments.

Fictional Scenario: Cycle of Fear

This scenario explores what mighthappen if proliferation concernsincreased to the point that large-scale intrusive security measureswere taken. In such a world,proliferators—such as illegal armsmerchants—might find itincreasingly hard to operate, but atthe same time, with the spread ofWMD, more countries might want toarm themselves for their ownprotection. This scenario is depictedin a series of text-message exchangesbetween two arms dealers. One isideologically committed to levelingthe playing field and ensuring theMuslim world has its share of WMD,while the other is strictly for hire.Neither knows for sure who is at theend of his chain—a governmentclient or terrorist front. As thescenario progresses, the cycle of fearoriginating with WMD-ladenterrorist attacks has gotten out ofhand—to the benefit of the armsdealers, who appear to be engaged inlucrative deals. However, fear begetsfear. The draconian measuresincreasingly implemented bygovernments to stem proliferationand guard against terrorism alsohave the arms dealers beginning torun scared. In all of this,globalization may be the real victim.

are u there? Marco contacted me already. It's going to be difficult.

You're kidding. U're in one of the poorest countries

How? In procuring it? No. Moving it. Too many eyes on me.

And to get back at the Crusaders?

Those terrorists are ruining our business. That series of attacks spooked everybody, not just the Americans.

How do you know you didn't help the terrorists?

Can't know for certain, but I think my ultimate client's different.

Yeah I know you're committed. I'm in it for the money. Doesn't matter too much who pays just so long as they do.

Yeah, went overboard. Still I worry. Lots of people sympathize, worry even in Muslim world. America also had its share of the real thing. A big hit happened before hoof and mouth. That new Patriot Act went way beyond anything imagined after 9/11.

I worry about the chip.

You'r telling me. Dubai was so civilized, but now it's impossible to operate there.

I want my people and faith to be respected. The bomb's important.

Don't be so sure. America's got a lot of support 'cause of the terrorists. People also leery of attacks, especially bw.

Yeah they really got the superpower on the run. Even when it isn't WMD, they think it is. Regular hoof and mouth, I heard. Hard to tell the difference at first.

That too. But the yanks are doing us a favor. Their military threats got my client's attention. He can't wait now for things to happen. The more talk of military action, the better, I say. And I have other buyers who are interested. Let's say more shady types.

Dealer B (gold phone) warns that the tide of international public opinion may be turning in favor of stronger counter-proliferation because of the terrorist attacks.

Two arms dealers engage in unspecified illegal activity. . .

. . . and are finding conducting business increasingly difficult.

Dealer A (green phone) seems to think he is working for a country. The material he is interested in could be nuclear technology. However, he intimates that terrorists are also interested in doing business with him.

Both dealers indicate they are increasingly worried about new devices that can track them.

But maybe not as many as they think, if you know what I mean.

You're right. Lots of legits going belly up. What happened to globalization? Ha, ha.

Yeah, but that's not bad for business

Which business? I've got several to tend to.

Yeah some have turned into mini-states.

Lots of countries want an insurance policy.

Big brother and some of the smaller fry.

What do you mean?Against big brother. My client's scared s------- about the terrorists and their capabilities.

. . . or they run them.Sa'id contacted you? Yeah. No relation to

marco, of course.

Conversation breaks off at this point.

A month later. Dealer A (in black) again talks to Dealer B (in blue). Marco, the in-between mentioned in last month's conversation, has changed aliases and is now known as Sa'id, which may or may not be his real name. The dealer's quip about there being no relation is an obvious inside joke. The first dealer also reverts to his theme that the downturn in the world economy has been a boon to the illegal business. Legitimate businesses are now turning a blind eye and selling dual-use technology even when they have doubts about the end user. Dealers have also changed devices, which are shown in new colors.

D-- well better not, but I don't beleive what those guys claim about protecting privacy. Too much has happened. martial law. Talk of preemption, special measures. Those operations last year wrapped up a big chain.

Got one imbedded in you?

You can't trust the Americans, and they have friends in the world to help them.

Dealer A (in green ) goes back to explaining why the increased terrorist attacks have also increased government interest in WMD programs.

Dealer A (in green) looks on the bright side. With the world slipping into a recession because of the terrorist attacks and the severe clampdown, he thinks he can get legitimate businesses to look the other way.

A little hangup with the certification. Corporate type told me he was questioned. But he was cool. He said Feds did not suspect.

