The new industrial revolution in Asia, above all in China and India, has led to the redistribution of the world's wealth in favor of new leaders. In the 1980s and 1990s, globalization favored developed nations, but now the tables have turned. Still more critical in the long term is the West's declining moral and intellectual authority in defining the international agenda. It has made too many mistakes and has used too much self-serving rhetoric. At the same time, thinkers from "the second new world" are not being listened to or are too shy to speak up. Thus an intellectual vacuum has emerged. As people and their leaders fail to understand what is happening and where to go, they often resort to outdated recipes.
All of these changes clearly mark a new stage in international development. The Cold War was followed by 12 to 14 years of the post-Cold War era. The dawn of the 21st century saw the end of this period and the beginning of a new one that I call NEC -- a New Era of Competition, Confrontation, or Cooperation. This will be a period of transition, uncertainty, and competition.
The weakening of the traditional democratic model of development has dealt a serious blow to the ideal of political democracy, which has suffered from the economic success of authoritarian nations. China is doing much better than the more democratic -- but far from fully democratic -- India. A partially democratic Kuwait is lagging behind the monarchies of the Persian Gulf. A democratic Lebanon and the Palestinian state ruled by democratically elected radicals are in the throes of civil war. Their more authoritarian neighboring Arab states are doing better.
Indeed, at least for the time being, the one and only shining path for humanity has been replaced by multiple paths. Until the 1990s there had been two shining paths: democratic capitalism and communism. The latter collapsed ignominiously. The West celebrated the final and seemingly irrevocable victory ("the end of history"). In addition to winning a moral victory, the West enjoyed a redistribution of wealth, human, and other resources in its favor. However, this process was eventually stopped and reversed by economic slowdown and -- most importantly -- the success of new capitalist and relatively authoritarian states. It is most likely that the setback of traditional Western democratic capitalism is temporary. The vast majority of more affluent and comfortable countries are capitalist democracies, and it is highly likely that with increasing wealth the new capitalist states will move toward more democracy. Yet for now and for the next decade or so the West will continue to lose the geopolitical, economic, and ideological competition.
In addition, recent years have seen dramatic changes in the energy sector. A decade ago, 85 to 90 percent of the world's fossil fuel reserves were controlled by major Western oil companies or by the governments of producer countries compliant to the West. Today, the situation has been reversed with more than 90 percent of fossil fuel resources accessible outside of the United States owned and controlled by the national corporations of producer nations that are much less dependent on the West. The shifts in the energy sector have caused an acute sense of vulnerability and unease, especially in Europe. Despite the rhetoric about diversifying energy routes that bypass Russia, Europeans realize that they have no plausible alternatives but to rely on Russia and other outside sources. Meanwhile, Russia has alternative solutions for its gas and oil, namely the eastern and domestic markets.
Faced by new shifts in international power, the West is contemplating a rapprochement after 15 years of drifting apart. The idea of a new "alliance of democracies" floated by American thinkers was even embraced by the Republican presidential nominee John McCain. Some Europeans, fearful of their weakened position in the face of new competitors, have put forth similar ideas. The idea of setting up a community of powerful and responsible states to lead the fight against new threats is reasonable. Yet the "alliance of democracies" project, as it is presented now, smacks of a pact made by the seniors against the juniors. In all seriousness, if implemented, this project could exacerbate and institutionalize a new wave of competition and systemic confrontation.
Russia has largely benefited from many of these economic and energy changes. For the first time in history, the winds of luck seem to be blowing into Russian sails. The resurgence of Russia has become especially evident against the background of the relative decline of the United States because of Iraq, and Europe because of its "lowest common denominator" policies and temporary loss of direction. The West's persistent inability to stabilize the Middle East has amplified Russia's voice. Even the growth of China has increased Russia's importance as a possible counterbalance to, integrator, or ally of the emerging superpower. The growing demand for fossil fuels and the ensuing rise of prices has made Russia look like an "energy superpower."
Yet much of Russia's success is self-made. With the presidency of Vladimir Putin, the country resurrected itself from that of a nearly failed state in the late 1990s. It has since pursued mostly sound economic and financial policies. A great part of the country's economic growth is now generated by sectors other than oil and gas. Russia won -- against all odds and predictions -- a political victory against separatists and Islamists in Chechnya, although at a horrible price. It demonstrated the political will of its leadership and the resolve and unity of the nation. Most people in Russia believe that the current tensions with the West are a result of the latter's dissatisfaction with Russia's new assertiveness. This is only partly true. Russia's resurrection and its efforts to change the rules of the game, which were set during the years of Russia's near-collapse and weakness, exploit the West's present weaknesses and attempts to protect its position.
