State of the World Summit Speech 2022

Ian Bremmer, Eurasia Group

Good morning.
Can one person change the world?
On February 24 of this year, Vladimir Putin gave us an answer to that question.
The invasion of Ukraine that he ordered… to the surprise of many of his own generals… opened a conflict that is
shifting international politics, roiling the global economy, remaking relations between East and West… as well as
the West and Global South… for years, perhaps decades, to come.
This still-expanding conflict was, and continues to be, the design of one man, but its effects have upended lives
and livelihoods in every region of our still-very-much interconnected world.
I’ll open with thoughts on the changes this war has wrought. But there are much larger questions to consider. The
biggest of all centers on the entire international system. Where is all this going?
Our world is plagued with crises that are coming more often and more abruptly, and the current system is not yet
equipped to respond. In particular, the world’s most powerful nation – the United States – has become the mostpolitically divided and dysfunctional democracy of all the G7 countries. And relations between America, still theworld’s superpower, and its most important emerging actor, China, are bad and getting worse. They’re barely
talking at all.
But in the final part of my speech, I will explain how, despite these two crucial obstacles to progress – USdysfunction and growing US-China confrontation – I see real opportunity for positive change… particularly inareas where multiple stakeholders have influence over what happens next.

The WarI open with Putin’s war, and we must begin with its awful implications for Ukraine. Despite Ukraine’s remarkable
recent gains on the battlefield, this war continues to threaten its survival as an independent state. Russia still
controls about 20 percent of Ukraine’s territory, and though Ukrainian forces have launched a counteroffensivethat has recaptured ground and shows promise, they are unlikely ever to evict Russian fighters fully. This week,
Vladimir Putin’s government is preparing to annex much of this occupied land into the Russian Federation.
Ukraine’s economy will probably contract by 40 percent this year. International aid will help the government to pay
its employees, including its soldiers, and finance its bid to continue the fight. But Russia’s gains will permanently
reduce Ukraine’s GDP and long-term growth potential.
Ukraine will survive. Its process of integration into the European Union will keep the effort to rebuild and reform
Ukraine’s economy on track. But with no end to the fighting in sight, Ukraine will remain fully mobilized for war,
its economy will continue to suffer, and Western commitment to Ukraine will diminish. US and European militaryemail: media@eurasiagroup.net

support won’t continue at current levels beyond the next 12-24 months – and that reality will undermine President
Zelensky’s ability to negotiate an end to the war that’s acceptable to Ukrainians who have already lost so much.
That will be Ukraine’s biggest longer-term political problem. Despite confidence in Kyiv that the war can still bewon... whatever that means… the near-term goal remains survival… and a better day in the longer-term future.
Now we turn to Russia.
Make no mistake: for Russia’s future, the war in Ukraine is a catastrophe. Vladimir Putin’s unwillingness to accept
this reality makes the problem much worse.
President Putin intends to declare “victory” at some point, perhaps once Russia annexes enough of Ukraine’s
land to make the claim credible inside Russia. But one of Russia’s stated goals when the invasion began was to“demilitarize” Ukraine. Instead, Russian and Ukrainian forces have now proven that Russia is not strong enough toaccomplish that. Instead, Ukraine will remain much better armed, much more fully integrated with NATO forces,
and much more determined to defend its independence than was imaginable before the February invasion. Last
week, Putin has announced the mobilization of up to 300,000 reservists, and eventually that will matter for thebalance of power on the ground. But it will take months to train and equip all these people for combat.
President Putin also hoped to divide America and Europe, and to weaken NATO’s cohesion and sense of purpose.
He has accomplished exactly the opposite. The US and Europe have not worked together as closely on any projectsince the Cold War’s end. NATO is in the process of expanding to include Finland and Sweden, strengthening
the Alliance’s capabilities and instantly doubling the length of the borders Russia shares with NATO members.
Germany is sharply increasing its defense spending. Putin has managed to provide America’s Republicans and
Democrats with an enemy they hate even more than one another.
Russia now faces hundreds of thousands of forward-deployed battle-ready NATO troops at a time when its militaryis struggling to recover from the loss of tens of thousands of its soldiers and a staggering amount of its firepower.
Sanctions and export controls have tied Russia’s military supply chains in knots. Export controls on high-tech parts
will deny Russia the ability to restock its most modern weapons.
More broadly, Russia’s economy is in real trouble. Yes, high commodity prices, the government’s ability to bolster
the ruble temporarily, Europe’s continued dependence on Russian oil and gas, and the willingness of countries like
China and India to buy unsanctioned energy exports at heavily discounted products have cushioned the near-termblow for Russia’s people. Putin is correct that the coming winters will be difficult for Europe as it works hard to
break its addiction to Russian energy supplies.
But Russia’s president has proven to European leaders that they can never again trust him as a reliable commercial
partner. They know they must absorb considerable pain in coming months to deny Moscow the ability to punish
Europe again in the future. Once they have stopped buying Russian oil and gas altogether… probably by 2024… it
will be Russia that faces lasting damage.
As long as Putin remains in power, there will be little reason for the US and EU to lift sanctions. He shows no signsof reversing course -- in the past week, he has only escalated – and next month, despite all the economic hardship,
27 EU countries will unanimously approve yet an eighth round of sanctions.