Why the feds? It wasn't transiting America.

Yeah but they traced it back from the subsidiary. Got some help in other country. Have to be extremely careful these days. They get confused by our names. Can't keep up-marco, sa'id, muhammed. Just don't have an ear for it.

It is not clear if text messaging has failed to go through, Dealer B has gone underground or been swept up by a security roundup. One would hope Dealer A is now getting nervous.

I'd say witting, but with plausible deniability.

Witting or unwitting?This recession's helping.

What do you mean? Makes the corporate world an easy target.

Got the stuff through?

This would indicate that authorities inside some countries remain helpful despite the clampdown or outward cooperation with the United States.

One month later

Dealer A (in black) is no doubt being intentionally cryptic about the material for fear of interception. It may have something to do with nuclear technology or possibly other illicit goods.

Are u there? Where are u?

"Lessons Learned"

·The fear cycle generated by an increasing spread of WMD and terrorist attacks,

once under way, would be one of the hardest to break. The greater sense of

insecurity might prompt more countries to acquire WMD for protection or

deterrence.

·A complication in combating the spread of WMD would be the ideological factor, as

exemplified by one of the dealers in the scenario story. Some dealers would not be

in it for the money but to level the playing field between the Muslim world and the

West.

·Achieving a balance so that international commerce was not obstructed by

excessive security would be important since any economic meltdown could spur

legitimate businesses and scientists to engage in a highly lucrative, albeit illegal

activity.

·Developing and sustaining international cooperation when the fear cycle might

drive some to go it alone would be a challenge.

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Policy Implications

The international order will be in greaterflux in the period out to 2020 than at anypoint since the end of the Second WorldWar. As we map the future, theprospects for global prosperity and thelimited likelihood of great power conflictprovide an overall favorable environmentfor coping with the challenges ahead.Despite daunting challenges, the UnitedStates, in particular, will be betterpositioned than most countries to adapt tothe changing global environment.

As our scenarios illustrate, we seeseveral ways in which major globalchanges could begin to take shape andbe buffeted or bolstered by the forces ofchange over the next 15 years. In asense, the scenarios provide us with fourdifferent lenses on future developments,underlining the wide range of factors,discontinuities, and uncertainties shapinga new global order. One lens is theglobalized economy, another is thesecurity role played by the US, a third isthe role of social and religious identity,and a fourth is the breakdown of theinternational order because of growinginsecurity. They highlight various“switching points” that could shiftdevelopments onto one path or the other.The most important tipping points includethe impact of robust economic growth andthe spread of technology; the nature andextent of terrorism; the resiliency orweakness of states, particularly in theMiddle East, Central Asia, and Africa; andthe potential spread of conflict, includingbetween states.

• On balance, for example, as thehypothetical Davos World scenario

shows, robust economic growthprobably will help to overcomedivisions and pull more regions andcountries into a new global order.However, the rapid changes mightalso produce disorder at times; one ofthe lessons of that and the otherscenarios is the need for managementto ensure globalization does not go offthe rails.

The evolving framework of internationalpolitics in all the scenarios suggests thatnonstate actors will continue to assumea more prominent role even though theywill not displace the nation-state. Suchactors range from terrorists, who willremain a threat to global security, toNGOs and global firms, which exemplifylargely positive forces by spreadingtechnology, promoting social andeconomic progress, and providinghumanitarian assistance.

The United States and other countriesthroughout the world will continue to bevulnerable to international terrorism.As we have noted in the Cycle of Fearscenario, terrorist campaigns thatescalate to unprecedented heights,particularly if they involve WMD, are oneof the few developments that couldthreaten globalization.

Counterterrorism efforts in the yearsahead—against a more diverse set ofterrorists who are connected more byideology and technology than bygeography—will be a more elusivechallenge than focusing on a relativelycentralized organization such asal-Qa’ida. The looser the connections

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Is the United States’ Technological Prowess at Risk?

US investment in basic research and the innovative application of technology hasdirectly contributed to US leadership in economic and military power during the post-World War II era. Americans, for example, invented and commercialized thesemiconductor, the personal computer, and the Internet with other countries followingthe US lead.a While the United States is still the present leader, there are signs thisleadership is at risk.

The number of US engineering graduates peaked in 1985 and is presently down 20percent from that level; the percentage of US undergraduates taking engineering is thesecond lowest of all developed countries. China graduates approximately three timesas many engineering students as the United States. However, post-9/11 securityconcerns have made it harder to attract incoming foreign students and, in some cases,foreign nationals available to work for US firms.b Non-US universities—for which a USvisa is not required—are attempting to exploit the situation and bolster their strength.

