US 'faces great challenge' as global power shifts
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'Rise of the rest': Journalist Fareed Zakaria (Lateline)
Wealth and innovation are bubbling up in the most unexpected places. The tallest buildings, the biggest dams, the highest grossing movies, some of the most advanced technologies: they're all being created outside of the United States. It's called "the rise of the rest", and as global power shifts, Washington will face its greatest challenge: it'll have to learn how to share power.
Fareed Zakaria is the editor of Newsweek International and the author of a new book called The Post-American World. He spoke to ABC TV's Lateline on Thursday night about the cartography of the new global landscape.
Virginia Trioli: "The rise of the rest": it's a nicely evocative phrase. Who are they? Who's the rest?
Fareed Zakaria: Well, it really is everyone. I mean, what I was struck by when I was looking at this subject, I thought to myself, 'Well, of course it's the rise of Asia', we know about that. But then I'd go to Latin America and see Brazil was booming, Mexico was doing better than it had ever done, Costa Rica was doing well, the Dominican Republic is growing at 8 per cent, for heaven's sake.
And then I'd go to Africa and I learned last year Africa had 30 countries that grew at over 4 per cent. That's about two thirds of the continent. So, in a real sense, you have growth taking place around the world: 2006, 2007, 124 countries around the world grew at 4 per cent a year or more. And I think this is so dramatically different from any period in human history before to have the majority of the world's countries doing well, that I couldn't think of any better way to describe it than to say "the rise of the rest", meaning, really, the rest of the world.
VT: Couldn't this really just be some sort of trickle down effect, the result of the greatest peace time boom we've ever enjoyed that we've recorded, and it's simply those riches now are reaching to other corners of the earth?
FZ: It's partly that. Peace is an enormous part of it. Peace, stability, the incidents of major wars have declined dramatically in the last 20 or 30 years. And we hear about terrorism on the television all the time, but the reality is the chances of dying in war, civil war and terrorism have declined dramatically in the last 20 or 30 years. But a lot of it is also, to put it simply, the natives have gotten very good at capitalism. The secret of how to organise your economy is out, and it's out all over the world, and as a result, you see better economic management in all kinds of places, and it's showing results. We should celebrate it. It's a wonderful thing, but it means a very different world than we've known with the 15 rich countries of the world, which have been the 15 rich countries of the world for 400 years.
VT: It's fascinating, isn't it, because those rich countries, of course, have wanted other countries for a long time now to embrace capitalism? That's happened. But it poses, as you argue in your book, a certain kind of threat for the West, and for the US in particular. What is that threat?
FZ: Well, you know, we have, as you said - we've been particular in the United States, we've been going around the world telling countries, "Open yourselves up. Open up your trade, open yourselves up to technology, open your capital markets up." And now, finally, the rest of the world is saying, "OK, we'll do it", and we're thunderstruck. We're not quite sure how to respond and we're challenged by it and we feel threatened by it.
We're trying to in some ways close ourselves off, and I mean this collectively in the West. We're worried about immigration. We're worried about trade. The real challenge, I think, is to recognise that this is a world historic change that we can't stop, and that our choice is really do we embrace it and thus ride this wave, or are we going to try to fight it in some way. And if we fight it, I fear first of all we won't be able to change it, but we'll close ourselves off, and close ourselves off to the future - to the growth, the innovation, to what's going on in the rest of the world.
'The pie expands'
VT: But, Fareed Zakaria, how do you argue that this actually poses some sort of threat of power to the United States, because it's still the case, isn't it, that nothing really threatens that? If it comes to any major military intervention around the world or financial decision or rescue, it's to the United States that the world still looks. That hasn't really shifted that substantially, has it?
FZ: Well, it's a very good question, because economically you're right: this doesn't really pose many challenges. It means the pie expands, everybody does better, the United States still occupies a kind of central position in all of this. But, politically, militarily, diplomatically, you know, power is not - in that sense power is a bit of a zero sum game. As China grows more important in Asia, as Brazil grows more important in Latin America, as South Africa grows more important in Africa, whose unilateral space to move is being constrained? The United States of course, and we can see this in the sense that - take even the issue of the economic bail outs. What has happened in Asia is since the 1996-97 Asian crisis, Asian countries have grown so powerful economically, and they have built up such massive foreign exchange reserves, that were there to be another East Asian crisis, the one thing we know for sure is they will not go to the West for help. They will not need the West for help.
VT: They'll bail themselves out now.
FZ: They'll bail themselves out. They've built up that capacity. And I think if you look at what's going on in Zimbabwe and Darfur, it's clear without the leadership of South Africa and Nigeria, nothing that the United States will do will matter. Take the issue you were talking about on the program before - Iran. Iran has become a major regional player, and as long as oil is at $US130-140 a barrel, it's going to continue to be a major regional player because it has enormous cash on its hands to build missiles, to fund Hezbollah, to give money to other proxies. You know, and that's something that is very much part of this broad economic growth that's been taking place.
VT: Well, look, let's test the thesis a little bit, shall we? It's interesting that we had Will Hutton on this program recently, the well-known British commentator, and he said that the great lie about the rise of China was that it might look economically powerful, but what would constrain that growth, what would prevent it from turning into a big superpower was its lack of democratic institutions. It didn't have a free press; it didn't really have free, fair and representative elections. And if it didn't embrace that, it would always stay in a certain place and never really become that power. If that's the case, then China is no threat to the US.
FZ: Well, I'm not sure that I - I think one can make any grand predictions about something as complicated as the modernisation of China. And it's - and China is early on in that stage. It's at about $4,000 per capita GDP. The United States is at about $40,000. I would guess, Australia is in somewhere - in a similar range. So, China has a long way to go, and who knows what a China at $20,000 per capita GDP will look like. But the crucial point is this: China is enormously invested in the success of the global economy and the success, particularly, of the United States and other Western countries. If the US economy does badly, we stop buying Chinese goods. That sends China into a tailspin. And in that sense, this mutual interdependence has actually been a wonderful and positive and beneficial thing, whether or not China becomes a democracy. That's what's different about this current world than any previous era of interdependence and globalisation. China cannot prosper, and it cannot sustain - the Communist Party cannot sustain its monopoly on power and its position if the United States economy is doing badly. That's unusual.
VT: So, you're saying that the old criteria of: is it a formal democracy in the form that we understand, that won't apply any more. China will actually rewrite the rules?
FZ: To a certain extent China will rewrite the rules. But, you know, I tend to believe that we are very ahistorical when we think about this development that takes place. Most of the Western world developed economically before it was - they were liberal democracies. I mean, the reformat of - in Great Britain takes place in 1832, at a point which Britain is still, you know, is already developed economically quite a bit. Most European countries became capitalist, advanced, industrial countries under absolute monarchies. Let's remember that China is still a very poor developing country. And as I say, when it gets to $20,000 per capita GDP, when it has a real middle class - that's several hundred million people who start demanding a greater degree of space and rights - who knows what will happen. But that's probably 20 years off. And in the interim, for sure, China will be able to maintain, I think, this kind of strange political system it has, which I call "market Leninism", because it's pretty free market, but it still has a Leninist political apparatus.
You can find the rest of the transcript of Fareed Zakaria's interview here, or watch the attached video.