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It’s no surprise then that many of Russia’s most ambitious and talented young people are leaving their country insearch of a better life. Russia has suffered “brain drains” many times over the centuries. Each wave of exits has
diminished the country’s long-term potential. This exodus will gather speed.
At this stage, we’re left to wonder whether Putin understands the depth of the hole he continues to dig for hiscountry. His security forces have suppressed almost all public displays of dissent. Ordinary Russians know thatparticipation in protests leaves them at the mercy of police who have a mandate to abuse them. Public use of theword “war” can send a Russian citizen to prison for 15 years.
But the successful crackdown on protest risks numbing his government to the pain and lasting danger of
unrecognized public anger. Putin understands that public resistance is a danger. He saw it again with the surge inanger in several Russian cities – and thousands of arrests – that followed last week’s mobilization announcement.
Surely he now knows that the war’s true costs – in Russian lives and long-term economic damage – can’t behidden forever.
In short, Putin hoped to strengthen Russia, boost the country’s prestige on the world stage, and replenish publicconfidence in his leadership. It is increasingly obvious, even to ordinary Russians, that Putin has accomplishedexactly the opposite.
The war’s impact on the West has been nearly as dramatic.
For those of us who came of age in a time of Cold War, it is startling to realize that the Berlin Wall fell one-third of acentury ago. Since then, Americans and Europeans have come to believe that the Wall, and the East-West conflict
it symbolized, are now subjects only for history books.
One of NATO’s early leaders famously said in the 1950s that the purpose of the Alliance was “to keep the Sovietsout, the Americans in, and the Germans down.” Since 1992, a European might reasonably ask why any of thatremained necessary. The Soviets were consigned to the dustbin of history. NATO continued, but its purpose
became a subject of debate. Americans and Europeans were freed to focus on their differences rather than oncommon values, interests, and threats.
On February 24, President Putin brought that era to an end. Russia’s invasion threatens other countries that are now
EU members and transforms European perceptions of Moscow’s destructive potential. It reveals the continuing valueof both security partnership with Washington and Germany’s willingness to spend a lot more money on weapons.
NATO is once again necessary, and G7 leaders have new problems to solve and plans to make.
Washington, Brussels, and London are in near lockstep on efforts to both punish Russia and degrade its militaryand economic capabilities. The pandemic and its economic fallout has bolstered unity within the EU, and the needfor collective action to bolster European security, fundamentally redesign Europe’s energy architecture, boost
Ukraine’s firepower, and absorb Ukraine’s refugees have added more momentum to that movement.
Even Italy’s new far-right, euro-skeptic government backs the EU effort to bolster Zelensky’s government inKyiv. And though the accession process remains a long and winding road, the unanimous EU decision to accept
Ukraine and Moldova as candidates for Union membership – embracing the Russian invasion as a European war –speaks for itself.