Privately funded industrial research and development—which accounts for 60 percent ofthe US total—while up this year, suffered three previous years of decline.c Further,major multinational corporations are establishing corporate “research centers” outside ofthe United States.

While these signs are ominous, the integrating character of globalization and theinherent strengths of the US economic system preclude a quick judgment of animpending US technological demise. By recent assessments, the United States is stillthe most competitive society in the world among major economies.d In a globalizedworld where information is rapidly shared—including cross-border sharing doneinternally by multinational corporations—the creator of new science or technology maynot necessarily be the beneficiary in the marketplace.

a “Is America Losing Its Edge? Innovation in a Globalized World.” Adam Segal, Foreign Affairs, NovemberDecember 2004; New York, NY p.2.b “Observations on S&T Trends and Their Potential Impact on Our Future.” William Wulf (President, NationalAcademy of Engineering). Paper submitted to the Center for Strategic and International Studies (CSIS) in supportof the National Intelligence Council 2020 Study, Summer 2004.c “Is America Losing Its Edge?,” p.3.d Global Competitiveness Report 2004-2005, World Economic Forum, http://www.weforum.org. October 2004.

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among individual terrorists and variouscells, the more difficult it will be touncover and disrupt terrorist plotting.

• One of our scenarios—PaxAmericana—envisages a case inwhich US and European consensuson fighting terrorism would grow muchstronger but, under other scenarios,including the hypothetical NewCaliphate, US, Russian, Chinese andEuropean interests diverge, possiblylimiting cooperation oncounterterrorism.

“The US will have to battle worldpublic opinion, which hasdramatically shifted since the endof the Cold War.”

The success of the US-led globalcounterterrorism campaign will hinge onthe capabilities and resolve of individualcountries to fight terrorism on their ownsoil. Efforts by Washington to bolster thecapabilities of local security forces inother countries and to work with them ontheir priority issues (such as soaringcrime) would be likely to increasecooperation.

• Defense of the US Homeland willbegin overseas. As it becomes moredifficult for terrorists to enter theUnited States, they are likely to try toattack the Homeland from neighboringcountries.

A counterterrorism strategy thatapproaches the problem on multiplefronts offers the greatest chance ofcontaining—and ultimately reducing—theterrorist threat. The development of moreopen political systems, broader economic

opportunities, and empowerment ofMuslim reformers would be viewedpositively by the broad Muslimcommunities who do not support theradical agenda of Islamic extremists. ANew Caliphate scenario dramatizes thechallenge of addressing the underlyingcauses of extremist violence, not just itsmanifest actions.

• The Middle East is unlikely to be theonly battleground in which thisstruggle between extremists andreformers occurs. European andother Muslims outside the Middle Easthave played an important role in theinternal ideological conflicts, and thedegree to which Muslim minorities feelintegrated in European societies islikely to have a bearing on whetherthey see a clash of civilizations asinevitable or not. Southeast Asia alsohas been increasingly a theater forterrorism.

Related to the terrorist threat is theproblem of the proliferation of WMD andthe potential for countries to haveincreased motivation to acquire nuclearweapons if their neighbors and regionalrivals are doing so. As illustrated in theCycle of Fear scenario, global efforts toerect greater barriers to the spread ofWMD and to dissuade any othercountries from seeking nuclear arms orother WMD as protection will continue tobe a challenge. As various of ourscenarios underline, the communicationsrevolution gives proliferators a certainadvantage in striking deals with eachother and eluding the authorities, and the“assistance” they provide can cut yearsoff the time it would take for countries todevelop nuclear weapons.

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How the World Sees the United States

In the six regional conferences that we hosted we asked participants about their views of therole of the United States as a driver in shaping developments in their regions and globally.

AsiaParticipants felt that US preoccupation with the war on terrorism is largely irrelevant to thesecurity concerns of most Asians. The key question that the United States needs to ask itself iswhether it can offer Asian states an appealing vision of regional security and order that will rivaland perhaps exceed that offered by China.

US disengagement from what matters to US Asian allies would increase the likelihood that theywould climb on Beijing’s bandwagon and allow China to create its own regional security orderthat excludes the United States.

