key: cord-0859436-b4tvujv0 authors: Dynkin, A. A. title: International Turbulence and Russia date: 2020-06-14 journal: Her Russ Acad Sci DOI: 10.1134/s101933162002001x sha: cdfb24834093da897673e1b8fb6aa529a782bcbe doc_id: 859436 cord_uid: b4tvujv0 Using a multidisciplinary approach, this report analyzes the current transformation of the world-order architecture. It is noted that the speed and depth of this transformation is unprecedented for peacetime over the past 200 years. One of the most important indicators of turbulence is a certain deglobalization of the world economy. A study of the technological, social, economic, and political variables of social change has revealed that the traditional (for developed countries) social contract between government, business, and civil society has come to a crisis. This social contract has been in effect for more than half a century, since the times before globalization, the times of an industrial and bipolar world. Its inconsistency with modern realities, coupled with the inability of the old political center to offer convincing approaches to its modernization, has polarized societies and weakened social cohesion in the developed part of the world. As a result, populist and isolationist political forces have come to power. It is these forces that have started the dismantling of the existing system of global governance and its norms and institutions. The main contradiction of the current transformation in the world order is an attempt to bring back the polycentric world to a unipolar architecture with the dominance of the United States. The most likely scenario for resolving this contradiction is to create a new bipolarity. The author of the report expresses his views on the possible outlines of Russia’s foreign policy, which would enable the country to adapt to the bipolarity of the 21st century and to a new role as a balance-keeper. A new design of global architecture is proposed, which is based on multilateral responsible leadership. The world-order architecture that had existed for most of the second half of the twentieth century, relying on the economic and military power of states, remained steadily bipolar; i.e., it was the Soviet Union versus the United States, and their allies. The collapse of the world socialist system in Central and Eastern Europe demolished this bipolarity. The period 1990-2008 is conventionally called a "unipolar moment," with the dominance of the United States. For the past decade-plus, after the global crisis of 2008, the world has become polycentric, or multipolar. The reason is the rise of China and India and the return of Russia to the ranks of great powers. These events could not but affect the transformation of the fundamental pillars and institutions of the world order that had been established in the post-war period. However, in order to understand the underlying causes of the above events, one should go beyond political science interpretations. The political science perspective requires an in-depth multidisciplinary approach including an analysis of the technological, social, and economic variables of social development. This interdisciplinary analysis sets a more reliable framework to formulate and solve analytical and forecasting problems. This analysis is especially helpful for the study of the causes, drivers, duration, and possible consequences and threats of such a multifaceted phenomenon as the current transformation of the worldorder architecture and its norms and institutions. One of the central signs of transformation of the world-order is manifested in another inhibition of globalization in the early teens of the 21st century (Fig. 1) . Indeed, over the past 200 years, the growth of international trade outpaced that of the global GDP in periods of stable world-order architecture. These events led to a radical revision of the entire postwar US foreign economic strategy. This strategy had been designed around the maximum liberalization of foreign trade and investment regimes in the interests of global expansion of US capital. The United States set minimum customs tariffs, forcing partners to retaliate, in order to open up their markets. For as long as the power of the US economy, as well as its technological leadership, was not called into question, this strategy had worked. At one point, however, companies from China, Japan, the European Union, and other countries built up capital and competencies and launched the transition from imitating to pioneering technological innovations and, apparently, began winning the competition not only in their domestic markets but in foreign ones too, including the US domestic market-all these developments revealed the need to redefine the traditional approaches. The Trump administration abandoned the liberal strategy in favor of tough protectionism with a focus on intellectual property, state subsidies, and symmetry of other, nontariff regulations. Political pressure is exerted to distort the established rules of market behavior and break the standards and rules of competition in world markets. Trump attempts to rewrite the rules of globalization by force ("America First") on a transactional basis and in almost all directions. He has achieved this goal with Canada and Mexico (NAFTA) and will do so, in the near future, with the United Kingdom. Pressure is increasing on France and the European Union as a whole. The administration of the 45th US president convinced Brazil to abandon the status of a developing country. The first phase of the decrease in the US trade war with China has begun, which was most likely tactical, aiming to avoid