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Global Trends 2025:
A Transformed WorldFor sale by the Superintendent of Documents, US Government Printing OfficeInternet: bookstore.gpo.gov
Phone: toll free (866) 512-1800; DC area (202) 512-1800;
Fax: (202) 512-2104; Mail: Stop IDCC, Washington DC 20402-0001
ISBN 978-0-16-081834-9
To view electronic version:www.dni.gov/nic/NIC_2025_project.html

November 2008
NIC 2008-003

We prepared Global Trends 2025: A Transformed World to stimulate strategic
thinking about the future by identifying key trends, the factors that drive them, where
they seem to be headed, and how they might interact. It uses scenarios to illustrate someof the many ways in which the drivers examined in the study (e.g., globalization,
demography, the rise of new powers, the decay of international institutions, climatechange, and the geopolitics of energy) may interact to generate challenges andopportunities for future decisionmakers. The study as a whole is more a description of
the factors likely to shape events than a prediction of what will actually happen.
By examining a small number of variables that we judge probably will have adisproportionate influence on future events and possibilities, the study seeks to help
readers to recognize signposts indicating where events are headed and to identify
opportunities for policy intervention to change or lock in the trajectories of specificdevelopments. Among the messages we hope to convey are: “If you like where events
seem to be headed, you may want to take timely action to preserve their positive
trajectory. If you do not like where they appear to be going, you will have to develop andimplement policies to change their trajectory.” For example, the report’s examination of
the transition out of dependence on fossil fuels illustrates how different trajectories willentail different consequences for specific countries. An even more important message isthat leadership matters, no trends are immutable, and that timely and well-informedintervention can decrease the likelihood and severity of negative developments andincrease the likelihood of positive ones.
Global Trends 2025 is the fourth installment in the National Intelligence Councilled effort to identify key drivers and developments likely to shape world events a decadeor more in the future. Both the product and the process used to produce it benefited fromlessons learned in previous iterations. Each edition of Global Trends has tapped larger
and more diverse communities of experts. Our first effort, which looked out to 2010,
relied primarily on expertise within the US Intelligence Community. There was someoutreach to other elements of the United States Government and the American academic
community. For Global Trends 2015, we engaged more numerous and more variedgroups of non-US Government experts, most of whom were American citizens.
For the third iteration, Global Trends 2020, we greatly expanded the participationof non-American specialists by convening six seminars on five continents. We also
increased the number and varied the format of meetings in the United States. Thesesessions enhanced our understanding of both specific trends and drivers and the ways
these factors were perceived by experts in different regions of the world.

Each past iteration produced an even more interesting and influential report.
Indeed, the worldwide response to Global Trends 2020 was extraordinary. The reporthas been translated into several languages, debated in government offices, discussed inuniversity courses, and used as a point of departure in community meetings oninternational affairs. The report was closely read and constructively criticized by myriad
experts and members of the public.
Seeking to capitalize on the interest generated by previous reports and to capture
even wider circles of expertise, we modified our processes yet again to produce Global
Trends 2025. In addition to increasing still more the participation of non-USG experts
from the United States and abroad to develop the framework for the current study, weshared several drafts with participants via the Internet and a series of discussion sessions
across the US and in several other countries. This iteration of Global Trends is the mostcollaborative yet produced; that collaboration has made it a better product and we are
extremely grateful for the time and intellectual energy that literally hundreds of people
have devoted to this effort.
As was the case with our previous looks at global trends that will shape the future,
the process and spin-off benefits of preparing Global Trends 2025 were as important as
the final product. The ideas generated and insights gained during the preparation of theaccompanying report have enriched the work of countless analysts and been incorporated
into numerous analytic products published by the National Intelligence Council and otherIntelligence Community agencies. Anecdotal evidence indicates they have also
influenced the thinking and work of many participants in the process who do not work for
the United States Government. We are pleased by and proud of these ancillary benefits
and look forward to reaping many more when others have a chance to read and react tothis edition of Global Trends.
Many people contributed to the preparation of Global Trends 2025, but no one
contributed more than did Mathew Burrows. His intellectual gifts and managerial
abilities were critical to the production of this report and everyone involved owes him ahuge debt of gratitude. Mat’s own note of appreciation on the following page lists others
who made especially noteworthy contributions. Many others also made important
contributions. We could not have produced this edition of Global Trends without the
support of everyone who participated and we are deeply grateful for the partnerships andthe friendships that facilitated and resulted from this collaborative effort.

C. Thomas Fingar
Chairman, National Intelligence Council

Acknowledgements
In preparing this work the National Intelligence Council received immeasurable help
from numerous think tanks, consulting firms, academic institutions, and literally
hundreds of experts inside and outside governments here in the United States andoverseas. We cannot possibly name all the institutions and individuals we consulted but
would like to acknowledge a number for their important contributions.
The Atlantic Council of the United States and the Stimson Center were both important for
opening doors to institutions abroad and viewpoints that we would not easily havegathered for this project. Dr. William Ralston, Dr. Nick Evans and their team at SRI
Consulting Business Intelligence provided needed S & T expertise and guidance.
Dr. Alexander Van de Putte of PFC Energy International put together a series of meetings
in three regional hubs across the globe to help us begin the process of conceiving andconstructing the scenarios. Others involved in that effort include Professor Jean-Pierre
Lehmann of the Evian Group at IMD in Lausanne and Peter Schwartz and Doug Randall
at the Monitor Group’s Global Business Network in San Francisco. Professor Barry
Hughes of the University of Denver contributed notably in the scenario construction
process and in plotting out the possible trajectories of major powers. Dr. Jacqueline
Newmyer and Dr. Stephen Rosen from the Long Term Strategy Group organized threeworkshops that were critical to advancing our thinking on the complexities of the future
security environment and the changing character of conflict. Several individuals andinstitutions helped organize roundtables to critique drafts or delve deeply into various
aspects, including Dr. Geoff Dabelko at the Wilson Center; Dr. Greg Treverton of
RAND; Sebastian Mallaby at the Council on Foreign Relations; Carlos Pascual at
Brookings; Dr. Michael Auslin at AEI; Professor Christopher Layne at Texas A&M
University; Professor Sumit Ganguly at Indiana University and Dr. Robin Niblett andJonathan Paris at Chatham House in London. Professor John Ikenberry from Princeton’s
Woodrow Wilson School organized several workshops of prominent international
relations scholars, helping us with changing geopolitical trends. Two workshops—one
organized by Professor Lanxin Xiang and hosted by CICIR in Beijing, the otherorganized and hosted by Dr. Bates Gill at SIPRI in Stockholm—were particularly
instrumental in gathering international perspectives on strategic challenges facing theworld.
Within the United States government, special thanks goes to Julianne Paunescu from theState Department’s Bureau of Intelligence and Research (INR). In helping us at every
step of the way, she and her team fulfilled their mandate spearheading intelligencecommunity outreach to nongovernmental experts in an outstanding manner. Marilyn
Maines and her experts at NSA provided essential expertise on S&T and organizedworkshops with Toffler Associates to delve more deeply into future trends. The NIC’s
Analysis and Production staff, including Elizabeth Arens’ deft editorial hand, provided
essential support.

Contents
Page

Executive Summaryvi

Introduction: A Transformed World
More Change than Continuity
Alternative Futures

1
3
3

Chapter 1: The Globalizing Economy
Back to the Future
Growing Middle Class
State Capitalism: A Post-Democratic Marketplace Rising in the East?
Bumpy Ride in Correcting Current Global ImbalancesMultiple Financial Nodes
Diverging Development Models, but for How Long?

6
7
8
8
11
12
13

Chapter 2: The Demographics of Discord
Populations Growing, Declining, and Diversifying—at the Same TimeThe Pensioner Boom: Challenges of Aging Populations
Persistent Youth Bulges
Changing Places: Migration, Urbanization, and Ethnic Shifts
Demographic Portraits: Russia, China, India, and Iran

18
19
21
21
23
24

Chapter 3: The New Players
Rising Heavyweights: China and India
Other Key Players
Up-and-Coming Powers

28
29
31
35

Global Scenario I: A World Without the West37

Chapter 4: Scarcity in the Midst of Plenty?
The Dawning of a Post-Petroleum Age?
The Geopolitics of Energy
Water, Food, and Climate Change

40
41
45
51

Global Scenario II: October Surprise

57

Chapter 5: Growing Potential for Conflict
A Shrinking Arc of Instability by 2025?
Growing Risk of a Nuclear Arms Race in the Middle East
New Conflicts Over Resources?
Terrorism: Good and Bad News
Afghanistan, Pakistan, and Iraq: Local Trajectories and Outside Interests

60
61
61
63
68
72
76

Global Scenario III: BRICs’ Bust-UpiChapter 6: Will the International System Be Up to the Challenges?
Multipolarity without Multilateralism
How Many International Systems?
A World of Networks
Global Scenario IV: Politics is Not Always Local
Chapter 7: Power-sharing in a Multipolar World
Demand for US Leadership Likely to Remain Strong, Capacities Will Shrink
New Relationships and Recalibrated Old Partnerships
Less Financial Margin of Error
More Limited Military Superiority
Surprises and Unintended Consequences
Leadership Will Be Key

ii

80
81
82
84
89
92
93
93
94
97
98
98

Textboxes:
The 2025 Global LandscapeviComparison Between Mapping the Global Future: Report of the Intelligence
Council’s 2020 Project and Global Trends 2025: A Transformed World

2

Long-Range Projections: A Cautionary Tale

5

Globalization at Risk with the 2008 Financial Crisis?

10

Science and Technology Leadership: A Test for the Emerging Powers

13

Latin America: Moderate Economic Growth, Continued Urban Violence

15

Women as Agents of Geopolitical Change

16Higher Education Shaping the Global Landscape in 2025

17

The Impact of HIV/AIDS

23

Muslims in Western Europe

25

Timing is Everything

44

Winners and Losers in a Post-Petroleum World

46

Technology Breakthroughs by 2025

47

Two Climate Change Winners

52

Strategic Implications of an Opening Arctic

53

Sub-Saharan Africa: More Interactions with the World and More Troubled

56

A Non-nuclear Korea?

62

Middle East/North Africa: Economics Drives Change, but with Major Risk
of Turmoil

65

Energy Security

67

Another Use of Nuclear Weapons?

68

Why al-Qa’ida’s “Terrorist Wave” Might Be Breaking Up

69

The Changing Character of Conflict72

End of Ideology?

73

Potential Emergence of a Global Pandemic

76

Greater Regionalism—Plus or Minus for Global Governance?

83

Proliferating Identities and Growing Intolerance?

86

Future of Democracy: Backsliding More Likely than Another Wave

87

Anti-Americanism on the Wane?

95

iii

The 2025 Global Landscape
Relative Certainties

Likely Impact

A global multipolar system is emerging
with the rise of China, India, and others.
The relative power of nonstate actors—
businesses, tribes, religiousorganizations, and even criminal
networks—also will increase.

By 2025 a single “international community”
composed of nation-states will no longer exist.
Power will be more dispersed with the newer
players bringing new rules of the game while risks
will increase that the traditional Western alliances
will weaken. Rather than emulating Westernmodels of political and economic development,
more countries may be attracted to China’s
alternative development model.
The unprecedented shift in relative
As some countries become more invested in theirwealth and economic power roughly
economic well-being, incentives towardfrom West to East now under way will
geopolitical stability could increase. However, thecontinue.
transfer is strengthening states like Russia that want
to challenge the Western order.
The United States will remain the single Shrinking economic and military capabilities may
most powerful country but will be lessforce the US into a difficult set of tradeoffs
dominant.
between domestic versus foreign policy priorities.
Continued economic growth—coupled
The pace of technological innovation will be key towith 1.2 billion more people by 2025— outcomes during this period. All current
will put pressure on energy, food, andtechnologies are inadequate for replacing
water resources.
traditional energy architecture on the scale needed.
The number of countries with youthful
Unless employment conditions change dramatically
populations in the “arc of instability”1in parlous youth-bulge states such as Afghanistan,will decrease, but the populations ofNigeria, Pakistan, and Yemen, these countries willseveral youth-bulge states are projected remain ripe for continued instability and state
to remain on rapid growth trajectories.
failure.
The potential for conflict will increase
The need for the US to act as regional balancer inowing to rapid changes in parts of thethe Middle East will increase, although othergreater Middle East and the spread ofoutside powers—Russia, China and India—will
lethal capabilities.
play greater roles than today.
Terrorism is unlikely to disappear by
Opportunities for mass-casualty terrorist attacks
2025, but its appeal could lessen if
using chemical, biological, or less likely, nuclear
economic growth continues in theweapons will increase as technology diffuses andMiddle East and youth unemployment is nuclear power (and possibly weapons) programs
reduced. For those terrorists that are
expand. The practical and psychologicalactive the diffusion of technologies will consequences of such attacks will intensify in an
put dangerous capabilities within theirincreasingly globalized world.
reach.
1

Countries with youthful age structures and rapidly growing populations mark a crescent or “arc of instability”
stretching from the Andean region of Latin America across Sub-Saharan Africa, the Middle East and the Caucasus,
and through the northern parts of South Asia.

iv

Key Uncertainties

Potential Consequences

Whether an energy transition away fromoil and gas—supported by improved
energy storage, biofuels, and clean
coal—is completed during the 2025
time frame.

With high oil and gas prices, major exporters suchas Russia and Iran will substantially augment theirlevels of national power, with Russia’s GDP
potentially approaching that of the UK and France.
A sustained plunge in prices, perhaps underpinned
by a fundamental switch to new energy sources,
could trigger a long-term decline for producers as
global and regional players.
Climate change is likely to exacerbate resource
scarcities, particularly water scarcities.

How quickly climate change occurs andthe locations where its impact is mostpronounced.
Whether mercantilism stages acomeback and global markets recede.
Whether advances toward democracy
occur in China and Russia.

Whether regional fears about a nucleararmed Iran trigger an arms race andgreater militarization.
Whether the greater Middle East
becomes more stable, especiallywhether Iraq stabilizes, and whether the
Arab-Israeli conflict is resolved
peacefully.
Whether Europe and Japan overcome
economic and social challenges caused
or compounded by demography.

Whether global powers work withmultilateral institutions to adapt theirstructure and performance to thetransformed geopolitical landscape.

Descending into a world of resource nationalism
increases the risk of great power confrontations.
Political pluralism seems less likely in Russia in theabsence of economic diversification. A growing
middle class increases the chances of politicalliberalization and potentially greater nationalism inChina.
Episodes of low-intensity conflict and terrorism
taking place under a nuclear umbrella could lead toan unintended escalation and broader conflict.
Turbulence is likely to increase under mostscenarios. Revival of economic growth, a more
prosperous Iraq, and resolution of the IsraeliPalestinian dispute could engender some stability as
the region deals with a strengthening Iran andglobal transition away from oil and gas.
Successful integration of Muslim minorities in
Europe could expand the size of the productive
work forces and avert social crisis. Lack of efforts
by Europe and Japan to mitigate demographic
challenges could lead to long-term declines.
Emerging powers show ambivalence toward global
institutions like the UN and IMF, but this couldchange as they become bigger players on the global
stage. Asian integration could lead to more
powerful regional institutions. NATO faces stiffchallenges in meeting growing out-of-area
responsibilities with declining European militarycapabilities. Traditional alliances will weaken.

v

Executive Summary
The international system—as constructed following the Second World War—will be almost
unrecognizable by 2025 owing to the rise of emerging powers, a globalizing economy, an
historic transfer of relative wealth and economic power from West to East, and the growing
influence of nonstate actors. By 2025, the international system will be a global multipolar one
with gaps in national power2 continuing to narrow between developed and developing countries.
Concurrent with the shift in power among nation-states, the relative power of various nonstate
actors—including businesses, tribes, religious organizations, and criminal networks—isincreasing. The players are changing, but so too are the scope and breadth of transnational issues
important for continued global prosperity. Aging populations in the developed world; growing
energy, food, and water constraints; and worries about climate change will limit and diminish
what will still be an historically unprecedented age of prosperity.
Historically, emerging multipolar systems have been more unstable than bipolar or unipolar
ones. Despite the recent financial volatility—which could end up accelerating many ongoing
trends—we do not believe that we are headed toward a complete breakdown of the international
system, as occurred in 1914-1918 when an earlier phase of globalization came to a halt.
However, the next 20 years of transition to a new system are fraught with risks. Strategic
rivalries are most likely to revolve around trade, investments, and technological innovation andacquisition, but we cannot rule out a 19th century-like scenario of arms races, territorial
expansion, and military rivalries.
This is a story with no clear outcome, as illustrated by a series of vignettes we use to map out
divergent futures. Although the United States is likely to remain the single most powerful actor,
the United States’ relative strength—even in the military realm—will decline and US leverage
will become more constrained. At the same time, the extent to which other actors—both stateand nonstate—will be willing or able to shoulder increased burdens is unclear. Policymakers
and publics will have to cope with a growing demand for multilateral cooperation when theinternational system will be stressed by the incomplete transition from the old to a still-forming
new order.
Economic Growth Fueling Rise of Emerging Players
In terms of size, speed, and directional flow, the transfer of global wealth and economic power
now under way—roughly from West to East—is without precedent in modern history. This shiftderives from two sources. First, increases in oil and commodity prices have generated windfall
profits for the Gulf states and Russia. Second, lower costs combined with government policies
have shifted the locus of manufacturing and some service industries to Asia.
Growth projections for Brazil, Russia, India, and China (the BRICs) indicate they willcollectively match the original G-7’s share of global GDP by 2040-2050. China is poised tohave more impact on the world over the next 20 years than any other country. If current trends
persist, by 2025 China will have the world’s second largest economy and will be a leading
2

National power scores, computed by the International Futures computer model, are the product of an index
combining the weighted factors of GDP, defense spending, population, and technology.

vimilitary power. It also could be the largest importer of natural resources and the biggest polluter.
India probably will continue to enjoy relatively rapid economic growth and will strive for a
multipolar world in which New Delhi is one of the poles. China and India must decide the extent
to which they are willing and capable of playing increasing global roles and how each will relate
to the other. Russia has the potential to be richer, more powerful, and more self-assured in 2025
if it invests in human capital, expands and diversifies its economy, and integrates with global
markets. On the other hand, Russia could experience a significant decline if it fails to take thesesteps and oil and gas prices remain in the $50-70 per barrel range. No other countries areprojected to rise to the level of China, India, or Russia, and none is likely to match theirindividual global clout. We expect, however, to see the political and economic power of othercountries—such as Indonesia, Iran, and Turkey—increase.
For the most part, China, India, and Russia are not following the Western liberal model for selfdevelopment but instead are using a different model, “state capitalism.” State capitalism is aloose term used to describe a system of economic management that gives a prominent role to thestate. Other rising powers—South Korea, Taiwan, and Singapore—also used state capitalism todevelop their economies. However, the impact of Russia, and particularly China, following thispath is potentially much greater owing to their size and approach to “democratization.” Weremain optimistic about the long-term prospects for greater democratization, even thoughadvances are likely to be slow and globalization is subjecting many recently democratizedcountries to increasing social and economic pressures with the potential to undermine liberal
institutions.
Many other countries will fall further behind economically. Sub-Saharan Africa will remain
the region most vulnerable to economic disruption, population stresses, civil conflict, andpolitical instability. Despite increased global demand for commodities for which Sub-SaharanAfrica will be a major supplier, local populations are unlikely to experience significant economic
gain. Windfall profits arising from sustained increases in commodity prices might further
entrench corrupt or otherwise ill-equipped governments in several regions, diminishing theprospects for democratic and market-based reforms. Although many of Latin America’s majorcountries will have become middle income powers by 2025, others, particularly those such as
Venezuela and Bolivia that have embraced populist policies for a protracted period, will lag
behind—and some, such as Haiti, will have become even poorer and less governable. Overall,Latin America will continue to lag behind Asia and other fast-growing areas in terms of
economic competitiveness.
Asia, Africa, and Latin America will account for virtually all population growth over the next
20 years; less than 3 percent of the growth will occur in the West. Europe and Japan willcontinue to far outdistance the emerging powers of China and India in per capita wealth, but they
will struggle to maintain robust growth rates because the size of their working-age populations
will decrease. The US will be a partial exception to the aging of populations in the developed
world because it will experience higher birth rates and more immigration. The number of
migrants seeking to move from disadvantaged to relatively privileged countries is likely toincrease.

vii

The number of countries with youthful age structures in the current “arc of instability” isprojected to decline by as much as 40 percent. Three of every four youth-bulge countries thatremain will be located in Sub-Saharan Africa; nearly all of the remainder will be located in thecore of the Middle East, scattered through southern and central Asia, and in the Pacific Islands.
New Transnational Agenda
Resource issues will gain prominence on the international agenda. Unprecedented global
economic growth—positive in so many other regards—will continue to put pressure on a numberof highly strategic resources, including energy, food, and water, and demand is projected to
outstrip easily available supplies over the next decade or so. For example, non-OPEC liquidhydrocarbon production—crude oil, natural gas liquids, and unconventionals such as tar sands—
will not grow commensurate with demand. Oil and gas production of many traditional energy
producers already is declining. Elsewhere—in China, India, and Mexico—production has
flattened. Countries capable of significantly expanding production will dwindle; oil and gas
production will be concentrated in unstable areas. As a result of this and other factors, the world
will be in the midst of a fundamental energy transition away from oil toward natural gas, coaland other alternatives.
The World Bank estimates that demand for food will rise by 50 percent by 2030, as a result of
growing world population, rising affluence, and the shift to Western dietary preferences by alarger middle class. Lack of access to stable supplies of water is reaching critical proportions,particularly for agricultural purposes, and the problem will worsen because of rapid urbanizationworldwide and the roughly 1.2 billion persons to be added over the next 20 years. Today,
experts consider 21 countries, with a combined population of about 600 million, to be either
cropland or freshwater scarce. Owing to continuing population growth, 36 countries, with about
1.4 billion people, are projected to fall into this category by 2025.
Climate change is expected to exacerbate resource scarcities. Although the impact of climatechange will vary by region, a number of regions will begin to suffer harmful effects, particularlywater scarcity and loss of agricultural production. Regional differences in agricultural
production are likely to become more pronounced over time with declines disproportionately
concentrated in developing countries, particularly those in Sub-Saharan Africa. Agriculturallosses are expected to mount with substantial impacts forecast by most economists by late thiscentury. For many developing countries, decreased agricultural output will be devastating
because agriculture accounts for a large share of their economies and many of their citizens live
close to subsistence levels.
New technologies could again provide solutions, such as viable alternatives to fossil fuels ormeans to overcome food and water constraints. However, all current technologies are inadequate
for replacing the traditional energy architecture on the scale needed, and new energy
technologies probably will not be commercially viable and widespread by 2025. The pace oftechnological innovation will be key. Even with a favorable policy and funding environment forbiofuels, clean coal, or hydrogen, the transition to new fuels will be slow. Major technologies
historically have had an “adoption lag.” In the energy sector, a recent study found that it takes anaverage of 25 years for a new production technology to become widely adopted.

viiiDespite what are seen as long odds now, we cannot rule out the possibility of an energy
transition by 2025 that would avoid the costs of an energy infrastructure overhaul. The greatest
possibility for a relatively quick and inexpensive transition during the period comes from better
renewable generation sources (photovoltaic and wind) and improvements in battery technology.
With many of these technologies, the infrastructure cost hurdle for individual projects would belower, enabling many small economic actors to develop their own energy transformation projects
that directly serve their interests—e.g., stationary fuel cells powering homes and offices,
recharging plug-in hybrid autos, and selling energy back to the grid. Also, energy conversion
schemes—such as plans to generate hydrogen for automotive fuel cells from electricity in the
homeowner’s garage—could avoid the need to develop complex hydrogen transportation
infrastructure.
Prospects for Terrorism, Conflict, and Proliferation
Terrorism, proliferation, and conflict will remain key concerns even as resource issues move up
on the international agenda. Terrorism is unlikely to disappear by 2025, but its appeal could
diminish if economic growth continues and youth unemployment is mitigated in the Middle East.
Economic opportunities for youth and greater political pluralism probably would dissuade somefrom joining terrorists’ ranks, but others—motivated by a variety of factors, such as a desire forrevenge or to become “martyrs”—will continue to turn to violence to pursue their objectives.
In the absence of employment opportunities and legal means for political expression, conditions
will be ripe for disaffection, growing radicalism, and possible recruitment of youths into
terrorist groups. Terrorist groups in 2025 will likely be a combination of descendants of longestablished groups—that inherit organizational structures, command and control processes, andtraining procedures necessary to conduct sophisticated attacks—and newly emergent collectionsof the angry and disenfranchised that become self-radicalized. For those terrorist groups that are
active in 2025, the diffusion of technologies and scientific knowledge will place some of theworld’s most dangerous capabilities within their reach. One of our greatest concerns continues
to be that terrorist or other malevolent groups might acquire and employ biological agents, orless likely, a nuclear device, to create mass casualties.
Although Iran’s acquisition of nuclear weapons is not inevitable, other countries’ worries about
a nuclear-armed Iran could lead states in the region to develop new security arrangements withexternal powers, acquire additional weapons, and consider pursuing their own nuclear ambitions.
It is not clear that the type of stable deterrent relationship that existed between the great powers
for most of the Cold War would emerge naturally in the Middle East with a nuclear-weapons
capable Iran. Episodes of low-intensity conflict taking place under a nuclear umbrella could leadto an unintended escalation and broader conflict if clear red lines between those states involved
are not well established.
We believe ideological conflicts akin to the Cold War are unlikely to take root in a world inwhich most states will be preoccupied with the pragmatic challenges of globalization andshifting global power alignments. The force of ideology is likely to be strongest in the Muslim
world—particularly the Arab core. In those countries that are likely to struggle with youth
bulges and weak economic underpinnings—such as Pakistan, Afghanistan, Nigeria, andYemen—the radical Salafi trend of Islam is likely to gain traction.

