The Return of Geopolitics
The Brookings International Advisory Council convened in Washington for its ninth annual gathering at a time of ascending geopolitics. The global economic issues that drive business decisionmaking around the world, particularly after the 2008 economic crisis and the uneven recovery that followed it, were giving way to a new focus on strategic relationships between nations. Through sessions on Asia, the Middle East, Latin America, Europe, American leadership and competitiveness, social mobility, and NSA surveillance, as well as briefings from Secretary of State John Kerry and other senior policymakers, members of the Council explored critical topics around the world.
An instantaneous polling tool allowed IAC members to register their attitudes going into the meetings on several key topics, from the state of the global economy, U.S. leadership, and developments (both positive and negative) around the world. Among the findings were that 78% said that the global economy was the same or improved from the previous year, while 75% said that the Obama administration has been a disappointment or has good intentions but poor implementation.
The 2014 International Advisory Council meeting came at an inflection point, if not a turning point, in relations between Russia and the west. I was particularly struck by how the Council members’ thoughtful commentary complemented what our experts on Russia and Ukraine—especially Fiona Hill and Steven Pifer—had to say about Vladimir Putin and his intentions in the “near abroad.” I know that a lot of our members—as well as the Trustees in attendance—were interested in how NATO might respond to a potential Russian incursion into member states in the Baltics, and how Article 5 would come into play. I am convinced of NATO’s resolve, and believe that Putin will ultimately fail in this gambit. That said, it is going to take intense diplomacy and steady pressure from the international community to ensure that the situation does not escalate. – Strobe Talbott
Russia’s incursion into Ukraine—and whether it heralded a return to the great power struggles of the previous century—found its way into almost every discussion. Likewise, with Europe having just concluded parliamentary elections, participants examined the messages that voters were sending to their home governments and implications for the future of the European Union.
“Europe is at a critical point as it struggles with internal problems and its historical global responsibility. The world wants Europe to appear as the global leader it should be, but right now Europe is confused, tired, and lacks visionary leadership.” — Hanzade Doğan Boyner
“This was my first IAC meeting and I found it uniquely valuable for bringing a wide variety of perspectives to a long—and always growing—list of challenges. Hearing from my fellow members and the eminent experts of Brookings gave all of us new ideas to take home.” — Nicolas Berggruen
China also came in for close examination, as the effects of its slowing growth ripple outward to the rest of the global economy and its territorial disputes with Japan, Vietnam, and the Philippines threaten to escalate. Combined with China’s continued support of North Korea and its mercurial leader, these disputes have increased regional instability, which undermines the business prospects of firms in countries like the Republic of Korea.
“Peace is an overriding concern. Japan and China have long been able to separate their cold political relationship from their hot economic relationship, but this firewall has begun to deteriorate, accelerated by Japan’s purchase of the disputed Senkaku Islands in the South China Sea. Nonetheless, the pull between the two economies remains strong and each relies on the other—China for Japan’s electronics and components and Japan for China’s manufacturing.” — Kihak Sung
With its aging population, Japan is going to have to rely on overseas markets to sustain the growth that Prime Minister Shinzo Abe’s “Abenomics” program of reforms seeks to foster. At the same time, the growth of China’s consumer class holds promise for other economies around the world looking for demand for their exports.
“It is important to note that China’s automobile market is over 20 million cars annually, more than the combined demand of the U.S. and Japan, making it too big a market to ignore for any company.” — Yukitoshi Funo
The American economy, said former Chairman of the Federal Reserve Ben Bernanke, now a Distinguished Fellow in Residence at Brookings, has fared better than other advanced economies in the post-Great Recession period, with dropping unemployment despite weak GDP growth. Over a longer horizon, the rise of long-term unemployment is a concern as workers become disconnected from the labor force and their skills begin to erode. Add to that the long-run fiscal challenges of high health care costs and an aging population, as well as the self-inflicted wounds of a gridlocked Congress, and careful economic stewardship remains a priority.
