EXECUTIVE SUMMARY
Globalization has entered a turbulent period. Over the past twenty years,
the most significant threats to international security, stability, and prosperity have evolved rapidly.
Global systems are now tightly interconnected, with risk proliferating freely across borders.
The drivers of change—including population growth, climate change and resource scarcity, a
major shift in economic power, and increasing state fragility—produce unpredictable, non-linear
effects. Technology continues to diffuse rapidly, while information is corroding traditional
hierarchies. Security-related risks have become increasingly asymmetric.
Looking across the most important global risks, one sees that the world faces novel challenges
(e.g. managing bio-security) and needs to develop both unprecedented institutions (e.g. resilient
global carbon markets), and tough mechanisms for enforcement (e.g. for nuclear proliferation or
emissions control). Power shifts must be managed both in the short term (economic imbalances)
and over the long term (demographic change). There are complex interactions between risks
(energy and food security, for example), while insurgent groups have attractive opportunities to
disrupt global networks (especially when state weakness and access to these networks coincide).
Pressure from these forces builds for long periods with no visible effect, but when released, it
triggers abrupt shifts and cascading consequences across interlinked global systems. Shocks,
rather than stresses, are the primary triggers of change, as three global crises—the September 11
attacks in 2001, the combined food and oil price spike that peaked in 2008, and the global financial
crisis in the same year—have demonstrated over the last decade.
At present, the international system is crippled by design faults
that render it unable to confront and control the volatility of contemporary globalization.
At both national and global levels, policy formation and delivery is weak and fragmented across
issues and organizations. The need to overcome these 'silos' forces complex issues upwards to
leaders' level, both at home and internationally in forums such as the G20. Unfortunately, lack of
'bandwidth' leaves heads of government with limited capacity, and leads to a prioritization of firefighting
over long-term risk management. The organizations charged with the delivery of foreign
policy—aid agencies, militaries, foreign ministries—were designed for a different age.
The first globalization ended in 1914 with two world wars and an intervening global depression. It
failed because states' shared assumptions pushed them towards fragmentation rather than
cooperation, mutual incomprehension instead of shared awareness. An epoch that seemed to be
characterized by interdependence and common interests ended in shared disaster.
The second globalization, which has steadily deepened since World War II, could fare better.
Today, all powers profess to profit more from stability than turbulence. The response to the
financial crisis, for example, has been effective, at least in the short term. But dangers remain: in
misunderstandings among the major powers; over competition for resources and emission rights;
in tension over protectionism and exchange rates; and particularly during acute emergencies,
where events can run suddenly beyond control.
To reduce the threat to globalization from systemic challenges, a new doctrine—attuned to an age of global risks—is needed.
As President Obama has recognized, the line between international and domestic policy is now
blurred, with the primacy of national sovereignty increasingly challenged by the reality of common
problems that respect no borders. For most states, at most times, the greatest threats to security
and prosperity are not posed by other states acting alone, but by networks of state and non-state
actors, by the unintended consequences of trans-boundary flows (finance, contraband, technology,
emissions, biological material, weapons, ideas), and by the under-supply of global public goods.
The overarching need is hence to move from a foreign policy paradigm that focuses on a usually
ill-defined conception of the national interest, to one that aims to manage shared risk. Although
agreement will still prove elusive, a risk paradigm provides a basis for cooperation between states
(see box). It emphasizes uncertainty; increases the focus on future challenges; provides a longterm
context to balance immediate interests in acute crisis; and can bind together disparate
structures for cooperation.
At the same time, it pushes governments and international institutions to increase their focus on
long-term stresses, while preparing for acute shocks, and anticipating the deliberate disruption of
systems.
FOUNDATIONS FOR COOPERATION
Bandwidth—increasing the number, nature and content of the relationships
between the constituent parts of the international system.
Aggregation—organizing a broader system into cohesive subgroups, reducing
complexity by clarifying areas of agreement and disagreement.
Foresight—making explicit the bets that states are taking on the future, while
increasing the shadow that the future casts on the present.
Signaling—cutting through complexity in ambiguous environments, while
establishing high-level principles which provide a framework on which cooperation
can be built.
Fairness—bringing competing visions of what is fair to the surface, rather than
obscuring them with technocratic agreements, or tolerating cheating and corruption.
Penalties—graduated sanctions that establish boundaries that are sufficiently
robust to repel free riders.