ix

Types of conflict we have not seen for awhile—such as over resources—could reemerge.
Perceptions of energy scarcity will drive countries to take actions to assure their future access toenergy supplies. In the worst case, this could result in interstate conflicts if government leadersdeem assured access to energy resources, for example, to be essential for maintaining domestic
stability and the survival of their regimes. However, even actions short of war will haveimportant geopolitical consequences. Maritime security concerns are providing a rationale fornaval buildups and modernization efforts, such as China’s and India’s development of blue-water
naval capabilities. The buildup of regional naval capabilities could lead to increased tensions,
rivalries, and counterbalancing moves but it also will create opportunities for multinational
cooperation in protecting critical sea lanes. With water becoming more scarce in Asia and the
Middle East, cooperation to manage changing water resources is likely to become more difficult
within and between states.
The risk of nuclear weapon use over the next 20 years, although remaining very low, is likely to
be greater than it is today as a result of several converging trends. The spread of nuclear
technologies and expertise is generating concerns about the potential emergence of new nuclear
weapon states and the acquisition of nuclear materials by terrorist groups. Ongoing low-intensity
clashes between India and Pakistan continue to raise the specter that such events could escalate
to a broader conflict between those nuclear powers. The possibility of a future disruptive regimechange or collapse occurring in a nuclear weapon state such as North Korea also continues toraise questions regarding the ability of weak states to control and secure their nuclear arsenals.
If nuclear weapons are used in the next 15-20 years, the international system will be shocked as
it experiences immediate humanitarian, economic, and political-military repercussions. A future
use of nuclear weapons probably would bring about significant geopolitical changes as somestates would seek to establish or reinforce security alliances with existing nuclear powers andothers would push for global nuclear disarmament.
A More Complex International System
The trend toward greater diffusion of authority and power that has been occurring for a couple
decades is likely to accelerate because of the emergence of new global players, the worsening
institutional deficit, potential expansion of regional blocs, and enhanced strength of nonstate
actors and networks. The multiplicity of actors on the international scene could add strength—
in terms of filling gaps left by aging post-World War II institutions—or further fragment theinternational system and incapacitate international cooperation. The diversity in type of actor
raises the likelihood of fragmentation occurring over the next two decades, particularly given thewide array of transnational challenges facing the international community.
The rising BRIC powers are unlikely to challenge the international system as did Germany andJapan in the 19th and 20th centuries, but because of their growing geopolitical and economic clout,
they will have a high degree of freedom to customize their political and economic policies rather
than fully adopting Western norms. They also are likely to want to preserve their policy freedom
to maneuver, allowing others to carry the primary burden for dealing with such issues as
terrorism, climate change, proliferation, and energy security.

xExisting multilateral institutions—which are large and cumbersome and were designed for adifferent geopolitical order—will have difficulty adapting quickly to undertake new missions,accommodate changing memberships, and augment their resources.
Nongovernmental organizations (NGOs)—concentrating on specific issues—increasingly will
be a part of the landscape, but NGO networks are likely to be limited in their ability to effectchange in the absence of concerted efforts by multilateral institutions or governments. Efforts atgreater inclusiveness—to reflect the emergence of the newer powers—may make it harder forinternational organizations to tackle transnational challenges. Respect for the dissenting viewsof member nations will continue to shape the agenda of organizations and limit the kinds ofsolutions that can be attempted.
Greater Asian regionalism—possible by 2025—would have global implications, sparking or
reinforcing a trend toward three trade and financial clusters that could become quasi-blocs:
North America, Europe, and East Asia. Establishment of such quasi-blocs would have
implications for the ability to achieve future global World Trade Organization (WTO)
agreements. Regional clusters could compete in setting trans-regional product standards for
information technology, biotechnology, nanotechnology, intellectual property rights, and otheraspects of the “new economy.” On the other hand, an absence of regional cooperation in Asia
could help spur competition among China, India, and Japan over resources such as energy.
Intrinsic to the growing complexity of the overlapping roles of states, institutions, and nonstate
actors is the proliferation of political identities, which is leading to establishment of new
networks and rediscovered communities. No one political identity is likely to be dominant inmost societies by 2025. Religion-based networks may be quintessential issue networks andoverall may play a more powerful role on many transnational issues such as the environment andinequalities than secular groupings.
The United States: Less Dominant Power
By 2025 the US will find itself as one of a number of important actors on the world stage, albeit
still the most powerful one. Even in the military realm, where the US will continue to possess
considerable advantages in 2025, advances by others in science and technology, expanded
adoption of irregular warfare tactics by both state and nonstate actors, proliferation of long-range
precision weapons, and growing use of cyber warfare attacks increasingly will constrict US
freedom of action. A more constrained US role has implications for others and the likelihood of
new agenda issues being tackled effectively. Despite the recent rise in anti-Americanism, the US
probably will continue to be seen as a much-needed regional balancer in the Middle East andAsia. The US will continue to be expected to play a significant role in using its military power tocounter global terrorism. On newer security issues like climate change, US leadership will be
widely perceived as critical to leveraging competing and divisive views to find solutions. At thesame time, the multiplicity of influential actors and distrust of vast power means less room for
the US to call the shots without the support of strong partnerships. Developments in the rest of
the world, including internal developments in a number of key states—particularly China andRussia—are also likely to be crucial determinants of US policy.

xi

2025—What Kind of Future?
The above trends suggest major discontinuities, shocks, and surprises, which we highlightthroughout the text. Examples include nuclear weapons use or a pandemic. In some cases, thesurprise element is only a matter of timing: an energy transition, for example is inevitable; theonly questions are when and how abruptly or smoothly such a transition occurs. An energy
transition from one type of fuel (fossil fuels) to another (alternative) is an event that historicallyhas only happened once a century at most with momentous consequences. The transition fromwood to coal helped trigger industrialization. In this case, a transition—particularly an abrupt
one—out of fossil fuels would have major repercussions for energy producers in the Middle Eastand Eurasia, potentially causing permanent decline of some states as global and regional powers.
Other discontinuities are less predictable. They are likely to result from an interaction of several
trends and depend on the quality of leadership. We put uncertainties such as whether China or
Russia becomes a democracy in this category. China’s growing middle class increases the
chances but does not make such a development inevitable. Political pluralism seems less likely
in Russia in the absence of economic diversification. Pressure from below may force the issue,or a leader might begin or enhance the democratization process to sustain the economy or spur
economic growth. A sustained plunge in the price of oil and gas would alter the outlook andincrease prospects for greater political and economic liberalization in Russia. If either country
were to democratize, it would represent another wave of democratization with wide significancefor many other developing states.
Also uncertain are the outcomes of demographic challenges facing Europe, Japan, and even
Russia. In none of these cases does demography have to spell destiny with less regional andglobal power an inevitable outcome. Technology, the role of immigration, public healthimprovements, and laws encouraging greater female participation in the economy are some of
the measures that could change the trajectory of current trends pointing toward less economic
growth, increased social tensions, and possible decline.
Whether global institutions adapt and revive—another key uncertainty—also is a function ofleadership. Current trends suggest a dispersion of power and authority will create a global
governance deficit. Reversing those trend lines would require strong leadership in theinternational community by a number of powers, including the emerging ones.
Some uncertainties would have greater consequences—should they occur—than would others.
In this work, we emphasize the overall potential for greater conflict—some forms of which could
threaten globalization. We put WMD terrorism and a Middle East nuclear arms race in thiscategory. The key uncertainties and possible impacts are discussed in the text and summarized
in the textbox on page vii. In the four fictionalized scenarios, we have highlighted newchallenges that could emerge as a result of the ongoing global transformation. They present new
situations, dilemmas, or predicaments that represent departures from recent developments. As aset, they do not cover all possible futures. None of these is inevitable or even necessarily likely;but, as with many other uncertainties, the scenarios are potential game-changers.
•

In A World Without the West, the new powers supplant the West as the leaders on the worldstage.

xii

•October Surprise illustrates the impact of inattention to global climate change; unexpectedmajor impacts narrow the world’s range of options.

•

In BRICs’ Bust-Up, disputes over vital resources emerge as a source of conflict between
major powers—in this case two emerging heavyweights—India and China.

•

In Politics is Not Always Local, nonstate networks emerge to set the international agenda on
the environment, eclipsing governments.

xiii

xiv

nonstate actors that are not grouped into rival
camps of roughly equal weight. The mostsalient characteristics of the “new order” willbe the shift from a unipolar world dominatedby the United States to a relatively
unstructured hierarchy of old powers andrising nations, and the diffusion of powerfrom state to nonstate actors.

The international system—as constructedfollowing the Second World War—will bealmost unrecognizable by 2025. Indeed,“international system” is a misnomer as it islikely to be more ramshackle than orderly, its
composition hybrid and heterogeneous as
befits a transition that will still be a work inprogress in 2025. The transformation is being
fueled by a globalizing economy, marked byan historic shift of relative wealth andeconomic power from West to East, and by
the increasing weight of new players—
especially China and India. The US willremain the single most important actor but
will be less dominant. As was true of theUnited States in the 19th and 20th centuries,
China and India will at times be reticent andat other times impatient to assume larger roles
on the world stage. In 2025, both will still be
more concerned about their own internal
development than changing the international
system.

“…we do not believe that we are headed
toward a complete breakdown [of theinternational system]…However, the next 20
years of transition toward a newinternational system are fraught withrisks…”
History tells us that rapid change brings many
dangers. Despite the recent financial
volatility, which could end up accelerating
many ongoing trends, we do not believe that
we are headed toward a complete
breakdown—as occurred in 1914-1918 when
an earlier phase of globalization came to a
halt. However, the next 20 years of transition
toward a new international system are fraught
with risks—more than we envisaged when we
published Mapping the Global Future3 in2004. These risks include the growing
prospect of a nuclear arms race in the Middle
East and possible interstate conflicts overresources. The breadth of transnational
issues requiring attention also is increasing toinclude issues connected with resource
constraints in energy, food, and water; andworries about climate change. Global
institutions that could help the world deal
with these transnational issues and, moregenerally, mitigate the risks of rapid change
currently appear incapable of rising to theConcurrent with the shift in power among
nation-states, the relative power of various
nonstate actors—including businesses, tribes,
religious organizations, and even criminal
networks—will continue to increase. Several
countries could even be “taken over” and run
by criminal networks. In areas of Africa orSouth Asia, states as we know them mightwither away, owing to the inability of
governments to provide for basic needs,
including security.
By 2025, the international community will becomposed of many actors in addition tonation-states and will lack an overarchingapproach to global governance. The “system”
will be multipolar with many clusters of bothstate and nonstate actors. Multipolarinternational systems—like the Concert ofEurope—have existed in the past, but the onethat is emerging is unprecedented because it isglobal and encompasses a mix of state and3

See Mapping the Global Future: Report of the
National Intelligence Council’s 2020 Project,
National Intelligence Council, December 2004, which
can be found at:www.dni.gov/nic/NIC_2020_project.html.

1Comparison Between Mapping the Global Future:
Report of the Intelligence Council’s 2020 Projectand Global Trends 2025: A Transformed World
The most dramatic difference between Mapping the Global Future: Report of the Intelligence
Council’s 2020 Project and Global Trends 2025: A Transformed World is the latter’s
assumptions of a multipolar future, and therefore dramatic changes in the international system.
The 2025 report describes a world in which the US plays a prominent role in global events, but
the US is one among many global actors who manage problems. In contrast, the 2020 reportprojects continued US dominance, positing that most major powers have forsaken the idea ofbalancing the US.
The two documents also differ in their treatment of energy supply, demand, and new alternative
sources. In 2020, energy supplies “in the ground” are considered “sufficient to meet global
demand.” What is uncertain, according to the earlier report, is whether political instability inproducer countries, supply disruptions, or competition for resources might deleteriously affectinternational oil markets. Though 2020 mentions the global increase in energy consumption, itemphasizes the domination of fossil fuels. In contrast, 2025 sees the world in the midst of atransition to cleaner fuels. New technologies are projected to provide the capability for fossil
fuel substitutes and solutions to water and food scarcity. The 2020 report acknowledges thatenergy demands will influence superpower relations, but the 2025 report considers energy
scarcity as a driving factor in geopolitics.
Both reports project probable strong global economic growth—fueled by the rise of Brazil,
Russia, India, and China, absent major shocks. The 2025 report, however, assesses thelikelihood of major discontinuities to be high, emphasizing that “no single outcome seems
preordained” and that the next 20 years of transition toward a new international system are
fraught with risks, such as a nuclear arms race in the Middle East and possible interstate conflicts
over resources.
The scenarios in both reports address the future of globalization, the future structure of theinternational system, and the dividing lines among groups that will cause conflict orconvergence. In both reports, globalization is seen as a driver so pervasive that it will reordercurrent divisions based on geography, ethnicity, and religious and socio-economic status.

2

challenges without concerted efforts by theirleaders.

Alternative Futures
This study is organized into seven sections
that examine:

More Change than Continuity
The rapidly changing international order at atime of growing geopolitical challenges
increases the likelihood of discontinuities,
shocks, and surprises. No single outcome
seems preordained: the Western model of
economic liberalism, democracy, andsecularism, for example, which many
assumed to be inevitable, may lose its
luster—at least in the medium term.
In some cases, the surprise element is only amatter of timing: an energy transition, forexample, is inevitable; the only questions arewhen and how abruptly or smoothly such atransition occurs. Other discontinuities areless predictable. Recognizing that what may
seem implausible today could become
feasible or even likely by 2025, we havelooked at a number of single development“shocks.” Examples include the global
impact of a nuclear arms exchange, a rapid
replacement for fossil fuels, and a“democratic” China.

•

The Globalizing Economy.

•

Demographics of Discord.

•

The New Players.

•

Scarcity in the Midst of Plenty.

•

Growing Potential for Conflict.

•

Will the International System Be Up to
the Challenges?

•

The US in a Power-sharing World.

As with our previous works, we will describe
possible alternative futures that could result
from the trends we discuss.4 We see the next
15-20 years as one of those great historicalturning points where multiple factors arelikely to be in play. How such factors
intersect with one another and the role ofleadership will be crucial to the outcome.

New technologies could provide solutions,such as viable alternatives to fossil fuel ormeans to overcome food and water
constraints. A critical uncertainty is whether
new technologies will be developed andcommercialized in time to avert a significant
slowdown in economic growth owing toresource constraints. Such a slowdown would
jeopardize the rise of new powers and deal aserious blow to the aspirations of thosecountries not yet fully in the globalization
game. A world in which shortages
predominate could trigger behaviors different
from one in which scarcities are overcome
through technology or other means.

In constructing these scenarios, we focused on
critical uncertainties regarding the relative
importance of the nation-state as comparedwith nonstate actors, and the level of global
cooperation. In some of the scenarios, states
are more dominant and drive global
dynamics; in others, nonstate actors, including
religious movements, nongovernmentalorganizations (NGOs), and super-empowered4

See Global Trends 2015, A Dialogue About the
Future with Nongovernment Experts, National
Intelligence Council, December 2000; and Mapping
the Global Future: Report of the National
Intelligence Council’s 2020 Project, National
Intelligence Council, December 2004. The reports canbe found atwww.dni.gov/nic/NIC_global trends 2015.html andwww.dni.gov/nic/NIC_2020_project.html respectively.

3

community has not been able to issue specificwarnings, but worries increase that a tipping
point has been reached in which climatechange has accelerated and possible impacts
will be very destructive. New York City is hit
by a major hurricane linked to global climatechange; the NY Stock Exchange is severely
damaged and, in the face of such destruction,world leaders must begin to think about
taking drastic measures, such as relocatingparts of coastal cities.

individuals play more important roles. In
some of the scenarios, key players interact incompeting groups, through partnerships andcross-border affiliations. Other scenarios
envision more interaction as autonomous
players operate independently and sometimes
conflict with one another.
In all the fictionalized scenarios, we highlightchallenges that could emerge as a result of theongoing global transformation. The scenarios
present new situations, dilemmas, orpredicaments that would cause upheavals in
the global landscape, leading to very different“worlds.” None of these is inevitable or evennecessarily likely; but, as with many otheruncertainties, they are potential gamechangers.

BRICs’ Bust-Up. In this world, conflictbreaks out between China and India overaccess to vital resources. Outside powers
intervene before the conflict escalates andexpands into a global conflagration. The
clash is triggered by Chinese suspicion ofefforts by others to threaten Beijing’s energy
supplies. Misperceptions and miscalculations
lead to the clash. The scenario highlights theimportance of energy and other resources tocontinued growth and development as a great
power. It shows the extent to which conflictin a multipolar world is just as likely to occur
between rising states as between older andnewer powers.

A World Without the West. In this world,
described in a fictional letter from a future
head of the Shanghai Cooperation
Organization (SCO), new powers supplant theWest as the leaders on the world stage. The
US feels overburdened and withdraws fromCentral Asia, including Afghanistan; Europe
will not step up to the plate and take the lead.
Russia, China, and others are forced to deal
with the potential for spillover and instability
in Central Asia. The SCO gains ascendance
while NATO’s status declines. Anti-China
antagonism in the US and Europe reaches acrescendo; protectionist trade barriers are put
in place. Russia and China enter a marriageof convenience; other countries—India andIran—rally around them. The lack of any
stable bloc—whether in the West or the nonWestern world—adds to growing instability
and disorder, potentially threatening
globalization.

Politics is Not Always Local. In this world,
outlined in an article by a fictional Financial
Times reporter, various nonstate networks—
NGOs, religious groups, business leaders, andlocal activists—combine to set theinternational agenda on the environment anduse their clout to elect the UN Secretary
General. The global political coalition of
nonstate actors plays a crucial role in securing
a new worldwide climate change agreement.
In this new connected world of digitalcommunications, growing middle classes, andtransnational interest groups, politics is nolonger local and domestic and international
agendas become increasingly interchangeable.

October Surprise. In this world, depicted in adiary entry of a future US President, many
countries have been preoccupied withachieving economic growth at the expense ofsafeguarding the environment. The scientific4Long-Range Projections: A Cautionary TaleIn the 20th century, experts forecasting the next 20 years—roughly the time frame of this study—
often missed major geopolitical events, basing their predictions largely on linear projections
without exploring possibilities that could cause discontinuities. Before WW I, while tensions
between European “great powers” were on the rise, few had an inkling of major changes in theoffing, from the extent of mutual slaughter to the downfall of age-old empires. In the early
1920s, few envisioned the lethal situation about to unfold, ushered in by the Great Depression,
Stalin’s gulags, and an even more bloody world war encompassing multiple genocides. The
postwar period saw the establishment of a new international system—many of whose
institutions—the UN and Bretton Woods—remain with us. Although the bipolar and nuclear age
did not lack war and conflict, it did provide a stable framework until the collapse of the Soviet
Union. The development of a globalized economy in which China and India play major roles
has opened a new era without clear outcomes.
Lessons from the last century, however, appear to suggest:•

Leaders and their ideas matter. No history of the past hundred years can be told without
delving into the roles and thinking of such leaders as Vladimir Lenin, Josef Stalin, Adolf
Hitler or Mao Zedong. The actions of dominating leaders are the hardest element toanticipate. At several junctures in the 20th century, Western experts thought liberal andmarket ideas had triumphed. As demonstrated by the impacts of Churchill, Roosevelt, andTruman, leadership is key even in societies where institutions are strong and the maneuvering
room for wielding personal power is more constrained.

•

Economic volatility introduces a major risk factor. Historians and social scientists havediscovered a strong correlation between rapid economic change—both positive andnegative—and political instability. The massive dislocation and economic volatility
introduced by the end of the “first” globalization in 1914-1918 and the rise of protectionist
barriers in the 1920s and 1930s, combined with the lingering resentments over the Versailles
peace settlement, laid the groundwork for WW II. The collapse of multinational and ethnic
empires—begun after WW I and continuing with the end of the colonial empires in the postWW II period—also unleashed a long series of national and ethnic conflicts that reverberates
today. Today’s globalization also has spurred the movement of people, disrupting traditionalsocial and geographic boundaries.

•

Geopolitical rivalries trigger discontinuities more than does technological change.
Many stress the role of technology in bringing about radical change and there is no question
it has been a major driver. We—as others—have oftentimes underestimated its impact.
However, over the past century, geopolitical rivalries and their consequences have been moresignificant causes of the multiple wars, collapse of empires, and rise of new powers thantechnology alone.

5

6

several factors, including the ability ofWestern countries to reduce oil consumption
and demand, the ability of these states tocapitalize on a favorable export climate insectors of comparative strength, such astechnology and services, and the domestic
policies of recipient states, particularly on
issues of monetary policy and openness toforeign investment.

In terms of size, speed, and directional flow,
the global shift in relative wealth andeconomic power now under way—roughly
from West to East—is without precedent inmodern history. This shift derives from two
key sources. First, sustained increases in oiland commodity prices have generated
windfall profits for the Gulf states andRussia.. Second, relatively low labor costs
combined with certain government policies
have shifted the locus of manufacturing andsome service industries to Asia. Strong
global demand for these products has madefor wide economies of scale margins acrossAsia, particularly in China and India. These
shifts in demand and supply are deep andstructural, which suggests that the resulting
transfer of economic power we are witnessing
is likely to endure. These shifts are thedriving force behind globalization that—as
we underlined in our Mapping the Global
Future report—is a meta-trend, transforming
historic patterns of economic flows andunderlying stocks, creating pressures forrebalancing that are painful for both rich andpoor countries.

Back to the Future
Asia’s economic powerhouses—China andIndia—are restoring the positions they held
two centuries ago when China produced
approximately 30 percent and India 15
percent of the world’s wealth. China andIndia, for the first time since the 18th century,
are set to be the largest contributors toworldwide economic growth. These twocountries will likely surpass the GDP of allother economies except the US and Japan by2025, but they will continue to lag in percapita income for decades. The years around2025 will be characterized by the “dualidentity” of these Asian giants: powerful, butmany individual Chinese or Indians feeling
relatively poor compared to Westerners.

“In terms of size, speed, and directional
flow, the global shift in relative wealth andeconomic power now under way—roughly
from West to East—is without precedent inmodern history.”

Growth projections for Brazil, Russia, India,
and China have them collectively matching
the original G-7’s share of global GDP by
2040-2050. According to these same
projections, the eight largest economies in2025 will be, in descending order: the US,
China, India, Japan, Germany, the UK, andFrance, and Russia.

Although this transfer is not zero-sum, early
losers such as most of Latin America (withthe exception of Brazil and a few others) and
Africa are receiving neither a stake in theinitial asset transfer nor any significant
inbound investment from the recipient
countries. Certain industrialized states such
as Japan also appear increasingly challenged
by inchoate financial links among theseemerging markets. The US and Eurozone arereceiving much of this emerging market
liquidity, but whether they will benefit
relative to their current position depends on

China, especially, has emerged as a new
financial heavyweight, claiming $2 trillion inforeign exchange reserves in 2008. Rapidly
developing countries, including China andRussia, have created sovereign wealth funds(SWFs)5 with the aim of using their hundreds
5

Sovereign wealth funds (SWFs) constitute capital
generated from government surpluses and invested in
private markets abroad. Since 2005, the number of7

of billions of dollars’ worth of assets toachieve higher returns to help them weather
economic storms. Some of these funds will
return to the West in the form of investments,
thereby promoting greater productivity andeconomic competitiveness. However, foreign
direct investment (FDI) by emerging powers
in the developing world is increasing
significantly.

Over the next several decades the number ofpeople considered to be in the “global middle
class” is projected to swell from 440 million
to 1.2 billion or from 7.6 percent of theworld’s population to 16.1 percent, according
to the World Bank. Most of the new entrants
will come from China and India.
•

A generation of globally competitive
companies is emerging from the new powers,
helping to further solidify their position in the
global marketplace; from Brazil inagribusiness and offshore energy exploration;
Russia in energy and metals; India in IT
services, pharmaceuticals, and auto parts; andChina in steel, home appliances, andtelecommunications equipment. Of the top
100 new global corporate leaders from thenon-OECD world listed in a 2006 report fromThe Boston Consulting Group, 84 were
headquartered in Brazil, Russia, China andIndia.

However, there is a dark side to the global
middle class coin: continued divergenceat the extremes. Many countries—
especially the landlocked and resourcepoor ones in Sub Saharan Africa—lackthe fundamentals for entering the
globalization game. By 2025-2030, theportion of the world considered poor will
shrink by about 23 percent, but theworld’s poor—still 63 percent of the
globe’s population—stand to become
relatively poorer, according to the WorldBank.

State Capitalism: A Post-DemocraticMarketplace Rising in the East?
The monumental achievement of millions
escaping extreme poverty underpins the riseof new powers—especially China and India—
on the international scene but does not tell thewhole story. Today wealth is moving not justfrom West to East but is concentrating more
under state control. In the wake of the 2008
global financial crisis, the state’s role in theeconomy may be gaining more appeal
throughout the world.

Growing Middle ClassWe are witnessing an unprecedented momentin human history: never before have so many
been lifted out of extreme poverty as ishappening today. A stunning 135 million
people escaped dire poverty between 1999
and 2004 alone—more than the population ofJapan and almost as many as live in Russia
today.

With some notable exceptions like India, thestates that are beneficiaries of the massive
shift of wealth—China, Russia, and Gulf
states—are non-democratic and theireconomic policies blur distinctions between
public and private. These states are notfollowing the Western liberal model for selfdevelopment but are using a different
model—“state capitalism.” State capitalism
is a loose term to describe a system ofstates with SWFs has grown from three to over 40, andthe aggregate sum under their control from around$700 billion to $3 trillion. The range of functions
served by SWFs also has expanded, as many of thestates that created them recently have done so out of adesire to perpetuate current account surpluses, or tocultivate intergenerational savings, rather than to buffer
commodity market volatility. Should current trends
hold, SWFs will swell to over $6.5 trillion within five
years, and to $12-15 trillion within a decade, exceeding
total fiscal reserves and comprising some 20 percent of
all global capitalization.

8

economic management that gives a prominentrole to the state.

state control and distrust of an unregulated
marketplace.

Others—like South Korea, Taiwan, andSingapore—also chose state capitalism as
they initially developed their economies.
However, the impact of Russia, andparticularly China, following this path ispotentially greater given their weight on theworld stage. Ironically, the majorenhancement of the state role in Western
economies now under way as a result of thecurrent financial crisis may reinforce theemerging countries’ preference for greater

These states typically favor:•

9

An Open Export Climate. Given thewealth flowing into these states, their
desire for a weak currency despite strong
domestic economic performance requires
heavy intervention in currency markets,
leading to heavy official asset
accumulation, typically until now in theform of US Treasury bonds.