Participants felt that the rise of China need not be incompatible with a US-led internationalorder. The critical question is whether or not the order is flexible enough to adjust to a changingdistribution of power on a global level. An inflexible order would increase the likelihood ofpolitical conflict between emerging powers and the United States. If the order is flexible, it maybe possible to forge an accommodation with rising powers and strengthen the order in theprocess.

Sub-Saharan AfricaSub-Saharan African leaders worry that the United States and other advantaged countries will“pull up the drawbridge” and abandon the region.

Participants opined that the United States and other Western countries may not continue toaccept Africa’s most successful “export,” its people. The new African diaspora is composedoverwhelmingly of economic migrants rather than political migrants as in previous eras.

Some participants felt that Africans worry that Western countries will see some African countriesas “hopeless” over the next 15 years because of prevailing economic conditions, ecologicalproblems, and political circumstances.

Participants feared that the United States will focus only on those African countries that aresuccessful.

Latin AmericaConference participants acknowledged that the United States is the key economic, political, andmilitary player in the hemisphere. At the same time, Washington was viewed as traditionally notpaying sustained attention to the region and, instead of responding to systemic problems, asreacting primarily to crises. Participants saw a fundamentalist trend in Washington that wouldlead to isolation and unilateralism and undercut cooperation. Most shared the view that the US“war on terrorism” had little to do with Latin America’s security concerns.

Latin American migrants are a stabilizing force in relations with the United States. An importantpart of the US labor pool, migrants also remit home needed dollars along with new views ondemocratic governance and individual initiative that will have a positive impact on the region.

(Continued on next page…)

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(Continued…) How the World Sees the United States

US policies also can have a positive impact. Some participants said the region would benefitfrom US application of regional mechanisms to resolve problems rather than punitive measuresagainst regimes not to its liking, such as that of Fidel Castro.

Middle EastParticipants felt that the role of US foreign policy in the region will continue to be crucial. Theperceived propping up of corrupt regimes by the United States in exchange for secure oilsources has in itself helped to promote continued stagnation. Disengagement is highly unlikelybut would in itself have an incalculable effect.

Regarding the prospects for democracy in the region, participants felt that the West placed toomuch emphasis on the holding of elections, which, while important, is only one element of thedemocratization process. There was general agreement that if the United States and Europecan engage with and encourage reformers rather than confront and hector, genuine democracywould be achieved sooner.

Some Middle East experts argued that Washington has reinforced zero-sum politics in theregion by focusing on top Arab rulers and not cultivating ties with emerging leaders in andoutside the government.

Although the Middle East has a lot to gain economically from globalization, it was agreed thatArabs/Muslims are nervous that certain aspects of globalization, especially the pervasiveinfluence of Western, particularly American, values and morality are a threat to traditionalcultural and religious values.

Europe and EurasiaParticipants engaged in a lively debate over whether a rift between the US and Europe is likelyto occur over the next 15 years with some contending that a collapse of the US-EU partnershipwould occur as part of the collapse of the international system. Several participants contendedthat if the United States shifts its focus to Asia, the EU-US relationship could be strained to thebreaking point.

• They were divided over whether China’s rise would draw the United States and Europecloser or not.

• They also differed over the importance of common economic, environmental, and energyproblems to the alliance.

In our Eurasia workshop, participants agreed that the United States has only limited influenceon the domestic policies of the Central Asian states, although US success or failure in Iraqwould have spillover effects in Central Asia. Countries in western Eurasia, they believed, willcontinue to seek a balance between Russia and the West. In their view, Ukraine almostcertainly will continue to seek admission to NATO and the European Union while Georgia andMoldova probably will maintain their orientation in the same direction.

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“A counterterrorism strategy thatapproaches the problem on multiplefronts offers the greatest chance ofcontaining—and ultimatelyreducing—the terrorist threat.”

On the more positive side, one of thelikely features of the next 15 years is thegreater availability of high technology,not only to those who invent it. As we tryto make clear in our Davos Worldscenario, the high-tech leaders are notthe only ones that can expect to makegains, but also those societies thatintegrate and apply the new technologies.For example, our scenario points up thebeneficial effects of possible newtechnologies in Africa in helping toeradicate poverty. As we have notedelsewhere in this paper, global firms willplay a key role in promoting morewidespread prosperity and moretechnological innovation.

