Editor's note: This is part one of a two-part series. For part two, click here.

Power in Today's World

The ability of nation-states to amass material wealth and wield hard power is historically unprecedented. Yet, the utilization of power by well-established nation-states, such as the United States, rarely ensures foreign policy objectives are met, and often yields undesirable outcomes instead.

Transnational non-state actors like Al-Qaeda and Jemaah Islamiya have taken advantage of this emerging paradox. Their objectives are to destabilize and undermine established Western institutions, norms and values. Fatalist worldviews held by terrorist organizations are meant to justify these non-state actors complete lack of political accountability to any nation-state. They are empowered by their disregard for any international rule of law, while nation-states must consider public opinion, domestic political opposition and global opinion in waging a defensive against terrorism.

In some cases, nation-states and non-state actors, both steeped in political or religious ideology, often follow self-centric policies that are meant to exonerate them from any responsibility to the global community. They even believe theirs is the right and duty to impose their ideology on those not "fortunate enough" to be born into the "right" cultural or national identity, whether religious or political in nature.

However, there is a crucial difference between the two. Non-state actors, such as terrorists, generally share the belief that the existing world order is against them. All their suffering is caused by the "the system", and the way it is set up and steered by nation-states. More specifically, these actors are angry and they direct their anger at a world order highly influenced by U.S. foreign policy, a perceived exportation of American cultural hegemony and capitalism's sway over emerging democratic nations.

On the other hand, many institutional and nation-state actors have still not come to terms with these turns of events. For them, the current world order serves as a crucial global economic and political model with Western cultural values that have been refined over much of modern history. Faced by negative reactions, nation-states ask, "What is wrong with them?" But what needs to be asked is, "What is wrong with us? Why do our actions arouse so much anger when they are meant to be engaging?" These questions end in a mixture of sorrow, disappointment and deep resentment towards non-states actors.

It is for this reason that dialogue between states and non-state actors has not taken place: You cannot reconcile those seeking to preserve a system with those seeing it as their divine right to destroy it. To make matters worse, the traditional beneficiaries (natural born citizens) of the nation-state are threatened by globalization.

With regard to information communications, the Internet, satellite TV, blogs and alternative media have empowered individuals and groups to change traditional power dynamics. The power of global communications is no longer solely in the hands of the nation-state.

Changes in Power Creation

Power in the age of instantaneous information and images is the ability to forge and shape the mindsets of people, while earning widespread political support.

Under this definition, power and influence do not flow from the nation-state, but pour away from it. In fact, the United States efforts in Iraq were undermined by video footage from Abu Ghraib that showed prisoners being mishandled, beaten up and sexually abused. And the whole world saw Saddam Hussein's hanging, which resulted in a colossal negative image of the Iraqi government and America. Non-traditional media outlets spread the images from these events widely. Meanwhile, the real-time images of the underground during the July 7, 2005 bombings in London were not disseminated by the mass media, but by people using their cell phones.

The agenda is gradually being set, not by nation-states or mass media, but by individuals on the spot-each with his or her own set of values, often diverging from those of the country in which they live. American soldiers at Abu Ghraib prison clearly did not act in accordance with U.S. military regulations or any society's moral standards. The wardens who used their cell phones to record Saddam Hussein's execution had their own agenda as well, probably that of revenge. For their part, institutions and nation-state actors are finding it almost impossible to cope with the swift and rather ruthless "hijacking" of news dissemination with values, norms and ethics differing from their own. When the news hits the fan, the media resorts to damage control, but in the process, they often aggravate the issue rather then limit its damage.

Who are the New Beneficiaries?

Generally speaking, there are two groups-very different in origin and direction-that benefit from this shift in power creation. Of course, there are the violent non-state actors like Al-Qaeda, but there are also less obvious transnational organizations like multinational corporations (MNC), both of whom are held together by self-interested motives instead of a shared national identity.

MNCs ride on the back of economic globalization, which has brought about tremendous economic growth and unprecedented wealth for such entities. And the growing economic inequality within and between nation-states-driven by globalization-has engendered a strong backlash among the non-beneficiaries. Considering there are no international structures in place to ensure a more equitable distribution of wealth, many politicians find it difficult to manage further structural adjustment problems spawned from outsourcing as MNCs relocate their activities from one nation-state to another.

As MNCs increase technology transfers from one geographical area to another and fund research and development in other countries where the pool of talented people is larger, it may appear that they no longer act in conformity with the interests of their nation-state of origin. Their loyalty to the "flag" has decreased, even disappeared, and the world is their playground. But this privilege is not available to the nation-state and the large majority of its citizens.

The international political economy, since the age of industrialization, was designed to control economic activity and offer a politically acceptable distribution of wealth. Globalization has made many of those mechanisms impotent without replacing them.

Meanwhile, the role of the nation-state as an anchor of individual's identities is disappearing. Globalization, in a sense, has also led to immigrants flocking to new nation-states, not for their national appeal, but for economic opportunities. It is convenient to have a passport and to rely on the benefits provided by the nation-state, however, when it comes to shared beliefs, the answers increasingly point to cross-border affiliations that are held together by common values rather than by a shared national identity.

Non-state actors, such as Al-Qaeda, are an example of this development. Their ideology easily crosses national borders and is able to secure the loyalty of people from many different locales.

The Existing Political Structure

The nation-state used to be the sole agent that decided on the speed and direction of international politics. Today the nation-state is faced with many more constraints.

Efforts by the nation-state to control international economic developments generally have been futile. Globalization and the instantaneous dissemination of news, ideas and values have surpassed everything the nation-state comes up with. The nation-state's powers are derived from and confined to its sovereign borders, while the main beneficiaries of globalization operate outside and above these borders. And because nation-states, driven by mutual suspicion, are reluctant to relinquish any controls to supra-national political regimes, non-state actors are allowed to operate within a regulatory vacuum created by the absence of the nation-state.

Apart from the EU, the only genuine rule-based transnational organization, attempts to introduce political steering mechanisms on an international level have run aground. Many nation-states have preferred to hold on to the imaginary powers of sovereignty instead of opting to act in concert for the sake of facing mounting challenges.

Citizens of any given nation may still be loyal to their respective nations because the nation-state continues to be the framework for economic welfare, jobs, rising living standard and human security. But the nation-state is finding it increasingly difficult to deliver these public goods. Some challenges include the ability of MNCs to relocate and the threat to physical security from terrorism nourished from abroad. Now, these challenges may not defeat the nation-state, but they can definitely disrupt order and undermine its legitimacy and authority.

Editor's note: Part two of this article will be published on National Interest online next week, featuring an analysis of America's response to the aforementioned developments and its potential impact on global stability.

Joergen Oerstroem Moeller, is visiting senior research fellow at the Institute of Southeast Asian Studies, Singapore, and adjunct professor at the Copenhagen Business School. Dr. Terence Chong is a fellow at the Institute of Southeast Asian Studies, Singapore.