Globalization at Risk with the 2008 Financial Crisis?
As with most of the trends discussed in this report, the impacts from the financial crisis will
depend heavily on government leadership. Proactive fiscal and monetary policies probably will
ensure the current panic and likely deep national recessions will not turn into an extended
depression, although reduced economic growth could slow globalization’s pace, increasingprotectionist pressures and financial fragmentation.
The crisis is accelerating the global economic rebalancing. Developing countries have been hurt;
several, such as Pakistan with its large current account deficit, are at considerable risk. Even
those with cash reserves—such as South Korea and Russia—have been severely buffeted; steep
rises in unemployment and inflation could trigger widespread political instability and throw
emerging powers off course. However, if China, Russia, and Mideast oil exporters can avoid
internal crises, they will be in a position to leverage their likely still sizeable reserves, buying
foreign assets and providing direct financial assistance to still-struggling countries for politicalfavors or to seed new regional initiatives. In the West, the biggest change—not anticipated
before the crisis—is the increase in state power. Western governments now own large swaths of
their financial sectors and must manage them, potentially politicizing markets.
The crisis has increased calls for a new “Bretton Woods” to better regulate the global economy.
World leaders, however, will be challenged to renovate the IMF and devise a globallytransparent and effective set of rules that apply to differing capitalisms and levels of financial
institutional development. Failure to construct a new all-embracing architecture could leadcountries to seek security through competitive monetary policies and new investment barriers,
increasing the potential for market segmentation.
••

added ladder into high technology andservice sectors. The significant difference
between today’s efforts and those ofearlier periods, however, is that thesestates now directly own the economic
wherewithal to implement their plans andneed not rely on incentivizing parties orluring foreign capital.

Sovereign Wealth Funds (SWFs) and
Other State Investment Vehicles. Having
amassed huge assets, Gulf Cooperation
Council (GCC) and Chinese officials haveincreasingly used various forms ofsovereign investment. States entering
private markets are doing so partly for theprospect of higher return. SWFs are themost widely publicizedbut only one of many sovereign
investment vehicles.

•

Renewed Efforts Toward Industrial
Policy. Governments that highly manage
their economies often have an interest inindustrial policy. China, Russia, and the
Gulf states have state plans to diversify
their economies and climb the value-

10

Rollback of Privatization and the
Resurgence of State-Owned Enterprises(SOEs). In the early 1990s, many
economists predicted that SOEs would bea relic of the 20th century. They were
wrong. SOEs are far from extinction, arethriving, and in many cases seek toIndeed, the Wall Street events of 2008 markthe opening chapters of a larger story of
rebalancing and course correction from these
imbalances. The righting of these imbalances
will be bumpy as the global economy moves
into realignment. The difficulties of global
economic policy coordination—in part a
byproduct of the growing political andfinancial multipolarity—increase the chancesof a bumpy ride.

expand beyond their own borders,
particularly in the commodities andenergy sectors. SOEs, especially nationaloil companies, are likely to attract
investment for the surfeit of ready capitalthat these states are accumulating. Much
like SWFs, SOEs serve a secondaryfunction as pressure valves, helping torelieve inflation and currency appreciationpressures. They also can act as vehicles
for increased political control. To theextent state-owned firms reach acrossstate borders, they may become vehicles
for geopolitical influence, particularly
those dealing in key strategic resources
such as energy.

One of the following developments or a
combination could cause an adjustment: aslowdown in US consumption and an
attendant increase in the US savings rate, andan increase in demand from emerging Asianmarkets, particularly China and India.
Whether imbalances stabilize or rebound out
to 2025 depends in part on the particularlessons that the emerging powers choose to
draw from the financial crisis. Some mayinterpret the crisis as a rationale for hoarding
yet more in the way of a cushion, whileothers—in understanding that few if any
emerging economies were immune from thewidespread downturn—could come to regard
the stockpiling of reserves as less of apriority.

The increasing role of the state as a player inemerging markets has contrasted until
recently with nearly opposite trends in theWest, where the state has struggled to keep
pace with private financial engineering, suchas derivatives and credit swaps. The seeds ofthis capital market’s depth and complexity
date to the 1980s but grew with rising asset
prices and bull markets from the 1990s until
recently. The financial engineering—based
upon a magnitude of leverage unthinkableeven a decade ago—in turn has injected an
unprecedented degree of risk and volatility
into global markets. Greater controls andinternational regulation—a possible outcomeof the current financial crisis—could change
this trajectory, although a gap on the role ofthe state in the economy is likely to remain
between the West and the rapidly emerging
economic powers.

Major financial disruptions and the needed
economic and political readjustments haveoften spread beyond the financial arena.
History suggests that this rebalancing will
require long-term efforts to establish a newinternational system. Specific problems to be
overcome include:•

Bumpy Ride in Correcting Current Global
Imbalances
The refusal of emerging markets to allow
currency appreciation despite booming
economies, together with the willingness of
the US to incur greater sums of debt, hascreated a mutually supporting, albeit
ultimately unsustainable cycle of imbalances.

11

Greater Trade and Investment
Protectionism. Increasingly aggressive
foreign acquisitions by corporations basedin the rapidly emerging economies—
many will be state-owned—will raise
political tensions, potentially creating apublic backlash in countries against
foreign trade and investment. The
perception of uneven benefits from

unparalleled global reserve currency by2025, and become a first among equals ina market basket of currencies. This may
force the US to consider more carefully
how the conduct of its foreign policy
affects the dollar. Without a steadysource of external demand for dollars, US
foreign policy actions might bring
exposure to currency shock and higher
interest rates for Americans.

globalization in the US may fuelprotectionist forces.
••

An Accelerated Resource Grab. The new
powers increasingly will have the means
to acquire commodities in an effort toensure continued development. Russia,
China, and India have linked their national
security to increased state control of andaccess to energy resources and markets
through their state-owned energy firms.
Gulf states are interested in land leases
and purchases elsewhere to ensure
adequate food supplies.

Growing use of the euro is already evident,
potentially making it harder for the US in the
future to exploit the unique role of the dollar
in international trade and investment to freeze
assets and disrupt the financial flows of its
adversaries, such as it recently has
accomplished with financial sanctions against
the leadership in North Korea and Iran.
Incentives and inclinations to move awayfrom the dollar will be tempered, however, byuncertainties and instabilities in theinternational financial system.

Slowing Democratization. China,
particularly, offers an alternative model
for political development in addition todemonstrating a different economic
pathway. This model may prove
attractive to under-performing
authoritarian regimes, in addition to weakdemocracies frustrated by years of
economic underperformance.

•

The Overshadowing of International
Financial Institutions. Sovereign wealthfunds have injected more capital into
emerging markets than the IMF andWorld Bank combined, and this trend
could even continue with unwinding
global imbalances. China already is
beginning to couple SWF investment withdirect aid and foreign assistance, often
directly outbidding the World Bank on
development projects. Such foreign
investment by newly rich states such as
China, Russia, and the GCC states willlead to diplomatic realignments and new
relationships between these states and thedeveloping world.

•

A Decline in the Dollar’s International
Role. Despite recent inflows into dollar
assets and the appreciation of the dollar,
the dollar could lose its status as an

Multiple Financial Nodes
Anchored by the US and EU in the West,
Russia and the GCC states in Central Asiaand the Middle East, and China andeventually India in the East, the financial
landscape for the first time will be genuinely
global and multipolar. Insomuch as the recent
financial crisis heightens interest in lessleveraged finance, Islamic finance may also
see a boost. While such a global andmultipolar financial order signals a relative
decline for US power and a likely increase inmarket competition and complexity, thesedownsides are likely to be accompanied bymany positives. Over time, and as they
develop, these multiple financial centers may
create redundancies that help insulate markets
against financial shocks and currency crises,
quelling their effects before global contagion
takes hold. Similarly, as regions become
more invested in their financial epicenters,
incentives to preserve geopolitical stability to12Science and Technology Leadership: A Test for the Emerging Powers
The relationship between achievements in science and technology and economic growth has
been long established, but the path is not always predictable. More significant is the overall
effectiveness of a nation’s National Innovation System (NIS)—the process by which intellectual
concepts are moved toward commercialization for the benefit of a national economy. According
to a NIC-contracted global survey of scientific experts, the United States currently boasts a
stronger innovation system than the developing economies of China and India.
•

The idea of an NIS was first developed in the 1980s as an aid to understanding how somecountries were proving better than others at turning intellectual concepts into commercial
products that would boost their economies. The NIS model is evolving as information
technology and the effect of increased globalization (and multinational corporations)influence national economies.

According to the NIC-commissioned study, nine factors can contribute to a modern NIS: fluidityof capital, flexibility of the labor pool, government receptivity to business, information
communication technologies, private sector development infrastructure, legal systems to protect
intellectual property rights, available scientific and human capital, marketing skills, and culturalpropensity to encourage creativity.
China and India are expected in 10 years to achieve near parity with the US in two different
areas: scientific and human capital (India) and government receptivity to business innovation(China). China and India will narrow significantly but not close the gap in all remaining factors.
The United States is expected to remain dominant in three areas: protection for intellectual
property rights, business sophistication to mature innovation, and encouragement of creativity.
Companies in China, India, and other major developing countries have unique opportunities tobe the first to develop a host of emerging technologies. This is especially the case in thoseinstances where companies are building new infrastructure and not burdened by historicalpatterns of development. Such opportunities include distributed electrical power generation,
development of clean water sources, and the next generation of Internet and new information
technologies (such as ubiquitous computing and the Internet of Things—see the foldout). Earlyand significant adoption of these technologies could provide considerable economic advantage.

shelter these financial flows will increase.
History suggests, however, that such aredirection toward regional financial centers
could soon spill over into other areas ofpower. Rarely, if ever, have such “financiersof last resort” been content to limit theirinfluence to strictly financial realms. Interregional tensions could divide the West with
the US and EU having increasingly divergent
economic and monetary priorities,

complicating Western efforts to lead andjointly grow the global economy.
Diverging Development Models, but for
How Long?
The state-centric model in which the state
makes the key economic decisions and, in thecase of China and increasingly Russia,
democracy is restricted, raises questions about
the inevitability of the traditional Western
recipe—roughly liberal economics and13over the next two decades is a particularly
critical test for the long-term sustainability ofan alternative to the traditional Westernmodel. Although democratization probably
will be slow and may have its own Chinesecharacter, we believe the emerging middle
class will press for greater political influence
and accountability of those in charge,
particularly if the central government faltersin its ability to sustain economic growth or isunresponsive to growing “quality of life”
issues such as increasing pollution or the needfor health and education services. The
government’s own efforts to boost S&T andestablish a “high tech” economy will increase
incentives for greater openness to develop
human capital at home and attract expertiseand ideas from outside.

democracy—for development. Over the next
15-20 years, more developing countries may
gravitate toward Beijing’s state-centric model
rather than the traditional Western model ofmarkets and democratic political systems toincrease the chances of rapid development
and perceived political stability. While webelieve a gap will remain, the enhanced roleof the state in Western economies may also
lessen the contrast between the two models.
In the Middle East, secularism, which also has
been considered an integral part of theWestern model, increasingly may be seen asout of place as Islamic parties come into
prominence and possibly begin to run
governments. As in today’s Turkey, we could
see both increased Islamization and greater
emphasis on economic growth andmodernization.

Historical patterns evinced by other energy
producers suggest deflecting pressures forliberalization will be easier for Russianauthorities. Traditionally, energy producers
also have been able to use revenues to buy off
political opponents; few have made thetransition to democracy while their energy
revenues remain strong.

“China, particularly, offers an alternativemodel for political development in addition
to demonstrating a different economic
pathway.”
The lack of any overarching ideology and themix-and-match of some of the elements—for
example Brazil and India are vibrant market
democracies—means the state-centric model
does not yet constitute anything like analternative system and, in our view, isunlikely ever to be one. Whether China
liberalizes both politically and economically

A sustained plunge in the price of oil and gas
would alter the outlook and increase prospects
for greater political and economic
liberalization in Russia.

14

Latin America: Moderate Economic Growth, Continued Urban Violence
Many Latin American countries will have achieved marked progress in democratic consolidation
by 2025, and some of these countries will have become middle income powers. Others,
particularly those that have embraced populist policies, will lag behind—and some, such as
Haiti, will have become even poorer and still less governable. Public security problems willcontinue to be intractable—and in some cases unmanageable. Brazil will become the leading
regional power, but its efforts to promote South American integration will be realized only inpart. Venezuela and Cuba will have some form of vestigial influence in the region in 2025, but
their economic problems will limit their appeal. Unless the United States is able to deliver
market access on a permanent and meaningful basis, the US could lose its traditionally privileged
position in the region, with a concomitant decline in political influence.
Steady economic growth between now and 2025—perhaps as high as 4 percent—will fuelmodest decreases in poverty levels in some countries and a gradual reduction of the informal
sector. Progress on critical secondary reforms, such as education, regressive tax systems, weakproperty rights, and inadequate law enforcement will remain incremental and spotty. The
relative growing importance of the region as a producer of oil, natural gas, biofuels, and otheralternative energy sources will spur growth in Brazil, Chile, Colombia, and Mexico, but state
ownership and political turmoil will impede efficient development of energy resources. The
economic competitiveness of Latin America will continue to lag behind Asia and some other fast
growing areas.
Population growth in the region will be relatively moderate, but the rural poor and indigenous
populations will continue to grow at a faster rate. Latin America will have a graying population
as the growth rate of adults aged 60 and over rises.
Parts of Latin America will continue to be among the world’s most violent areas. Drugtrafficking organizations, sustained in part by increased local drug consumption, transnational
criminal cartels, and local crime rings and gangs, will continue to undermine public security.
These factors, and persistent weaknesses in the rule of law, will mean that a few small countries,
especially in Central America and the Caribbean, will verge on becoming failed states.
Latin America will continue to play a marginal role in the international system, except for its
participation in international trade and some peacekeeping efforts.
US influence in the region will diminish somewhat, in part because of Latin America’s
broadening economic and commercial relations with Asia, Europe, and other blocs. Latins, ingeneral, will look to the United States for guidance both globally and for relations with theregion. An increasingly numerous Hispanic population will ensure greater US attention to, andinvolvement in, the culture, religion, economics, and politics of the region.

15

Women as Agents of Geopolitical Change
Economic and political empowerment of women could transform the global landscape over the
next 20 years. This trend already is evident in the area of economics: The explosion in global
economic productivity in recent years has been driven as much by fostering humanresources—particularly through improvements in health, education, and employment
opportunities for women and girls—as by technological advances.
•

The predominance of women in Southeast Asia’s export manufacturing sector is a likely key
driver of that region’s economic success; women agricultural workers account for half theworld’s food production—even without reliable access to land, credit, equipment, andmarkets.

•

Over the next 20 years the increased entry and retention of women in the workplace may
continue to mitigate the economic impacts of global aging.

Women in much of Asia and Latin America are achieving higher levels of education thanmen, a trend that is particularly significant in a human capital-intensive global economy.
•

Demographic data indicate a significant correlation between a higher level of female literacy
and more robust GDP growth within a region (e.g., the Americas, Europe, and East Asia).
Conversely, those regions with the lowest female literacy rates (southern and western Asia;
the Arab world; and Sub-Saharan Africa) are the poorest in the world.

•

Improved educational opportunities for girls and women also are a contributing factor tofalling birth rates worldwide—and by extension better maternal health. The long-term
implications of this trend likely include fewer orphans, less malnutrition, more children inschool, and other contributions to societal stability.

Although data on women’s political involvement are less conclusive than those regarding
economic participation, political empowerment of women appears to change governmental
priorities. Examples as disparate as Sweden and Rwanda indicate that countries withrelatively large numbers of politically active women place greater importance on societal
issues such as healthcare, the environment, and economic development. If this trend continues
over the next 15-20 years, as is likely, an increasing number of countries could favor social
programs over military ones. Better governance also could be a spinoff benefit, as a highnumber of women in parliament or senior government positions correlates with lower corruption.
Nowhere is the role of women potentially more important for geopolitical change than in the
Muslim World. Muslim women do far better assimilating in Europe than their male relatives,
partly because they flourish in the educational system, which facilitates their entry into jobs in
information or service industries. Sharply declining fertility rates among Muslims in Europe
demonstrate this willingness to accept jobs outside the home and a growing refusal to conform to
traditional norms. In the short term, the decline of traditional Muslim family structures may help
explain the openness of many young Muslim men to radical Islamic messages. However, in(Continued on next page…)
16

(Continued…)
rearing future generations, women might help show the way to greater social assimilation andreduce the likelihood of religious extremism. The impact of growing numbers of women in theworkplace may also have an impact outside Europe. The modernizing countries of the Islamic
Mediterranean have close ties to Europe, to which these countries have sent many migrants.
Migrants return to visit or resettle and bring with them new ideas and expectations. These
Islamic countries also receive foreign influences from European mass media, through satellite
dishes and the Internet.

Higher Education Shaping the Global Landscape in 2025
As global business grows increasingly borderless and labor markets more seamless, education
has become a key determinant of countries’ economic performance and potential. Adequate
primary education is essential, but the quality and accessibility of secondary and higher
education will be even more important for determining whether societies successfully graduate
up the value-added production ladder.
The US lead in highly skilled labor will likely narrow as large developing countries, particularly
China, begin to reap dividends on recent investments in human capital, including education but
also nutrition and healthcare. India faces a challenge because inadequate primary education is
widespread in the poorer regions and top-flight educational institutions cater to a relatively
privileged few. Funding as a proportion of GDP has grown to around 5 percent in most
European countries, although few European universities are rated as world class. Spending on
education in the Arab world is roughly on par with the rest of the world in absolute terms andsurpasses the global mean as a percentage of GDP, lagging only slightly behind OECD highincome countries. UN data and research findings by other institutions suggest, however thattraining and education of Middle Eastern youth is not driven by the needs of employers,
especially for science and technology. There are some signs of progress.
The US may be uniquely able to adapt its higher education and research system to rising global
demand and position itself as a world education hub for the growing number of students that willenter the education market out to 2025. Although further opening of US classrooms andlaboratories could mean greater competition for US students, the US economy would likely
benefit because companies tend to base their operations near available human capital. Continued
export of US educational models with the building of US campuses in the Middle East andCentral Asia could boost the attractiveness and global prestige of US universities.

17

18

its current population of over 1.3 billion.
(See graphic on page 22.)

Trends in birth, death, and migration arechanging the absolute and relative size ofyoung and old, rural and urban, and ethnic
majority and minority populations within andamong emerging and established powers.
These demographic reconfigurations willoffer social and economic opportunities forsome powers and severely challengeestablished arrangements in others. The
populations of more than 50 countries will
increase by more than a third (some by morethan two-thirds) by 2025, placing additional
stresses on vital natural resources, services,
and infrastructure. Two-thirds of thesecountries are in Sub-Saharan Africa; most of
the remaining fast-growing countries are in
the Middle East and South Asia.
Populations Growing, Declining, andDiversifying—at the Same Time
World population is projected to grow by
about 1.2 billion between 2009 and 2025—
from 6.8 billion to around 8 billion people.
Although the global population increase issubstantial—with concomitant effects on
resources—the rate of growth will be slower
than it was, down from levels that added 2.4
billion persons between 1980 and today.
Demographers project that Asia and Africa
will account for most of the population
growth out to 2025 while less than 3 percentof the growth will occur in the “West”—
Europe, Japan, the United States, Canada,
Australia, and New Zealand. In 2025,
roughly 16 percent of humanity will live in
the West, down from the 18 percent in 2009
and 24 percent in 1980.
••

In aggregate, the countries of Sub-SaharanAfrica are projected to add about 350
million people during the same period,
while those in Latin America and the
Caribbean will increase by about 100
million.

•Between now and 2025, Russia, Ukraine,
Italy, almost all countries in Eastern
Europe, and Japan are expected to see
their populations decline by several
percent. These declines could approach orexceed 10 percent of the current
populations in Russia, Ukraine, and a few
other Eastern European countries.

•

The populations of the US, Canada,
Australia, and a few other industrial stateswith relatively high immigration rates willcontinue to grow—the US by more than
40 million, Canada by 4.5 million, andAustralia by more than 3 million.

By 2025, the already diverse array of national
population age structures promises to be morevaried than ever, and the gap between theyoungest and oldest profiles will continue towiden. The “oldest” countries—those inwhich people under age 30 form less than
one-third of the population—will mark a bandacross the northern edge of the world map. In
contrast, the “youngest” countries, where theunder-30 group represents 60 percent of the
population or more, will nearly all be locatedin Sub-Saharan Africa. (See maps on page
20.)

The largest increase will occur in India,
representing about one-fifth of all growth.
India’s population is projected to climb byaround 240 million by 2025, reachingapproximately 1.45 billion people. From2009 to 2025, Asia’s other giant, China, isprojected to add more than 100 million to

19

20

replacement level in Western Europe, theratio of seniors to people in their working
years would continue to rise steadily throughthe late 2030s. In Japan, it would continue torise through the late 2040s.

The Pensioner Boom: Challenges of Aging
Populations
Population aging has brought today’s
developed countries—with a few exceptions
such as the US—to a demographic “tipping
point.” Today, nearly 7 out of every 10
people in the developed world are in the
traditional working years (ages 15 to 64)—ahigh-tide mark. This number has neverbefore been so high and, according to experts,
in all likelihood will never be so high again.

The annual level of net immigration would
have to double or triple to keep working-age
populations from shrinking in Western
Europe. By 2025, non-European minority
populations could reach significant
proportions—15 percent or more—in nearly
all Western European countries and will havea substantially younger age structure than thenative population (see page 20). Given
growing discontent with current levels of
immigrants among native Europeans, suchsteep increases are likely to heighten tensions.

In almost every developed country, the periodof most rapid growth in the ratio of seniors(age 65 and older) to the working-age
population will occur during the 2010s and2020s, boosting the fiscal burden of old-age
benefit programs. By 2010, there will be
about one senior for every four working-age
people in the developed world. By 2025, thisratio will have climbed to one to three, andpossibly higher.
•

Japan is in a difficult position: its
working-age population has been
contracting since the mid-1990s and its
overall population since 2005. Today’s
projections envision a society in which, by2025, there will be one senior for every
two working-age Japanese.

•

The picture for Western Europe is more
mixed. The UK, France, Belgium, theNetherlands, and the Nordics will likely
maintain the highest fertility rates in
Europe but will remain below twochildren per woman. In the rest of theregion, fertility probably will stay below
1.5 children per woman, on par with Japan(and well below the replacement level of
2.1 children per woman).

The aging of societies will have economic
consequences. Even with productivity
increases, slower employment growth from ashrinking work force probably will reduce
Europe’s already tepid GDP growth by 1
percent. By the 2030s, Japan’s GDP growthis projected to drop to near zero according tosome models. The cost of trying to maintainpensions and health coverage will squeeze out
expenditures on other priorities, such as
defense.
Persistent Youth Bulges
Countries with youthful age structures andrapidly growing populations form a crescent
stretching from the Andean region of Latin
America across Sub-Saharan Africa, theMiddle East and the Caucasus, and thenthrough the northern parts of South Asia. By
2025, the number of countries in this “arc of
instability” will have decreased by 35 to 40
percent owing to declining fertility andmaturing populations. Three quarters of thethree dozen “youth bulge countries” projected
to linger beyond 2025 will be located in SubSaharan Africa. The remainder will be

Large and sustained increases in the fertility
rate, even if they began now, would notreverse the aging trend for decades in Europe
and Japan. If fertility rose immediately to the21located in the Middle East and scatteredacross Asia and among the Pacific Islands.
••

and adjacent Afghanistan and Pakistan
will persist through 2025. Unlessemployment conditions change
dramatically, youth in weak states willcontinue to go elsewhere—externalizing
volatility and violence.

The emergence of new economic tigers by
2025 could occur where youth bulges
mature into “worker bulges.” Experts
argue that this demographic bonus is mostadvantageous when the country provides
an educated work force and a businessfriendly environment for investment.
Potential beneficiaries include Turkey,
Lebanon, Iran, and the Maghreb states ofNorth Africa (Morocco, Algeria andTunisia), Colombia, Costa Rica, Chile,
Vietnam, Indonesia, and Malaysia.

The populations of already parlous youthbulge states—such as Afghanistan,
Democratic Republic of Congo (DROC),
Ethiopia, Nigeria, Pakistan, and Yemen—are
projected to remain on rapid-growthtrajectories. Pakistan’s and Nigeria’s
populations are each projected to grow by
about 55 million people. Ethiopia and DROC
will likely add about 40 million each, while
the populations of Afghanistan and Yemen
are projected to grow more than 50 percent
larger than today’s. All will retain age
structures with large proportions of young

The current youth bulges in the Maghreb
states, Turkey, Lebanon, and Iran willdiminish rapidly but those in the West
Bank/Gaza, Iraq, Yemen, Saudi Arabia

22

The Impact of HIV/AIDS
Neither an effective HIV vaccine nor a selfadministered microbicide, even if developed
and tested before 2025, will likely be widely
disseminated by then. Although prevention
efforts and local behavioral changes will
depress infection rates globally, experts
expect HIV/AIDS to remain a global
pandemic through 2025 with its epicenter of
infection in Sub-Saharan Africa. Unlike
today, the vast majority of people living withHIV will have access to life-extending antiretroviral therapies.
••

If prevention efforts and effectivenessremain at current levels, the HIV-positive
population is expected to climb to around50 million by 2025—up from 33 million
today (22 million in Sub-Saharan Africa).
In this scenario, 25 million to 30 million
people would need anti-retroviral therapy
to survive during 2025.

•

Europe will continue to attract migrants
from younger, less developed, and fastergrowing African and Asian regions
nearby. However, other emerging centersof industrialization—China and southern
India and possibly Turkey and Iran—
could attract some of this labor migration
as growth among their working-age
populations slows and wages rise.

•

Labor migration to the United States
probably will slow as Mexico’s industrial
base grows and its population ages—a
response to rapid fertility declines in the
1980s and 1990s—and as competing
centers of development arise in Brazil andthe southern cone of South America.

Urbanization. If current trends persist, by
2025 about 57 percent of the world’s
population will live in urban areas, up fromabout 50 percent today. By 2025, the world
will add another eight megacities to thecurrent list of 19—all except one of theseeight will be in Asia and Sub-Saharan Africa.
Most urban growth, however, will occur insmaller cities of these regions, which areexpanding along highways and coalescingnear crossroads and coastlines, often without
formal sector job growth and without
adequate services.

In another scenario assuming fully scaledup prevention by 2015, the HIV-infected
population would peak and then fall tonear 25 million worldwide by 2025,
bringing the number needing antiretroviral therapy to between 15 and 20
million people.