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None of this was possible before February 24. All of it is the direct result of one man’s historic mistake.
And as is obvious here in Japan, this is not just a story about Europe. Russia’s war boosted security concerns for all
advanced industrial democracies. With a nervous glance toward Beijing… Japan, South Korea, Australia and New
Zealand can see that what’s happening inside Ukraine – and inside Russia – is directly relevant to Asia’s security.
This gives these countries new reason to renew their security partnerships with the American military superpower.
In short, Russia’s war in Ukraine has created the crisis needed to bring unity where there had been only
fragmentation in recent years, and the positive effects of this shock will continue long into the future.
And yet…
As we turn to a broader look at the current state of the world, we must recognize that Russia’s war has added
to the health, economic, social, and political stresses created by the pandemic to create yet more turmoil in the
countries least equipped to absorb them.
The breakdown of global supply chains, the higher food and fuel prices exacerbated by the war, and the growing
debt burdens all of this imposes on the cash-poor governments of many developing countries have created turmoil
in 2022 – and they will create much more in 2023.
It is no exaggeration to say that the developing world’s globalization gains of recent decades – first among them thecreation of the first truly global middle class – have been thrown into reverse… first by COVID and now by the Kremlin.

The three decouplings
With that warning, I want to turn to a broader and longer-term question: What will replace our G-Zero world order,
the continuing lack of credible and sustainable international leadership?
The last fifty years of world economic development have been defined by globalization – all the processes bywhich ideas, information, people, money, goods and services cross borders at historically unprecedented speed.
Globalization has generated an era of economic growth on a scale unmatched in human history. It has created
opportunities and profit for multinational corporations, banks, and global elites. And it has lifted billions of people
out of poverty and created the first global middle class.
But it has also created losers. Workers in wealthy countries who haven’t been part of the transitions towardknowledge-based jobs in the 21st century digital economy… American and European factory workers, inparticular… have gained much less than their peers in emerging countries. And they’ve come to resent the“globalism” – an ideological faith in the positive power of universal interconnectedness – that allows wealthy andpowerful elites to write rules that benefit themselves.
Opportunistic politicians have recognized this backlash, and they’ve invented new ways to profit from it. The result
is a pushback in many countries against liberalized international trade and the promotion of social values they see
as alien to traditional culture.