a world recession until November 2020. However, even if it works, the weighted average rate of US customs tariffs for goods from China in 2020 will be almost twice the level of tariffs in 2015, i.e., before the start of the trade war. Extraterritorial efforts are intensifying to impose US regulatory principles and technological standards under the pretext of national security (blocking the Chinese company Huawei from the 5G network and abandonment of Chinese civilian drones). This behavior is an attempt to take leadership in the digital infrastructure of globalization. Moreover, off-market, politically motivated competition is increasing in the global energy markets under the same pretext (sanctions against Nord Stream-2 and an attempt to block new Russian oil and gas projects in the Arctic). These extremely dramatic developments of the current recession in the postwar globalization wave demonstrate the search for a "new normality," a break in the evolutionary pattern of world development. In what follows, I attempt to assess the risks of the current transformation from the technological, social, economic, and political science perspectives. AND THE WORLD ORDER Digital economy. On the threshold of the third decade of the 21st century, the world has become digital, networked, and urbanized. As of January 2019, out of the 7.6 billion of the global population, 67% used mobile phones; 57% used the Internet; and 45% actively used social networks. In addition, 56% live in cities [1]. Two countries have become leaders of digital technology: the United States and China. It is estimated that, in each of these countries, the digital economy is 6.9-8% and 4-6% of GDP, respectively [2] . This economy creates the so-called disruptive innovations (Table 1) . These countries' corporations support digital platforms, which carry out the bulk of online trading in goods; financial instruments; and intangible content and services, including media and entertainment (cloud data and computing, aggregators of traditional services). Thus, a new globalization infrastructure is developing, which presents a difficult object for statistical accounting and regulatory impact. Corporations that are leaders in the digital economy have mastered individually targeted advertising techniques and campaign PR technologies. Algorithms, artificial intelligence, and big data affect consumer and electoral preferences and thereby stylize and impose demand and modify the political process. The digital economy also changes the labor market and the demand in this market. As of the beginning of 2019, 40 million developers were registered at the Github global Internet software development platform alone, and 2.1 million companies used their services [3] . The platform is free for open source projects. There are dozens of large and hundreds of smaller Internet platforms like Github. The economy of digital platforms, or the gig economy, works 24/7/365 and has low entry barriers. Econ-omies of scale, comprehensiveness, and global coverage give these platforms high competitive advantages. This alternative global labor market destroys traditional markets and the established social safety nets. At the same time, it opens up opportunities for flexible, autonomous employment, especially in developing countries. According to surveys, in China, 12% of those working under contracts via digital platforms consider this as permanent employment, and another 33%, as secondary employment. The corresponding figures are, respectively, 8 and 31% in India and 4 and 10% in the United Sates [3]. Both people with unique competencies and those with average qualifications can likewise become contracted as digital freelancers. For employers, the platforms optimize the search for employees and change the principles of corporate governance. Employment under temporary contracts requires in employees such new qualities as quick adaptability; flexible cooperation capabilities; and the skills of using advanced intelligence, i.e., artificial intelligence and computer robots. The economy of digital platforms, as a form of knowledge economy, inevitably polarizes revenues. In the agrarian economy, individual labor productivity differed by a factor of 2-3; in the industrial economy, this gap rose to 5-6. In the knowledge economy, this difference may reach orders of magnitude, creating a huge pay gap. These processes erode the middle class, traditional in the industrial and service economies, which has served as the backbone of political stability in developed countries. Dispersed employment blocks traditional state and union labor protection instruments. This is why centrist political parties are losing their foothold. Energy sector. New technologies, climate change, and environmental restrictions cause major changes in the energy sector. Hydraulic fracturing and horizontal drilling have made the United States a leader in crude oil production, inducing a change in geopolitical [4] . At that time, it provoked discussions, but today everyone is beginning to accept it. Since then, the annually updated IMEMO long-term forecasts have confirmed the high probability of a peak in global oil demand in the mid-2030s. In the scenario of increased promotion of new renewable energy sources (NRES) and electric vehicles, the peak of global oil demand may be reached in the early 2030s. Low oil prices will slow down the promotion of electric vehicles and NRES, which will postpone the global peak in oil demand. According to the CNPC forecast of 2019 [5] , the Chinese economy may reach a peak in oil demand in 2030 and in gasoline demand as early as in 2025. China