Identity Demography. Where ethno-religious
groups have experienced their transition tolower birth rates at varying paces, lingering
ethnic youth bulges and shifts in groupproportions could trigger significant politicalchanges. Shifts in ethno-religious
composition resulting from migration also
could fuel political change, particularly where
immigrants settle in low-fertility
industrialized countries.

adults, a demographic feature that is
associated with the emergence of politicalviolence and civil conflict.
Changing Places: Migration, Urbanizationand Ethnic Shifts
Moving Experiences. The net migration ofpeople from rural to urban areas and frompoorer to richer countries likely will continue
apace in 2025, fueled by a widening gap in
economic and physical security between
adjacent regions.

•23

Differing rates of growth among Israel’s
ethnic communities could abet politicalshifts in the Knesset (Israel’s parliament).

East, and South Asia (see box on page 25).
Immigration and integration politics, andconfrontations with Muslim conservatives
over education, women’s rights, and therelationship between the state and religion arelikely to strengthen right-of-center politicalorganizations and splinter the left-of-center
political coalitions that were instrumental inbuilding and maintaining Europe’s welfare
states.

By 2025, Israeli Arabs, who currently
comprise a fifth of the population, willcomprise about a quarter of Israel’s
expected population of nearly 9 million.
Over the same period, Israel’s ultraorthodox Jewish community could nearly
double, becoming larger than 10 percentof the population.
•

Irrespective of their political status in
2025, the populations of the West Bank,
currently about 2.6 million people, andGaza, now at 1.5 million, will have grown
substantially: the West Bank by nearly 40
percent; Gaza by almost 60 percent. Their
combined population in 2025—stillyouthful, growing, and approaching 6
million (or exceeding that figure,according to some projections)—promises
to introduce further challenges toinstitutions hoping to generate adequate
employment and public services, maintainsufficient availability of fresh water andfood, and achieve political stability.

By 2025, international migration’s humancapital and technological transfer effects will
begin to favor the most stable Asian and Latin
American countries. Although the emigrationof professionals probably will continue todeprive poor and unstable countries across
Africa and parts of the Middle East of talent,
the likely return of many wealthy andeducated Asian and Latin Americans from the
US and Europe will help boost thecompetitiveness of China, Brazil, India, andMexico.
Demographic Portraits: Russia, China,
India, and Iran
Russia: A Growing Multiethnic State?
Currently a country with around 141 million
people, Russia’s demographically aging anddeclining population is projected to drop
below 130 million by 2025. The chances ofstemming such a steep decline over thisperiod are slim: the population of women in
their 20s—their prime childbearing years—
will be declining rapidly, numbering around55 percent of today’s count by 2025.

A number of other ethnic shifts between now
and 2025 will have regional implications. For
example, growing proportions of Native
Americans in several Andean and Central
American democracies are likely to continue
to push governments in those countries
toward populism. In Lebanon, ongoingfertility decline in the Shiite population,
which currently lags ethnic neighbors inincome and exceeds them in family size, willbring about a more mature age structure inthis community—and could deepen Shiite
integration into the mainstream of Lebanese
economic and political life, easing communal
tensions.

Russia’s high rate of male middle-age
mortality is unlikely to change dramatically.
Muslim minorities that have maintained
higher fertility will comprise larger
proportions of the Russian population, as will
Turkic and Chinese immigrants. According
to some more conservative projections, theMuslim minority share of Russia’s population
will rise from 14 percent in 2005 to 19

Western Europe has become the destinationof choice for more than one million
immigrants annually and home for more than
35 million foreign born—many from Muslimmajority countries in North Africa, the Middle

24Muslims in Western Europe
Western Europe’s Muslim population currently totals between 15 and 18 million. The largest
proportions of Muslims—between 6 and 8 percent—are in France (5 million) and theNetherlands (nearly 1 million), followed by countries with 4 to 6 percent: Germany (3.5 million),
Denmark (300,000), Austria (500,000), and Switzerland (350,000). The UK and Italy also haverelatively large Muslim populations, 1.8 million and 1 million respectively, though constituting
less overall proportions (3 percent and 1.7 percent respectively). If current patterns ofimmigration and Muslim residents’ above-average fertility continue, Western Europe could have
25 to 30 million Muslims by 2025.
Countries with growing numbers of Muslims will experience a rapid shift in ethnic composition,
particularly around urban areas, potentially complicating efforts to facilitate assimilation andintegration. Economic opportunities are likely to be greater in urban areas, but, in the absence ofgrowth in suitable jobs, the increasing concentration could lead to more tense and unstablesituations, such as occurred with the 2005 Paris surburban riots.
Slow overall growth rates, highly regulated labor markets, and workplace policies, if maintained,
will make it difficult to increase job opportunities, despite Europe’s need to stem the decline ofits working-age population. When coupled with job discrimination and educational
disadvantage, these factors are likely to confine many Muslims to low-status, low-wage jobs,
deepening ethnic cleavages. Despite a sizeable stratum of integrated Muslims, a growing
number—driven by a sense of alienation, grievance, and injustice—are increasingly likely tovalue separation in areas with Muslim-specific cultural and religious practices.
Although immigrant communities are unlikely to gain sufficient parliamentary representation todictate either domestic or foreign policy agendas by 2025, Muslim-related issues will be a
growing focus and shaper of the European political scene. Ongoing societal and political tension
over integration of Muslims is likely to make European policymakers increasingly sensitive tothe potential domestic repercussions of any foreign policies for the Middle East, includingaligning too closely with the US on policies seen as pro-Israeli.

percent in 2030, and 23 percent in 2050. In ashrinking population, the growing proportion
that are not Orthodox Slavs will likely
provoke a nationalist backlash. Because
Russia’s fertility and mortality problems arelikely to persist through 2025, Russia’s
economy—unlike Europe’s and Japan’s—will
have to support the large proportion of
dependents.

population. The advantageous condition of
having a relatively large working populationand small proportions of both old-age andchildhood dependents will begin to fadearound 2015, when the size of China’s
working-age population will start to decline.
Demographic aging—the onset of larger
proportions of retirees and relatively fewer
workers—is being accelerated by decades ofpolicies that have limited childbirth and by a
tradition of early retirement. By opting toslow population growth dramatically in orderto dampen growing demand for energy, water,

Antique China? By 2025, demographers
expect China to have almost 1.4 billion
people, nearly 100 million above its current

25

will largely dissipate over the next decade,yielding more mature population and workforce growth rates comparable to current rates
in the US and China (near 1 percent per year).
In this time frame, the working-age
population will grow large relative tochildren, creating opportunities to accumulatesavings, better educate, and eventually to shift
to more technical industries and raise living
standards. Whether Iran capitalizes on thisdemographic bonus depends on the country’s
political leadership, which at present is
unfriendly to markets and private businesses,
unsettling for investors, and more focused on
oil revenues than on broader job creation.

and food, China is hastening the aging of its
population. By 2025, a large proportion ofChina’s population will be retired or entering
retirement. Although China may over time
reverse its restrictive policies on childbearing
to achieve birth cohorts more closely
balancing infant girls and boys, marriage-age
adults in 2025 will still experience asignificant male-dominated imbalance thatwill create a large pool of unmarried males.
Two Indias. India’s current fertility rate of
2.8 children per woman masks vastdifferences between the low-fertility states ofSouth India and the commercial hubs of
Mumbai, Delhi, and Kolkata on the one hand,
and the higher rates of populous states in theso-called Hindi-speaking belt across thenorth, where women’s status is low andservices lag. Largely owing to growth inIndia’s densely populated northern states, its
population is projected to overtake China’s
around 2025—just as China’s population is
projected to peak and begin a slow decline.

Two additional demographic near-certainties
are apparent: first, despite low fertility, Iran’s
population of 66 million will grow to around77 million by 2025. Second, by then, a newyouth bulge (an echo produced by births
during the current one) will be ascending—but in this one, 15-to-24 year olds willaccount for just one-sixth of those in theworking age group compared to one third
today. Some experts believe this echo bulge
signals a resurgence of revolutionary politics.
Others speculate that, in the more educatedand developed Iran of 2025, young adults willfind career and consumption more attractive
than extremist politics. Only one aspect of
Iran’s future is sure: its society will be moredemographically mature than ever before andstrikingly different than its neighbors.

By then, India’s demographic duality will
have widened the gap between north andsouth. By 2025, much of India’s work force
growth will come from the most poorly
educated, impoverished, and crowded districtsof rural northern India. Although North
Indian entrepreneurial families have lived for
decades in southern cities, the arrival ofwhole communities of Hindi-speaking
unskilled laborers looking for work could
rekindle dormant animosities between India’s
central government and ethno-nationalist
parties in the South.
Iran’s Unique Trajectory. Having
experienced one of the most rapid fertility
declines in history—from more than six
children per woman in 1985 to less than two
today—Iran’s population is destined for
dramatic changes by 2025. The country’s
politically restless, job-hungry youth bulge

26This page left intentionally blank.

27

28

difficult. Demography is not always destiny,
but diversifying the economy so that Russia
can maintain its standing after the worldtransitions away from dependence on fossil
fuel will be central to its long-term prospects.
Europe and Japan also will be confronting
demographic challenges; decisions taken now
are likely to determine their long-term
trajectories.

By 2025, the United States will find itself inthe position of being one of a number ofimportant actors on the world stage, albeit
still the most powerful one. The relative
political and economic clout of many
countries will shift by 2025, according to an
International Futures model measuring GDP,
defense spending, population, and technology
for individual states (see graphic on page28).6 Historically, emerging multipolarsystems have been more unstable than bipolar
or even unipolar ones; the greater diversity
and growing power of more countries
portends less cohesiveness and effectivenessfor the international system. Most emerging
powers already want a greater say and, alongwith many Europeans, dispute the notion of
any one power having the right to be ahegemon. The potential for less cohesivenessand more instability also is suggested by the
relatively steeper declines in national powerof Europe and Japan.

Although the rise of no other state can equal
the impact of the rise of such populous statesas China and India, other countries withpotentially high-performing economies—Iran,Indonesia, and Turkey, for example—could
play increasingly important roles on the worldstage and especially for establishing new
patterns in the Muslim world.
“Few countries are poised to have more
impact on the world over the next 15-20
years than China.”
Rising Heavyweights: China and India
China: Facing Potential Bumps in theRoad. Few countries are poised to have more
impact on the world over the next 15-20 years
than China. If current trends persist, by 2025
China will have the world’s second largest
economy and will be a leading military
power. It could also be the largest importer ofnatural resources and an even greater polluter
than it is now.

Although we believe chances are good that
China and India will continue to rise, theirascent is not guaranteed and will require
overcoming high economic and social
hurdles. Because of this, both countries arelikely to remain inwardly focused and per
capita wealth will lag substantially behindWestern economies throughout the period to2025 and beyond. Individuals in theseemerging economic powerhouses are likely tofeel still poor in relation to Westerners eventhough their collective GDP increasingly willoutdistance those of individual Westernstates. For Russia, remaining in the top tierwhere it has been since its remarkable
resurgence during the late 1990s and earlypart of the 21st century may be extremely•

US security and economic interests could
face new challenges if China becomes apeer competitor that is militarily strong aswell as economically dynamic and energy
hungry.

The pace of China’s economic growth almost
certainly will slow, or even recede, even withadditional reforms to address mounting socialpressures arising from growing income
disparities, a fraying social safety net, poor
business regulation, hunger for foreign

6

National Power scores are the product of an index
combining the weighted factors of GDP, defense
spending, population, and technology. Scores arecalculated by the International Futures computer modeland are expressed as a state’s relative share(percentage) of all global power.

29energy, enduring corruption, andenvironmental devastation. Any of these
problems might be soluble in isolation, but
the country could be hit by a “perfect storm”
if many of them demand attention at the sametime. Even if the Chinese Government canmanage to address these issues, it will nothave the ability to assure high levels of
economic performance. Most of China’s
economic growth will continue to be
domestically driven, but key sectors rely on
foreign markets, resources, and technology as
well as globalized production networks. As aresult, China’s economic health will beaffected by that of other economies—
particularly the United States and the EU.

criticism by blaming China’s woes on foreigninterference, stoking the more virulent andxenophobic forms of Chinese nationalism.

In addressing these challenges, Chinese
leaders must balance the openness necessary
to sustain economic growth—essential to
public tolerance for the Communist Party’s
monopoly of political power—against the
restrictions necessary to protect thatmonopoly. Facing so many social andeconomic changes, the Communist Party andits position are likely to undergo furthertransformations. Indeed, Communist Party
leaders themselves talk openly about the needto find new ways to retain public acceptanceof the Party’s dominant role. So far, however,these efforts do not appear to include opening
the system to free elections and a free press.
Moreover, barring the “perfect storm”
described above, we do not foresee socialpressures forcing real democracy in China by
2025. That said, the country could be moving
toward greater political pluralism and moreaccountable governance.

•

Historically, people who become
accustomed to rising living standards react
angrily when their expectations are nolonger met, and few people have hadgrounds for such high expectations as do
the Chinese.

•

China’s international standing is based
partly on foreigners’ calculations that it is“the country of the future.” If foreigners
treat the country less deferentially,nationalistic Chinese could respondangrily.

India: A Complicated Rise. Over the next
15-20 years, Indian leaders will strive for a
multipolar international system, with New
Delhi as one of the poles and serving as apolitical and cultural bridge between a rising
China and the United States. India’s growinginternational confidence, derived primarily
from its economic growth and its successful
democratic record, now drives New Delhi
toward partnerships with many countries.
However, these partnerships are aimed at
maximizing India’s autonomy, not at aligning
India with any country or international
coalition.
India probably will continue to enjoy
relatively rapid economic growth. Although
India faces lingering deficiencies in its
domestic infrastructure, skilled labor, andenergy production, we expect the nation’s
rapidly expanding middle class, youthful
population, reduced reliance on agriculture,and high domestic savings and investment
rates to propel continued economic growth.
India’s impressive economic growth over the
past 15 years has reduced the number ofpeople living in absolute poverty, but the

Chinese leaders could, however, continue
managing tensions by achieving significant
growth without jeopardizing the Party’s
political monopoly, as they have for the past
three decades. Although a protracted slump
could pose a serious political threat, theregime would be tempted to deflect public

30

military also will be eager to benefit fromexpanded defense ties with Washington.
Indian leaders, however, probably will avoid
ties that could resemble an alliancerelationship.

growing gap between rich and poor will
become a more important political issue.
We believe Indians will remain strongly
committed to democracy, but the polity could
become more fragmented and fractious, withnational power being shared across successive
political coalitions. Future elections are likely
to be multi-sided affairs yielding awkward
coalitions with unclear mandates. The
general direction of India’s economic
policymaking is unlikely to be reversed, but
the pace and scale of reform will fluctuate.

“Russia has the potential to be richer, more
powerful, and more self-assured in
2025….[but] multiple constraints could limit
Russia’s ability to achieve its full economic
potential.”
Other Key Players
Russia’s Path: Boom or Bust. Russia has thepotential to be richer, more powerful, andmore self-assured in 2025 if it invests inhuman capital, expands and diversifies its
economy, and integrates with global markets.
On the other hand, multiple constraints could
limit Russia’s ability to achieve its fulleconomic potential. Chief among them are a
shortfall in energy investment, key
infrastructure bottlenecks, decaying educationand public health sectors, an underdevelopedbanking sector, and crime and corruption. A
sooner-than-expected conversion toalternative fuels or a sustained plunge inglobal energy prices before Russia has the
chance to develop a more diversified
economy probably would constrain economic
growth.

Regional and ethnic insurgencies that haveplagued India since independence are likely topersist, but they will not threaten India’s
unity. We assess New Delhi will remain
confident that it can contain the Kashmiri
separatist movement. However, India islikely to experience heightened violence andinstability in several parts of the country
because of the growing reach of the Maoist
Naxalite movement.
Indian leaders do not see Washington as amilitary or economic patron and now believe
the international situation has made such abenefactor unnecessary. New Delhi will,
however, pursue the benefits of favorable US
ties, partly, too, as a hedge against any
development of hostile ties with China.
Indian policymakers are convinced that US
capital, technology, and goodwill are essential
to India’s continued rise as a global power.
The United States will remain one of India’s
largest export destinations, the key tointernational financial institutions such as theWorld Bank and foreign commercial lending,and the largest source of remittances. The
Indian diaspora—composed largely of highly
skilled professionals—will remain a key
element in deepening US-Indian ties. The
Indian market for US goods will growsubstantially as New Delhi reduces
restrictions on trade and investment. India’s

Russia’s population decline by 2025 will
force hard policy choices. By 2017, forexample, Russia is likely to have only
650,000 18-year-old males from which tomaintain an army that today relies on 750,000
conscripts. Population decline also could takean economic toll with severe labor force
shortages, particularly if Russia does notinvest more in its existing human capital,
rebuild its S&T base, and employ foreignlabor migrants.
If Russia diversifies its economy, it could
develop a more pluralistic, albeit not31

democratic, political system—the result of
institutional consolidation, a rising middle
class, and the emergence of new stakeholders
demanding a greater voice.

resolve a perceived democracy gap dividing
Brussels from European voters and move past
the protracted debate about its institutional
structures.

A more proactive and influential foreign
policy seems likely, reflecting Moscow’s
reemergence as a major player on the worldstage; an important partner for Western,
Asian, and Middle East capitals; and a leading
force in opposition to US global dominance.
Controlling key energy nodes and links in the
Caucasus and Central Asia—vital to its
ambitions as an energy superpower—will be a
driving force in reestablishing a sphere of
influence in its Near Abroad. Sharedperceptions regarding threats from terrorism
and Islamic radicalism could align Russianand Western security policies more tightly,
notwithstanding disagreements on otherissues and a persisting “values gap.”

The EU will be in a position to bolster
political stability and democratization on
Europe’s periphery by taking in additional
new members in the Balkans, and perhaps
Ukraine and Turkey. However, continued
failure to convince skeptical publics of thebenefits of deeper economic, political, andsocial integration and to grasp the nettle of ashrinking and aging population by enacting
painful reforms could leave the EU a hobbled
giant distracted by internal bickering andcompeting national agendas, and less able totranslate its economic clout into global
influence.
The drop-off in working-age populations will
prove a severe test for Europe’s social welfare
model, a foundation stone of Western
Europe’s political cohesion since WorldWar II. Progress on economic liberalization
is likely to continue only in gradual steps until
aging populations or prolonged economic
stagnation force more dramatic changes—acrisis point that may not hit before some timein the next decade and might be pushed off
even further. There are no easy fixes for
Europe’s demographic deficits except likely
cutbacks in health and retirement benefits,
which most states have not begun to
implement or even to contemplate. Defense
expenditures are likely to be cut further tostave off the need for serious restructuring ofsocial benefits programs. The challenge of
integrating immigrant, especially Muslim,
communities will become acute if citizens
faced with a sudden lowering of expectations
resort to more narrow nationalism andconcentrate on parochial interests, as
happened in the past.

The range of possible futures for Russia
remains wide because of starkly divergent
forces—liberal economic trends and illiberalpolitical trends. The tension between the twotrends—together with Russia’s sensitivity topotential discontinuities sparked by politicalinstability, a major foreign policy crisis, orother wild cards—makes it impossible toexclude alternative futures such as anationalistic, authoritarian petro-state or evena full dictatorship, which is an unlikely but
nevertheless plausible future. Less likely,
Russia could become a significantly more
open and progressive country by 2025.
Europe: Losing Clout in 2025. We believe
Europe by 2025 will have made slow progress
toward achieving the vision of current leadersand elites: a cohesive, integrated, andinfluential global actor able to employ
independently a full spectrum of political,
economic, and military tools in support ofEuropean and Western interests and universal
ideals. The European Union would need to32attentiveness to Moscow’s interests by key
countries, including Germany and Italy, who
see Russia as a reliable supplier. Europe
could pay a price for its heavy dependence,
especially if Russian firms are unable to fulfill
contract commitments because ofunderinvestment in their natural gas fields orif growing corruption and organized criminal
involvement in the Eurasian energy sector
spill over to infect Western business interests.

Europe’s strategic perspective is likely toremain narrower than Washington’s, even if
the EU succeeds in making reforms thatcreate a “European President” and “European
Foreign Minister” and develops greater
institutional capacity for crisis management.
Divergent threat perceptions within Europe
and the likelihood that defense spending willremain uncoordinated suggest the EU will not
be a major military power by 2025. The
national interests of the bigger powers willcontinue to complicate EU foreign andsecurity policy and European support for
NATO could erode.

Japan: Caught Between the US and China.
Japan will face a major reorientation of its
domestic and foreign policies by 2025 yet
maintain its status as an upper middle rank
power. Domestically, Japan’s political,
social, and economic systems will likely be
restructured to address its demographic
decline, an aging industrial base, and a morevolatile political situation. Japan’s decreasing
population may force authorities to consider
new immigration policies like a long-term
visa option for visiting workers. The
Japanese, however, will have difficulty
overcoming their reluctance to naturalize
foreigners. The aging of the population also
will spur development in Japan’s healthcare
and housing systems to accommodate large
numbers of dependent elderly.

The question of Turkey’s EU membershipwill be a test of Europe’s outward focus
between now and 2025. Increasing doubts
about Turkey’s chances are likely to slow its
implementation of political and human rights
reforms. Any outright rejection risks wider
repercussions, reinforcing arguments in the
Muslim world—including among Europe’s
Muslim minorities—about the incompatibilityof the West and Islam. Crime could be thegravest threat inside Europe as Eurasiantransnational organizations—flush frominvolvement in energy and mineral
concerns—become more powerful andbroaden their scope. One or moregovernments in Eastern or Central Europe
could fall prey to their domination.

The shrinking work force—and Japan’scultural aversion to substantial immigrantlabor—will put a major strain on Japan’ssocial services and tax revenues, leading to
tax increases and calls for more competitionin the domestic sector to lower the price ofconsumer goods. We anticipate continued
restructuring of Japan’s export industries,
with increased emphasis on high technology
products, value-added production, andinformation technologies. The shrinking ofJapan’s agricultural sector will continue,
perhaps down to just 2 percent of the labor
force, with a corresponding increase inpayments for food imports. The working-age
population, declining in absolute numbers,

Europe will remain heavily dependent on
Russia for energy in 2025, despite efforts topromote energy efficiency and renewableenergy and lower greenhouse gas emissions.
Varying levels of dependence, differing
perspectives on Russia’s democratic maturity
and economic intentions, and failure toachieve consensus on Brussels’ role arehampering nascent efforts to develop common
EU polices on energy diversification andsecurity. In the absence of a collective
approach that would reduce Russia’s
leverage, this dependence will foster constant33

its own national power through advanced
military hardware. Tokyo would assume
strong support from Washington in thiscircumstance and would move to shapepolitical and economic forums in theregion to isolate or limit Chinese
influence. This would cause states in theregion to make a difficult choice between
their continued unease with Japanesemilitary strength and a China that has thepotential to dominate nearly all nations
near its borders. As a result, Japan mightfind itself dealing with an ad-hoc nonaligned movement of East Asian statesseeking to avoid being entrapped by either
Tokyo or Beijing.

includes a large number of unemployed anduntrained citizens in their late teens and 20s.
This could lead to a shortage of white collar
workers.
With increasing electoral competition, Japan’s
one-party political system probably will fully
disintegrate by 2025. The Liberal Democratic
Party may split into a number of contending
parties, but it is more likely that Japan will
witness a continual splitting and merging ofcompeting political parties, leading to policy
paralysis.
On the foreign front, Japan’s policies will be
influenced most by the policies of China andthe United States, where four scenarios are
possible.
••In the first scenario, a China that
continues its current economic growth
pattern will be increasingly important toJapan’s economic growth, and Tokyo will
work to maintain good political relations
and increase market access for Japanese
goods. Tokyo may seek a free trade
agreement with Beijing well before 2025.
At the same time, China’s military power
and influence in the region will be ofincreasing concern to Japanesepolicymakers. Their likely response will
be to draw closer to the United States,
increase their missile defense and antisubmarine warfare capabilities, seek todevelop regional allies such as South
Korea, and push for greater developmentof international multilateral organizations
in East Asia, including an East Asian
Summit.
In a second scenario, China’s economic
growth falters or its policies become
openly hostile toward countries in theregion. In response, Tokyo would likely
move to assert its influence, in part byseeking to rally democratic states in East
Asia, and in part by continuing to develop
34•

In a third scenario, should the UnitedStates’ security commitment to Japan
weaken or be perceived by Tokyo as
weakening, Japan may decide to movecloser to Beijing on regional issues andultimately consider security arrangementsthat give China a de facto role inmaintaining stability in ocean areas near
Japan. Tokyo is highly unlikely torespond to a loss of the US security
umbrella by developing a nuclear
weapons program, short of clearlyaggressive intent by China toward Japan.

•

A fourth scenario would see the UnitedStates and China move significantly
toward political and security cooperationin the region, leading to US
accommodation of a Chinese militarypresence in the region and acorresponding realignment or drawdown
of US forces there. In this case, Tokyo
almost certainly would follow theprevailing trend and move closer to
Beijing to be included in regional security
and political arrangements. Similarly,
others in the region, including South
Korea, Taiwan, and ASEAN members
likely would follow such a US lead,putting further pressure on Tokyo to aligndiversified economy and put Brazil on a more
rapid economic growth path. The oil
discoveries in the Santos Basin—potentiallyholding tens of billions of barrels ofreserves—could make Brazil after 2020 a
major oil exporter when these fields are fully
exploited. Optimistic scenarios, whichassume a legal and regulatory frameworkattractive to foreign investment, project oil
rising to a 15 percent share of GDP by 2025;
even then, petroleum would only complement
existing sources of national wealth.

its policies with those of the other actors
in the region.
Brazil: Solid Foundation for an Enhanced
Leadership Role. By 2025 Brazil probably
will be exercising greater regional leadership,
as first among equals in South American fora,
but aside from its growing role as an energy
producer and its role in trade talks, it will
demonstrate limited ability to project beyond
the continent as a major player in world
affairs. Its progress in consolidating
democracy and diversifying its economy willserve as a positive regional model.

“The oil discoveries in the Santos Basin—
potentially holding tens of billions of barrelsof reserves—could make Brazil after 2020 a
major oil exporter…”

The country’s maturing commitment todemocracy is on a secure footing with fair andopen electoral processes and smoothtransitions having become routine. The
current President, Lula da Silva, has a strongsocialist orientation and has pursued amoderate policy course domestically andinternationally, setting a positive precedentfor his successors. Brazilian views about theimportance of playing a key role as both aregional and world leader have largely
become ingrained in the national
consciousness and transcend party politics.