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We see this in the bitter opposition the American left expressed toward almost all proposed trade deals and in thetribalism that now drives the Trump faction of the Republican Party. We see it in every reference that Britain’s Liz
Truss or Italy’s Giorgia Meloni make to “woke culture” and in the anti-capitalist rhetoric that animated the French
left during elections earlier this year.
But we also increasingly see it in low and middle income economies as well. Xi Jinping’s insistence on Chinese
self-reliance and in Vladimir Putin’s appeal to Russian Orthodox values as a shield against the liberal Western
fetish for personal freedom.
That’s why the new global buzzword is… decoupling.
The “aspiration for separation” is the natural consequence of a ‘my country first’ ideology, one that plays on both
legitimate worries and nativist grudges to reject the idea that global interdependence is good for security andprosperity. In this view, safety can be found only in self-reliance… and outside influences are to be defiantly resisted.
But unlike globalization, a word that describes a single broad phenomenon, decoupling describes three separate
processes that are very different one from another. These three decouplings will not end globalization, but they will
fracture the global economy and, accordingly, change our geopolitical order.
The first decoupling separates Russia from the “West.” It’s the most abrupt of the three. It’s also the most
severe… and the most irreversible.
The most important lasting implication of Russia’s invasion of Ukraine will be the near-complete severing of
economic ties between Russia and the world’s advanced industrial economies. Western multinationals have exited
the Russian marketplace and unloaded their assets.
Most of Russia’s business elite has seen its assets frozen. Russian banks are under sanction and cut off from theglobal payments system. Europe has finally come to accept that Russia will never be a reliable provider of energy.
This decoupling between Russia and the West is near-complete and functionally permanent.
Russia is not entirely isolated. It won’t become North Korea. Its natural resources remain far too important to theglobal economy for that. China, India and others will continue buying, if only at sharply discounted prices. The
developing world still need Russian grain and fertilizer. Developing world strongmen will continue to hire Russian
mercenaries and weapons – presuming Russia can produce them – to help keep order.
But the long-term impact on Russia that follows its decoupling from the West will be staggering. Its access toadvanced technologies will be sharply limited, with dire implications for both Russian industry and the country’s
broken military. The Western aspirations of its people will be frustrated, except for those willing and able to taketheir talents elsewhere. Russia will be the first country effectively ejected from the G20, and its government will
respond with new attempts to disrupt the status quo.
The result is a new Cold War—with elements of hot war. But unlike the conflict of the 20th century, this one willunite, rather than divide, Europe.
The second decoupling separates the West and Global South. As we move deeper into our crisis-plagued 21st
century, US-China frictions and Russia’s war will keep East-West conflict in the headlines. But emerging points ofcontention between West and Global South will also pose important threats and challenges.

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Continuing interdependence leave America and China in the same boat toward a common destination. More onthat in a moment. Unfortunately, many poorer developing countries, especially vulnerable to the world’s politicaland economic turmoil and a source of millions of migrants and refugees desperate to escape, will find over the
next decade they don’t even have seats in the lifeboats.
The global pandemic has pushed already indebted poor countries into dangerous territory. Some 58 percent of theworld’s poorest countries are already in debt distress or at high risk of it, the World Bank warned us in June, andthe danger is now spreading to middle-income countries. Broken supply chains, rising interest rates, and surging
inflation combine with falling growth and fewer remittances to create conditions for a developing world debt crisisin coming years.
Russia’s war has added price volatility for the food and fuel that slows rich-world economies but devastatespoor ones. With an unstable stalemate in Ukraine feeding further uncertainty for years, that problem will widen
opportunity gaps between West and South.
Finally, poorer countries are less well prepared to limit the harm done by erratic weather patterns, and otherunpredictable results of continuing climate change over the next decade will add to the already catastrophic
humanitarian, political, and economic storms created by mass flows of migrants. That’s especially true in SouthAsia, North Africa, and the Middle East, where surging temperatures will more often test the limits of humanendurance, and in Central America, a region already plagued with poverty and violent crime.
Wealthier countries will respond to these crises in coming years with steps designed mainly to protect themselvesrather than to invest in the common good. High inflation and recession fears in America and Europe will reduce
already limited political appetites for expensive investments in emergency management and debt restructuring inother regions. Concerns over continuing long-term threats from Russia will further distract Western leaders fromexisting conflicts and potential crises in Afghanistan, Yemen, and elsewhere. Investments in plans to limit climate
damage will focus on disasters and dislocated people at home. Western-led institutions like the IMF and WorldBank will have to make tough choices on where to invest resources made increasingly scarce by the swellingnumber of local emergencies.
India, now projected to become the world’s most populous country in 2023, will align with the US and its Asian
allies on efforts to contain China’s expanding influence. But on the emergencies described above, it falls squarelyin the global South. How will Narendra Modi’s government respond in coming years to the many economic
challenges his country will face? Or Brazil? South Africa? Indonesia?
These are incremental changes. None can afford to break their relations with the United States and the West. But
all are increasingly tilting towards populism and protectionism to bolster their political support at home.
And that leads us to the final decoupling, the one now separating China and the United States.
For now, the Biden administration has little choice but to spend much of its time focused on Putin. But it’s not
the Ukraine-obsessed Kremlin that’s challenging US power by becoming more economically influential andtechnologically dynamic. It is China’s growing clout and rising hostility toward US influence that has many ofAmerica’s policymakers and pundits, Democrats and Republicans, pointing a finger of warning toward Beijing.