is a leader in the production and consumption of electric vehicles. Over six months of 2019, the sales of electric vehicles here reached 650000, showing an increase of 67%, compared with the same period in 2018. In September 2019, Russia's Ministry of Energy recognized the risk of a peak in global oil demand in the updated draft of the Energy Strategy of Russia until 2035 [6] . This describes the background against which countries with large hydrocarbon reserves have engaged into a race for their accelerated monetization. This race is spurred by expectations that investors may become disinterested in investing in the oil and gas business. It is in this vein that we should consider the recent record-breaking IPO of Saudi Aramco ($25.6 billion), a long-pondered decision (four years after the announcement) of Mohammed bin Salman, the Crown Prince of Saudi Arabia, in the hope of diversifying the kingdom's economy. The trends in the digital economy and energy sector, the two major sectors of the global economy, exert a multivector impact on international relations. The most recent global financial and economic crisis of 2008-2009 has remained in history with the distinctive mark "Made in the United States." This was due to grave regulatory errors, which may have been committed not without a motive. The crisis revealed deep underlying imbalances. The main one was the exhaustion of the liberal social contract concluded between the government, business, and civil society in the early 1960s. This contract was "signed" before globalization, in a nondigital, industrial, bipolar world. That world had faced neither mass migration nor climate change nor global competition for investment and human capital. The essence of this contract was simple-each subsequent generation had a better life and broader opportunities than the previous one. Children became more successful than their parents. The collapse of the world socialist system strengthened confidence in the effectiveness of the old social contract and weakened the efforts to maintain a socially acceptable distribution of public goods. A feeling arose that liberal-market democracy was universally suited for all the regions throughout the world. This provoked a geopolitical expansion, first in Eastern Europe and then in the Middle East. The British politician David Miliband aptly called this period the age of impunity for the West [7] . Corporate elites focused on increasing shareholder value to the detriment of social responsibility. The for- (1993) (1994) (1995) (1996) (1997) admits in 2020: "The truth is, American corporations are sacrificing workers and communities as never before, in order to further boost record profits and unprecedented CEO pay" [8] . The political establishment joined the race. Edward Luce, a columnist of Financial Times, writes, "Mr. Biden (when he was a senator in 1973-2009) helped to turn Delaware, his home state, into the most popular domicile for anonymously-owned companies." Further he writes, "America is the largest dirty money haven in the world" [9] . According to the World Bank, in 2017, the United States had ten times more shell companies than the next 41 jurisdictions combined [9] . After 2008, however, something went wrong at this "feast of life." The decline in the growth rates (Fig. 3) or stagnation of the incomes of the middle-class; the sharp polarization of these incomes, especially in the United States; and the formation of regions with stagnant poverty reached critical levels 1 (Fig. 4 ). All these processes occurred amid a rise in the cost of college education (Fig. 5 ). As far back as in 2003, the education debt amounted to 3% of household debts, but in 2018 it came to the second position at 11% [11] . For the middle class, the costs of college education for their children is an extremely sensitive parameter. Opinion polls confirm the economic analysis. As follows from the data in Fig. 6 , the optimists live in the BRICS countries. In the United States, the share of those who believe that their children's lives will be either worse or not better than their own is 50%. In France, this opinion is shared by 65% of the respondents; in Germany, by 75%. A British barrister Hashi Mohamed argues that "the so-called 'millennial generation' face challenges that make them the first generation to do worse than their parents" [12] . As for American society, it is becoming increasingly fatigued of the endless, almost two-decade-long Middle Eastern wars. Europe has been faced, for a decade, with low growth rates and double-digit youth unemployment. The migration blow, which came as a result of the reckless military operations in the Middle East, added pungency to these trends. The old political elite failed to offer modernization changes to the traditional social contract. The center-left parties-the French socialists, the German social democrats, and now the British Labor Party-are rapidly losing their electorate. The developed countries are faced with an end of social cohesion-divided societies have emerged. Against this background, populist political forces, preaching the slogans of protectionism, isolationism, and national revival and attacking sharply the old political center, have won the voters. Donald Trump, 1 Nicholas Kristof, a Pulitzer Prize laureate, wrote that a quarter of his schoolmates in Yamhill County (Oregon), which had flourished for most of the 20th century but grew empty when jobs disappeared, had died from drugs and alcohol, or committed suicide, or died in reckless accidents [10] . Previously, such a large-scale revision of the world order, conducted in such