Progress on social issues, such as reducing
crime and poverty, will likely play a decisiverole in determining Brazil’s future leadershipstatus. Without advances in the rule of law,even rapid economic growth will be undercutby the instability that results from pervasive
crime and corruption. Mechanisms toincorporate a growing share of the population
into the formal economy also will be needed
to buttress Brazil’s status as a modernizing
world power.

Economically, Brazil has established a solid
foundation for steady growth based onpolitical stability and an incremental reform
process. The growing consensus forresponsible fiscal and monetary policy islikely to lessen the disruptions from crisesthat have plagued the country in the past.
Dramatic departures from the current
economic consensus in Brazil, either a radical
turn toward a free-market and free tradeoriented economic model or a heavy-handed
statist orientation, appear to be unlikely by2025.

Up-and-Coming Powers
Owing to the large populations and expansive
landmasses of the new powers like India andChina, another constellation of powerhouses
is unlikely to erupt on the world scene overthe next decade or two. However, up-andcoming developing states could account for
an increasing proportion of the world’s
economic growth by 2025. Others also willplay a dynamic role in their own
neighborhoods.

Brazil’s recent preliminary finds of new,possibly large offshore oil deposits have thepotential to add another dynamic to an alreadyIndonesia, Turkey and a post-clerically run
Iran—states that are predominantly Islamic,
but which fall outside the Arab core—appear
well-situated for growing international roles.
A growth-friendly macro-economic policy
35

climate would allow their natural economic
endowments to flourish. In the case of Iran,radical political reform will be necessary.

Looking at Iran—a state rich in natural gas
and other resources and high in humancapital—political and economic reform in
addition to a stable investment climate could
fundamentally redraw both the way the worldperceives the country and also the way inwhich Iranians view themselves. Under thosecircumstances, economic resurgence could
take place quickly in Iran and embolden alatent cosmopolitan, educated, at times
secular Iranian middle-class. If empowered,this portion of the population could broaden
the country’s horizons, particularly eastward
and away from decades of being mired in the
Arab conflicts of the Middle East.

Indonesia’s performance will depend upon
whether it can replicate its success at political
reform with measures to spur the economy.
In the past decade, Indonesians havetransformed their once-authoritarian country
into a democracy, turning the vast archipelago
into a place of relative calm where support formoderate political solutions is strong,
separatist movements are largely fading away,
and terrorists, finding little public support, areincreasingly found and arrested. Withabundant natural resources and a large
population of potential consumers (it is theworld’s fourth most populous country),
Indonesia could rise economically if its
elected leaders take steps to improve theinvestment climate, including strengthening
the legal system, improving the regulatory
framework, reforming the financial sector,
reducing fuel and food subsidies, andgenerally lowering the cost of doing business.

Turkey’s recent economic track record ofincreased growth, the vitality of Turkey’s
emerging middle class and its geostrategic
locale raise the prospect of a growing regionalrole in the Middle East. Economic
weaknesses such as its heavy dependence on
external energy sources may help to spur it
toward a greater international role as Turkishauthorities seek to develop their ties withenergy suppliers—including close neighbors
Russia and Iran—and bolster its position as atransit hub. Over the next 15 years, Turkey’s
most likely course involves a blending ofIslamic and nationalist strains, which could
serve as a model for other rapidly
modernizing countries in the Middle East.

36

Preconditions for this scenario include:

Global Scenario I: A World
Without the WestIn this fictionalized account, the new powers
supplant the West as leaders on the worldstage. This is not inevitable nor the only
possible outcome of the rise of new states.
Historically the rise of new powers—such as
Japan and Germany in the late 19th and early
20th centuries—presented stiff challenges tothe existing international system, all of which
ended in worldwide conflict. More plausible
in our minds than a direct challenge to theinternational system is the possibility that the
emerging powers will assume a greater role inareas affecting their vital interests,
particularly in view of what may be growing
burden fatigue for Western countries.
Such a coalition of forces could be acompetitor to institutions like NATO, offeringothers an alternative to the West. As detailed,
we do not see these alternative coalitions asnecessarily permanent fixtures of the newlandscape. Indeed, given their diverse
interests and competition over resources, thenewer powers could as easily distancethemselves from each other as come together.
Although the emerging powers are likely tobe preoccupied with domestic issues andsustaining their economic development,
increasingly, as outlined in this chapter, they
will have the capacity to be global players.

37•

Lagging Western growth prompts the US
and Europe to begin taking protectionist
measures against the faster-growing
emerging powers.

•

Different models of state-society
relationships help underpin the powerful(albeit fragile) Sino-Russia coalition.

•

Tensions between the principal actors in
the multipolar world are high as states
seek energy security and strengthened
spheres of influence. The Shanghai
Cooperation Organization (SCO),
especially, seeks reliable and dependable
clients in strategic regions—and Central
Asia is in both Russia’s and China’s
backyards.

38

39

40

than 2 degree centigrade—the threshold at
which effects are thought to be no longer
manageable.

The international system will be challenged
by growing resource constraints at the sametime that it is coping with the impact of new
players. Access to relatively secure and clean
energy sources and management of chronic
food and water shortages will assume
increasing importance for a growing numberof countries during the next 15-20 years.
Adding well over a billion people to theworld’s population by 2025 will itself put
pressure on these vital resources. An
increasing percentage of the world’s
population will be moving from rural areas tourban and developed ones to seek greater
personal security and economic opportunity.
Many—particularly in Asia—will be joining
the middle class and will be seeking toemulate Western lifestyles, which involve
greater per capita consumption of all theseresources. Unlike earlier periods whenresource scarcities loomed large, thesignificant growth in demand from emerging
markets, combined with constraints on new
production—such as the control exerted now
by state-run companies in the global energy
market—limits the likelihood that market
forces alone will rectify the supply-anddemand imbalance.

Food and water also are intertwined withclimate change, energy, and demography.
Rising energy prices increase the cost for
consumers and the environment of industrialscale agriculture and application of
petrochemical fertilizers. A switch from useof arable land for food to fuel crops provides
a limited solution and could exacerbate boththe energy and food situations. Climatically,
rainfall anomalies and constricted seasonal
flows of snow and glacial melts areaggravating water scarcities, harming
agriculture in many parts of the globe.
Energy and climate dynamics also combine toamplify a number of other ills such as healthproblems, agricultural losses to pests, andstorm damage. The greatest danger may arise
from the convergence and interaction of many
stresses simultaneously. Such a complex and
unprecedented syndrome of problems could
overload decisionmakers, making it difficult
for them to take actions in time to enhancegood outcomes or avoid bad ones.
The Dawning of a Post-Petroleum Age?
By 2025 the world will be in the midst of afundamental energy transition—in terms ofboth fuel types and sources. Non-OPEC
liquid hydrocarbon production (i.e., crude oil,natural gas liquids, and unconventionals suchas tar sands) will not be able to growcommensurate with demand. The productionlevels of many traditional energy producers—
Yemen, Norway, Oman, Colombia, the UK,
Indonesia, Argentina, Syria, Egypt, Peru,
Tunisia—are already in decline. Others’
production levels—Mexico, Brunei,
Malaysia, China, India, Qatar—have
flattened. The number of countries capable ofmeaningfully expanding production will
decline. Only six countries—Saudi Arabia,
Iran, Kuwait, the UAE, Iraq (potentially), andThe already stressed resource sector will befurther complicated and, in most cases,
exacerbated by climate change, whose
physical effects will worsen throughout thisperiod. Continued escalation of energy
demand will hasten the impacts of climatechange. On the other hand, forcibly cuttingback on fossil fuel use before substitutes arewidely available could threaten continued
economic development, particularly forcountries like China whose industries have
not yet achieved high levels of energy
efficiency. Technological advances andpolicy decisions around the world germane togreenhouse gas emissions over the next 15
years are likely to determine whether the
globe’s temperature ultimately rises more
41

Russia—are projected to account for 39
percent of total world oil production in 2025.
The major producers increasingly will belocated in the Middle East, which contains
some two-thirds of world reserves. OPEC
production in the Persian Gulf countries is
projected to grow by 43 percent during 20032025. Saudi Arabia alone will account foralmost half of all Gulf production, an amountgreater than that expected from Africa and theCaspian area combined.

highly concentrated. Three countries—
Russia, Iran, and Qatar—hold over 57 percentof the world’s natural gas reserves.
Considering oil and natural gas together, twocountries—Russia and Iran—emerge as
energy kingpins. Nevertheless, North
America (the US, Canada, and Mexico) is
expected to produce an appreciable
proportion—18 percent—of total world
production by 2025.
“Aging populations in the developed world;
growing resource constraints in energy,
food, and water; and worries about climatechange are likely to color what will continue
to be an historically unprecedented age ofprosperity.”

A partial consequence of this growing
concentration has been increased control of
oil and gas resources by national oil
companies. When the Club of Rome made its
famous forecast of looming energy scarcities,
the “Seven Sisters” still had a strong influenceon global oil markets and production.7
Driven by shareholders, they responded toprice signals to explore, invest, and promotetechnologies necessary to increase production.
By contrast, national oil companies havestrong economic and political incentives tolimit investment in order to prolong the
production horizon. Keeping oil in the
ground provides resources for future
generations in oil states that have limited theireconomic options.

Even though the use of natural gas is likely togrow steadily in absolute terms, coal may be
the fastest growing energy source despite
being the “dirtiest.” Rising prices for oil andnatural gas would put a new premium onenergy sources that are cheap, abundant, andclose to markets. Three of the largest andfastest-growing energy consumers—the US,
China, and India—and Russia possess thefour largest recoverable coal reserves,
representing 67 percent of known global
reserves. Increased coal production could
extend non-renewable carbon-based energy
systems for one or even two centuries. China
will still be very dependent on coal in 2025
and Beijing is likely to be under increasing
international pressure to use clean
technologies to burn it. China is overtaking
the US in the amount of carbon emissions it
puts in the atmosphere despite its muchsmaller GDP.

The number and geographic distribution of oil
producers will decrease concurrent withanother energy transition: the move tocleaner fuels. The prized fuel in the shorter
term likely will be natural gas. By 2025,
consumption of natural gas is expected to
grow by about 60 percent, according to
DoE/Energy Information Agency projections.
Although natural gas deposits are notnecessarily co-located with oil, they are

The use of nuclear fuel for electrical power
generation is expected to expand, but theincrease will not be sufficient to fill growing
demand for electricity. Third-generation
nuclear reactors have lower costs of power

7

The “Seven Sisters” refers to seven Western oil
companies that dominated mid-20th century oil
production, refining, and distribution. With theformation and establishment of OPEC in the 1960s and1970s, the Western oil companies’ influence and clout
declined.

42generation, improved safety characteristics,
and better waste and proliferation
management features than previous reactor
designs. Third-generation nuclear reactors
are economically competitive at present
electricity prices and are beginning to be
deployed around the world. Although mostnuclear power plants are currently inindustrialized countries, growing demand forelectricity in China, India, South Africa andother rapidly growing countries will increase
the demand for nuclear power.

limit the future deployment of nuclear power.
Available uranium is likely to be sufficient tosupport the expansion of nuclear energy
without reprocessing well into the second halfof the century. If uranium should prove to be
in short supply, reactors capable of breeding
nuclear fuels, along with recycling of usedfuels, could continue to support the global
expansion of nuclear energy.
However, because of its infrastructure
requirements, concern over proliferation of
nuclear expertise and material, anduncertainty over licensing and spent fuelThe supply of uranium, which is the principal
feedstock for nuclear power, is unlikely to

43Timing is Everything
All current technologies are inadequate for replacing traditional energy architectures on the scaleneeded, and new energy technologies probably will not be commercially viable and widespread by2025 (see foldout). The present generation of biofuels is too expensive to grow, would further boost
food prices, and their manufacture consumes essentially the same amount of energy they produce.
Other ways of converting nonfood biomass resources to fuels and chemical products should be more
promising, such as those based on high-growth algae or agricultural waste products, especiallycellulosic biomass. Development of clean coal technologies and carbon capture and storage is
gaining momentum and—if such technologies were cost-competitive by 2025—would enable coal togenerate more electricity in a carbon-constrained regulatory environment. Long-lasting hydrogenfuel cells have potential, but they remain in their infancy and are at least a decade away fromcommercial production. Enormous infrastructure investment might be required to support a“hydrogen economy.” An Argonne National Laboratory study found that hydrogen, from well totank, is likely to be at least twice as costly as gasoline.
Even with the favorable policy and funding environment that would be needed for biofuels, cleancoal, or hydrogen, major technologies historically have had an “adoption lag.” A recent study foundthat in the energy sector, it takes an average of 25 years for a new production technology to become
widely adopted. A major reason for this lag is the need for new infrastructure to handle majorinnovation. For energy in particular, massive and sustained infrastructure investments made foralmost 150 years encompass production, transportation, refining, marketing, and retail activities.
Adoption of natural gas, a fuel superior to oil in many respects, illustrates the difficulty of a transition
to something new. Technologies to use natural gas have been widely available since at least the
1970s, yet natural gas still lags crude oil in the global market because the technical and investment
requirements for producing and transporting it are greater than they are for oil-based fuels.
Simply meeting baseline energy demand over the next two decades is estimated to require more than
$3 trillion of investment in traditional hydrocarbons by companies built up over more than a century
and with market capitalizations in the hundreds of billions of dollars. Because a new form of energy
is highly unlikely to use existing infrastructure without modifications, we expect any new form ofenergy to demand similarly massive investment.
Despite what are seen as long odds now, we cannot rule out the possibility of a transition by 2025
that would avoid the costs of an infrastructure overhaul. The greatest possibility for a relatively
quick and inexpensive transition during that period comes from better renewable generation sources(photovoltaic and wind) and improvements in battery technology. With many of these technologies,
the infrastructure cost hurdle for individual projects would be lower, enabling many small economic
actors to develop their own energy transformation projects that directly serve their interests—e.g.,
stationary fuel cells powering homes and offices, recharging plug-in hybrid autos, and selling energy
back to the grid. Also, energy conversion schemes—such as plans to generate hydrogen forautomotive fuel cells from electricity in a homeowner’s garage—could avoid the need to develop
complex hydrogen transportation infrastructure. Similarly, non-ethanol biofuels derived fromgenetically modified feed stocks may be able to leverage the considerable investment in liquid
petroleum transport and distribution infrastructure.

44

prices. A number of these states have been
identified by outside experts as at risk of state
failure—the Central African Republic,
DROC, Nepal, and Laos, for example. States
characterized by high import dependence, low
GDP per capita, high current account deficits,
and heavy international indebtedness form aparticularly perilous state profile. Such a
profile includes most of East Africa and theHorn. Pivotal yet problem-beset countries,
such as Pakistan, will be at risk of state
failure.

processing, expansion of nuclear power
generation by 2025 to cover anywhere near
the increasing demand would be virtually
impossible. The infrastructure (human andphysical), legal (permitting), and construction
hurdles are just too big. Only at the end of
our 15-20 year period are we likely to see a
serious ramp up of nuclear technologies.
The Geopolitics of Energy
Both high and low energy price levels would
have major geopolitical implications and,over the course of 20 years, periods of both
could occur. DoE’s Energy Information
Administration and several leading energy
consultants believe higher price levels arelikely, at least to 2015, because of plateauing
supply and growing demand. These causes
are unlike the case in 1970s and early 1980s
when high oil prices were caused by anintentional restriction in supply. Even withthe overall secular rise in energy costs, prices
well below $100 a barrel are periodicallylikely with the expected increased volatility
and need not come about as a result oftechnological breakthroughs and rapid
commercialization of a substitute fuel.
Plausible scenarios for a downward shift andchange in market psychology include slowing
global growth; increased production in Iraq,
Angola, Central Asia, and elsewhere; andgreater energy efficiencies with currently
available technology.

With higher prices, more stable countries farebetter but their prospects for economic growthwould drop somewhat and political turbulence
could occur. Efficient, service-sector oriented
OECD economies are not immune but are
harmed the least. China, though cushioned byits massive financial reserves, would be hit byhigher oil prices, which would make lifting
millions more out of poverty more difficult.
China also would need to mine and transport
more domestic coal, build more nuclear
power plants, and seek to improve energy
end-use efficiencies to offset the higher priced
imports.
With high prices, major exporters such as
Russia and Iran would have the financial
resources to increase their national power.
The extent and modalities of steps to increase
their power and influence would depend on
how they used their profits to invest in humancapital, financial stabilization, and economic
infrastructure. Judicious application of
Russia’s increased revenues to the economy,social needs, and foreign policy instruments
would likely more than double Russia’s
standing as measured by an academic national
power index.

“With high prices, major exporters such as
Russia and Iran would have the financial
resources to increase their national
power…”
Even at prices below $100 a barrel, financialtransfers connected with the energy trade
produce clear winners and losers. Most of the
32 states that import 80 percent or more of
their energy needs are likely to experiencesignificantly slower economic growth thanthey might have achieved with lower oil

A sustained plunge in oil prices would havesignificant implications for countries relying
on robust oil revenues to balance the budget
or build up domestic investment. For Iran, a45Winners and Losers in a Post-Petroleum World
We believe the most likely occurrence by 2025 is a technological breakthrough that will provide
an alternative to oil and natural gas, but implementation will lag because of the necessary
infrastructure costs and need for longer replacement time. However, whether the breakthroughoccurs within the 2025 time frame or later, the geopolitical implications of a shift away from oiland natural gas will be immense.
•

Saudi Arabia will absorb the biggest shock, as its leaders will be forced to tighten up on thecosts of the royal establishment. The regime could face new tensions with the Wahabi
establishment as Riyadh seeks to promote a series of major economic reforms—including
women’s full participation in the economy—and a new social contract with its public as ittries to institute a work ethic to accelerate development plans and diversify the economy.

•

In Iran, the drop in oil and gas prices will undermine any populist economic policies.
Pressure for economic reform will increase, potentially putting pressure on the clerical
governing elite to loosen its grip. Incentives to open up to the West in a bid for greater
foreign investment, establishing or strengthening ties with Western partners—including with
the US—will increase. Iranian leaders might be more willing to trade their nuclear policies
for aid and trade.

For Iraq, emphasis on investing in non-oil sectors of its economy will increase. The smaller Gulf
states, which have been making massive investments designed to transform themselves into
global tourist and transport hubs, are likely to manage the transition well, bolstered by theirrobust sovereign wealth funds (SWFs). Across the Arab world, SWFs are being deployed todevelop non-oil sectors of the economy in a race against oil as a diminishing asset.
Outside the Middle East, Russia will potentially be the biggest loser, particularly if its economy
remains heavily tied to energy exports, and could be reduced to middle power status. Venezuela,
Bolivia, and other petro-populist regimes could unravel completely, if that has not occurred
beforehand because of already growing discontent and decreasing production. Absent support
from Venezuela, Cuba might be forced to begin China-like market reforms.
Early oil decline states—those exporters which had peaked or were declining as is currently thecase with Indonesia and Mexico—may be better prepared to shift the focus of their economic
activities and diversify into non-energy sectors.

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50

•drop in oil prices to the $55-60 range or
below would put significant pressure on theregime to make painful choices between
subsidizing populist economic programs andsustaining funding for intelligence andsecurity operations and other programs
designed to extend its regional power. The
notion that state-dominated economies,
apparently able to achieve economic growthabsent political freedoms or a fully freemarket, are a credible alternative to Westernnotions of free markets and liberal democracy
could be badly dented, particularly since
history suggests the US and other Westernstates adapt more quickly and effectively tounexpected changes in energy markets.

Water, Food, and Climate Change
Experts currently consider 21 countries with a
combined population of about 600 million tobe either cropland or freshwater scarce.
Owing to continuing population growth, 36
countries, home to about 1.4 billion people,
are projected to fall into this category by
2025. Among the new entrants will be
Burundi, Colombia, Ethiopia, Eritrea,
Malawi, Pakistan, and Syria. Lack of accessto stable supplies of water is reaching
unprecedented proportions in many areas of
the world (see map on page 55) and is likely
to grow worse owing to rapid urbanizationand population growth. Demand for water for
agricultural purposes and hydroelectric power
generation also will expand. Use of water for
irrigation is far greater than for household
consumption. In developing countries,
agriculture currently consumes over 70
percent of the world’s water. The
construction of hydroelectric power stations
on major rivers may improve flood control,
but it might also cause considerable anxiety todownstream users of the river who expect
continued access to water.

Under any scenario energy dynamics could
produce a number of new alignments orgroupings with geopolitical significance:•

Russia, needing Caspian area natural gas
in order to satisfy European and othercontracts, is likely to be forceful in
keeping Central Asian countries within
Moscow’s sphere, and, absent a nonRussia-controlled outlet, has a goodchance of succeeding.

•

China will continue to seek to buttress its
market power by cultivating political
relationships designed to safeguard its
access to oil and gas. Beijing’s ties with
Saudi Arabia will strengthen, as theKingdom is the only supplier capable ofresponding in a big way to China’s
petroleum thirst.

•

We believe India will scramble to ensure
access to energy by making overtures to
Burma, Iran, and Central Asia. Pipelines
to India transiting restive regions mayconnect New Delhi to local instabilities.

“Experts currently consider 21 countries,
with a combined population of about 600
million, to be either cropland or freshwater
scarce. Owing to continuing population
growth, 36 countries, home to about 1.4
billion people, are projected to fall into thiscategory by 2025.”

Beijing will want to offset its growing
reliance on Riyadh by strengthening ties
to other producers. Iran will see this as anopportunity to solidify China’s support for
Tehran, which probably would strain
Beijing’s ties to Riyadh. Tehran may also
be able to forge even closer ties with
Russia.

The World Bank estimates that demand forfood will rise by 50 percent by 2030, as aresult of growing world population, rising
affluence, and shifts to Western dietary
preferences by a larger middle class. The

51

investment has distorted agricultural prices in
the past. If political elites are more worried
about urban instability than rural incomes—asafe bet in many countries—these policies arelikely to persist, increasing the risk of tightsupplies in the future. The demographic trend
for increased urbanization—particularly indeveloping states—underscores the likelihoodthat failed policies will continue.

Two Climate Change Winners
Russia has the potential to gain the most fromincreasingly temperate weather. Russia has
vast untapped reserves of natural gas and oilin Siberia and also offshore in the Arctic, andwarmer temperatures should make thereserves considerably more accessible. This
would be a huge boon to the Russian
economy, as presently 80 percent of thecountry’s exports and 32 percent ofgovernment revenues derive from theproduction of energy and raw materials. In
addition, the opening of an Arctic waterway
could provide economic and commercial
advantages. However, Russia could be hurt
by damaged infrastructure as the Arctic
tundra melts and will need new technology todevelop the region’s fossil energy.

Between now and 2025, the world will haveto juggle competing and conflicting energy
security and food security concerns, yielding
a tangle of difficult-to-manage consequences.
In the major grain exporters (the US, Canada,
Argentina, and Australia), demand forbiofuels—enhanced by government
subsidies—will claim larger areas of croplandand greater volumes of irrigation water, evenas biofuel production and processing
technologies are made more efficient. This
“fuel farming” tradeoff, coupled with periodic
export controls among Asian producers andrising demand for protein among growing
middle classes worldwide, will force grain
prices in the global market to fluctuate atlevels above today’s highs. Some economists
argue that, with international markets settlingat lower grain volumes, speculation—invitedby expectations of rising fuel costs and more
erratic, climate change-induced weather
patterns—could play a greater role in foodprices.

Canada will be spared several serious North
American climate-related developments—
intense hurricanes and withering heatwaves—and climate change could open up
millions of square miles to development.
Access to the resource-rich Hudson Bay
would be improved, and being a circumpolar
power ringing a major portion of a warming
Arctic could be a geopolitical and economic
bonus. Additionally, agricultural growing
seasons will lengthen, net energy demand forheating/cooling will likely drop, and forests
will expand somewhat into the tundra.
However, not all soil in Canada can takeadvantage of the change in growing season,and some forest products are alreadyexperiencing damage due to changes in pest
infestation enabled by warmer climates.

A consortium of large agricultural
producers—including India and China, alongwith the US and EU partners—is likely towork to launch a second Green Revolution,
this time in Sub-Saharan Africa, which could
help dampen price volatility in worldwide
grain markets. By 2025, increases in African
grain yields probably will be substantial, but
the increases will be confined principally tostates in the southern and eastern regions of
the continent, which will have deepened tradeand security relations with East and Southglobal food sector has been highly responsive
to market forces, but farm production
probably will continue to be hampered by
misguided agriculture policies that limit
investment and distort critical price signals.
Keeping food prices down to placate theurban poor and spur savings for industrial

52

Strategic Implications of an Opening Arctic
Estimates vary as to when the Arctic is likely to be ice free during the summer. The National
Snow and Ice Data Center suggests a seasonally ice-free Arctic by 2060; more current researchsuggests the date could be as soon as 2013. The two most important implications of an opening
Arctic are improved access to likely vast energy and mineral resources and potentially shorter
maritime shipping routes.
Transiting the Northern Sea Route above Russia between the North Atlantic and the North
Pacific would trim about 5,000 nautical miles and a week’s sailing time off a trip compared withuse of the Suez Canal. Voyaging between Europe and Asia through Canada’s Northwest
Passage would trim some 4,000 nautical miles off of a trip using the Panama Canal.
Resource and shipping benefits are unlikely to materialize by 2025. The US National Petroleum
Council has said that some of the technology to exploit oil from the heart of the Arctic region
may not be ready until as late as 2050. Nonetheless, these potential riches and advantages are
already perceptible to the United States, Canada, Russia, Denmark, and Norway—as evidenced
by the emergence of competing territorial claims, such as between Russia and Norway, andCanada and Denmark.
Although serious near-term tension could result in small-scale confrontations over contested
claims, the Arctic is unlikely to spawn major armed conflict. Circumpolar states have othermajor ports on other bodies of water, so the Arctic does not pose any lifeblood blockade dangers.
Additionally, these states share a common interest in regulating access to the Arctic by hostile
powers, states of concern, or dangerous nonstate actors; and by their shared need for assistancefrom high-tech companies to exploit the Arctic’s resources.
The greatest strategic consequence over the next couple of decades may be that relatively large,
wealthy, resource-deficient trading states such as China, Japan, and Korea will benefit fromincreased energy resources provided by any Arctic opening and shorter shipping distances.

populations. Although this is considered highby many experts, broad agreement exists
about the risks of large scale migration andthe need for better preparation. Most
displaced persons traditionally relocate within
their home countries, but in the future manyare likely to find their home countries havediminishing capabilities to accommodate
them. Thus the number of migrants seeking
to move from disadvantaged into relatively
privileged countries is likely to increase. The
largest inflows will mirror many current
migratory patterns—from North Africa andWestern Asia into Europe, Latin America into
the US, and Southeast Asia into Australia.

