Silvio Berlusconi is out and Angela Merkel was reelected. Nelson Mandela and Hugo Chavez passed away. Fidel Castro didn’t. People took to the streets in Kiev and Bangkok, Cairo and Khartoum. The president of Syria ignored Barack Obama’s red line and used chemical weapons, while Iran was willing to engage in negotiations with the United States for the first time in 34 years. China elected a new leader and jailed another. North Korea’s tyrant-in-training executed his uncle.There is never a dull moment in global politics, and 2013 was no exception. But which of the myriad, attention-grabbing events that took place this year will have lasting consequences? Surely, the international repercussions of Berlusconi’s political demise in Italy are not as significant as Xi Jinping’s ascent to power in China. Street protests against the government in Istanbul or Sao Paolo did not have as much impact as those in Cairo, where a democratically elected president was ousted. A thaw in relations between Washington and Tehran is bound to change the world more than the massacres in Syria. Here are the stories from 2013 that will reshape the world long after this year draws to a close.
Few developments are bound to redraw the world’s geopolitical landscape as much as the current boom in North America’s energy production. And Mexico’s decision in December to end a 75-year state oil monopoly and allow foreign firms to invest in its oil and gas sector will only accelerate this trend. According to a 2013 International Energy Agency (IEA) report, North American oil production will increase by almost 4 million barrels per day from 2012 to 2018, accounting for more than half of the increase predicted for non-OPEC countries. In parallel, oil imports to North America will diminish from about 6 million barrels per day in 2012 to some 3.5 million barrels per day in 2018, while intracontinental oil and gas shipments will intensify.The IEA calls such changes “revolutionary”—and for good reason. U.S. dependence on Middle East exporters will decline and, with it, that region’s weight in world affairs. The IEA estimates that global oil production capacity will grow to 102 million barrels per day by 2017, a volume well above demand forecasts of 96 million barrels per day. Such excess production will weaken oil prices in the medium term and deal a blow to oil-rich Russia’s economy and political clout. The U.S. military will be able to recalibrate its role in ensuring safe passage in the sea lanes through which Middle Eastern oil reaches global markets.
Analyst Nikolas Gvosdev argues that America’s newfound energy capacity means that “a robust U.S. military presence abroad will no longer be seen as essential for prosperity at home…. [T]he Carter Doctrine and the Reagan Corollary, which commit the United States to defend the countries of the Persian Gulf against outside aggression and internal subversion because this region and its energy resources are deemed invaluable to U.S. interests, [could] go the way of other now-irrelevant U.S. foreign policy doctrines.”
Barack Obama cautioned the government of a small and almost-failed state not to use chemical weapons on its people, only for Syria’s Bashar al-Assad to ignore the warning while the U.S. president discovered that he did not have the power to deliver on his threat. Thanks to a last-minute, face-saving diplomatic gambit engineered by Vladimir Putin, Obama was spared the embarrassment of seeing his threat annulled by a Congress that was likely to deny him the authorization to launch military strikes. He also discovered that he did not have the power to avert the shutdown of his government or to make sure that the website of his most important domestic initiative—Obamacare—would work. He was unable to prevent Brazilian President Dilma Rousseff from canceling a state visit to Washington once Edward Snowden’s immensely consequential leaks this summer revealed that the U.S had been spying on her telephone conversations—or from joining Germany’s Angela Merkel and other U.S. allies in condemning the espionage.
Throughout all these mishaps, the rest of the world was watching. The United States came across as inept and its president, who came to power in 2009 riding a wave of enthusiasm, looked weak. As Prince Turki al-Faisal, the former head of Saudi Arabia’s intelligence services, put it, “We’ve seen several red lines put forward by the president, which went along and became pinkish as time grew, and eventually ended up completely white.”
As the U.S. economy continues to recover, the benefits of the energy revolution become tangible, government shutdowns are averted, budgets are passed, and Obamacare starts to deliver on its promise—or even as some visible diplomatic breakthroughs are achieved—the perception of America’s weakness is bound to improve. Nonetheless, the damage suffered by “Brand Obama” in 2013 is a reality. In politics—and in geopolitics—perceptions are a critical part of reality, and the perceptions of an America weakened by political gridlock, unable to make timely and effective decisions or deliver on its threats, may—rightly or wrongly—determine the actions of its friends and foes.
