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1.  Introduction

After the general discussion of global risks, including their ranking based on probability, potential impact, and a combination of these two factors, the Global Risk Report 2014 discussed how the most interconnected of all 31 global risks is that of Global Governance Failure.

It then goes into a discussion of how this “central risk” is related to the others in three in-depth discussions.    The discussion is how Global Governance Failure is related to

• Geopolitical and Societal Risks (Instability in a Multipolar World)
• Economic Risks (Generation Lost?)
• Technological Risks (Digital Disintegration)

The one area I think they should have explored as well is the link between Global Governance Failure and Environmental Risks, and I may do this myself as a separate post.

This particular post goes into the first nexus listed above, the link between Global Governance Failure and Geopolitical and Societal Risks.

2.  An Increasingly Multipolar World

In the decades after World War II, the geopolitical landscape formed into competing blocs of power surrounding the United States of America and the Soviet Union.   There were countries that tried to maintain independence from either side, the non-aligned countries such as Brazil, India and China, but most of the emerging economies of the world ended up falling under the political and economic influence of one superpower bloc or the other.  That bipolar framework surrounding the “Cold War” between these two superpowers started to dissolve in 1991 when the Soviet Union collapsed.

Although neoliberals in Washington, D.C. dreamed for two decades of extending the influence of the United States in a “one-world framework”, the politics in the United States are currently in a condition of paralysis that is gradually reducing the influence of that country on the world stage at the same time that the economic and concomitant political power of the BRICs (Brazil, Russia, India, China) is rising.   The end result is an increasingly multipolar world.   The challenges to this multipolar world are that

• Emerging market uncertainties
• Economic and geopolitical friction between nations
• Proliferation of low-level conflict (asymmetrical warfare)
• Slowing progress on global challenges

3.  Emerging market uncertainties

Although the growth rate in the four BRIC nations has outpaced that of the nations in the developed economies, the growth model of these economies will not be able to keep up the same rate of growth.

The economic growth that has occurred in these countries has seen the rising of a middle class, which has created demand for economic and political reforms as well as the extension of welfare networks.    For example, the rising air pollution levels in China has created the demand on the central government for more regulations to control it.

4.  Economic and geopolitical friction between nations

Because of the limited success of the trade liberalization talks in the global trade framework under the World Trade Organization, there is more progress being made at the regional level, with new trade partnerships being negotiated such as the TPP (Trans-Pacific Partnership), TTIP (Transatlantic Trade and Investment Partnership), the Eurasian Union, and the African Free Trade Zone.

Whether they will be accepted by the countries that comprise these partnerships remains to be seen.   Will they be seen as truly creating opportunities for trade and innovation, or will they be seen as stifling innovation by assisting oligopolies to continue rent-seeking behavior?  Will they be seen as contributing to economic and political stability, or will they be seen as “democracy-bypass operations”, which take political power away from national governments and giving it to multinational corporations?

5.  Proliferation of low-level conflict (asymmetrical warfare)

When there is a mismatch between levels of power, asymmetrical warfare rather than conventional warfare becomes the instrument of choice for the powerless.   In practical terms, this can mean resorting to activities traditionally described as “terrorist” activities.

Technology-based aggressions (drone technology, cyber attacks) are a new form of warfare, but the only way to moderate the risks of these new forms of warfare is to create multilateral agreements that manage the low-level conflicts which give rise to them.

6.  Slowing progress on global challenges

There are many challenges which are beyond the capability of national governments to handle, such as

• Climate change
• Internet governance
• Management of the oceans (including the resources of the newly accessible Arctic Ocean)
• Cooperation on space missions
• Enhancement of human rights

The problem is that, with the global economy slowly emerging out of the slump that occurred after the financial crises of 2008-09, many national governments are focusing on the short-term risks of fiscal crises, and structural unemployment/underemployment, and are not focusing on the risks which are seen as longer-term risks (such as climate change).

This is one of the reasons why there is more persistent deadlock on negotiations regarding international agreements on greenhouse gas emissions.

7.  Conclusion

As the report says on p. 30, “the growing scale and assertiveness of leading emerging market countries will increasingly challenge the legitimacy, relevance and efficacy of incumbent global multilateral organizations or groupings.”

However, my take on it is that the phrase should be amended as follows: “the growing scale and assertiveness of leading emerging market countries will increasingly challenge the legitimacy, relevance and efficacy of existing incumbent global multilateral organizations or groupings.

In other words, global multilateral organizations will be forced to enlarge their conversation to include the emerging market countries in order to maintain their legitimacy, relevance and efficacy.   But in my mind, that is all to the good.

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