Asian states. Elsewhere south of the Sahara,
civil conflict and the political and economic
focus on mining and petroleum extraction arelikely to foil most of the consortium’s
attempts to upgrade irrigation and ruraltransportation networks and to extend credit
and investment, allowing population growth
to outpace gains in agricultural productivity.
In addition to the currently projectedscarcities of freshwater and cropland, the UK
Treasury-commissioned Stern Report
estimates that by the middle of the century
200 million people may be permanently
displaced “climate migrants”—representing aten-fold increase over today’s entire
documented refugee and internally displaced53

Over the next 20 years, worries about climatechange effects may be more significant thanany physical changes linked to climatechange. Perceptions of a rapidly changing
environment may cause nations to takeunilateral actions to secure resources,
territory, and other interests. Willingness toengage in greater multilateral cooperation will
depend on a number of factors, such as the
behavior of other countries, the economic
context, or the importance of the interests to
be defended or won.

Many scientists worry that recent assessments
underestimate the impact of climate change
and misjudge the likely time when effects will
be felt. Scientists currently have limited
capability to predict the likelihood ormagnitude of extreme climate shifts but
believe—based on historic precedents—that it
will not occur gradually or smoothly. Drastic
cutbacks in allowable CO2 emissions
probably would disadvantage the rapidly
emerging economies that are still low on theefficiency curve, but large-scale users in thedeveloped world—such as the US—also
would be shaken and the global economy
could be plunged into a recession or worse.

54

55

Sub-Saharan Africa: More Interactions with the World and More Troubled
In 2025, Sub-Saharan Africa will remain the most vulnerable region on Earth in terms of
economic challenges, population stresses, civil conflict, and political instability. The weaknessof states and troubled relations between states and societies probably will slow major
improvements in the region’s prospects over the next 20 years unless there is sustainedinternational engagement and, at times, intervention. Southern Africa will continue to be themost stable and promising sub-region politically and economically.
Sub-Saharan Africa will continue to be a major supplier of oil, gas, and metals to world markets
and increasingly will attract the attention of Asian states seeking access to commodities,
including China and India. However, despite increased global demand for commodities,
increased resource income may not benefit the majority of the population or result in significant
economic gains. Poor economic policies—rooted in patrimonial interests and incomplete
economic reform—will likely exacerbate ethnic and religious divides as well as crime andcorruption in many countries. Ruling elites are likely to continue to accrue greater income andwealth, while poverty will persist or worsen in rural areas and sprawling urban centers. The
divide between elite and non-elite populations is likely to widen, reinforcing conditions that
could generate divisive political and religious extremism.
By 2025, the region’s population is expected to reach over one billion, notwithstanding theeffects of HIV/AIDS. Over one-half of the population will be under age 24, and many will beseeking economic opportunity or physical safety via out-migration owing to conflict, climatechange, or widespread unemployment. The earliest global effects of climate change, including
water stress and scarcity, will begin to occur in Sub-Saharan Africa by 2025.
Today almost one-half (23 of 48) of the countries in Sub-Saharan Africa are classed as
democracies, and the majority of African states are on a democratic path, but the most populous
states in the region and those with high population growth could backslide.
Although Africa is already assuming more of its own peacekeeping responsibilities, the region
will be vulnerable to civil conflict and complex forms of interstate conflict—with militaries
fragmented along ethnic or other divides, limited control of border areas, and insurgents andcriminal groups preying on unarmed civilians in neighboring countries. Central Africa contains
the most troubling of these cases, including Congo-Kinshasa, Congo-Brazzaville, Central
African Republic, and Chad.
In contrast to other regions of the world, African attitudes toward the US will remain positive,
although many African governments will remain critical of US policies on issues like the Middle
East, Cuba, and global trade. Africa will continue to push for UN reform and for permanent
representation on the UN Security Council.

56

Preconditions assumed in this scenario
include:Global Scenario II: October
SurpriseIn the following fictionalized account, global
inattention to climate change leads to major
unexpected impacts, thrusting the world into a
new level of vulnerability. Scientists are
currently uncertain whether we already have
hit a tipping point at which climate change
has accelerated and whether there is little we
can do—including reducing emissions—thatwill mitigate effects even over the longer
term. Most scientists believe we will notknow whether we have hit a tipping point
until it is too late. Uncertainties about thepace and specific vulnerabilities or impacts
from climate change are likely to persist overthe next 15-20 years even if our knowledge
about climate change deepens, according tomany scientists.
An extreme weather event—as described inthis scenario—could occur. Coping with thegreater frequency of such events, coupledwith other physical impacts of climate changesuch as growing water scarcities and more
food crises, may preoccupy policymakers
even while options for solving such problems
dwindle. In this example, relocating the New
York Stock Exchange to a less vulnerable
location is considered, but serious
consideration also would be given to
relocating other institutions to ensure
continuity of operations. Although this
scenario focuses on an event that occurs in theUS, other governments have been caught by
surprise with different types of environmental
disasters and have suffered a loss of standing.
Mitigation efforts—further cutbacks in carbon
emissions—are unlikely to make any
difference, at least in the short run, according
to this account. Such a world involving
potentially major dislocations could threatenboth developed and developing countries.

57•

Nations adopt a “growth-first” mentality
leading to widespread environmental
neglect and degradation.

•

Governments, particularly those lacking
transparency, lose legitimacy as they fail
to cope with environmental and otherdisasters.

•

Despite significant technological progress,
no technological “silver bullet” is found tohalt the effects of climate change.

•

National solutions to environmental
problems are short term and inadequate.

58

59

60

vulnerability to systemic changes in worldenergy markets also may act as a goad tofurther economic reform, including greater
diversification in energy-rich states.

We now assess the potential for conflict—both interstate and intrastate—over the next
15-20 years to be greater than we anticipatedin Mapping the Global Future, particularly in
the greater Middle East. Large parts of theregion will become less volatile than today
and more like other parts of world, such as
East Asia, where economic goals
predominate, but other portions of the region
remain ripe for conflict. The combination ofincreasingly open economies and persistently
authoritarian politics creates the potential for
insurgencies, civil war, and interstate conflict.
By 2025, Iran’s nuclear ambitions are likely
to be clear in one way or the other and theregion will either be swept up in an arms raceor have found another way to try to establish
regional security. Although we believe theappeal of al-Qa’ida and other international
terrorist groups will diminish over the next
15-20 years, pockets of support will remain,
ensuring a continuing threat, particularly as
lethal technology is expected to become moreaccessible.

For regimes, managing economic change will
involve a delicate balancing act between theimperatives of fostering economic growth andmaintaining authoritarian rule. Althoughsome regimes may succeed, the odds are that
only one or two will become genuine
democracies and one or two will end up withcivil disorder and conflict because rulers
miscalculate the tradeoffs or take gambles
that don’t pay off.
Growing Risk of a Nuclear Arms Race in
the Middle East
A number of states in the region are alreadythinking about developing or acquiring
nuclear technology useful for development of
nuclear weaponry. Over the next 15-20 years,
reactions to the decisions Iran makes about its
nuclear program could cause a number ofregional states to intensify these efforts andconsider actively pursuing nuclear weapons.
This will add a new and more dangerous
dimension to what is likely to be increasing
competition for influence within the region,
including via proxies—Shia in Iran’s case andSunnis for most of its neighbors—and acompetition among outside powers anxious topreserve their access to energy supplies and tosell sophisticated conventional weaponry inexchange for greater political influence andenergy agreements.

A Shrinking Arc of Instability by 2025?
In our previous study, Mapping the Global
Future, we assessed that those states mostsusceptible to conflict are in a great arc of
instability stretching from Sub-Saharan Africa
through North Africa, into the Middle East,
the Balkans, the Caucasus, and South andCentral Asia, and parts of Southeast Asia.
Today, parts of this arc are experiencing
increasing economic activity, including
moderate to high levels of GDP growth, slow
but perceptible economic reform, improved
regulatory performance, deepening financial
markets, high levels of outside and intraregional investment and related technology
transfers, and development of new tradecorridors. In the medium-to-longterm,increased rates of growth are likely to besustained if energy prices remain high, but notso high that they depress growth in otherregions. Awareness of increasing

Not Inevitable… Historically, many states
have had nuclear weapons ambitions but havenot gone the distance. States may prefer toretain the technological ability to produce
nuclear weapons rather than to develop actual
weapons. Technological impediments and adesire to avoid political isolation and seek
greater integration into the global economy

61

be regarded by them as a sufficient offset toan Iranian nuclear weapons capability, but it
could be a tall order to expect such guarantees
to satisfy all of those concerned about anuclear Iran.

A Non-nuclear Korea?
We see a unified Korea as likely by 2025—if
not as a unitary state, then in some form of
North-South confederation. While diplomacy
working to end North Korea’s nuclear
weapons program continues, the final
disposition of the North’s nuclear
infrastructure and capabilities at the time ofreunification remain uncertain. A new,reunified Korea struggling with the large
financial burden of reconstruction will,
however, be more likely to find international
acceptance and economic assistance byensuring the denuclearization of thePeninsula, perhaps in a manner similar towhat occurred in Ukraine post-1991. A
loosely confederated Korea might complicate
denuclearization efforts. Other strategic
consequences are likely to flow from Korean
unification, including prospects for new levelsof major power cooperation to manage newand enduring challenges, such as
denuclearization, demilitarization, refugee
flows, and financing reconstruction.

…But Potentially More Dangerous than theCold War. The prospect that nuclear
weapons will embolden Iran, lead to greater
instability, and trigger shifts in the balance ofpower in the Middle East appears to be thekey concern of the Arab states in the region
and may drive some to consider acquiring
their own nuclear deterrent. Iran’s growing
nuclear capabilities are already partly
responsible for the surge of interest in nuclear
energy in the Middle East, fueling concern
about the potential for a nuclear arms race.
Turkey, United Arab Emirates, Bahrain,
Saudi Arabia, Egypt, and Libya are or haveexpressed interest in building new nuclear
power facilities. Future Iraniandemonstrations of its nuclear capabilities thatreinforce perceptions of its intent and ability
to develop nuclear weapons potentially would
prompt additional states in the region to
pursue their own nuclear weapons programs.

could motivate Tehran to forego nuclear
weaponization. However, even an Iraniancapacity to develop nuclear weapons might
prompt regional responses that could bedestabilizing.

“We see a unified Korea as likely by 2025—
if not as a unitary state, than in some formof North-South confederation.”
It is not certain that the type of stable
deterrent relationship that existed for most of
the Cold War would emerge naturally in the
Middle East with multiple nuclear-weapons
capable states. Rather than episodes ofsuppressing or shortening low-intensity
conflicts and terrorism, the possession of
nuclear weapons may be perceived as making
it “safe” to engage in such activities, or evenlarger conventional attacks, provided thatcertain redlines are not crossed. Each such
incident between nuclear-armed states,
however, would hold the potential for nuclear
escalation.

If Iran does develop nuclear weapons, or isseen in the region as having acquired a latent
nuclear weapons capability, other countries in
the region may decide not to seek acorresponding capability. It is more likely,
however, that a few of Iran’s neighbors willsee Iran’s development of nuclear weapons ora latent weapons capability as an existential
threat or as resulting in an unacceptable,
fundamental shift of power in the region, andtherefore will seek offsetting capabilities.
Security guarantees from existing nuclear
powers that regional states find credible may

62geopolitical implications as states undertake
strategies to hedge against the possibility thatexisting energy supplies will not meet risingdemands. Energy security considerations are
already driving countries such as China andIndia to purchase equity stakes in energy
fields, and evolving competitions are
increasingly being supported by militarycapabilities leading to the potential forheightened tensions and even conflict.
Energy-deficient states may employ transfersof arms and sensitive technologies and thepromise of a political and military alliance as
inducements to establish strategic
relationships with energy-producing states.

The continued spread of nuclear capabilities
in the greater Middle East, where several
states will be facing succession challenges
over the next 20 years, also will raise newconcerns over the capacity of weak states tomaintain control over their nuclear
technologies and arsenals. If the number ofnuclear-capable states increases, so will thenumber of countries potentially willing toprovide nuclear assistance to other countries
or to terrorists. The potential for theft ordiversion of nuclear weapons, materials, andtechnology—and the potential forunauthorized nuclear use—also would rise.
Finally, enough countries might decide toseek nuclear weapons capabilities in reaction
to an Iranian capability that countries beyond
the region would begin pursuing their own
nuclear weapons programs.
New Conflicts Over Resources?
The rising energy demands of growing
populations and economies may bring into
question the availability, reliability, andaffordability of energy supplies. Such asituation would heighten tensions between
states competing for limited resources,
especially if accompanied by increased
political turbulence in the Middle East and ageneral loss of confidence in the ability of themarketplace to satisfy rising demands.
National companies could control the lion’sshare of the world’s hydrocarbon resources,
leading to a further blending of energy-state
relationships and geopolitical concerns.
Perceptions of energy scarcity will drive
countries to take actions to assure their futureaccess to energy supplies. In the worst casethis could lead to interstate conflicts if
government leaders deem assured access toenergy resources to be essential tomaintaining domestic stability and thesurvival of their regime. However, evenactions short of war will have important

63•

Central Asia has become an area ofintense international competition foraccess to energy. Although Russia andChina currently are working cooperatively
to reduce the leverage of outside powers,
especially the United States, competition
between the two in Central Asia could
escalate if in the future Russia seeks tointerfere with China’s relations in theregion or China becomes more aggressive
in obtaining its access to energy supplies
in parts of the former Soviet Union.

•

The future development of novel drilling
techniques may create new opportunities
to find and exploit previously unexploredultra-deep oil fields. Such fields,
however, may be located in areas ofcontested ownership, such as Asia or theArctic, creating the potential for conflict.

Middle East/North Africa:
Economics Drives Change, but with Major Risk of Turmoil
The Middle East and North Africa (MENA) will remain a geopolitically significant region in
2025, based on the importance of oil to the world economy and the threat of instability. The
region’s future will depend on how leaders manage oil windfalls, demographic changes, pressure
for political change, and regional conflicts.
In a positive scenario in which economic growth becomes increasingly rooted and sustained,
regional leaders will choose to invest in the region; implement economic, educational, and social
policies that encourage more growth; move forward with political reform that empowers
moderate—and probably Islamic—political parties; work to settle regional conflicts; andimplement security agreements that help prevent future instability.
•

In a more negative scenario, leaders will fail to prepare their growing populations toparticipate productively in the global economy, authoritarian regimes will hold tightly topower and become more repressive, and regional conflicts will remain unresolved as
population growth strains resources.

Demographically, a number of Middle Eastern and North African countries are positioned where
Taiwan and South Korea were before their takeoff in the 1960s and 1970s. Over the next 15 or
so years, the proportion of the economically active populations (ages 15-64) in countries like
Egypt will exceed that of the economically dependent population by a much greater amount thanin any other region. This differential provides an opportunity to accelerate economic growth ifgovernments put appropriate economic and social policies in place. Prospects are best in the
North African and Gulf states.
•

Foreign investment—much of it originating from within the region—will increase integration
between Arab economies and drive private-sector development. The most promisingindustries for job growth are likely to be in services, putting the region on a different
developmental path than East Asia.

•

To maximize growth potential, MENA governments will need to improve their educational
systems to produce a more technically skilled work force and encourage citizens accustomed
to public sector jobs to accept the demands and volatility of the private sector. (East Asian
economies prospered because of sustained government efforts to improve rapidly the qualityof the work force through universal education and by developing export industries.)

In other regions, integrating young adults into the work force—coupled with a declining birthrate and shrinking youth bulge—has provided an opening for democratization. Social scientists
have found that, as an increasing proportion of the population had a stake in the system, formerly
authoritarian states like South Korea and Taiwan felt they could experiment with politicalliberalization. An important cluster of North African countries—Algeria, Libya, Morocco,
Egypt, and Tunisia—has the potential to realize such a demographic-democratic nexus in the
period to 2025, but it is unclear whether these authoritarian regimes will exploit theseopportunities to liberalize.
(Continued on next page…)
64

(Continued…)
A Two-Tier Muslim World? Although the Western paradigm separating religious and secularauthority may still be less compelling to Muslim publics, a greater emphasis on economics and,most importantly, greater participation of women in the work force may spur new forms ofprogressive Islam. This does not mean that extremist strands will disappear; in the short term
they might benefit from unease over the changing role of women and alternative family models.
But over time, lower fertility promotes religious and political stability and, if secularization insouthern Europe is a guide, modernized versions of Islam could take root by 2025.
The channeling of political dissent into Islamic discourse—a variant of the global revival ofreligious identity in the aftermath of the Cold War—and states’ efforts to manipulate Islamic
currents will reinforce the dominance of Islam in Middle Eastern politics and society in 2025.
As a result, pressures for greater political pluralism are likely to produce a bigger role for Islamic
political parties and a re-thinking of how Islam and politics should interact and influence eachother, with considerable political and social turmoil generated in the process.
Even as some states may liberalize, others may fail: youth bulges, deeply rooted conflicts, andlimited economic prospects are likely to keep Palestine, Yemen, Afghanistan, Pakistan, andothers in the high-risk category. Spillover from turmoil in these states and potentially others
increases the chance that moves elsewhere in the region toward greater prosperity and politicalstability will be rocky. The success of efforts to manage and resolve regional conflicts and todevelop security architectures that help stabilize the region will be a major determinant of theability of states to grow their economies and pursue political reform.
Resolution of the Syrian and Palestinian conflicts with Israel, in particular, would broaden theideological and political discourse within secular and Islamic circles, undermine a traditional
pretext for maintaining large militaries and curtailing freedoms, and help defuse sectarian andethnic tensions in the region.
Iran’s trajectory is also likely to have lasting regional impacts—for good or ill. Iran’s fractious
regime, nationalist identity, and ambivalence toward the United States will make any transition
from regional dissenter toward stakeholder perilous and uneven. Although Iran’s aims forregional leadership—including its nuclear ambitions—are unlikely to abate, its regional
orientation will have difficulty discounting external and internal pressures for reform. An
Iranian perception of greater shared interests with the West in Iraq and Afghanistan, for example,
and sustained progress on Arab-Israeli peace that weakens Iranian-Syrian ties and accommodates
or sidelines Iran’s sub-state allies would provide security incentives and pressures on Iran toadjust its regional role. A political consensus within Iran to develop further its significant
economic potential—fueled potentially by a sustained popular backlash against corruption andeconomic mismanagement and a fall in energy rents—could provide an additional push to shift
Iran’s factional politics to the left and an incentive for Iran to adjust its policies with a view
toward easing US and international sanctions.

65the region, such as China’s and India’s
development of “blue-water” naval
capabilities, to protect critical economic
assets and secure access to energy resources.
Other national navies in the Middle East andAsia will not be able to replace the US Navy’s
role in protecting strategic sea lines ofcommunication in 2025, but the buildup ofregional naval capabilities could lead toincreased tensions, rivalries, andcounterbalancing.

Energy Security
Other possible examples of the militarization ofenergy security include:

States using their control of energy
resources as weapons of political coercion
and influence. Russia is seeking to position
itself to control energy supply and relatedtransportation networks from Europe to East
Asia. This would enable Moscow to use its
control over energy flows to promote Russianinterests and influence.
Threats posed by terrorism and piracy toenergy production and transit. Publicstatements by al-Qa’ida leaders indicate
terrorists are interested in striking Persian
Gulf oil facilities. The protection of energy
pipelines, facilities, and shipping fromterrorist attacks will be a key security concern
and mission for military forces.
Domestic instability, insurgencies, andconflict within strategic energy-producing
and exporting states. Ethnic and politicalviolence and criminal activity currently
threaten a large portion of Nigeria’s oil
production. State failure in a key energy
producing country may require militaryintervention by outside powers to stabilize
energy flows.

Concerns about assuring future access toenergy supplies also are fostering increased
naval competition. Despite the growing
number of pipeline projects, in 2025 Asian
countries will remain dependent on sea
transfers of energy from suppliers in the
Middle East. This is raising concerns about
the future of maritime security in a zone
extending from the Persian Gulf to East andSoutheast Asia. Maritime security concerns
are providing the rationale for a series ofnaval buildups and modernization efforts in•

Growing concerns over maritime security
may create opportunities for multinational
cooperation in protecting critical sea
lanes. Mutual suspicions regarding theintentions behind naval build-ups bypotential regional rivals or theestablishment of alliances that exclude
key players would, however, undermine
efforts for international cooperation.

•

A naval arms race in Asia may emerge in
response to China’s further developmentof naval power projection. A naval arms
race might also be spurred by “antiaccess” capabilities—such as attack
submarines and long-range antiship
missiles—that become widely viewed asefforts by Beijing to extend its politicalinfluence in the region and to deter
attempts to cut off China’s seaborneenergy supplies by threatening mutual
disruption of sea trade.

Climate change is unlikely to trigger
interstate war, but it could lead to increasingly
heated interstate recriminations and possibly
to low-level armed conflicts. With water
becoming more scarce in several regions,cooperation over changing water resources islikely to be increasingly difficult within andbetween states, straining regional relations.
Such regions include the Himalayan region,
which feeds the major rivers of China,
Pakistan, India, and Bangladesh; Israel-66

Another Use of Nuclear Weapons?
The risk of nuclear weapon use over the next 20 years, although remaining very low, is likely to
be greater than it is today as a result of several converging trends. The spread of nuclear
technologies and expertise is generating concerns about the potential emergence of new nuclear
weapon states and the acquisition of nuclear materials by terrorist groups. Ongoing low-intensity
clashes between India and Pakistan continue to raise the specter that such events could escalate
to a broader conflict between those nuclear powers. The possibility of a future disruptive regimechange or collapse occurring in a nuclear weapon state such as North Korea also continues toraise questions regarding the ability of weak states to control and secure their nuclear arsenals.
In addition to these longstanding concerns, new political-military developments could further
erode the nuclear “taboo.” The prospect of a nuclear-armed Iran spawning a nuclear arms race inthe greater Middle East will bring new security challenges to an already conflict-prone region,
particularly in conjunction with the proliferation of long-range missile systems. Furthermore,
future acquisition of nuclear weapons by states with weak command and control procedures andsafeguards increases the probability of accidental or unauthorized nuclear use.
Future asymmetries in conventional military capabilities among potential rivals might tempt
weak states to view nuclear weapons as a necessary and justifiable defense in response to thethreat of overwhelming conventional attacks. In such cases, the defending power might try tolimit the potential for escalation by employing a nuclear weapon test to signal resolve and deter
aggression or by confining the use of nuclear weapons to the defense of its own territory.
Options for limited physical destruction attacks such as those that use very low-yield weapons or
high-altitude nuclear blasts designed to disrupt an enemy’s information networks and systems via
an electromagnetic pulse effect could further erode the taboo against nuclear weapon use andprompt reassessments of the vulnerabilities of modern conventional military forces.
If nuclear weapons are used destructively in the next 15-20 years, the international system will
be shocked as it experiences immediate humanitarian, economic, and political-military
repercussions. How the world would respond over the long-term to another use of nuclear
weapons would, however, likely depend on the context in which such weapons were used.
Prevailing perceptions regarding whether the use of a nuclear weapon was justified, the level ofdestructiveness it created, and the future utility of nuclear weapons would drive global reactions
regarding counterproliferation and nuclear disarmament.
•

A terrorist use of a nuclear weapon or an escalating conflict between two nuclear powers,
such as India and Pakistan, would graphically demonstrate the danger of nuclear weapons,
prompting calls for global nuclear disarmament and energizing counterproliferation andcounterterrorism measures.

A successful nuclear weapon test or use of a nuclear weapon by a state to deter or halt a
conventional attack might, on the other hand, enhance the perception of the utility of nuclear
weapons in defending territorial sovereignty and increase pressures for proliferation in countries
that do not possess a strong conventional military or security guarantees.
(Continued on next page…)
67

(Continued…)
In either case, a future use of nuclear weapons probably would bring about significant
geopolitical changes as some states would seek to establish or reinforce security alliances withexisting nuclear powers and others would push for global nuclear disarmament. In Europe, forexample, divisions could emerge between some countries in Western Europe that support nuclear
disarmament and those of Eastern Europe that still might fear Russia’s nuclear arsenal.
•

Palestinian Territories; along the Jordan River(Israel-Jordan) and the Fergana Valley ofCentral Asia. Such dire scenarios are notinevitable even with worse-than-anticipatedclimate change impacts, however. Economic
development, the spread of new technologies,
and robust new mechanisms for multilateral
cooperation to deal with climate change may
foster greater global collaboration.
Terrorism: Good and Bad News
Terrorism is unlikely to disappear by 2025,
but its appeal could diminish if economic
growth continues and youth unemployment is
mitigated in the Middle East. Economic
opportunities for youth and greater politicalpluralism probably would dissuade some fromjoining terrorists’ ranks, but others—
motivated by a variety of factors, such as adesire for revenge or to become “martyrs”—
will continue to turn to violence to pursue
their objectives.

As long as turmoil and societal disruptions,generated by resource scarcities, poor
governance, ethnic rivalries, or environmental
degradation, increase in the Middle East,conditions will remain conducive to the
spread of radicalism and insurgencies. Futureradicalism could be fueled by global
communications and mass media. Increasing
interconnectedness will enable individuals tocoalesce around common causes acrossnational boundaries, creating new cohorts of
the angry, downtrodden, and disenfranchised.
In some situations these new networks could
act as forces for good by pressuring
governments through non-violent means toaddress injustice, poverty, the impacts ofclimate change, and other social issues. Other
groups, however, could use networks andglobal communications to recruit and train
new members, proliferate radical ideologies,
manage their finances, manipulate public
opinion, and coordinate attacks.

“For those terrorist groups active in 2025,
the diffusion of technologies and scientificknowledge will place some of the world’s
most dangerous capabilities within theirreach.”•

Terrorist and insurgent groups in 2025
will likely be a combination ofdescendants of long-established groups—that inherit organizational structures,command and control processes, andtraining procedures necessary to conductsophisticated attacks—and newly
emergent collections of the angry anddisenfranchised that become selfradicalized.