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It is unfortunate that the world’s most important bilateral relationship consists of countries with competing politicaland economic systems. It’s even more unfortunate that the pragmatism that allowed both China and America toprofit enormously from globalization has broken down into acrimony and deep-seated distrust.
Worse still, public expressions of hostility toward the other government play well in the domestic politics of bothcountries. In America, Democrats and Republicans don’t agree on much, but leaders in both parties insist that
China poses global threats that must be contained. China’s political leaders argue that the only way to overcome
US containment strategies is to undermine US power wherever and whenever possible.
That’s why, in both countries, the idea of decoupling has only become more popular over the past decade.
Washington now wants to spur strategic investment in semiconductors, not just to expand growth but to beat the
Chinese. China’s renewable energy investments push the Americans to go greener faster as part of a battle formarket dominance. In both countries, sectors with national security importance – which in China includes social
media and other information industries – are off-limits to potentially valuable investment from the other.
There is better news here: While the West’s decoupling with Russia is near absolute, US-China decoupling is far
more limited. It is true that trust between Washington and Beijing is now in shorter supply than in half a century.
Americans fear China will threaten US security and prosperity by exporting its authoritarian system of governmentand state-directed way of capitalism.
President Xi Jinping shares Vladimir Putin’s deep sense of grievance against America’s claims to exceptionalism
and its drive to make rules that others must follow. Yet, US and Chinese leaders know that problems muchcloser to home will occupy much of their attention in coming years. There remains a consensus within the US
government that America still needs China’s economy to remain strong. A dangerously destabilized China would
create mutually assured economic destruction.
The Biden administration recognizes that already high inflation in the United States is exacerbated by tariffs on
China, and the problem would grow worse if the US even signaled the intention to fully decouple. Biden may still
try to remove at least some of these tariffs in coming years. If so, whatever its rhetoric, Beijing would welcome thenew opening.
There is similar pragmatism within China’s leadership. Xi would be happy to see Vladimir Putin damage Western
confidence and drive a wedge between America and Europe, but he sees that Russia’s headstrong president andhis war have failed. Instead, Putin has brought the transatlantic partners closer together and raised fears overTaiwan that have Americans and their Asian allies making plans for the future.
More importantly, Xi knows the Communist Party’s monopoly hold on domestic political power depends oncontinuing to meet the expectations of China’s people for a continually rising standard of living. That, in turn, depends
on continued robust commercial relations with the EU, the US, and Japan, which together buy nearly 40 percent ofChina’s exports. That’s a figure that has barely budged during Xi’s decade in power. (Russia accounts for just 2%).
China remains America’s largest trade partner in goods, its largest supplier of goods imports, and its third-largest
export market. The US remains both China’s largest goods trade partners and biggest export market. Businesselites in both countries continue to protect the opportunities that US-Chinese commercial ties continue to create.

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As important, other governments, even those most fearful of China’s rise or resentful of America’s sometimes
arrogant use of power, want the US and China to compete peacefully and for the benefit of the entire global economy.
America’s closest allies in Europe, Asia, and the Americas want no part of a great power conflict. Trade with
China is too important to their futures, though they do want American protection against China’s push for new
terms of trade and investment. There is not, and is unlikely to be, a US-China Cold War because 21st century
interdependence can’t be undone by 20th century Cold War-style threats.
The US-China decoupling in tech and security sectors will intensify in coming years, but the interdependence
that binds their fates together is becoming more important, not less. That is why, though globalization faces
unprecedented stress tests, it would be foolish to bet against its long-term potential to generate more gains for
those who participate in it.
Globalization today is not over. Nor is it being destroyed. It’s adrift.

