A projection of international trends to 2025 published today by the United States National Intelligence Council, foresees an unstable multipolar world, growing conflict over natural resources, a decline in United States influence, and China as the number two world power.

The report which will be required reading for President-elect Barack Obama, recalls that, historically, multipolar systems have been less stable than bipolar or unipolar systems, and that a “19th century style scenario of arms races, territorial expansion and military rivalries” cannot be ruled out. This will mean, the authors say, an increased, although still small, risk of nuclear conflict.

Clashes may be triggered by competition for dwindling natural resources, particularly oil, natural gas and water; and climate change will add a new dimension to international security risks.

The transfer of global wealth and economic power under way from West to East is, the report says, “without precedent in modern history.” While highlighting the growing weight of the BRIC countries, Brazil, Russia, India and China, it singles out China as “poised to have more impact on the world over the next 20 years than any other country”. By 2025, it predicts, China will be the world’s second largest economy and will wield military clout to match.

Brazil, Russia, India, and China, the report says, will match the G7’s share of global GDP sometime in the 2040s. Before then, China and India will have restored their standing of two centuries ago when they represented, respectively, 30 percent and 15 percent of the world’s wealth.

The report highlights the alternative development model being followed by the major emerging economies, which, in contrast to the West, rely heavily on state intervention in the economy and state owned enterprises. Whereas in the early 1990s economists were predicting the imminent disappearance of SOEs, the process of privatization is being rolled back and a new economic phenomenon is emerging – the state owned multinational. The authors suggest that, in the wake of the economic crisis, the trend for greater state intervention in the economy will spread to developed Western economies.

Several, sometimes tongue-in-cheek, scenarios sketch out possible consequences of the shift in world power. In one, the Russian Head of the Shanghai Cooperation Organization writes a humorous and self-congratulatory letter to the NATO Secretary General, drawing attention to the SCO’s strategic parity with the Western alliance and thanking the West for the diplomatic blunders that made this possible. In another scenario the BRIC countries fall out and Chinese and Indian forces clash in the Gulf of Oman over energy supply routes. In a frightening scenario that owes something to Hollywood, climate change triggers a freak weather event that floods New York.

While Chinese leaders may derive some satisfaction from the US Intelligence assessment, Europeans will likely be smarting as the EU is largely written off as doomed to irrelevance by a declining and aging population and what, in US eyes, is an excessively generous and increasingly unaffordable welfare system.

(China.org.cn by John Sexton, November 21, 2008)