Surge of the 'Second World'

April 25, 2012 Topic: NATOWTOGreat PowersRising Powers

Surge of the 'Second World'

Mini Teaser: Those nations falling between the developed West and the world’s poorest countries are jockeying for position in their own regions and playing powers against each other. They will make life increasingly difficult for the reigning great powers.

by Author(s): Parag Khanna

THE OLD Order no longer qualifies as an order. The term “world order” denotes a stable distribution of power across the world. But power concentration today is in a state of tremendous flux, characterized by rapid diffusion and entropy toward a broad set of emerging powers that now share the regional and global stage. Western-centered multilateralism represents at best a partial component of a world system that is increasingly fragmented.

Nostalgia for the post–World War II or post–Cold War periods will not affect this picture. At those junctures, America had an opportunity to fashion a new world order. After World War II, America capitalized on this moment; after the Cold War, it squandered it. The world has moved beyond even the assumptions embedded in President George H. W. Bush’s famous “new world order” speech to a joint session of Congress two decades ago in which he envisioned a unipolar order managed through a multilateral system. Instead, the world has quickly become multipolar, institutionally polycentric and even “multiactor,” meaning nonstate groups such as corporations and NGOs are commanding more and more influence on key issues. This trend seems irreversible, and it needs to be digested before any kind of new global-governance mechanism can be formulated, with or without American leadership.

One leading contributor to the demise of the Old Order has been the so-called rising powers such as China, India, Russia and Brazil. These states increasingly serve as anchors of regional order and also wield influence beyond their immediate neighborhoods. By most measures, China is already a superpower; its presence is factored into diplomatic, economic and strategic decisions by nearly all countries worldwide. India, Brazil and Russia lag behind China, but it’s a reality of geopolitics that states do not need to forge new systems of order to undermine the existing one.

The set of nations that can influence global system dynamics and great-power foreign policy is much broader than just those countries famously labeled the BRICS (short for Brazil, Russia, India, China and South Africa). What I have called “Second World” nations coalesce into regional entities of significance—Latin America, the Middle East, central Asia, Southeast Asia—whose composite nations and complex regional dynamics will help shape the future of geopolitics. Second World states are important for their geographic position, natural resources and regional influence. Some of these states I have highlighted are Colombia, Algeria, the United Arab Emirates, Iran, Kazakhstan and Indonesia. All are pivotal Second World players whose decisions and alignments could affect the balance of power and influence among the United States, China and the European Union.

Who are the other Second World states, and precisely how will this collection of nations influence the course of world events? It is important to note that not all of these emerging states are on a linear path toward regional-power status. Some will rise while others stumble. But collectively, the ones that rise will exercise a significant pull on events. One reason I repurposed the term Second World for these countries was to emphasize their internally divided nature, embodying both First World and Third World attributes. Of the approximately two hundred states in the world today, only thirty are members of the First World club of the Organisation for Economic Co-operation and Development (OECD). Meanwhile, the bottom forty-eight (mostly in Africa) are formally labeled Least Developed Countries (LDCs). In between lie the Second World nations.

There are about a hundred of them, and there is little certainty these days over which ones will rise into the First World and which will descend into the bottom category. It is important to note that most of the world’s poor today are not congregated in the LDCs but rather are spread across developing countries and emerging markets. The result is a high prospect for internal instability within those countries. No doubt the Arab Spring, which arose in what had seemed to be relatively stable regional powers such as Egypt and Syria, has its roots partially in such inequalities. But, whether Second World states rise or stumble, their emergence—and their drive to find some kind of national expression in a rapidly changing world—will exercise significant influence on global developments.

THIS TREND of Second World emergence is viewed best through a number of distinct geopolitical prisms that together forge an analytical framework. First, Second World nations do not look to great powers for leadership, especially not the Western powers that have largely dominated the globe since about 1500, but they are also wary of leading challengers such as China. Instead, they will go their own way and influence events, to the extent that they can, based on their own interests. Their alignments with Western nations, if any, will be ad hoc. Second, these Second World nations are forging new regional-power relationships that will have an impact on future world events. Sometimes jockeying for position in their neighborhoods and sometimes forging potent regional cooperatives, they will become significant global players largely through strategic activity at the regional level. And third, these emerging nations will be looking for new modes of governance and new ways of ordering their economies. Western pluralism and capitalism aren’t likely to reign as models for these countries to any significant or consistent degree, and their enthusiasm for the norms and institutions of today’s liberal international order is likely to be limited.