The next world order(s)What does all this mean for the future of the global order?
First, the bad news. The United States, the world’s most powerful country, is only becoming more politically divided
and dysfunctional. I’d love to tell you that I soon see a brighter day ahead for American politics. I don’t. Left-rightdifferences in worldview are too entrenched; policy positions are too polarized. Only a catastrophic electoral defeat
for one side is likely to change the current political calculus, and (for now) the nation is too evenly divided for that.
Nor will US-China relations improve much in coming years. Yes, economic and political self-interest in bothcountries will prevent a total breakdown in the relationship. But frictions are increasing. Bipartisan US hostility
toward China, a surge of Chinese nationalism stoked by the Communist Party, tariffs, tech competition, the politics
of the pandemic, and the Russian invasion of Ukraine have all worked to minimize the possibility that a new USChina alignment will help provide the world with better leadership.
So… there will be no G1 or G2 to replace G-Zero.
Now for the good news. When one or two superpowers set the agenda and make the rules in every importantarena of the international system, you have a single global order. For better and for worse.
But what happens when the world isn’t led by superpowers anymore? Tomorrow’s geopolitics will be based not
on a single global order, but on multiple coexisting orders, with different actors providing leadership to manage
different kinds of challenges.
This is the way out of the G-Zero dilemma that we’ve been living with now for more than a decade.
Let’s start with the global security order, the one area of international relations that hasn’t changed very much.
The United States remains the only country on Earth that can project military power into every region of theworld. Despite China’s much greater investment in naval capacity and a growing willingness to use it in East andSoutheast Asia, America’s hard power has no serious rival. For now, China remains a regional military power.

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Ironically, Putin’s invasion has bolstered American security power by reminding Europe just how valuable thetransatlantic alliance can be. NATO has expanded, and its members will spend more on defense against Russia…
not because Americans want them too, but because Russia has persuaded them that they have to.
America’s Asian allies are also looking to strengthen military ties with Washington. China’s increasingly bellicose
foreign policy rhetoric has set teeth on edge from Japan across South Korea through India all the way to Australia.
None of these countries wants China as an enemy. All want to profit from the commercial opportunities China canoffer. But all are wary of too deep a dependence on Beijing’s good will and want to keep American military powerin the region.
Russia will actively push against this existing security order, but its reckless and self-destructive war in Ukraine,
the unified Western response to it, and the economic implications of both have damaged the Russian military sobadly that it will take decades to rebuild.
In years to come, Russia is more likely to behave like a “large Iran” than an “aspiring China.” As its economy
deteriorates dramatically, it will build the kind of intensified police state we see in Belarus. It will look for new ways
to destabilize Europe and the United States… as Iran does via proxies in the Middle East. We can expect a deeper
Russian investment in political interference, disinformation, an expansion of cyberattacks against soft targets,and even support for radicalism. And as Putin has done in recent days, he will use nuclear threats to try to blunt
Western responses. Washington will continue to lead the response.
The global economic order is a different story.
Though there is little reason to doubt the continuing dynamism and resilient consumption-led growth in the UnitedStates, this is an area where we’re moving much more quickly from a unipolar world toward a multipolar world.
Several different models are plausible. If China becomes the world’s largest economy over the next ten years, andthen extends its economic lead, Chinese investment abroad and international demand for access to the Chinese
market will ensure a more multilateral trade order, with America’s push for strategic competition tempered by thehedging of European and Asian allies (to say nothing of the American private sector) and a Chinese alignment formost of the developing world.
But I am not at all confident that this is our direction of travel. China’s poor demographics, its large and growing
debt load, as well as growing inequality and protectionism in the developed and developing worlds could stall
China’s growth and force its policymakers to turn inward. China’s Belt and Road Initiative might well wither in this
scenario, leaving dominant regional powers as the most important players on trade.
The US will remain economically dynamic, but Europe, India, Brazil, and many others will continue to help fuelglobal growth. And the European Union will continue to exercise important leadership on the setting of standards
and the writing of rules that create boundaries for 21st century commerce.
The climate order is not being led at all by the US and Chinese governments, and that’s highly unlikely to change
in coming years. Instead, this system will be determined by a diverse set of countries, all of whom face a now
universally recognized common problem. In short, the climate effort has already become multipolar and multistakeholder in ways that should give us more resilient confidence in our future.