In November, while the world was focusing on nuclear talks between Iran and six world powers, the Chinese government made a seemingly small and rather technical announcement that may turn out to be a harbinger of things to come, as the giant nation’s economic success feeds its geopolitical ambitions. Beijing announced the creation of a new Air Defense Identification Zone (ADIZ) in the East China Sea—one that happened to include the airspace over a small group of islands claimed by both China and Japan. The official statement by China’s Ministry of National Defense warned that “China’s armed forces will adopt defensive emergency measures to respond to aircraft that do not cooperate in the identification or refuse to follow the instructions.” Washington and Tokyo immediately protested, and the U.S. sent two B-52 bombers to overfly the area without bothering to identify the planes. The tensions continue.
Until recently, China’s official line was that improving the standard of living of its people was its priority—and that the country’s foreign policy would always reflect that priority. Beijing officially referred to this policy as “China’s peaceful rise.” The aim was to reassure other nations that China’s ascent as one of the world’s largest economies and development as a military powerhouse would not drive it to act belligerently on the world stage, but rather to conduct itself as a responsible global stakeholder interested in contributing to international peace and security. Avoiding unnecessary international confrontations was the guiding principle of its foreign policy, Chinese officials reiterated at every occasion.
The ADIZ—both the way it is enforced and the way China behaves in negotiations with Japan, South Korea, and the United States over it—will reveal if China’s peaceful rise doctrine is still the foundation of its foreign policy.
Inequality is nothing new. At times, it has fed violent revolutions, while at others it has simply been accepted as a fact of life. In the United States, the immense riches accumulated by tycoons like Warren Buffet, innovators like Steve Jobs, or entertainers like Oprah Winfrey are often admired and celebrated. Less so in places where wealth typically results from corruption and shady deals with the government. In recent years, however, the economic crises in the U.S. and Europe, and the painful austerity policies that followed, have made the world more aware of the extent to which the gap between rich and poor has widened. As a result, demands to fight inequality have become far more common.
President Obama recently called inequality the “defining challenge of our time,” while, a week earlier, Pope Francis wrote that “Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality … Such an economy kills.” The traction the issue has gotten among world leaders is due in part to the recognition that the hundreds of thousands of people marching in the streets of a large and growing number of cities list inequality among the grievances that energize their cause. But it is also fueled by the mounting evidence that, in richer countries, economic inequality is increasing and, in places like the United States, has reached levels that were last seen a century ago.
Politicians, journalists, social scientists, and even business leaders now routinely call attention to growing disparities in income and wealth. And increasingly, governments, institutions, and citizens are trying to reverse this trend. This is good news. But the challenge will be to fight against inequality without empowering the demagogues who advocate policies that could end up aggravating it. Latin America and Africa are rife with examples of populist leaders who ultimately boosted inequality by imposing economic policies that stifled investment, destroyed jobs, fueled inflation, and nurtured an oligarchy that thrived on cronyism.
In the last 12 months, everything seemed to happen at once in the Middle East: the overthrow of Mohammed Morsi in Egypt and the Assad government’s decision to use chemical weapons against its own people in Syria; the ongoing negotiations over the Iranian nuclear program; new talks between the Palestinians and Israelis, which began in July and aim to reach a final agreement by mid-2014. If these latter two negotiations in particular succeed, the consequences will be enormous and their impact will transcend the Middle East. If they fail, the consequences will be equally momentous. The probability of greater armed conflict in the region hangs in the balance.
The Carnegie International Economics Program monitors and analyzes short- and long-term trends in the global economy, including macroeconomic developments, trade, commodities, and capital flows, drawing out their policy implications. The current focus of the program is the global financial crisis and its related policy issues. The program also examines the ramifications of the rising weight of developing countries in the global economy among other areas of research.
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