a short time, was typical only of postwar periods. The current US administration does not hide its intention to destroy the polycentric world order. It seems that the 45th president stands generally against any architecture whatsoever and in favor of political and economic Darwinism and for the most severe geopolitical competition. It seems that he follows the principle that "it was in the zoo that everyone had to live by the rules, but now when we are in the jungle, the United States is the strongest beast." America is willing to pursue its national interests, fight or negotiate with any competitors without any particular consideration to their ideology. "We will defend the obedient but according to their contribution," be it NATO countries, Israel, or Japan. What are the preliminary economic results of trumponomics? The IMF predicts [15] that the average annual growth rate in 2016-2020 will be 3.6% in the world, 2.1% in developed countries, and 2.5% in the United States. Thus, lagging behind the world growth rate, the US economy is not only ahead of other developed economies but also demonstrates a higher growth rate than during Obama's second presidential term (2.3%) [15] . The stock market growth (S&P 500 index) in 2019 set a record for the 21st century. Meanwhile, unemployment also remains at a record low (since 1969) (3.5%, December 2019) [16] . Deep recession of the American economy due to Covid-19 pandemic already broke these trends in March 2020: US GDP is expected to fall by 5.9%. On May 1 the unenployment was 30 million people (12.4%), and the stock market dropped to the level of 1987. However, one cannot ignore the delayed dangerous trends and symptoms. Trump has increased, at a rate twice as fast as the GDP growth, the federal debt by $4.7 trillion by 2029, mainly due to tax cuts and increased federal spending, including on defense. Will global financial markets continue to absorb the increase of the Federal Treasury's debt? This question remains open. The gap has also grown significantly between the rate of capitalization of the US business and the total profit of US companies. This kind of imbalance is usually eliminated by an economic crisis. When will it happen? Will the coroonavirus pandemic trigger a global recession or will it be a deep but short correction of the markets? Facts suggest that the likelihood of a global recession in 2020-2021 remains high. The level of uncertainty is definitely on the rise. However, the reasons are political rather than economic: the trade war between the United States and China, Brexit, the killing of one of the Iranian leaders, and the blockade of this country, and the growing contradictions between the United States and the European Union. This is what is new in this situation. The likelihood remains of a global recession in 2020-2021, which compels one to keep a countercyclical "safety bag" of macrofinancial stability. Meanwhile, the lessons learned during the Soviet era force one to maintain focus on nonmilitary security parameters too. And these parameters are now approaching their limits. Figure 7 shows a calculation for 15 countries that are the world leaders in defense spending. The ratio is given between federal social spending on health and education (without science and culture) and on defense. The simultaneous sanctions and the new arms race may create a severe multiplier effect on the economy and living standards. The IMEMO analysis of the anti-Iranian sanctions demonstrates that they have a cumulative negative effect over a 10-year horizon. In the case of Russia, their effect may manifest itself by 2024. Challenge to strategic stability. The reduction in confidence-building measures in the event of the nonrenewal of START-3 (the deadline is February 5, 2021) will cause a loss of transparency and predictability. During the period of START-3, the parties conducted 313 inspections and about 18 000 information exchanges [17] . No national intelligence will compensate for this loss. Moreover, the elimination of strate-gic offensive arms will serve as an invitation to expand the nuclear club to 14 countries in the foreseeable future. The "nuclear nine" may be expanded to include Japan, South Korea, Iran, Saudi Arabia, and Turkey. And the next echelon of those willing to join is coming into view. In the case of deployment of medium-range ballistic missiles in Poland, Romania, and even the Baltic countries, they will be able to reach the Urals or even further. Hypersonic warheads for the new Pershing-2 counterparts with short flying times and maneuvering trajectories and the new ground-based cruise missiles may partially weaken the effectiveness of the Russian counter-strike concept. This will force us (a) to increase at high cost the survivability of the strike nuclear forces and their information systems; (b) to deploy similar medium-range systems to cover the United States territory; and (c) adopt the preemptive nuclear strike concept. If the United States also adopts the preemptive strike strategy (and the 2018 Nuclear Posture Review contains hints at it), then the threshold for using nuclear weapons will drop sharply. Meanwhile, the destruction of the mechanism created by the Intermediate-Range Nuclear Forces Treaty and the risk of deploying US missiles in Europe will require retaliatory measures, which will cause a new phase in the deterioration of our relations with the EU countries. The US/NATO missile defense projects in Eastern European countries aim at the same thing. As concerns the expansion of the gap between Russia and the European Union, here the interests of the United States, Poland, and