Latin America has done well to insulate itself from future shocks to the global economy, with many nations investing in human capital, infrastructure, and technology. With regional trade agreements in progress across the Pacific and Atlantic, nations in Latin America have opportunities to gain access to new markets and sustain economic growth through exports. The U.S. has not taken advantage of its proximity to build strong relationships with its hemispheric neighbors.
“I am concerned about U.S. foreign policy towards Latin America. It needs a high ranking Presidential Special Envoy to the region. I am aware the U.S. has more urgent stakes and interests elsewhere, but it is leaving the door open for China to get more involved.” — Jorge Mandelbaum
Where is American leadership on these issues? President Obama’s May 28 speech at West Point outlined his vision for U.S. foreign policy and the government officials the International Advisory Council met with—Secretary of State John Kerry, U.S. National Trade Representative Michael Froman, Special Envoy to the Israeli-Palestinian Negotiations Martin Indyk (on leave from his post as Vice President of Foreign Policy at Brookings), Deputy Secretary of State Bill Burns, and Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland—detailed the various economic, military, and strategic dimensions of U.S. engagement in critical regions overseas.
The Edward Snowden case highlighted many IAC members’ interest in the U.S. instituting better checks and balances on its spy agencies to prevent these kinds of incursions. Likewise, cyber warfare—both offensive and defensive—has grown in importance, as evidenced by efforts like the Stuxnet attacks on Iranian centrifuges.
At the same time, commercial espionage by competing firms and national governments is viewed differently in different places across the world, which can have a significant effect on competitiveness. Where China does not see a distinction between gathering public and private sector intelligence, U.S. law bars the government from sharing what it finds with American companies.
The Middle East remains a challenge for the U.S. and international community, with Iran continuing to pursue a nuclear program with unclear ambitions, an incomplete Arab Spring, and a Syrian civil war that has drawn fighters from throughout the region and imposed a painful human toll of killed and displaced civilians.
“The nuanced discussion about the perspectives of different countries in the Middle East and the recommendations for what the US could do in the region to support the process were particular highlights.” — Mick Davis
Growing attention to inequality and mobility in the U.S. and across the world has spawned a range of ideas for making sure that people have a reasonable chance to prosper no matter the circumstances of their birth. Globalization has reduced the inequality between nations to some extent, but, by many measures, it has grown within countries.
“The factors, such as family structure, school quality, teenage employment rates, and racial and income segregation, are often the purview of sub-national governments, limiting the ability to address the issues in a comprehensive way.” — Paul Desmarais, Jr.
Given that some of these factors, particularly education, are direct contributors to renewed American competitiveness, it’s clear that more must be done to improve workers’ prospects for competing in the global economy. Advanced industries and the unique ecosystems that foster them—places where innovative firms cluster near educational and research institutions—are driving a new demand for an advanced training and educational system that can produce a highly skilled workforce.
“I come to this having spent virtually my entire career in emerging markets, and believing that there was a shift of competitiveness away from the United States. Now I believe there is a shift back to the United States. We’re going to an entirely new form of manufacturing that integrates robotics and 3D printing, IT, logistics, sensors, new materials, and other new technologies and discoveries. All of that together is what I would call ‘brainfacturing’ and that will be the future.” — Antoine van Agtmael
Looking ahead to the 2015 International Advisory Council meeting—the 10th annual—Brookings will continue to take on new issues in the global headlines and engage with all of its members in substantive conversations throughout the year that get to the root causes and possible outcomes of the challenges the world faces.
“When we launched the International Advisory Council nine years ago, I knew it had great potential but I never dreamed that it would achieve such heft in such a short time. It’s all a credit to the members, who arrive here at Brookings ready to roll up their sleeves and get to work on the most difficult challenges the world faces. One of our central aims as an Institution is to shape the debate over policy issues in a way that is constructive and pragmatic. The intelligence, enthusiasm, and wisdom that members bring to this enterprise helps ensure that we can remain as relevant today as we were when Brookings was founded 98 years ago.” — Strobe Talbott