Looking at these developments through the first prism, it is clear that Second World nations, in going their own way, will not move toward any kind of collective action. Instead, these countries see themselves as influencing the globe’s new order by radiating outward from their particular vantage points. They do not seem interested in attaching themselves to major global players on an ongoing basis, whether the United States or China. This is one reason it is a mistake to view the BRICS, for example, as any sort of coherent bloc. Two major potential conflict scenarios exist among these five nations—namely, between Russia and China and between China and India.

The result is a state of flux in the world that intensifies as more powers rise onto the scene and the scene becomes increasingly complex. As they rise, these powers pursue what might be called “opportunistic multialignnment,” in which they simultaneously pursue positive relations and advantage vis-à-vis greater powers. For example, they will play greater powers against each other and seek to leverage great-power rivalries. One can see this in the proxy competition between the United States and China to influence Second World and Third World nations. Every regime labeled a “rogue state” or “state of concern” by the United States—Cuba, Venezuela, Sudan, Zimbabwe, Syria, Iran, Uzbekistan, Myanmar and North Korea—receives active Chinese military, economic and diplomatic support. Whether in a bipolar or multipolar environment, Second World nations will seek to expand disputes involving minor powers into broader great-power tensions.

This approach gives Second World nations an opportunity to influence events at the margin even when they may not be rising powers in themselves. Disputes involving great powers and lesser states tend to provoke responses from the latter’s great-power sponsors, and this provides leverage to these upstart nations. This is but another example of Second World states pursuing their own paths rather than subordinating themselves to the strength and influence of great powers.

In the environment of uncertainty that prevails in today’s transition toward multipolarity, small perturbations among nations can quickly ripple into much larger confrontations. This is reflected in a trend whereby Second World regional powers are aggressively acquiring increasingly hefty armaments. This weapons-buying binge is motivated by a natural drive to modernize, concerns over regional rivalries and a felt need to hedge against waning American influence. Despite hosting substantial U.S. military assets on huge bases, Saudi Arabia and the Persian Gulf petrostates are rapidly acquiring F-16s, tanks, medium-range missiles and antiaircraft systems—justified yesterday by the rivalry with Israel, today by the Iranian menace and perhaps tomorrow by each other. In the Far East—particularly in Indonesia, South Korea and Vietnam—a similar dynamic is under way. The American defense establishment is seeking to draw a line in the waters of the South China Sea, where a more assertive China has recently bullied forward with territorial claims betraying an unusual diplomatic aggressiveness.

Russia perhaps best exhibits the discrepancy between the assumptions of some Second World states and the harsh global realities. At the height of Vladimir Putin’s power during his first administration as president, magazine covers gushed about a resurgent Russian superpower, ignoring the rapidly deteriorating fundamentals of Russian infrastructure and demographics. As its population shrinks toward a hundred million and clusters in its European regions west of the Ural Mountains, a far more modest picture emerges of Russia’s future. It becomes, like Turkey, an East-West conduit for natural resources—a bridge, not a hegemon. Russian influence peaked during the Soviet era, and the Eurasian geopolitical future will continue to unfold at Russia’s expense.

Here is where we see the ironies of Second World diplomacy most acutely. Summits between Putin and China’s Jiang Zemin regularly hailed the need for an antihegemonic bloc to counter American aggression. India’s Manmohan Singh and China’s Hu Jintao declared a mutual pact to forge a “new world order.” Each of the so-called BRICS has hosted gatherings of like-minded rising powers that took potshots at whatever American foreign-policy missteps captured the day’s headlines. But, while Second World states share an anti-imperialist impulse toward the West, they are wary of each other. China and India have several outstanding territorial disputes, with tensions flaring and even cross-border altercations stoking fears of another war reminiscent of the 1962 conflict. Russia’s nuclear posture is now focused on Chinese encroachment on its eastern enclaves, where Chinese firms rapaciously extract minerals and timber and purchase growing supplies of oil and fresh water. Population-growth rates among ethnic Chinese are a cause of concern as well. In global trade disputes, Brazil, which declared a “strategic alliance” with China in 2004, now sides with the United States and the European Union against China, which stands accused of dumping cheap products and undermining local industry. Thus, Brazil is as much a contributor to the West (especially in terms of energy security), at least for now, as it is one of the BRICS.

NOW LET’S look at these emerging Second World states through the second prism of regionalization. Ambitions for a new global structure along the lines of George H. W. Bush’s “new world order” suffered a massive blow with the rise of China, the ascent of the Second World and the unwillingness of Second World countries to support traditional global institutions (meaning Western norms). The active evasion and corollary erosion of Western norms was the first step toward creation of a new system, however lacking it may be in hierarchy and widespread acceptance. Indeed, the old U.S.-centric global system is being replaced by increasingly robust regional power centers fostered largely by the Second World. This growing volume of interregional diplomacy and trade is already the new dominant pattern of world affairs. Hence, it offers an avenue for understanding the emerging phase of world order. Particularly as interregional summitry and associated commercial ties deepen within such dyads as the Latin-Arab, Sino-African, Euro-Asian and others, this analytical lens becomes increasingly difficult to ignore.