In the absence of employment
opportunities and legal means for politicalexpression, conditions will be ripe fordisaffection, growing radicalism, andpossible recruitment of youths into
terrorist groups.

68Why al-Qa’ida’s “Terrorist Wave” Might Be Breaking Up
As al-Qa’ida celebrates its 20th birthday, most experts assert that the struggle against it willcontinue indefinitely, the so called “long war.” Other experts who have studied past “waves” ofterrorism believe that al-Qa’ida is an “aging” group by terrorist standards and suffers fromstrategic weaknesses that could cause it to decay into marginality, perhaps shortening thelifespan of the Islamic terrorist wave.
A wave of terror is a cycle of activity—which can last up to 40 years—characterized byexpansion and contraction phases: rise, floodtide of violence, and ebb. The wave of terror
concept was developed by UCLA Professor David C. Rapoport and provides a basis for thecomparative analysis of terrorist movements. In each wave, similar terrorist activities occur inmany countries, driven by a common vision—such as anarchism, Marxism, nationalism, orIslamic extremism. Terrorist groups who form the crest of each wave usually dissolve before
the entire wave does, and their decay contributes to the breaking of the wave. Al-Qa’ida’s
weaknesses—unachievable strategic objectives, inability to attract broad-based support, and selfdestructive actions—might cause it to decay sooner than many people think.
Research indicates that terrorists’ strategic objectives fail on two fronts. Objectives that pose athreat to the existing political order court tough counterterrorism measures, while objectives thatare seen as neither achievable nor relevant to solving problems have little appeal to elites or thegeneral populace. The two primary strategic aims of al-Qa’ida—the establishment of a global
Islamic caliphate and the removal of US and Western influence so that “apostate” regimes can betoppled—are clearly threats to many existing Muslim governments and are resulting in stronger
counterterrorism measures.
•

There is little indication that the vast majority of Muslims believe that such objectives are
realistic or that, if they could come to pass, would solve the practical problems of
unemployment, poverty, poor educational systems, and dysfunctional governance.

Despite sympathy for some of its ideas and the rise of affiliated groups in places like theMahgreb, al-Qa’ida has not achieved broad support in the Islamic World. Its harsh pan-Islamist
ideology and policies appeal only to a tiny minority of Muslims.
•

According to one study of public attitudes toward extremist violence, there is little support
for al-Qa’ida in any of the countries surveyed—Algeria, Egypt, Jordan, Kuwait, Lebanon,
Morocco, Qatar, Saudi Arabia, United Arab Emirates, and Yemen. The report also foundthat majorities in all Arab countries oppose jihadi violence, by any group, on their own soil.

•

Al-Qa’ida is alienating former Muslim supporters by killing Muslims in its attacks. Recent
scholarly research indicates that terrorist groups that kill civilians seldom accomplish theirstrategic goals. Although determining precisely the number of Muslims worldwide who havedied in al-Qa’ida attacks is difficult, examination of available evidence suggests that at least
40 percent of the victims have been Muslims.
(Continued on next page…)

69

(Continued...)The roughly 40-year cycle of terrorist waves suggests that the dreams that inspire terrorist groupmembers’ fathers to join particular groups are not attractive to succeeding generations. The
prospect that al-Qa’ida will be among the small number of groups able to transcend thegenerational timeline is not high, given its harsh ideology, unachievable strategic objectives, andinability to become a mass movement.
In relying almost exclusively on terrorism as a means to achieve its strategic objectives, rather
than transforming into a political movement like Hizbollah or Hamas, al-Qa’ida is using astratagem that rarely is successful. Recent academic research indicates that only 6 percent ofterrorist groups active in the last 40 years have achieved their proclaimed strategic objectives.
Al-Qa’ida’s lack of success in executing attacks against the “far enemy” could portend a period
of operational futility leading to increased frustration, decreased organizational élan, andinability to attract new members.
Because history suggests that the global Islamic terrorist movement will outlast al-Qa’ida as agroup, strategic counterterrorism efforts will need to focus on how and why a successor
terrorist group might evolve during the remaining years of the “Islamic terrorist wave.”security or military forces and to create masscasualties. The proliferation of advanced
tactical weapons will increase the potentialthat they will be used by terrorists. Improved
anti-tank guided missiles and other manportable weapon systems, thermobaric andother advanced explosives, and the spread ofcheap sensors and robotics that could be used
to create more capable improvised explosive
devices illustrate this danger.

On a positive note, support for terrorist
networks in the Muslim world appears to be
declining. To succeed, terrorist groups need alarge number of passive supporters who
sympathize with terrorists’ objectives.
Reducing those numbers is key to lessening
the appeal within societies. Analysis ofterrorists’ communications among themselvesindicates they see themselves in a “losing”
battle with Western materialistic values.
Surveys and analysis of jihadist websites
indicate growing popular dissatisfaction withcivilian casualties—particularly of fellow
Muslims—caused by terrorist actions.

Some governments will likely respond toincreasing terrorism and internal threats by
expanding domestic security forces,
surveillance capabilities, and the employmentof special operations-type forces.
Counterterrorism and counterinsurgency
missions increasingly will involve urban
operations as a result of greater urbanization.
Governments, citing the need for enhanced
internal security and their desire to control the
influx of unwanted refugees and immigrants,
may increasingly erect barricades and fences
around their territories to inhibit access.
Gated communities will continue to spring up

For those terrorist groups active in 2025, thediffusion of technologies and scientificknowledge will place some of the world’s
most dangerous capabilities within theirreach. The globalization of biotechnology
industries is spreading expertise andcapabilities and increasing the accessibility of
biological pathogens suitable for disruptive
attacks. Radiological and chemical weapons
may also be used by terrorists or insurgentsseeking an advantage against opposing
70

The Changing Character of Conflict
Conflict will continue to evolve over the next 20 years as potential combatants adapt to advancesin science and technology, improving weapon capabilities, and changes in the security
environment. Warfare in 2025 is likely to be characterized by the following strategic trends:
The Increasing Importance of Information. Advances in information technologies are enabling
new warfighting synergies through combinations of advanced precision weaponry, improving
target and surveillance capabilities, enhanced command and control, and the expanding use of
artificial intelligence and robotics. Future proliferation of long-range precision weapons will
permit a growing number of states to threaten rapid destruction of an adversary’s critical
economic, energy, political, and military and information infrastructures. The growing
importance of information technologies as an enabler of modern warfighting capabilities will
make information itself a primary target in future conflicts. By 2025 some states probably will
deploy weapons designed to destroy or disable information, sensor, and communication
networks and systems including anti-satellite, radiofrequency, and laser weapons.
The Evolution of Irregular Warfare Capabilities. The adoption of irregular warfare tactics byboth state and nonstate actors as a primary warfighting approach in countering advanced
militaries will be a key characteristic of conflicts in 2025. The spread of light weaponry,
including precision tactical and man-portable weapon systems, and information andcommunication technologies will significantly increase the threat posed by irregular forms of
warfare over the next 15-20 years. Modern communication technologies such as satellite andcellular phones, the Internet, and commercial encryption, combined with hand-held navigation
devices and high-capacity information systems that can contain large amounts of text, maps, anddigital images and videos will greatly enable future irregular forces to organize, coordinate, andexecute dispersed operations.
The Prominence of the Non-military Aspects of Warfare. Non-military means of warfare, suchas cyber, economic, resource, psychological, and information-based forms of conflict will
become more prevalent in conflicts over the next two decades. In the future, states and nonstate
adversaries will engage in “media warfare” to dominate the 24-hour news cycle and manipulate
public opinion to advance their own agenda and gain popular support for their cause.
The Expansion and Escalation of Conflicts Beyond the Traditional Battlefield. Containing the
expansion and escalation of conflicts will become more problematic in the future. The
advancement of weapons capabilities such as long-range precision weapons, the continued
proliferation of weapons of mass destruction, and the employment of new forms of warfare suchas cyber and space warfare are providing state militaries and nonstate groups the means toescalate and expand future conflicts beyond the traditional battlefield.

71

The future of Pakistan is a wildcard inconsidering the trajectory of neighboringAfghanistan. Pakistan’s Northwest Frontier
Province and tribal areas probably willcontinue to be poorly governed and the sourceor supporter of cross-border instability. If
Pakistan is unable to hold together until 2025,
a broader coalescence of Pashtun tribes islikely to emerge and act together to erase theDurand Line,8 maximizing Pashtun space atthe expense of Punjabis in Pakistan and Tajiks
and others in Afghanistan. Alternatively, theTaliban and other Islamist activists mightprove able to overawe at least some tribal
politics.

within many societies as elites seek to insulatethemselves from domestic threats.
Afghanistan, Pakistan, and Iraq: Local
Trajectories and Outside Interests
Developments in Afghanistan, Pakistan, andIraq will critically affect regional stability, if
not the global order. By 2025, the trajectoriesof these three states probably will havediverged sharply.
In 2025, Afghanistan may still evince
significant patterns of tribal interaction andconflict. With the exception of the Talibaninterlude, Afghanistan has not experienced
strong central authority; centrifugal forces arelikely to remain strong even if Kabul
increases its sway.
••

In Iraq, numerous ethnic, sectarian, tribal,
and local notables will compete to establish
and maximize areas of political and social
authority, access to resources, and to control
the distribution of those resources throughtheir patronage networks.

Western-driven infrastructure, economic
assistance, and construction are likely toprovide new stakes for local rivalriesrather than the basis for a cohesive
Western-style economic and social unity.

•

Globalization has made opium
Afghanistan’s major cash crop; thecountry will have difficulty developing
alternatives, particularly as long as
economic links for trade with Central
Asia, Pakistan, and India are not further
developed.

By 2025 the government in Baghdad
could still be an object of competition
among the various factions seeking
foreign aid and pride of place, rather thana self-standing agent of political authority,
legitimacy, and economic policy.

What happens in Iraq will affect neighbors aswell as internal contestants. Iran, Syria,
Turkey, and Saudi Arabia will haveincreasing difficulty staying aloof. An Iraq
unable to maintain internal stability could
continue to roil the region. If conflict there
breaks into civil war, Iraq could continue toprovide a strong demonstration of the adverse

Tribal and sectarian disputes probably willcontinue to arise, be fought out, and shiftconstantly in Afghanistan as the various
players realign themselves. Outsiders will
choose between making temporary alliances
to destroy terrorist enemies, gain access tolocal resources, and advance other immediate
interests or more ambitious—and costly—
goals.

8

The Durand Line is the border between Pakistan and
Afghanistan—an artificial division that the Afghan
Government does not recognize.

72

End of Ideology?
We judge that ideological conflicts akin to the Cold War are unlikely to take root in a world
where most states will be preoccupied with the pragmatic challenges of globalization andshifting global power alignments. The force of ideology is likely to be strongest in the Muslim
world—particularly the Arab core where Islam’s diverse expressions will continue to influence
deeply social norms and politics as well as serve as a prism through which individuals will
absorb the economic and cultural forces of globalization. Increasing religious observance andthe failures of secular Arab nationalism will leave Islamic political and social movements best
positioned to assert ideological influence over governments and publics in much of the Muslim
world over the next 15-20 years.
The ensuing Islamic discourse will be increasingly fluid as the clerical leadership detaches fromestablished seats of learning and traditions of jurisprudence and asserts its own interpretations of
the Quran and the Hadith (oral tradition). The trend toward bypassing tradition, aided by the
spread of media technologies, will encourage the spread of Salafism (reverence for the earliest
period in Islam), including its most radical forms, which risks undermining Western allies in the
Muslim world, especially in the Middle East. Nonetheless, the dispersal of religious authority
into networks of like-minded thinkers also could set the stage for a revival of innovative
perspectives on Islam’s relationship to the modern world and provide a counterweight to theradical trend.
The direction of Islam’s internal ideological struggle will be determined primarily by local
conditions. In countries where economic and demographic trends are favorable and publics andgovernments opt for the benefits of globalization, there will be strong incentives to revive andbroaden Islamic teachings that promote a culture of innovation, scientific learning, politicalexperimentation, and respect for religious pluralism. In those countries that are likely to struggle
with youth bulges and weak economic underpinnings—such as in Afghanistan, Nigeria,
Pakistan, and Yemen—the radical Salafi trend is likely to gain traction.

•consequences of sectarianism to othercountries in the region. Alternatively, a stable
Iraq could provide a positive example ofeconomic growth and political development.
•

All players will look to the United States
to guarantee stability, but Tehran willcontinue to fear US designs for Iran’s own
regime and sovereignty.

73

Public opinion polls likely will continue
to suggest popular adherence to being“Iraqi,” but the persistence of competing
security systems, social organizations, andeconomic subsistence networks will
animate robust local and sectarian
identities.

Development of a well-integrated nationalarmy would be an important factor in
maximizing prospects for a morefunctional Iraqi state. This would require
replacing the current tribal and sectarian
loyalties of officers and troops with amuch more robust sense of corporate élanand national purpose.

The Sunnis will have an interest in the central
state only if it provides them with what theyjudge to be an adequate share of resources
largely generated outside their areas ofcontrol. Absent this satisfaction, agitation by
Sunni jihadists, tribal leaders, and othernotables could remain a destabilizing factor.
In addition, any significant increase in thenumber of Iraqi Sunnis emigrating to Jordan
and Syria could jeopardize the stability of
those countries.
Shi’a, flush with their newfound primacy,
have historically been divided, and personal
rivalries among the Sadrs, Hakims, and otherShi’a notables are likely to continue to color
politics in this community. Tribes of mixed
Sunni-Shi’a ethnicity could serve as anintegrating intercommunal glue, but only if
economic development leads to a moretransparent and trustworthy central
administration and national system formaterial production and distribution.

74

Potential Emergence of a Global Pandemic
The emergence of a novel, highly transmissible, and virulent human respiratory illness for which
there are no adequate countermeasures could initiate a global pandemic. If a pandemic disease
emerges by 2025, internal and cross-border tension and conflict will become more likely as
nations struggle—with degraded capabilities—to control the movement of populations seeking to
avoid infection or maintain access to resources.
The emergence of a pandemic disease depends upon the natural genetic mutation or reassortmentof currently circulating disease strains or the emergence of a new pathogen into the humanpopulation. Experts consider highly pathogenic avian influenza (HPAI) strains, such as H5N1,
to be likely candidates for such a transformation, but other pathogens—such as the SARS
coronavirus or other influenza strains—also have this potential.
If a pandemic disease emerges, it probably will first occur in an area marked by high population
density and close association between humans and animals, such as many areas of China andSoutheast Asia, where human populations live in close proximity to livestock. Unregulated
animal husbandry practices could allow a zoonotic disease such as H5N1 to circulate in livestock
populations—increasing the opportunity for mutation into a strain with pandemic potential. To
propagate effectively, a disease would have to be transmitted to areas of higher population
density.
Under such a scenario, inadequate health-monitoring capability within the nation of origin
probably would prevent early identification of the disease. Slow public health response would
delay the realization that a highly transmissible pathogen had emerged. Weeks might pass
before definitive laboratory results could be obtained confirming the existence of a disease withpandemic potential. In the interim, clusters of the disease would begin to appear in towns andcities within Southeast Asia. Despite limits imposed on international travel, travelers with mild
symptoms or who were asymptomatic could carry the disease to other continents.
Waves of new cases would occur every few months. The absence of an effective vaccine andnear universal lack of immunity would render populations vulnerable to infection.a In this worstcase, tens to hundreds of millions of Americans within the US Homeland would become ill anddeaths would mount into the tens of millions.b Outside the US, critical infrastructure degradationand economic loss on a global scale would result as approximately a third of the worldwide
population became ill and hundreds of millions died.
_____________________________a

US and global health organizations currently are working to develop vaccines that may prevent or
mitigate influenza pandemics. A breakthrough in the next several years could reduce the risk posed bypandemic influenza during upcoming decades.
b

How fast a disease spreads, how many people become sick, how long they stay sick, the mortality rate,
and the symptoms and after-effects will vary according to the specific characteristics of whatever
pathogen is responsible for a pandemic. This scenario posits plausible characteristics that fall within arange of possibilities for these variables.

75

Preconditions underpinning this scenario
include:Global Scenario III: BRICs’
Bust-UpIn this fictionalized scenario, Chinese fears of
disruption of China’s energy supplies spark aclash with India. With increasing resource
constraints likely out to 2025, disputes overresources appear to us to be a growing
potential source of conflict. The sense ofvulnerability is heightened by the dwindlingnumber of energy producers and increasing
concentration in unstable regions such as theMiddle East. A world in which there are
more confrontations over other issues—suchas new trade barriers—is likely to increase thepotential for any dispute to escalate into
conflict. As outlined in this scenario,
misperceptions—along with miscommunications—could play as important a roleas any actual threats. Also illustrated by this
scenario is the competition by rising powers
for resources. Both China and India—thoughrich in coal—have limited and dwindling oil
and gas reserves and must rely on foreignsources. In thinking about the increased
potential for conflict in this multipolar world,
we need to keep in mind the scope for the
emerging powers to clash with one another.

76•

A steady period of growth has slowed asstates struggle to cope with energy andresource shortages, which are particularly
acute in the Asian economies.

•

A rise in nationalist sentiments occurs
with the intense energy competition in thiszero-sum world.

•

A balance of power emerges that
resembles a 21st century replay of theyears before 1914.

77

78

79

80

social movements, NGOs, philanthropic
foundations, and companies.

The trend toward greater diffusion of
authority and power occurring for a couple
decades is likely to accelerate because of theemergence of new global players, increasingly ineffective institutions, growth inregional blocs, advanced communications
technologies, and enhanced strength of
nonstate actors and networks.
•

By 2025, nation-states will no longer be
the only—and often not the mostimportant—actors on the world stage andthe “international system” will havemorphed to accommodate the new reality.
But the transformation will be incomplete
and uneven. Although states will not
disappear from the international scene, therelative power of various nonstate
actors—including businesses, tribes,
religious organizations, and even criminal
networks—will grow as these groups
influence decisions on a widening rangeof social, economic, and political issues.

•This fragmentation of interests and actors
will further erode prospects for the United
Nations to strengthen consensus among its
members for effective multilateral
action—particularly within the current or
an expanded Security Council—or forsustaining broader reforms of the UN
system.

•This multipolarity is also unlikely toinclude a single dominant nation-statewith the overwhelming power andlegitimacy to act as the agent ofinstitutional overhaul. (See below for
discussion of the role of the US.)

Most of the pressing transnational problems—
including climate change, regulation of
globalized financial markets, migration,
failing states, crime networks, etc.—areunlikely to be effectively resolved by theactions of individual nation-states. The needfor effective global governance will increase
faster than existing mechanisms can respond.
Leaders will pursue alternative approaches tosolving transnational problems—with new
institutions, or more likely, many informalgroupings. Recent trends suggest thatexisting multilateral institutions—which arelarge and cumbersome—will have difficulty
adapting quickly enough to undertake new
missions, accommodate changing
memberships, and obtain necessary resources.
NGOs and philanthropist foundations—concentrating on specific issues—increasingly
will be a part of the landscape but are likely tobe limited in their ability to effect change in
the absence of concerted efforts bymultilateral institutions or governments.

The growing multiplicity of actors could
strengthen the international system by filling
gaps left by aging post-World War II
institutions, but it also has the potential tofurther fragment the existing system and to
impede international cooperation. The
diversity in both types and kinds of actor
increases the likelihood of fragmentation overthe next two decades given the apparently
waning ability of legacy international
institutions to address new transnational
challenges.
Multipolarity without Multilateralism
In such a world, we are unlikely to see an
overarching, comprehensive, unitary approachto global governance. Current trends suggestthat global governance in 2025 will be apatchwork of overlapping, often ad hoc andfragmented efforts, with shifting coalitions ofmember nations, international organizations,

Quests for greater inclusiveness—to reflect
the emergence of newer powers—may makeit harder for international organizations to81may seek outsiders’ protection or intervention
in a balancing effort.

tackle transnational challenges. Respect forthe dissenting views of member nations willcontinue to shape the agenda of organizations
and limit the kinds of solutions possible.
Large and enlarging organizations—from the
UN General Assembly to NATO and theEU—may find the challenges to beparticularly difficult. There is unlikely to be
any effort to “zero base” the internationalorganizational structure such that someorganizations go away or are reinvented.

How Many International Systems?
The emerging powers, particularly China andIndia, have a shared interest in maintaining astable and open order, but they espousedifferent “means.” Their spectacular
economic success has been achieved with an
economic model that is at odds with theWest’s traditional laissez faire recipe for
economic development. As we have seen,
climate change, energy, and other resource
needs are likely to be more problematic forwhat many see as their primary goal ofcontinued economic development. Given
these differing perspectives, the question
arises as to whether the new players—andtheir alternative approaches—can be meldedwith the traditional Western ones to form acohesive international system able to tackle
the increasing number of transnational issues.

Effective action also may be impeded by theexistence of too many institutions—many ofwhich have declining purpose—with limited
legitimacy and effectiveness. This is likely toapply across the board, from Western-driven
institutions to those of the historic Third
World.
We anticipate that arms races, territorial
expansion, and military rivalries thatcharacterized late 19th century multipolarity
will be less significant in the emerging one,but we cannot rule out such possibilities. For
most countries, strategic rivalries are likely to
revolve around trade, investment, technology
innovation, and acquisition. However,increasing worries about resources—such asenergy or even water—could easily put thefocus back on territorial disputes orunresolved border issues.

While sharing a more state-centric view, thenational interests of the emerging powers arediverse enough, and their dependence on
globalization compelling enough, that there
appears little chance of an alternative bloc
forming among them to directly confront themore established Western order. The existing
international organizations—such as the UN,
WTO, IMF, and World Bank—may prove
sufficiently responsive and adaptive toaccommodate the views of emerging powers,
but whether the emerging powers will begiven—or will want—additional power andresponsibilities is a separate question. Indeed
some or all of the rising powers may becontent to take advantage of the institutions
without assuming leadership burdens
commensurate with their status. At the sametime, their membership does not necessarily
have to involve heavy responsibilities orburden-sharing, allowing them to pursue theirgoals of economic development. For some,the fact that agreement on new permanent

Asia is one region where the number of such
border issues is particularly noteworthy or, inthe case of Central Asia, where large deposits
of energy resources increase the potential fora repeat of the 19th century’s “Great Game”
with outsiders contending for the exclusive
right to control market access. The fact that a
number of countries may experience a sharp
fall in national power if alternatives for fossil
fuel are developed quickly injects a
potentially dangerous risk of instability. As
the national power of China, India, and others
grows, smaller countries in the neighborhood82

Greater Regionalism—Plus or Minus for Global Governance?
One exception to the trend toward greater multipolarity with less multilateralism may occur on aregional level in Asia. Greater Asian integration, if it occurs, could fill the vacuum left by aweakening multilaterally based international order but could also further undermine that order.
In the aftermath of the 1997 Asian financial crisis, a remarkable series of pan-Asian ventures—the most significant being ASEAN + 3—began to take root. Although few would argue that an
Asian counterpart to the EU is a likely outcome even by 2025, if 1997 is taken as a starting point,
Asia arguably has evolved more rapidly over the last decade than the European integration did in
its first decade(s). In the economic realm, extra-regional players such as the US will continue tobe a significant part of the 2025 Asian economic equation. However, movement over the next 15
years toward an Asian basket of currencies—if not an Asian currency unit as a third reserve—ismore than a theoretical possibility.
•

Such a development would be in part an effort by Asians to insulate themselves fromfinancial volatility outside their region, facilitate economic integration, and to achieve greater
representation at the global table.

•

Aspects of Asian regionalism that are difficult to quantify include the growing habits ofcooperation, buoyant confidence, frequency of encounters by a host of high-level officials
and the cultural diffusion that is bridging historical and political differences and isengendering a new sense of community.

Asian regionalism would have global implications, possibly sparking or reinforcing a trend
toward three trade and financial clusters that could become quasi-blocs (North America, Europe,and East Asia).
Establishment of such quasi-blocs also would have implications for the ability to achieve future
global World Trade Organization agreements and regional clusters could compete in the settingof trans-regional product standards for IT, biotech, nanotech, intellectual property rights, andother “new economy” products.
An Asian regional energy posture could set the terms for the rest of the world. Some two-thirdsof Mideast oil exports go to Asia, and some 70 percent of Asian imports are from the Middle
East. This pattern is likely to intensify. Whether this nexus is primarily commercial—complementary investments and military sales—or acquires an increasingly political/strategic
character could determine the character of the international system.
•

As stated, in the worst case—absent greater regional cooperation—concern over oil supply
routes could lead to a China-Japan-India naval arms race.

Developments in the security realm—where Asian integration is currently weakest and wheretrends toward competition and hedging persist—could dilute regionalism. Whether and how
Korea is reunified and the status of its nuclear program, and whether Taiwan’s relationship to theMainland moves toward conflict or is resolved peacefully, will be key factors shaping regional(Continued on next page…)

83

(Continued…)
dynamics. Current trends suggest traditional security concerns are declining in importance but
may be replaced by new issues, such as competition over resources. Managing and adjusting to atransition to a reunified Korea could expand the Six-Party talks into a mechanism that features
new levels of cooperation among the US, Japan, and China.
Whether greater or lesser integration occurs also depends largely on the future character of SinoJapanese ties. This is the first time in modern history that China and Japan have been major
regional and global actors at the same time. A key question is whether they can transcend
historical suspicions and compete peacefully. Peaceful resolution of the Korea and Taiwan
disputes and a Franco-German type entente between China and Japan would sharply diminish theregional desire for a US “offshore” balancer role. However, US allies and security partners in
the region will not trade in the US balancing role for any collective regional security
arrangement until the political and economic consequences of China’s rise become better known.

as terrorism, climate change, proliferation,and energy security. Russia’s and China’s
resource nationalism and state capitalism
underpin, for example, their elite-based
politics and limit their willingness tocompromise on major international economic
issues such as trade, energy, finance, or
climate change.

members of the Security Council appears
remote even over the next 15-20 years
provides an additional excuse to forego aglobal role which could come at the expenseof domestic goals. One large uncertainty is
whether the political will exists to reshape theinternational system to offer the emerging
powers enough responsibility for them toshoulder more global burdens.