Heading off Conflict
However, it has not yet become systemic confrontation. For now we are witnessing a mutual adjustment that may deteriorate into something worse. Russia has become a symbol of many changes that are unfavorable for the West. Basically a European state, Russia is seen as a part of an ascending Asia -- a fast growing semi-authoritarian state. It looks like a successful alternative model of authoritarian capitalism that provides relative wealth and an acceptable level of personal freedoms for most people. Only a decade ago it seemed that Russia's energy wealth was going to be put at the West's disposal. Now it is controlled by Moscow. An international beggar in the 1990s, Russia now has the third largest currency reserves in the world. It is true that Russia has contributed to the tensions by dogged efforts to change the rules established when it was weak. Russia made some awkward moves (like cutting off gas to Ukraine) and often displayed arrogance that was understandable considering past humiliations. Nevertheless, these moves were ill-founded and unforgivable.
Now the period of Russian restoration is almost over. Moscow is content with its new stature and influence, and is ready to become a strong actor once again. Moreover, Moscow understands that in spite of its boisterous self-praise Russia remains a relatively backward country with an obsolete and decaying infrastructure, high corruption, and poor medical and social services. Putin began economic reforms but ended up focusing on the consolidation of political power. Russian President Dmitri Medvedev has put forth an agenda for the modernization of the economy and society. Obviously, this is impossible to implement without economic and political liberalization and without close cooperation with states boasting the highest economic and technological growth -- both in Asia and the West. Faced with geopolitical challenges, Russia would not be able to deal with everything unilaterally in the long term.
Today the Russian ruling class seems to be content with the country's new might and prestige, knows its vulnerabilities, and is still in a fighting mood. But it is also increasingly ready to cooperate. The question is whether the old West is ready to do so. Hopefully, the ratification of the Lisbon Treaty and a gradual incorporation of "new Europeans" into the European Union will open the way toward a more self-assured and more effective Europe. A new US administration may lead to a process of withdrawal from Iraq, a revitalization of American soft power, and a more realistic and multilateral foreign policy.
The shifts that have taken place in the world order will not disappear. Yet Russia would at least be ready to move its part of the New Era of Competition toward a New Era of Cooperation. A new round of cooperation could prove to be more consistent than the cooperation of the 1990s, which developed under the diktat of the Cold War winners and hence was doomed to failure. Indeed, it is amazing how relatively mild and civilized the backlash has been so far.
Alternatively, the world may move in the direction of new confrontation. This may happen if there is an unfortunate escalation of a crisis or in the case of an attack against Iran. One way toward confrontation -- at least between Russia and the traditional West -- would be the implementation of the "union of democracies" idea through a further NATO enlargement that includes Ukraine. Such a step would lead to the emergence of an arc of crisis along the now open and friendly Russian-Ukrainian border. Moscow has had to grudgingly swallow the first two waves of NATO's eastward enlargement. It simply did not have the means to fight back. This has changed. Now it will be virtually impossible for the Russian elitein its present combative moodto ignore the challenge. Russia will certainly regard it as an act of open belligerence and will respond. It will most likely refuse to cooperate with the West and seek ways to undermine its positions, above all US positions in the Middle East.
During the last few years Russia has acted as a revisionist power. NATO's enlargement could turn it into a revanchistic one. Russia could even sacrifice its effective modernization, but the losses would be rationalized by the necessity to prevent an even worse scenario -- a large war. In Russia's expert circles there are already fears about a new world war resulting from a massive shift of power and a decline of world governance.
Preventing Systematic Confrontation
So what could and should be done to prevent the New Era of Competition from deteriorating into systemic confrontation? First and foremost, Russia should continue its renaissance and avoid unpredictable geopolitical games. The modernization of society, and the political and economic system should remain the top issues on the agenda. Furthermore, the elite should temper its overconfidence. All forecasts agree that in the foreseeable future Russia will not be able to exceed the present 2.5 percent share of world GDP. If it fails to attain sustainable annual growth of 7 to 10 percent, its share will even contract. Moreover, most factors that have contributed to Russia's success in the last few years are fraught with serious problems in the long term.
