The Future Belongs to the Flexible
In the emerging global order, the key to a country's success will be courting multiple partners
By IAN BREMMER
We've had G-8 and G-20, but the term that best captures the world we live in is G-Zero, argues author and Eurasia Group President Ian Bremmer. He talks with WSJ's John Bussey about his new book and the role of pivot nations and shadow states in a world without global leadership.
In March, the government of Myanmar—long dismissed as an isolated, paranoid military junta ruling from a fortified enclave in the middle of the jungle—announced that it would allow genuinely contested local elections for the first time in more than 20 years. In April, the generals kept their word, the opposition won big, and Western governments moved quickly to begin easing sanctions.
What inspired this dramatic about-face? Myanmar is coming in from the cold to ensure that it has options. It wants to ease its deepening dependence on China. Like a growing number of developed and developing countries, Myanmar recognizes the urgent need to build a broader set of trade and security ties.
We have entered what I like to call a "G-Zero" world: one in which no single nation (not even the U.S.) or alliance of governments (certainly not the G-7 or G-20) possesses the political and economic muscle to drive an international agenda. In this new decentralized global order, growth isn't enough. A country also must have resilience—the power to pivot.
Emiliano Ponzi
Brazil's economy is well diversified, Kazakhstan has juggled multiple allies, and tiny Singapore marries the East and West.
Which countries are best positioned to pivot deftly in this emerging world order?
Brazil, which recently surpassed Britain to become the world's sixth-largest economy, has many promising advantages. With a middle class of more than 100 million, it is home to Latin America's largest consumer market. Its government, led by a party of the left, has established a national consensus in favor of market- and investor-friendly economic policies. Though huge offshore oil discoveries in 2007 ensure that the country will become a leading energy exporter, its economy is well diversified.
But there is another crucial factor that adds resilience to Brazil's strength: Its government and leading companies have developed strong ties with multiple powerful partners. For 80 years, Brazil looked first to the U.S. During the past decade, however, its imports from China rose 12-fold, and its exports to China jumped 18-fold. In early 2009, trade with China surpassed trade with the U.S., helping the country ride out the recent American slowdown without much trouble.
Turkey's bid to join the European Union is going nowhere, but Ankara is actively expanding its international influence. NATO membership gives Turkey a voice in Europe and influence in Washington. It is an increasingly important emerging market, with per capita income nearly double that of China and four times that of India. Many in the Arab world look to Turkey as a dynamic, modern Muslim state. Add to this its position at the crossroads of Europe, Asia, the Middle East and the former Soviet Union, and Turkey is the very model of a modern major pivot state.
Africa has become a pivot continent. Between 2000 and 2010, its real gross domestic product grew 4.7% per year, and Africans now spend more on goods and services than a similarly sized population of Indians. Foreign direct investment in Africa has grown more than fivefold since 2000.
For years, cash-strapped African states had to turn almost exclusively to the IMF, World Bank and Western governments for financial help. They accepted Western aid with deep reluctance in many cases, because it often came with demands for democratic reforms and greater openness to Western investment. But in 2010 alone, China's trade with Africa expanded by more than 43%, according to official Chinese trade data, and it replaced the U.S. as Africa's largest trade partner.
Africa can now expect multinational and state-owned companies from developed and developing states to compete for access to African consumers and favorable investment terms. This isn't a story of the West losing out to China, because both will continue to profit in Africa. The winners here are all the newly resilient African governments.
Asia is home to several pivot states. Indonesia, with the world's fourth-largest population, enjoys a stable political environment with solid growth and a well-diversified economy. Its trade ties are well balanced among China, the U.S., Japan and Singapore—and are likely to remain so. Vietnam receives most of its aid from Japan, its arms from Russia, and its machinery (and tourists) from China, and its biggest export market is the U.S.
Tiny Singapore proves that a country's size need not limit its international options. The island city-state sits at the mouth of the strategically vital Strait of Malacca. Its per capita GDP is among the highest in the world. Unemployment hovers at about 2%. Singapore's government has worked to marry Eastern culture and Western business practices, and the country is now the world's fourth leading financial center, behind London, New York and Hong Kong. Many foreign companies looking to set up shop in Asia want a base that allows them access to all of Asia's power economies without overreliance on any of them, and Singapore fits the bill.
Wedged between Russia and China, Kazakhstan is already profiting from its position as a pivot state. It has built one of the world's fastest-growing economies, thanks mainly to the large-scale export of oil, metals and grains, which helps to ensure that it doesn't rely too heavily for trade on Russia, its former Soviet neighbor, or on China. Almaty, the country's largest city, has become an important regional financial center. Though Kazakhstan takes part in a customs union with Russia and is a member of the Shanghai Cooperation Organization, a security pact that includes both Russia and China, its largest trade partner is the European Union.
Not all pivot states are emerging markets. Canada remains vulnerable to a slowdown in the U.S., though not as vulnerable as it used to be—and not nearly as exposed as Mexico. The percentage of Canada's exports to countries other than the U.S. jumped from 18% in 2005 to more than 25% just four years later, and Canada now draws nearly 40% of its imports from countries other than the U.S.
In addition, Canada's economy is well diversified. Like Mexico, it exports large volumes of oil. But it also produces substantial quantities of natural gas, industrial machinery, auto parts and timber and exports them to many different consumer markets. Mexico's largest sources of foreign currency are oil sales, tourism and remittances from Mexicans working abroad. In all three cases, the vast majority of that currency comes from the U.S. The fate of its economy is linked tightly with the health of its giant neighbor.
In the years ahead, forget about much-discussed artificial groupings like the BRICS (Brazil, Russia, India, China and South Africa) and the so-called "Next 11" (N11), a roster of potential powerhouses that includes Turkey and South Korea but also political powder kegs like Pakistan, Nigeria and Iran.
In our emerging G-Zero world, with no single power able to set the agenda, the winners and losers of the next generation will be determined not by the rubrics of the moment but by how well and often they are able to pivot.
—Mr. Bremmer is the president of Eurasia Group, a research and consulting firm on global political risk. This essay is adapted from his new book, "Every Nation for Itself: Winners and Losers in a G-Zero World."
A version of this article appeared April 28, 2012, on page C3 in some U.S. editions of The Wall Street Journal, with the headline: The Future Belongs to the Flexible.
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