Although global interdependence is on the rise, actual institutional and policy integration is fundamentally a regional phenomenon. Most European trade is within Europe, and most Asian trade is within Asia—not across the oceans with America. In South America, Brazil has steadily championed the building of a more robust regional organization, now called the Union of South American Nations. As in other regions, trade and investment flows within South America have experienced rapid gains in recent years. Brazil has displaced the World Bank and Inter-American Development Bank as the region’s largest lender and aid donor. Not surprisingly, it has championed numerous cross-border infrastructure projects in the energy, power and transport sectors to connect Pacific-facing nations on the continent with Atlantic-facing ones. Regional orders are therefore logical anchors for any global order, and global governance will often defer to regional sensibilities.

Similar dynamics are at play in the Middle East and East Asia as well. Saudi Arabia, which represents approximately half the Arab world’s total GDP, spearheaded an intervention into neighboring Bahrain last year that was backed by other members of the Sunni Gulf Cooperation Council (GCC), and earlier this year the Saudis tabled a motion to rename the GCC the “Arabian Gulf Union.” In the Far East, despite America’s much-touted pivot to Asia, the fundamental economic picture is one of intensifying regionalization at the expense of trans-Pacific trade and investment, underpinned by an ever-deeper set of regional bodies such as the East Asian Community.

Regionalism is where balancing and bandwagoning occur at the same time. Anchor states such as China and Brazil create incentives for lesser states to support their leadership, while these states also coalesce in ways to mitigate their hegemony. On the bandwagoning side, China offers confidence-building measures to ease regional diplomatic tension such as joint military exercises, oil and gas exploration, and commercial projects. But there is also a new assertiveness in balancing would-be hegemons through mutual surveillance, shaming tactics and drawing in outside powers. The Association of Southeast Asian Nations, for example, has embraced America’s renewed visibility in the region and intensified its internal cooperation on environmental diplomacy in order to raise pressure on China to slow down its dam-construction activities on the upper Mekong River.

China occupies a special place as the premier Second World state as well as regional anchor and superpower. As a trade-dependent, exporting nation, its ability to leverage globalization to rise rapidly into the core of the global economy makes it a role model for other Second World countries seeking regional importance. Further, its insatiable demand for natural resources has been a boon to Second World natural-resource exporters from Latin America and the Middle East.

THROUGH THE third prism, we see new modes of governance and economic structuring in the Second World. The success of authoritarian capitalism in China, petromonarchies in the Persian Gulf and strongman rule in central Asia have presented alternative models of governance that have resisted democratic pressures from outside and to some extent from below. Rather than converging toward democratic standards, they exhibit a diversity of regime types and ideologies. In the economic sphere, state capitalism is the new norm across the Second World. State-owned enterprises, sovereign wealth funds, national champions, blatant subsidies, capital controls, currency intervention and other measures are all fair game in the varieties of industrial policy that underpin Second World economic strategies.

It is becoming clear that a renewed liberal international order will not be the guiding global framework for the future of Second World states. There is a complacent view held by numerous American scholars that because China, India and other rising powers do not present an alternative, off-the-shelf global institutional framework to rival the legacy of the postwar order, Western diplomatic leadership will sustain itself by default. This is false. Neither universalistic liberalism nor a world managed by a concert of great powers will command the loyalty and support of Second World states. They will pursue both international recognition and regional integration at the same time, paying lip service to global procedural norms while operating according to local customs in their own neighborhoods. This means that even as countries pursue inclusion in the G-20 or support a strengthened IMF, they will still shield themselves from antiprotectionist regulations and invest in regional trade agreements. This will mean horizontal structures as opposed to new international authorities emerging at the transnational level, particularly regionally and interregionally. It is a mistake, then, to conflate participation in bodies such as the World Trade Organization (WTO) with support for their rules. China’s manipulation of its WTO membership to extract concessions from trading partners while yielding little ground on internal reforms is a case study in this regard. Even the G-20, which has convened regularly with high expectations since 2009, is not a truly global body but an informal coordination platform—one that has achieved precious little meaningful coordination. The West cannot simply “integrate the BRICS” by inviting them to a summertime summit in France.