Sustaining the benefits of globalization will depend on creating an
international order that is more resilient in the face of a range of risks.
Resilient systems are those that can absorb disturbance and reorganize while undergoing change,
so as to retain or enhance effective function, structure, identity and feedbacks.
Resilience forces us to take the idea of failure seriously. It prompts us to plan for sudden and
disruptive changes, while providing a rationale for investing in redundant capacity for emergency
response (for example in humanitarian and peacekeeping systems). It encourages us to focus
above all on the functions delivered by the international system, rather than its organizational form.
And it demands sustained investment in innovation, allowing systems to respond to unfamiliar
challenges such as climate change, fragile states, and biosecurity.
A focus on risk and resilience has profound strategic implications. It will lead governments to
pursue fresh aims internationally, organize in different ways to gain influence, and redirect
resources in line with new priorities. In particular, they must work towards the emergence of shared
operating systems for managing global risks—a task that will involve building shared awareness of
common risks (both domestically and internationally) and then the shared platforms (alliances
between states and with non-state actors) to tackle them.
A retreat from globalization is neither desirable nor possible—despite the
arguments of those who argue for 'localization', a global 'powerdown', or a return to narrow
conceptions of national power. Yet without effective systems for managing risk at a global level, it
will prove impossible to provide prosperity and security for a world of 9 billion people.
The challenge facing globalization can be compared to 'shooting the rapids'. Charting a course
through whitewater, there are many possible paths, but few attractive destinations. It is the river,
not the paddler, that dictates the speed with which the boat moves. There is no opportunity to
pause and rethink strategy, or to reverse direction: it is the capacity to reorganize while undergoing
change that ultimately determines the journey's outcome. Above all, the challenge is a collective
one: the direction of the boat depends on the combined efforts of all those on board.
The task of building a resilient globalization is similar. Much could go wrong. The pace of the
transition will be dictated by the risks themselves, yet governments will only succeed if they are
prepared to take the initiative. Even in the best case, outcomes will be 'messy' and far from perfect.
Results will be determined by governments' ability to act in concert, as well as with networks of
non-state actors.
The aim should not be to balance power between competing states, but to aggregate the efforts of
those willing to aim for the preferred destination, while marginalizing or excluding those who are
not (including those who actively seek to capsize the boat).
A resilient globalization requires fundamental shifts in the paradigm, vision and
analysis that underpins governments' approach to global issues.
On any complex international issue, transformation will be 'sticky' with considerable force needed
to push the system from one equilibrium to another. Yet planning must precede a crisis rather than
follow it, ensuring that shocks lead to constructive reform, rather than losses in resilience.
Those governments that aspire to global leadership also need to develop a new appreciation of
how to influence and organize for change. They must invest in the skills needed to bring together
diverse networks of foreign policy actors—including publics, international organizations and other
non-state actors—in frameworks that allow them to manage global risks.
Governments should take several initial steps to position themselves to shoot the rapids, including:
- Investing in mechanisms that build shared awareness of key risks, using the Intergovernmental
Panel on Climate Change as a model. Policymakers should consider setting up similar bodies
that can provide a locus for strategic conversation on threats and solutions in areas such as
resource scarcity, bio-security, global climate policy (as opposed to science), and international
support for fragile states.
- Increasing the 'bandwidth' of the G20 by investing in stronger Sherpa mechanisms and building
links between the G20 and formal institutions, thereby providing heads of government with
more comprehensive analysis of policy options.
- Looking for opportunities to collaborate, whether in ad-hoc groups that are constructed risk by
risk; in semi-permanent alliances, negotiating blocs and interest groups that bring together
countries who have shared awareness across a range of risks; or in formal architectural
solutions like the EU, ASEAN, WTO or UNFCCC that institutionalize cooperation between
countries.
- Establishing a 'challenge function' within the international system that is charged with exploring
non-financial systemic risks, complementing the work of the Financial Stability Board in the
economic realm. Such an organization would need to be agile, flexible, networked and
relatively independent—organized on similar lines to the US Defense Advanced Research
Projects Agency (DARPA), which is charged with 'preventing surprise' for the United States.
- Changing the organization and delivery of foreign policy. All governments will need to increase
substantially the funding they devote to managing global risks, as part of a marked shift in
emphasis from domestic to global policy. Funding levels should be determined as part of a
fundamental review of the combined instruments of international relations—foreign assistance,
diplomacy, military—that evaluates the contribution of each level to effective risk management.
