[Seri column]Bracing for tectonic shifts

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[Seri column]Bracing for tectonic shifts

The United States has dominated the postwar world as the largest contributor of aid and a participant in many of the world’s conflicts. It has constructed a new world order through its leadership on many fronts.

In political terms, the U.S. has prevented or resolved international conflicts and ensured international security. Through its economic leadership, it has contributed to global growth by opening its markets to free trade, while developing an international monetary system that secures and supplies liquidity to the world. In diplomacy, it has led the establishment of international organizations like the North Atlantic Treaty Organization, the International Monetary Fund, the International Bank for Reconstruction and Development and the World Bank, incurring huge economic costs for itself in order to act as a powerful mediator among the interests of individual countries. American predominance has solidified as a result.

American economic leadership began to weaken in the 1980s as the European Union and Japan emerged as economic powerhouses. By then, Japan’s high-tech industry had advanced to a level that could successfully compete with the U.S., while the EU became the world’s largest market through economic integration. Since the 1990s, the euro has risen, weakening the dollar’s role as the standard global currency. Amid these circumstances, the U.S. started to lose economic strength as it grappled continuously with fiscal and current account deficits and financial crises like the recent subprime mortgage debacle.

On the military front, the U.S. was able to enjoy almost completely uncontested dominance after the collapse of the Soviet Union. However, international criticism of the U.S. has grown after a series of military operations since the 1990s ? the Gulf War, Kosovo, Afghanistan, the current war in Iraq ? and diplomatic confrontations with states that the U.S. considers as threats. U.S. military activities were also often criticized for what was regarded as ruthless prioritizing of its own interests, bolstered by its status as the sole superpower.

Military predominance, however, may not continue indefinitely, as the rise of the BRIC nations (Brazil, Russia, India and China) and an alliance between China and Russia, may challenge the U.S.-dominated world order. Whether the U.S. will sustain its dominance is thus a pressing issue.

In fact, conditions to build an alternative world order are here now, though no force strong enough to dislodge U.S. supremacy has emerged yet. Japan, for instance, has still not resolved its historical issues with its Asian neighbors after many decades, greatly hampering its ability to play a leading role in Asia.

In the EU, economic integration and expansion has created a market that surpasses that of the U.S., while the influence of the euro has risen. Under these circumstances, Europe appears to have the potential to challenge U.S. dominance, but it also has massive issues to tackle internally.

The BRICs are promoting a mutual alliance to rival that of the U.S. While they have gained global recognition for high economic growth, they too have conflicting interests that limit their ability to act mutually. China and Russia could also independently challenge U.S. dominance, but again both nations have their own issues, including restless minority populations and problems arising from modernization.

Without a critical international event, the U.S. will likely continue to hold court over the world for much of the 21st century. Nevertheless, it is more likely than ever that the U.S. will negotiate more with related countries, seek their agreement and try to resolve issues through international organizations, rather than acting unilaterally as has been the case in the past.

In this world, Korea will need to come up with appropriate strategies on a national, company and individual basis. From the national security perspective, a shift from the U.S.-dependent system to a closer relationship with China, Russia, and Japan is desirable. Diversification of economic relationships will also be beneficial. Economic cooperation, including free trade agreements between nations and regional blocs, is diversifying, while the share of the euro as a key currency is rising. With raw material prices skyrocketing, the relationship between resource-rich countries and resource consuming countries has also significantly changed, emerging as a critical factor for the shift in the world order. Indeed, shrewd organizations, both public and private, will recognize early on the need to adapt and make use of the changes in the world order that inevitably lie ahead.

*The writer is a research fellow at the Global Studies Department, Samsung Economic Research Institute. Inquiries on this article should be addressed to oosskk@seri.org.

by Oh Seung-Koo

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