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Europeans leaders have set the pace on rulemaking and model-setting for how a post-carbon world of governanceand society can function. Yet… though damage to Earth’s atmosphere has so far been a product of industrial
development in Europe and America… China, India, and the developing world will play the largest role indetermining the level of carbon emissions in coming decades – and, therefore, in just how much damage humans
will ultimately inflict on the planet we share. That is why they cannot and will not be denied their say in how thefight to limit climate change will move forward.
Crucially, this is also a struggle in which non-state actors – the UN, other international institutions, the global
scientific community, philanthropic organizations, provincial and local political leaders, multinational businesses andbanks, activist organizations, and even influential individuals have played a genuinely substantive role in advancing
the international effort to reverse the damage that humans have done, and will continue to do, to the planet.
This multi-stakeholder order will remain in effect whether the world can limit global warming to 1.5 degrees
Celsius… which looks increasingly implausible… or whether actors focus more on narrower, shorter-term
concerns, pushing global temperatures higher, to 2.5 degrees (as now looks likely) or even more.
The difference between these outcomes is a matter of tens of trillions of dollars and hundreds of millions of lives.
But whatever our trajectory, the global climate order will be a dramatically more multipolar and multi-stakeholder
world than has ever existed in modern times.
Finally, there is the digital order, the biggest departure from geopolitics of the past. While the US, and allies
equipped with its weapons, can still dominate most battlefields in the physical world, power in the digital world ismuch more diffuse. The US and China are still the dominant players here, but not as government actors.
Instead, it is the world’s largest technology companies who have sovereignty and rule-making power in the virtualworld. That’s true for commerce, for security, and even for civil society.
This is the techno-polar world.
Nearly all the most powerful tech companies are headquartered in just two countries: The United States andChina. But whether the techno-polar order evolves into a technology cold war, an open and competitive multipolar
global order, or breaks down into completely separate technology company-driven virtual worlds will dependon the strategic governance models of these companies and how they choose to interact with governments incoming years.
If US and Chinese political leaders assert themselves effectively in the digital space, and if the tech companies basedin each country then line up with their respective governments, a US-China technology Cold War becomes likely.
If the tech companies continue to pursue global growth strategies… and therefore refuse to align withgovernments, preserving the existing divide in the physical and digital fields of competition… we’ll see a more
multipolar globalist digital order.
But if the digital space itself becomes the most important arena of great power competition, and the power ofgovernments erodes relative to the power of tech companies, then the digital order itself will become the newdominant global order.
And if that happens, we’ll have to consider an entirely new set of actors – the technology companies – as thecentral players in 21st century geopolitics.