Postwar international institutions such as the International Monetary Fund and the World Bank, vestiges of Bretton Woods, no longer enjoy the standing of previous times, given the volume of global capital pools. No doubt both have witnessed a certain revival in assisting nations suddenly afflicted with investment drop-off and massive debts in the aftermath of the 2008 financial crisis. But fundamentally, these institutions only matter to such states in need and not beyond. Neither body is effectively preventing financial and trade protectionism, providing a global bailout fund or ushering in a new global reserve currency. This opens the door to regional currency agreements and development banks, which are gaining ground in Latin America, the Middle East and Africa.

Viewing this Second World phenomenon through the three prisms, we see it is foolish to impute any kind of coherence to the diverse rising powers of the Second World or to ignore their ascent. The Second World is out for itself—collectively, when beneficial, but otherwise individually. To paraphrase de Gaulle: these countries have no allies, only interests.

Even if they are individually unable to qualify as systemically revisionist powers, Second World states increasingly agitate in diverse combinations and coalitions. For example, the World Bank was caught off guard by the growing influence of the Gulf states, India and China as providers of economic assistance to countries in Africa, the Middle East and central Asia. This has led to hastily planned OECD discussions on the need for “greater coordination” among donors—something Western nations have rarely accomplished themselves. The same goes for the growing influence of Arab and Asian sovereign wealth funds, which have prompted Western treasuries to attempt another toothless rearguard regulatory declaration known as the Santiago Principles, aimed at ensuring the nonpolitical usage of bilateral sovereign investments. But emerging markets now hold the savings glut that Western economies need in order to finance low interest rates, and that is likely to soften opposition to Second World foreign investment in the West. Thus, the 2006 case of Dubai Ports World’s blocked purchase of U.S. port facilities would appear to be an aberration.

Second World diplomatic axes have been influential in geopolitical affairs as well. Most visibly, Russia and China have been consistent in wielding their UN Security Council vetoes to slow Western interventionist reflexes in Syria. And the Brazilian-Turkish effort to mediate the Iranian nuclear standoff in 2011 ruffled the United States and core European powers, which prefer to operate as the only legitimate stewards of negotiations with Iran.

HOW CAN the United States maintain leverage in dealing with the Second World? America’s relevance increasingly depends on whether it can act as a coanchor of various emerging regional orders. Its traditional approach of using offshore-balancing tactics to maintain its hegemonic status seems unlikely to continue. The new basing posture in the Pacific and allusions to a “Global NATO” comprised of India, Japan and Australia to surround China are essentially negative formulations. If the United States doesn’t work within regional systems to promote stability, it will be ignored as an outsider. A sound model is the balanced American policy vis-à-vis Vietnam, which deftly combines rapprochement, defense cooperation and economic investment. Malaysia, Indonesia and Thailand represent three other Second World relationships in Asia that could be effectively rekindled.

Second, the United States can no longer ignore the Second World region with arguably the greatest potential: Latin America. The nearly nine hundred million citizens south of America’s borders together match the economic size of China. This huge entity has been habitually taken for granted by Washington. But South America’s vast natural resources, the rise of Brazil as a pragmatic regional leader and the emergence of a “new-Left consensus” of welfare-oriented policies combine to make a postideological, interregional alliance for energy security and industrial competitiveness a more realistic prospect than ever before. South America should be viewed as nothing less than the third pillar of the West.

America is not alone in grappling with the potential and turbulence of the Second World as it seeks to craft grand strategy and implement foreign policy. As China’s commercial and infrastructural expansionism pulls it ever more uncomfortably into central Asia, the Near East and Southeast Asia, Beijing may find it increasingly difficult to import resources without importing instability. Similarly, the EU is already witnessing the social tensions that result from mass migration from Muslim lands. Though America’s rivals seem more fragile than it is, it remains to be seen whether being on the other side of the world will turn out to be a blessing or a curse.

Second World states are clearly rising up the priority list in the formulation of American foreign policy. Charles Kupchan of Georgetown University argues that leveraging emerging regional powers is one of four pillars of a sensible grand strategy. While most Second World states will not individually become drivers of the great shift in global order currently under way, collectively they have contributed to the demise of the Old Order and been key players in ensuring that no new hierarchical arrangement can easily emerge to replace the Western-led, post–World War II system. Any plan for a future world order is not worth writing if it does not include the dozens of Second World countries whose aspirations are bubbling up into the framework of the world with increasing force.

Parag Khanna is a senior research fellow at the New America Foundation and director of the Hybrid Reality Institute. His most recent book is How to Run the World: Charting a Course to the Next Renaissance (Random House, 2011).

Part of TNI's special issue on the Crisis of the Old Order.

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Image: Pullquote: In the environment of uncertainty that prevails in today’s transition toward multipolarity, small perturbations among nations can quickly ripple into much larger confrontations.Essay Types: Essay