•“Most experts…do not expect the rising
powers to challenge or radically alter theinternational system…”
Most experts—US and foreign—we consulted
do not expect the rising powers to challenge
or radically alter the international system as
did Germany and Japan in the 19th and early
20th centuries. The emerging powers will
have a high degree of freedom to “customize”
their political and economic policies rather
than fully adopting Western norms. Becauseof their growing geopolitical clout, domestic
markets, and roles in global resource
extraction, manufacturing, finance, andtechnology, the rising powers are also likely
to want to preserve their policy freedom tomaneuver and will want others to carry theburden of dealing with global challenges such

Others, such as India, lack strategic
economic and political visions and do notpossess domestic grassroots support for
deep economic liberalization. Many
global issues require sacrifices or abruptchanges to these countries’ development
plans, another reason for them to prefer tobe bystanders rather than leaders in a
multilateral system.

A World of Networks
In response to likely deficits in global
governance, networks will form among states
and nonstate actors focused on specific issues.
These networks will operate to pursue
convergent goals and interests, including a
genuine intent to solve problems, businessself-interest, moral grounds, and the desire of84international organizations and NGOs to be
relevant to the problems facing a changing
world. In some cases, the nucleus of an issue
network will be a national or international
commission or body of experts—unelected
but with substantial clout—to report on or
oversee some aspects of governance, trade, orother issues. Current examples of suchnetworks include the Financial Stability
Forum, the Carbon Sequestration Leadership
Forum, and the International Partnership for
the Hydrogen Economy.

“Although religious groups have been agreat beneficiary of globalization, religion
also has the potential to be a primary vehicle
for opposition to that same modernizing
process.”
A Growing Role for Religion. Religionbased networks may be quintessential issue
networks and overall may play a more
powerful role than secular transnationalgroupings in exerting influence and shaping
outcomes in the period out to 2025. Indeed,
we could be entering a new age of clericalleadership in which religious leaders become
major power brokers in resolving futureinternational disputes and conflicts.

Issue groups likely will help develop anddiffuse standards and regulations for various
realms, including information technology(IT), regulatory regimes, and management of
the “new post-industrial economy.” For somekinds of issues, the networks likely will
provide the basis for agreement among
nation-states. With the groundwork done in
informal contexts, nation-states will be able toadopt problem-solving measures, gaining
legitimacy and sometimes taking credit for
initiatives, while avoiding the stigma ofsolutions being imposed by externalinternational organizations. The numbers andtypes of NGOs could well explode by 2025.
Low entry costs, low overhead, and thecapacity of individuals and groups to affiliate
with each other using the Internet will
facilitate such collectives.

•

Rich rewards in power and influencealready fall to those religious
entrepreneurs and televangelists who span
the two hemispheres, the Global Southand North—Amir Khalede for Muslims
and Matthew Ashimolowo or Sunday
Adelaja for Christians. Khalede’s website
is the third most popular Arabic website in
the world (al-Jazeera’s is number one).

Within the Christian tradition, the emergenceof whole new patterns of authority andleadership across the Global South entails
autonomous ministers and religious
entrepreneurs, whose activities reap highstatus and great wealth. Before 2025, someevangelists and megachurch preachers
probably will seek to become the leaders ofnations, especially if those countries havebeen economically devastated during a global
downturn.

In addition to such issue groups, a new set ofsocial actors—super-empowered individuals
and even criminal networks—increasingly
will influence outcomes. These elites are
empowered by their wealth and an array ofnational and transnational contacts—
oftentimes spanning businesses, governments,
international organizations, and NGOs. Using
their broad contacts and multiple national
identities, they help leverage “transnational”
outcomes across national and organizationalboundaries.

Although religious groups have been a great
beneficiary of globalization, religion also has
the potential to be a primary vehicle foropposition to that same modernizing process.
Religious structures can channel social andpolitical protest, especially for those who lackthe means of communication and influence85

available to social elites. This is relevant
because many of the economic trends that will
dominate the next two decades have thepotential to drive social fragmentation andpopular resentment, including the growing
gaps between rich and poor, the urban andrural gulfs in India and China, the vastdisparities between nations and regions
advantaged or left behind by modernization,and between states able to manage theconsequences of globalization and those withgovernments unable to do so. Religious
activists can draw on sacred texts and long
historical tradition to frame popular
grievances in terms of social justice rhetoricand egalitarianism.

Proliferating Identities and Growing
Intolerance?
One aspect of the growing complexity of theinternational system is that no single political
identity—such as the conflation of citizenshipand nationality—is likely to be dominant inmost societies by 2025. Class struggles will
matter as much as religion and ethnicity. The
Internet and other multi-media will enable therevitalization of the reach of tribes, clans, andother fealty-driven communities. Explosive
urbanization will facilitate the spread of theseidentities and increase the likelihood ofclashes between groups. The increasing
numbers of migrants moving to cities fromrural areas will coalesce in neighborhoods
settled by previous co-ethnics or will findthemselves targeted for recruitment by gangs
and more complex criminal structures. As
these communities coalesce and become“self-governing” or sometimes co-opted byorganized crime groups, state and local
government will face “no-go” areas in manylarge cities as has already happened in cities
like Sao Paulo and Rio de Janeiro.

If global economic growth did suffer a severe
reverse—akin to the Indonesian crisis of thelate 1990s but on a worldwide scale—religiously based rural insurgencies and ethnic
struggles probably would ensue in a numberof countries including Brazil, India, China,
and in much of Africa. If even themoderately severe projections of climatechange are correct, the impacts could spur
religious conflict through large sections ofAfrica and Asia. Among the countries atgreatest risk of such conflict and scapegoatingof minority communities are a number ofpredominantly Muslim countries withsignificant Christian minorities (Egypt,Indonesia, and Sudan); predominately
Christian states with substantial Muslim
minorities (e.g., DROC, Philippines, andUganda) or finely balanced between Christianand Muslim (Ethiopia, Nigeria, andTanzania).

Although inherited and chosen layers ofidentity will be as “authentic” as conventional
categories of citizenship and nationality, one
category possibly will continue to stand out.
Islam will remain a robust identity. Sectarianand other differences within Islam will be asource of tension or worse. The challenge ofIslamic activism could produce a more
intense backlash of Christian activism.
Nigeria, Ethiopia, and other places in Africa
will remain battlegrounds in this sectarian
struggle. In 2025, notions of multiethnic
integration and the value of “diversity” could
face a combination of challenges fromnationalists, religious zealots, and perhaps
some version of a revived Marxist and otherclass-based or secular ideology.

If religious structures offer vehicles to resist
globalization, they also help people cope withthose same forces, enhancing social stability
and economic development. Without
religious safety nets, the degree of chaos andfragmentation in developing nations would be86

Future of Democracy: Backsliding More Likely than Another Wave
We remain optimistic about the long-term prospects for greater democratization, but advances
are likely to slow and globalization will subject many recently democratized countries toincreasing social and economic pressures that could undermine liberal institutions.
•

Ironically, economic setbacks could enhance prospects for movement toward pluralism andgreater democratization in China and Russia. The Chinese Communist Party’s legitimacy
increasingly rests on its ability to ensure greater material wealth for Chinese society.
Resentment of elite corruption is already on the rise but may overwhelm the regime in eventof a serious economic crisis. The government’s standing in Russia would be similarly
challenged if living standards fell dramatically.

•

Elsewhere surveys have shown democracy having taken root, particularly in Sub-SaharanAfrica and Latin America, where opinion views it positively independent of any material
benefits. Still, nascent democracies have historically been shown to be unstable to the extent
that they lack strong liberal institutions—especially rule of law—which can help support
democracy during economic downturns. Case studies suggest widespread corruption isespecially threatening because it undermines faith in democratic institutions.

•

As we have suggested elsewhere in the text, the better economic performance of many
authoritarian governments could sow doubts among some about democracy as the best formof government. The surveys we consulted indicated that many East Asians put greater
emphasis on good management, including increasing standards of livings, than democracy.
Elsewhere even in many well-established democracies, surveys show growing frustration
with the current workings of democratic government and questioning among elites over theability of democratic governments to take the bold actions necessary to deal rapidly andeffectively with the growing number of transnational challenges.

far worse. As predominantly rural societies
have become more urban over the last 30 or
40 years, millions of migrants have been
attracted to larger urban complexes without
the resources or infrastructures to provide
adequate healthcare, welfare, and education.
The alternative social system provided byreligious organizations has been a potent
factor in winning mass support for religion.
This holds across faiths.

The weaker the state and its mechanisms, themore critical the role of religious institutions
and the stronger the appeal of religious
ideologies, usually of a fundamentalist or
theocratic nature.

87

A “Shadow” International System by 2025?
Further fragmenting the international systemis the threat posed by growing transnational
criminal networks in managing the world’s
resources—especially global energy,
minerals, and other strategic markets—inaddition to their traditional involvement ininternational narcotics trafficking. Increased
demand for energy worldwide provides
opportunities for criminals to expand theiractivities through direct ties to energy
suppliers and leaders of countries where
suppliers are located. With energy supplies
increasingly concentrated in countries withpoor governance, longstanding practices ofcorruption, and an absence of the rule of law,
the potential for penetration by organizedcrime is high.
•The illicit activities of organized crime inthe energy sector provide affiliatedcompanies with an unfair competitive
advantage in the global energy market.

88•Over time, given their far-reachingtentacles into government offices andcorporate board rooms, criminals may bein a position to control states andinfluence market actions, if not foreign
policies. For many resource-richcountries, energy revenues provide thebasis for the whole economy and energy
policies are a key consideration in foreign
policy decisions.

•

The likelihood of penetration by criminal
networks is probably greatest in Eurasianmarkets where organized crime has been
an institutionalized part of the politicaland economic environment and where
over time organized crime figures have
evolved into influential businessmen andbecome valuable partners for corrupt
officials.

•

As Russian and Eurasian suppliers capturea larger and larger portion of the energy
markets in Europe and Asia, we expect
these organized crime networks to expand
their operations, fostering greater
corruption and manipulation of foreign
policies to their advantage.

Preconditions for this scenario include:

Global Scenario IV: Politics Is
Not Always Local
In this fictionalized scenario, a new world
emerges in which nation-states are not incharge of setting the international agenda.
The dispersion of power and authority awayfrom nation-states has fostered the growth of
sub-national and transnational entities
including social and political movements.
Growing public concerns about
environmental degradation and government
inaction come together in this example to“empower” a network of political activists to
wrest control of the issue out of country-level
officials in capitals. Global communications
technology enables individuals to affiliate
directly with identity-driven groups andnetworks that transcend geographic
boundaries. Environmentalism is an issue forwhich there is a widespread confluence ofinterests and desires.

89•

National governments’ relevance andpower lessens in an increasingly
decentralized world.

•

Diasporas, labor unions, NGOs, ethnic
groups, religious organizations, and others
acquire significant power and establish
formal and informal relationships withstates.

•Communications technology permits
ubiquitous and constant integration into
identity networks.

90

91

92

growing source of concern to its neighbors.
The level of concern may rise even if Asia’s
security improves, for example, with a PRCTaiwan accommodation, though in such an
eventuality the opposite reaction is also
possible. In the Middle East, a nuclear Iranwould increase pressure for extension of a US
security umbrella to Israel and other states.

The United States will have greater impact
on how the international system evolves overthe next 15-20 years than any otherinternational actor, but it will have less power
in a multipolar world than it has enjoyed formany decades. Owing to the relative decline
of its economic, and to a lesser extent,
military power, the US will no longer havethe same flexibility in choosing among as
many policy options. We believe that USinterest and willingness to play a leadershiprole also may be more constrained as the
economic, military, and opportunity costs ofbeing the world’s leader are reassessed byAmerican voters. Economic and opportunity
costs in particular may cause the US public tofavor new tradeoffs.

“Developments in the rest of theworld…particularly [in] China and Russia—
are also likely to be crucial determinants of
US policy.”
Other states will continue to seek US
leadership on the newer “security” issues,
such as climate change. For example, many
countries view US leadership as critical toencouraging major developing countries like
China and India that are emitters ofgreenhouse gasses to take on serious
commitments to reduce carbon emissions in a
post-2012 emissions control regime. Most
G-77 countries realize they are absorbing
environmental harm from polluters and are
not averse to the US intervening with Beijing.

Developments in the rest of the world,
including internal developments in a numberof key states—particularly China andRussia—are also likely to be crucial
determinants of US policy. A world of
relatively few conflicts with other major
powers would smooth the way toward
development of a multipolar system in which
the US is “first” among equals. In the end,
events will shape the parameters of US
foreign policy. Contingencies—such as theuse of nuclear weapons or WMD terrorism—
could convulse the entire international system
and refocus the US role.

Further, others will seek US leadership on
countering WMD proliferation by taking steps
to dissuade interest in WMD, strengthening
nonproliferation regimes, preventing
acquisition of WMD and associated expertiseand technology, rolling back or eliminating
WMD in countries of concern, fostering
deterrence in the use of WMD, and mitigating
the consequences of WMD use.

Demand for US Leadership Likely toRemain Strong, Capacities will Shrink
Despite the rise in anti-Americanism over the
past decade, the US is still likely to continue
to be seen as a much-needed regional balancer
in the Middle East and in Asia. A recent
survey (see box on pages 95-96) indicatesgrowing unease with China’s rise among its
neighbors and, in many regions, a leveling offof antagonism, if not some improvement in
attitudes toward the United States. In
addition to its increasing economic power,
China’s military modernization program is a

New Relationships and Recalibrated Old
Partnerships
An increasingly multipolar world suggests a
greater number of actors—including
influential nonstate ones—with whom the US
and other powers will have to contend.
Descent into a world in which mercantilism
and resource nationalism become theoverriding modus operandi for others

93roles and to increase their involvement on
certain key global issues such as trade andclimate change.

probably would narrow the number of US
partners, increasing the risks of tensions, if
not confrontation among the powers in such azero-sum world. On the other hand, a worldof continuing prosperity would enhanceprospects for greater burden-sharing and steps
towards revitalization of multilateralism andglobal institutions.

Current trends suggest Russia has a more
immediate interest in directly challenging
what it sees as a US-dominated international
system than do other rising powers. A morediversified economy, development of an
independent middle class, and reliance on
foreign technological expertise andinvestment for development of its energy
resources could change that trajectory,
however. An earlier-than-anticipated moveaway from fossil fuels also could undercut
Russia’s recent resurgence.

During the period out to 2025, China andIndia are likely to remain status quo powers
focused on their own development, drawing
benefits from the current system and not too
eager for the US or others to seek radical
changes to the international order until
Beijing and New Delhi judge that they are ina better position to help set the new rules of
the road.

In the Middle East, where the US is likely toremain the dominant external actor, current
trends suggest a greater role for Asian states
which are reinforcing their growing economic
links with stronger political ties. Asian
powers—in addition to European ones—
could seek or be drawn into roles in any
future international security effort in the
Middle East. The role of NGOs will growcommensurate with the increase ofhumanitarian needs owing to climate change.
In turn, the international community,
including the US, will become more
dependent on NGOs to shoulder the burden ofhumanitarian relief.

Although the emerging powers will want topreserve ample leeway and autonomy to exert
regional influence independent of the UnitedStates, their relationships with the US are
likely to deepen if their plans for greater
economic development remain on track.
Economic collapse, especially in China’scase, could lead to a nationalistic upsurge andincreased tensions with foreign powers,
including the United States.
Europe will face difficult domestic challenges
that could constrain its ability to play a larger
global role, especially in the security realm.
A sense of increased threat—whether fromterrorism or a resurgent Russia—couldchange the European calculus on the need formore defense spending and greater capacity
for unified action. Growing interest in
Maghreb and Middle East economic andsocial developments increases the potential
for Europe to play a stabilizing role similar towhat it accomplished with enlargement to theEast. Japan, to keep pace with China, may
increase its political and security role in theregion. We expect other countries, such as
Brazil, to assume more expansive regional

Less Financial Margin of Error
The dollar is vulnerable to a major financial
crisis and the dollar’s international role islikely to decline from that of the unparalleled“global reserve currency,” to something of afirst among equals in a basket of currencies
by 2025. This could occur suddenly in thewake of a crisis, or gradually with global
rebalancing. This decline will entail real
tradeoffs and force new, difficult choices in
the conduct of American foreign policy.

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Anti-Americanism on the Wane?
America’s reputation abroad has fluctuated over the decades—from the Ugly American of the
1950s to the widespread international protests over Vietnam in the 1960s and 1970s to antinuclear activism in Europe in the 1980s. Anti-Americanism has experienced an upsurge during
this decade. Between 2002 and 2007, the US image became less favorable in 27 of 33 countries
polled. Attitudes critical of the United States can be parsed into two basic categories:•“Transitory criticism” fueled by disagreements with specific aspects of the United States thatcan change with time, such as its foreign policies.

•“Anti-Americanism” reflecting deep and undifferentiated antipathy toward most aspects of
the United States.

To the extent that certain aspects of American life—for example, its political system, people,
culture, S&T, education, and business practices—are seen abroad as admirable, perceptions of
the United States will be complex, keeping views flexible and open to revision. The downward
trajectory of America’s reputation suggested above may have bottomed out. Polling in 2008 by
Pew’s Global Attitudes Project found US favorability ratings up in 10 of the 21 countries forwhich trend data are available. Looking ahead, what regional drivers and dynamics might bepivotal for encouraging such a turnaround?
Europe/Eurasia. In contrast to regions more uniformly pro- or anti-American, Europe/Eurasia
tends to hold more volatile views of the US. The views of Western Europeans appear to bebuoyed to the extent that the United States, its key allies, NATO, and the EU deepen practicalmultilateral approaches to international problems. The views of Central and East Europeans,
who are traditionally favorable toward the United States, probably will recede over time to theWest European norm. No single set of US actions will reassure all states of the former Soviet
Union, but avoiding a heavy movement of military assets into Moscow’s perceived Near Abroad
would stave off the tensest of relations with Russia.
Near East/South Asia. Societies most hostile to the United States are found in the Islamic
Middle East, as well as Pakistan and North Africa. India is an important exception. Drivers forturning around the US image include a strong commitment to significant progress on
Israel/Palestine, disentangling anti-terrorism from a perceived war on Islam, and seeking toprovide aid to needy citizens in addition to military-security elites. To the extent Iran isperceived to be a dangerous revisionist power, people and states in the region will tend to view
US military capability positively.
Sub-Saharan Africa. Africa continues to harbor goodwill toward the United States. Publics in
Sub-Saharan Africa tend to find American lifestyles and standards of living enviable. If
AFRICOM, the new US military command, does not present an overly militarized face tocitizens in African countries, and humanitarian and economic developmental aid continues, thesurveys suggest African opinion about the United States will remain favorable.
(Continued on next page…)

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(Continued…)
East/Southeast Asia: Views of the United States in this region are relatively positive. Despite
China’s economic growth, and nascent Asian integration, US “soft power” still eclipses China’s.
The United States will continue to be looked to as a reliable security partner in Northeast Asia,and to a lesser extent in Southeast Asia. Public perceptions are at risk of downward swings in
China, depending on portrayals of the United States in the country’s official media.
Latin America: On balance, views of the United States are fairly favorable and stable, much
more so in Central America, but less so in the Andean region. Some level of migration to theUnited States for jobs and subsequent remittance of earnings back to Latin America will be a
key. Also important will be the degree to which US and Latin interests are viewed as shared,
especially on multilateral tasks such as interdicting illegal drug supplies and combatingorganized crime and gangs.
Aggregating across regions, what does the tally sheet of factors affecting anti-Americanism look
like out to 2025? First, factors favorable to the United States:•

Many state leaders and publics are distrustful of vast power itself, independent of the owner.
As China becomes more powerful, some wariness will be displaced onto Beijing, and theUnited States’ own function as a counterweight will become more appreciated.

•

The US is benefiting from a likely turn in the battle of ideas. First, and foremost, support for
terrorism has declined dramatically over the last few years in many Muslim countries. Fewer
Muslims now consider suicide bombing justifiable, and confidence in Usama Bin Ladin has
waned.

•

As big emerging markets in Asia and elsewhere grow, globalization will less often beequated with Americanization. As traditional ways of life are upset around the globe,
unwanted foreign ideas and customs will appear more the product of modernity than ofAmerican sprawl.

Potentially unfavorable would be perceived slowness in tackling pressing transnational problems
such as global climate change, food security, and energy security. A currently indeterminate
factor will be the effect of increasingly pervasive mobile telephony, Internet connectivity, anddirect satellite media on how individuals around the world receive their images of the UnitedStates. On balance, however, major trends suggest that anti-Americanism is declining.

96•deterring openly aggressive behavior on thepart of any new nuclear states. The US will
also be expected to play a significant role inusing its military power to counter global
terrorism.

The dollar’s global reserve status confers
privileges on the US including insulationfrom risk of currency shocks, whichenables lower interest rates, while a steadysource of outside demand for US dollars
affords the US a unique ability to runlarge fiscal account deficits without
reproach from the global economy.

“Anticipated developments in the security
environment leading to 2025 may raisequestions about traditional US advantages inconventional military power.”

Enjoyed by the US for more than 60 years,
these privileges have perhaps so permeated
US thinking as to go unnoticed. While total
loss of reserve status is unlikely, the dollar’sdecline may force the US into difficult
tradeoffs between achieving ambitious
foreign policy goals and the high domestic
costs of supporting those objectives. In theface of higher interest rates, higher taxes, andpotential oil shocks, the US public would
have to weigh the economic consequences oftaking strong military action, for example.
The impact on others desirous of a stronger
US role could be equally great if the US
would decline or be unwilling to take action.
In addition, US financial dependence on
external powers for fiscal stability may curtailUS freedom of action in unanticipated ways.

However, potential US adversaries willcontinue to try to level the playing field bypursuing asymmetrical strategies designed to
exploit perceived US military and politicalvulnerabilities. In the future, advanced statesmight engage in counterspace strikes, network
attacks, and information warfare to disrupt US
military operations on the eve of a conflict.
Cyber and sabotage attacks on critical US
economic, energy, and transportation
infrastructures might be viewed by someadversaries as a way to circumvent US
strengths on the battlefield and attack directly
US interests at home. In addition, thecontinued proliferation of long-range missile
systems, anti-access capabilities, and nuclear
weapons and other forms of WMD might beperceived by potential adversaries and US
allies alike as increasingly constraining US
freedom of action in time of crisis despite US
conventional military superiority.

More Limited Military Superiority
In 2025, the US will still retain uniquemilitary capabilities, especially its ability to
project military power globally, that othernations will continue to envy and rely on tosecure a safer world. The United States’
ability to protect the “global commons” andensure the free flow of energy could gain
greater prominence as concerns over energy
security grow. The US also will continue tobe viewed as the security partner of choice bymany states confronted with the rise of
potential hostile nuclear powers. Although
the emergence of new nuclear-weapon states
may constrain US freedom of action, US
military superiority in both conventional andnuclear weapons and missile defense
capabilities will be a critical element in•97

Traditional US allies, particularly Israel
and Japan, could come to feel less securein 2025 than they do today as a result of
emerging unfavorable demographic trends
within their respective countries, resource
scarcities, and more intensive militarycompetitions in the Middle East and East
Asia, especially if there is also doubt
about the vitality of US security
guarantees.

devastating crises. The results of
miscalculation on the part of others—such as
the Chinese—have significant political costs,
which probably would make it more difficult
for the US and others to put together a planfor more sustainable economic development,
including conflicts among the major powers.

Surprises and Unintended
Consequences
As we have made clear throughout thisvolume, the next 15-20 years contain more
contingencies than certainties. All actors—
not just the United States—will be affected byunforeseen “shocks.” For various reasons the
US appears better able than most to absorb
those shocks, but US fortunes also ride on thestrength and resiliency of the entire
international system, which we judge to be
more fragile and less prepared for the
implications of obvious trends like energy
security, climate change, and increased
conflict, let alone surprises.

BRICs’ Bust-Up. In this scenario, growing
great power rivalries and increasing energy
insecurity lead to a military confrontation
between India and China. The US isperceived by Beijing as favoring India to
China’s detriment. Great power war isaverted, but the protagonists must rely on athird party—in this case Brazil—to help
reconstitute the international fabric. Given
the BRICs’ disarray, the United States’ poweris greatly enhanced, but the international
system is in for a bumpy ride as the military
clash leads to internal upheavals increasing
nationalist fervor.

While, by their nature, surprises are not easily
anticipated, we have tried through thescenarios to lay out possible alternative
futures and each is suggestive of possible
changes in the US role.
A World Without the West. In this scenario
the US withdraws and its role is diminished.
In dealing with unstable parts of the world in
its neighborhood like Afghanistan, China, andIndia, the Central Asians must form or bolster
other partnerships—in this case the Shanghai
Cooperation Organization. The fragmentation
and breakdown of the global order into
regional and other blocs—while not on thescale of US-Soviet bipolar split—probably
would usher in an era of slower economic
growth and globalization, less effective action
on transnational issues like climate change
and energy security, and the potential forincreased political instability.

Politics Is Not Always Local. On someissues, such as the environment, a seismic
shift in government versus nonstate actor
authorities has occurred. For the first time, acoalition of nonstate actors is seen by a large
number of electorates as better representing“planetary” interests and, in this scenario,
governments must heed their advice or faceserious political costs. This may not always
be the case since on other more traditional
national security issues, national, ethnic, classand other differences are likely to re-emerge,
undercutting the clout of transnational
political movements. The US, like othergovernments, must adapt to the changing
political landscape.

October Surprise. The lack of effective
management of the tradeoffs among
globalization, economic growth, andenvironmental damage is shared widely
among more players than the US. Implicit in
the scenario is the need for better US
leadership and stronger multilateral
institutions if the world is to avoid even more

Leadership Will Be Key
As we indicated at the beginning of the study,
human actions are likely to be the crucial
determinant of the outcomes. Historically, as
we have pointed out, leaders and their ideas—
positive and negative—were among the98

biggest game-changers during the lastcentury. Individually and collectively overthe next 15-20 years, leaders are likely to be
crucial to how developments turn out,
particularly in terms of ensuring a morepositive outcome. As we have emphasized,
today’s trends appear to be heading toward a
potentially more fragmented and conflictedworld over the next 15-20 years, but bad
outcomes are not inevitable. International
leadership and cooperation will be necessary
to solve the global challenges and tounderstand the complexities surrounding
them. This study is meant as an aid in thatprocess: by laying out some of the alternative
possibilities we hope to help policymakers
steer us toward positive solutions.

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