The dramatically altered geopoliticallandscape also presents a hugechallenge for the international system aswell as for the United States, which hasbeen the security guarantor of the post-World War II order. The possiblecontours as several trends develop—including rising powers in Asia,retrenchment in Eurasia, a roiling MiddleEast, and greater divisions in thetransatlantic partnership—remainuncertain and variable.

• With the lessening in ties formedduring the Cold War, nontraditionalad hoc alliances are likely to develop.For example, shared interest inmultilateralism as a cornerstone ofinternational relations has beenviewed by some scholars as the basis

for a budding relationship betweenEurope and China.

As the Pax Americana scenariosuggests, the transatlantic partnershipwould be a key factor in Washington’sability to remain the central pivot ininternational politics. The degree towhich Europe is ready to shoulder moreinternational responsibilities is unclearand depends on its ability to surmount itseconomic and demographic problems aswell as forge a strategic vision for its rolein the world. In other respects—GDP,crossroads location, stable governments,and collective military expenditures—ithas the ability to increase its weight onthe international stage.

“For Washington, dealing with arising Asia may be the mostchallenging of all its regionalrelationships.”

Asia is particularly important as anengine for change over the next 15 years.A key uncertainty is whether the rise ofChina and India will occur smoothly. Anumber of issues will be in play, includingthe future of the world trading system,advances in technology, and the shapeand scope of globalization. ForWashington, dealing with a rising Asiamay be the most challenging of all itsregional relationships. One couldenvisage a range of possibilities from theUS enhancing its role as regionalbalancer between contending forces toWashington being seen as increasinglyirrelevant. Both the Korea and Taiwanissues are likely to come to a head, andhow they are dealt with will be importantfactors shaping future US-Asia ties aswell as the US role in the region. Japan’s

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position in the region is also likely to betransformed as it faces the challenge of amore independent security role.

“A key uncertainty is whether therise of China and India will occursmoothly.”

With the rise of the Asian giants, USeconomic and technologicaladvantages may be vulnerable toerosion.

• While interdependencies will grow,increased Asian investment in high-tech research coupled with the rapidgrowth of Asian markets will increasethe region’s competitiveness across awide range of economic and technicalactivity.

• US dependence on foreign oilsupplies also makes it morevulnerable as the competition forsecure access grows and the risks ofsupply-side disruptions increase.

In the Middle East, market reforms,greater democracy, and progress towardan Arab-Israeli peace would stem theshift towards more radical politics in theregion and foster greater accord in thetransatlantic partnership. Some of ourscenarios highlight the extent to which theMiddle East could remain at the center ofan arc of instability extending from Africathrough Central and Southeast Asia,providing fertile ground for terrorism andthe proliferation of WMD.

Realization of a Caliphate-like scenariowould pose the biggest challengebecause it would reject the foundationson which the current international systemhas been built. Such a possibility pointsup the need to find ways to engage and

integrate those societies and regions thatfeel themselves left behind or rejectelements of the globalization process.Providing economic opportunities alonemay not be sufficient to enable the “have-nots” to benefit from globalization; rather,the widespread trend toward religious andcultural identification suggests thatvarious identities apart from the nation-state will need to be accommodated in aglobalized world.

The interdependence that results fromglobalization places increasingimportance not only on maintainingstability in the areas of the world thatdrive the global economy, where abouttwo thirds of the world’s populationresides, but also on helping the poor orfailing states scattered across a largeportion of the world’s surface which haveyet to modernize and connect with thelarger, globalizing community. Two of ourscenarios—Pax Americana and DavosWorld—point up the different roles thatthe United States is expected to play assecurity provider and as a financialstabilizer.

Eurasia, especially Central Asia and theCaucasus, probably will be an area ofgrowing concern, with its large number ofpotentially failing states, radicalism in theform of Islamic extremism, andimportance as a supplier or conveyor beltfor energy supplies to both West andEast. The trajectories of these Eurasianstates will be affected by external powerssuch as Russia, Europe, China, India andthe United States, which may be able toact as stabilizers. Russia is likely to beparticularly active in trying to preventspillover, even though it has enormousinternal problems on its own plate.Farther to the West, Ukraine, Belarus,and Moldova could offset their

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vulnerabilities as relatively new states bycloser association with Europe and theEU.

Parts of Africa share a similar profile withthe weak states of Eurasia and willcontinue to form part of an extended arcof instability. As the hypothetical DavosWorld scenario suggests, globalization interms of rising commodity prices andexpanded economic growth may be agodsend where good governance is alsoput in place. North Africa may benefitparticularly from growing ties with Europe.

