When Nassim Taleb, the ex-trader turned philosopher, used the metaphor of the Black swan in his eponymous essay published in 2007, to describe events whose probability of occurrence was so ridiculous by conventional theories that they were almost entirely ruled out by economists and financial markets, he could have barely anticipated the success of this metaphor as it came to dominate the global economic and political debate for years after the fall of Lehman Brothers i n September 2008 and the outburst of the Great Recession in early 2009.
Indeed the global crisis that erupted in 2008 and through which we are still muddling today would have been unthinkable a few years ago. After the collapse of the debt-fuelled growth regime of the 2Ks, the world has entered a new era, fraught with uncertainties on the economic and financial plans, compounded by radical transformations on the political and geopolitical levels. In this New Normal, – an expression coined by Mohamed El-Erian from Pacific Investment Management Company (PIMCO), the largest bond manager in the world with a portfolio of over a trillion dollars of assets under management – nothing of what we previously thought is anymore given for granted. Neither the prosperity of the Western hemisphere, nor its long standing domination over the rest of the world, as a result of centuries of economic, technological, and military expansion, are assured to remain in the not-so-distant future. On the contrary, the rise of new economic behemoths in East and South Asia (China and India), the Russian and Brazilian “renaissance” and the unexpected awakening of regions like the Middle East and Africa that seemed condemned to suffer for ages under the combined plagues of economic backwardness, autocracy and cultural stagnation, is a reminder of how much outdated is the Western-centric conception of the world.
The post-crisis Western countries now increasingly look like the characters of Gericault’s famous painting the Raft of the Medusa (Le Radeau de la Méduse), which vividly showcases a group of survivors packed together on a hastily assembled raft after a ship wreck, with attitudes balancing between
resignation, despair and madness, as the sun sets down on a horizon blackened with dark clouds. Not to say that everything is lost. As in the dramatic event that inspired Gericault, it is almost certain that the West will eventually find a way out of the doom and gloom that filled and continues to fill the headlines of the newspapers in the aftermath of the crisis. Some Western countries like Germany will emerge almost unscathed from the crisis, thanks to the economic and social reforms they enacted before the tempest. Other countries like Spain will find it more difficult to regain their lost shine, as
it will take years to clean up the damage caused by the burst of the real estate bubble and by the quasi collapse of the banking system. But even the Greek and Spanish economies, – if sufficient time is left for administering the treatment without killing the patient -, will eventually recover, with potentially stronger competitive advantages than before. All in all, it is not the resilience of the Western civilization to such a massive blow that is in question as much as it is the loss of its supremacy and attraction over the rest of the world.
As an evidence of this demise, consider the first major trip abroad of Mohammed Morsi, the first president to have been democratically elected in Egypt, after decades of autocracy in this pivotal Middle Eastern country. This trip was not made to Washington, as would have been candidly expected from a country receiving every year between one and two billion dollars of military and civil aid from the United States. Instead of that, the low-key California trained engineer from the Muslim Brotherhood headed straight to Beijing to court the Chinese red emperors and to plead the case of Egypt as a welcoming recipient of Chinese foreign investments. For the United States, that was a sobering wake-up call, away from the dreams of the Pax Americana and back into the harsh realities of a multipolar world. Decades of American financial assistance to the Egyptian military establishment, as a collateral for the enforcement of the Peace agreement signed in 1979 between Egypt and Israel, could be reversed in the course of a few months following a popular uprising.
In fact, the West in general and the United States in particular must realize that the “two weights, two measures” policies that they have been practicing
for decades toward the Rest, while claiming an unmovable attachment to democracy and human rights have started to backlash. America might have already lost the global battle of the hearts and minds that is reshaping the cultural and political landscape of the XXIst century. The trauma of 9-11 attacks and the full-scale “war on terror” have not been accompanied by positive signals addressed to the Muslim community in the United States and abroad. On the contrary, the wrongdoings of US soldiers during the disastrous Iraq and Afghanistan campaigns (including public abuse of prisoners and disrespect for the dead) have accentuated the instinctive distrust with which the hegemonic superpower is increasingly perceived in vast swathes of the Islamic world. In the love-hate relationship between the United States and many Islamic constituencies, the later tend to adopt a selective approach by absorbing key technological innovations such as the Internet and its social networks (Facebook, Twitter, etc.), while reclaiming a distinct path to modernity. This is evidenced by the success and broad-based appeal of “new age” televangelists such as the Egyptian Amr Khaled who have benefited from the massive development and household penetration of Gulf-based satellite TV channels. This can also be seen on the political ground in the wake of the so-called Arab Spring, from the success of Islamist movements from Morocco to Jordan that grabbed large number of seats in their national parliaments, and that have since then formed ruling coalitions.
On a more material ground, in a few years from now, China is poised to become the largest economy in the world, in nominal GDP terms. Commensurate with this change, this will translate into a rebalancing of the global monetary and financial system away from the dollar into a polycentric world with a few globally accepted currencies (dollar, euro, yuan), a bunch of major regional currencies (Russian ruble, Brazilian real, Indonesian rupiah) and a plethora of local currencies that would be pegged in a way or another to the former. China will still remain a middle-income country for decades and there are many unknown variables in the equation that would enable it to transform its authoritarian political system the way it managed to transform its economy. But in the meantime, the Internet is already transforming the Chinese society by unleashing irrepressible waves of grievances against corrupt officials, and by gestating a civil society that has distanced itself from official regime propaganda. Once it has resolved this equation and reconciled bottom-up aspirations for more democracy with top-down concerns with stability, China will undoubtedly pose a formidable challenge to the West.
However, China cannot and will not assume a leadership on global affairs in the foreseeable future. Multipolarity should remain the most salient feature of the post-cold war era, as illustrated by the advent of the BRICS diplomacy in the aftermath of the Great Recession of 2008-2009. What remains to be seen is how this multipolarity will feed through and transform the “international multilateral system”, or the vast set of international institutions that were created after World War II around the United Nations and the Bretton Woods financial institutions. As John Ilkenberry wrote in a Foreign Affairs article, the liberal world order that was shaped by the United States and its allies half a century ago is not necessarily doomed by the advent of multipolarity and by the loss of supremacy of its founders. While America will almost certainly lose the status it briefly enjoyed as an unrivalled superpower following the demise and implosion of the Soviet Union, it should all the more direct its efforts toward the rejuvenation and the reinforcement of the United Nations. It should look beyond the benign neglect or outright disdain with which multilateralism has been considered by successive US Administrations over the last thirty years. In this uncertain world, there is a need for clarity and for rules that would be accepted by all the players, the established as well as the emerging powers. Leadership is not just about power, it is about being smart enough to accept that others might be just as smart as you, as long as they play by the rules.