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JapanLet me now turn to what all this means for Japan. How is this country positioned for the four parallel orders I
described?
In the security order, Japan has cemented itself as America’s indispensable partner in Northeast Asia, largely
thanks to former prime minister Abe Shinzo’s leadership. Abe began championing a “Free and Open Indo-Pacific”
years before the US adopted the idea.
Japan has also started to do two other things to improve its security, apart from strengthening the US-Japan alliance.
First, it has been building up other alliances like the Quad (with the US, India, and Australia) and the new JapanAustralia Reciprocal Access Agreement. Second, Japan has been building its own defense capabilities year by year
since 2015, when the Japanese constitution was reinterpreted to allow for the right of collective self-defense.
These moves have allowed Japan to work more effectively with the United States in helping to build a global security
architecture of advanced industrial democracies that treats national sovereignty and self-determination as core rightsthat should be defended everywhere. The Ukraine crisis has only intensified Japan’s resolve to realize this vision, as
summed up in this warning from Prime Minister Kishida Fumio: “Ukraine today could be East Asia tomorrow.”
In the economic order, Japan is less aligned with the United States. With the world’s third largest economy but
a much smaller population than #1 and #2 (the US and China), Japan still punches far above its weight. But witha declining population and a shrinking market, the country must open foreign markets to squeeze out every bitof economic growth if it wants to remain strong. That means Japan will want to continue to do business with
China, which dwarfs the US as Japan Inc’s closest trading and manufacturing partner. At the same time, Japan
will strengthen multilateral trade to lessen its economic dependence on China. In fact, Japan is increasingly
taking up the US mantle in balancing China economically, as evidenced by its role as the de facto leader of theComprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the US withdrew from the
project it once led.
The bad news is that despite Japan’s embrace of a more ambitious trade agenda, Japan will struggle to generateincreased productivity growth from its shrinking population. Technology can help with that problem, but it can
only go so far. To boost structural growth, Japan must do two things it has remained reluctant to do: liberalize
immigration to bring in more foreign workers and make all necessary changes to bring more Japanese women into
the workforce and to keep them there. Unless it takes these steps, Japan will gradually lose much of its current
economic clout—no matter how effective and intelligently diversified its trade policy is.
In the climate order, the opportunities for Japan are much greater. An active member of the developed nation“team” on the climate crisis (though certainly not its “captain”), Japan is using its alliances to position itself tobecome a climate leader. It has leveraged the Quad to advance clean energy security. It is also a member of the
US’s Mineral Security Partnership that seeks to coordinate critical minerals for clean technology between allied
nations and away from Chinese dominance of this sector.
The country’s own leading technological advantage in the hydrogen economy and solar PV technology is essential
to the global energy transition and will prove a key asset for Japan in this sphere.

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Finally, in the technology order, Japan shares US and European concerns about emerging threats from China. It
was one of the first countries to become a victim of China’s practice of economic coercion, and it has responded
by pioneering the notion of “economic security,” which Prime Minister Kishida elevated to a cabinet-level position.
Japan will continue to take measures to limit technology transfers to China, protect Japanese data, secure supply
chains for crucial intermediate goods, and fortify key domestic industries such as semiconductors.
The biggest challenge here for Japan is that it has lost the technological edge it had decades ago and now doesn’t
have leading technology companies of its own to set global rules and standards. That’s an enormous problem,
especially considering how sorely an aging Japan needs to integrate more technology into its economy. Japan
must develop intelligent and creative plans for how best to compete in a world that threatens to relegate its
governments and companies to rule-takers rather than rule-makers.
The coming world is one that will be much less oriented toward growth and efficiency than it will be towardstability and resilience. That’s good news for Japan, which has one of the world’s strongest, most cohesive
governments, with a deep commitment to democracy, the rule of law, and multilateralism.
Japan must be ready to seize the opportunities for leadership created by the splintering of the global order. But it
must also be vigilant and honest about the difficult challenges that lie on the horizon.
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I’ll close this morning with this…
There are more crises to come. At next year’s summit, I’m confident that we’ll be talking about new conflicts andemergencies inside the United States, inside China, across Europe, inside Russia… and certainly in many parts ofthe developing world.
The growing problems of inflation and debt will generate anti-incumbent anger, and the risk of large-scale unrest,
particularly in developing countries. The world will get hotter, weather patterns will become more erratic, and theimpact of technology on our lives will grow more complex… and more dangerous.
But we will find the possibilities for progress embedded in these crises…
…and by “we,” I no longer just mean governments. Policymakers in these fields are increasingly business leaders,journalists, activists, and citizens. In short, human beings.
As our G-Zero world becomes four new global orders, the number of us who have a stake in our world’s future…
and who have in our hands the ability to bring about positive change... is growing.
We must not waste these opportunities.
Thank you for listening.
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