Russia's transformation to a knowledge-based economy should become real. There must be a continuous modernization of the political system so that the country does not slide into stagnant authoritarianism. In its foreign economic policy, Russia should systemically reorient part of its trade investment and energy supplies to the growing Asian markets, while at the same time making efforts to invigorate relations with major European nations and the European Union.
Russia should cooperate with NATO on certain issues if, of course, NATO does not prevent such cooperation by continuing its eastern enlargement. In principle, if it survives, NATO could become the foundation of a much needed world-wide security alliance. Internationally, Russia -- not a superpower any more, but still one of the most influential powers -- should concentrate on fulfilling several concurrent tasks: upholding and enhancing what is left of the international legal order; keeping up the UN system and even organizations like the OSCE in spite of the irritation over its recent meddling in the internal affairs of an independent state; and reinvigorating strategic arms control talks, at the very least to create a political obstacle to nuclear proliferation. Russia should build up cooperation with the leading nuclear powers, including perhaps India and China, in order to deal with the most imminent nuclear danger -- a destabilized Pakistan.
A New Era of Cooperation
Iran will most likely acquire nuclear arms. The leading nuclear nations should prepare multilateral contingency plans to prevent a chain reaction of proliferation and guarantee other nations in the greater Middle East protection from a nuclear threat. Israel, Saudi Arabia, and other nations of the region should not be left on their own. In the meantime, a coalition of powers should force the United States to negotiate a "big deal" with Tehran to try to prevent it from becoming nuclear. Hopefully, we still have time for that.
Amid declining international governance, a new strategy of institutionbuilding has been long awaited. Russia should help strengthen the Shanghai Cooperation Organization (SCO) to transform it into a new comprehensive alliance in order to fill the political security vacuums in Central Asia and the Persian Gulf. The SCO leaders should do their utmost to include India, and maybe even Iran and Saudi Arabia. In the present situation of multiple governance vacuums, new institutions can be numerous and of variable combinations. The recent cooperation among the BRIC states (Brazil, Russia, India, and China) serves as a good example.
Now we step onto the dangerous ground of challenging the idea of multipolarity, which has now become almost everybody's intellectual darling. It is either viewed as a counterbalance to unipolarity -- which never existed -- or it is actually the old balance of powers approach in a markedly more dynamic world. In my opinion, it is a prescription for chaos. To address the new challenges, we have to return to the idea of a new "concert of powers," a G8-13 consisting of powerful and responsible nations, and the only healthy and successful supranational organization -- the European Union. It should work along with the United Nations, but it should not be bound by the decisions or indecision of the almost 200 countries. In order to be effective, it will have to form a permanent secretariat, have a continuous decision-making and implementation mechanism -- and even a treaty. Eventually, a G8-13 should find ways to agree on common strategies, adhere to them and, hopefully, be able to enforce them. Moreover, it should form a new set of innovative think tanks that could provide a clearer view of the world than most of the existing ones, trapped as they are in their ways of thinking and vested interests.
Energy is an area that needs special institutional attention. It is now characterized by cut-throat competition that is ominously becoming militarized (there is even talk of an energy NATO). The International Energy Agency is no help here as it merely performs recording functions. But the real cause of the collision between producers and consumers is almost never mentioned: It is the price of a barrel of oil. And that price is negotiable unless it is imposed by means of force.
To overcome this tug of war, Russia has made offers to Europe to swap assets: Europe will own a part of Russian oil and gas fields if Russia gets a part of European distribution networks. In fact, "Grands for All" -- a European energy consortium or alliance -- is one proposal. The Europeans have not yet accepted the idea. The Americans, fearful of losing their influence in Europe, are fighting the deal like they fought the gas-pipeline deal almost half a century ago.
I realize that a G8-13 may be seen as another manifestation of "reactionary romanticism." But I do not see any other alternative to the eventual series of conflicts leading to a large war -- because never in human history have we seen in such a short period such a multiplicity of profound shifts in economic, financial, climatic, food, security, and nuclear challenges, in addition to enormous redistributions of power. If we are able to adjust to the changes, the future will offer us more freedom, democracy, and prosperity. But for that we need peace. The beginning of the 20th century offered the world a similar chance. But governance failed, and the world plunged into two horrible world wars. So the seemingly obsolete fight for peace and stability should once again become the key driver in international politics. If we succeed in dealing with new challenges, the New Era of Cooperation will become a reality and not just a pipedream.
Sergej Karaganov is dean of the School of International and Foreign Affairs at the State University Higher School of Economics in Moscow.
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