Latin America is likely to become a morediverse set of countries: those thatmanage to exploit the opportunitiesprovided by globalization will prosper,while those—such as the Andean nationscurrently—that do not or cannot will beleft behind. Governance andleadership—often a wild card—willdistinguish societies that prosper fromthose that remain ill-equipped to adapt.Both regions may have success stories—countries like Brazil or South Africa—which can provide a model for others tofollow. The United States is uniquelypositioned to facilitate Latin Americagrowth and integration stemming thepotential for fragmentation.

In that vein, the number of interstate andinternal conflicts has been ebbing, buttheir lethality and potential to grow inimpact once they start is a trend we havenoted.

• While no single country looks withinstriking distance of rivaling US militarypower by 2020, more countries will bein a position to contest the UnitedStates in their regions. Thepossession of chemical, biological,and/or nuclear weapons by more

countries by 2020 would increase thepotential cost of any military action bythe United States and its coalitionpartners.

• Most US adversaries, be they statesor nonstate actors, will recognize themilitary superiority of the UnitedStates. Rather than acquiesce to USforce, they will try to circumvent orminimize US strengths and exploitperceived weaknesses, usingasymmetric strategies, includingterrorism and illicit acquisition ofWMD, as illustrated in the Cycle ofFear scenario.

“…no single country looks withinstriking distance of rivaling USmilitary power by 2020.”

As our Pax Americana scenariodramatizes, the United States probablywill continue to be called on to helpmanage such conflicts as Palestine,North Korea, Taiwan, and Kashmir toensure they do not get out of hand if apeace settlement cannot be reached.However, the scenarios and trends weanalyze in the paper suggest thechallenge will be to harness the power ofnew players to contribute to globalsecurity, potentially relieving the UnitedStates of some of the burden. Such ashift could usher in a new phase ininternational politics.

• China’s and, to a lesser extent, India’sincreasing military spending andinvestment plans suggest they mightbe more able to undertake a largersecurity burden.

• International and regional institutionsalso would need to be reformed to

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meet the challenges and shouldermore of the burden.

Adapting the international order may alsobe increasingly challenging because ofthe growing number of other ethicalissues that have the potential to divideworldwide publics. These issues includethe environment and climate change,cloning and stem cell research, potentialbiotechnology and IT intrusions intoprivacy, human rights, international lawregarding conflict, and the role ofmultilateral institutions.

Many ethical issues, which will becomemore salient, cut across traditionalalliances or groupings that wereestablished to deal mainly with securityissues. Such divergent interestsunderline the challenge for theinternational community, including theUnited States, in having to deal withmultiple, competing coalitions to achieveresolution of some of these issues.

• Whatever its eventual impact orsuccess, the Kyoto climate changetreaty exemplifies how formerlynontraditional policy issues can cometo the fore and form the core ofbudding new networks orpartnerships.

• The media explosion cuts both ways:on the one hand, it makes it potentiallyharder to build a consensus because

the media tends to magnifydifferences; on the other hand, themedia can also facilitate discussionsand consensus-building.

The United States will have to battleworld public opinion, which hasdramatically shifted since the end of theCold War. Although some of the currentanti-Americanism13 is likely to lessen asglobalization takes on more of a non-Western face, the younger generation ofleaders—unlike during the post-WorldWar II period—has no personalrecollection of the United States as its“liberator.” Thus, younger leaders aremore likely than their predecessors todiverge with Washington’s thinking on arange of issues.

Finally, as the Pax Americana scenariosuggests, the United States may beincreasingly confronted with the challengeof managing—at an acceptable cost toitself—relations with Europe, Asia, theMiddle East and others, absent a singleoverarching threat on which to buildconsensus. For all the challenges ahead,the United States will nevertheless retainenormous advantages, playing a pivotalrole across the broad range of issues—economic, technological, political, andmilitary—that no other state can or willmatch by 2020. Even as the existingorder is threatened, the United States willhave many opportunities to fashion a newone.

13 The Pew Research survey of attitudes around theworld revealed sharply rising anti-Americanism,especially in the Muslim world, but it also found thatpeople in Muslim countries place a high value on suchdemocratic values as freedom of expression, freedomof the press, multiparty political systems, and equaltreatment under the law. Large majorities in almostevery Muslim country favor free market economicsystems and believe that Western-style democracy canwork in their own country.

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