the Baltic countries seem to coincide strangely and for various reasons. Russia influences and, simultaneously, is adapting both to the change in the balance of power in the world and to technological challenges, i.e., the two critical factors of the current transformation of the world order. Its central contradiction lies with the United States' attempt to bring the polycentric world-order architecture back to unipolarity. Moreover, Trump stands for America's primacy as such, not for responsible leadership, which involves a burden and, naturally, costs. The most likely way out of this contradiction is the formation of a new bipolarity of the 21st century: the United States and Japan + NATO versus Russia and China + CSTO countries. The IMEMO Strategic Forecast until 2035 [18] considered this scenario as one of four. Today, when five years have passed, I rate its probability above 50%. The same point of view was recently expressed by Mathew J. Burrows, a reputable American forecaster, in Global Risks 2035, published in September 2019 (Fig. 8) . In fact, we already live in a situation of mild bipolarity. Its formula for relations with China is "never against each other but not always together." Risks and challenges of the new bipolarity. On the left-hand part of the equation: the United States, Japan + NATO versus Russia, China + CSTO countries, the leader is obvious. It is reinforced, inter alia, by the 75-year-long presence of the US armed forces on the territory of two of its major allies: Japan and the Federal Republic of Germany. As to the right-hand side of the equation, the leadership here is controversial. In the medium term, China will increase its current GDP gap of the factor of eight from Russia and its technological leadership. However, Russia maintains world primacy in the majority of defense technologies, e.g., in air defense and missile defense and in the early-warning system, with which, as Vladimir Putin said in September 2019, Russia will help China. By the way, all the Chinese media, as if on command, missed out on this important piece of information. Beijing cannot but take into account that there are only two countries capable of destroying in 30 minutes not only each other but China as well. This consideration will set a limit on the trend towards China's dominance. However, this constraint will remain effective only until China reaches strategic parity with Russia and the United States, or until a strategic alliance is concluded between Russia and China, that is, until the soft bipolarity transforms into a hard one. I think that Beijing will be striving for this, especially by the middle of this century, if China continues to move towards global leadership, the goal proclaimed at the 19th Congress of the Communist Party of China (CPC) in 2017. Moreover, the United States' pursuit of a double containment policy pushes Moscow and Beijing into a strategic alliance. Let me remind you that there are 81 rounds of US sanctions against us. What are the Chinese interpretations of the new bipolarity scenario? It was noted at the conference held in Beijing at the end of 2019 by the influential economics magazine Caijing that tensions between China and the United States would remain in 2020 Possible outlines of Russia's foreign policy in the 2020s. In the event of a growing bipolar trend, Washington will seek to pull into its orbit countries such as Brazil, South Africa, South Korea, Indonesia, and Mexico. Naturally, they will try to keep their place out of each orbit. It seems that Russia should intensify its relations with them, and here Beijing is a natural ally. But the key issue is which side is India on? For the second track, we have been conducting tripartite consultations in the IMEMO-Observer Foundation-Woodrow Wilson Center format for several years. As one Indian participant of these consultations wittily retorted to the Americans, "if you forbid us to buy Russian weapons, the Indian political class will grow schizophrenic." However, Americans are stepping up their efforts to reformat both the expert and political communities of India. Their narrative, which rings quite nicely with Indians, says that Russia is a satellite of China. Our foreign policy planning cannot go past these US efforts. Obviously, neither Russia nor the European Union intends to take a backseat in the bipolar world. It seems Russia has a new role to play-that of a leading power brocker. A policy model with a "changing geometry of partnerships" has been tested successfully in the Middle East, in Syria and Libya. This multivector approach is gaining acceptance. Surveys of 20000 experts show that at the end of 2019, like at the end of 2018, Russia ranked second in the aggregate power and international influence rankings [21] . This long-term practice of interacting with a wide range of international partners should be fully supported. It is this approach that can keep the polycentric world from sliding into a hard bipolarity. I believe that our relations with the Euro-Atlantic countries should emphasize, as much as possible, our rapprochement with China, while sending signals to Beijing that Russia's interests should be properly observed, at least in post-Soviet countries. Meanwhile, we should work on searching for compromises and solutions, primarily with the leading EU states. * * * The leading centers of power have neither a wellformed understanding nor a clear view of a desirable future world order. The concepts like "Make America Great Again" and "A community of shared future for mankind," or in other words "One Belt, One Way" have a distinct focus on narrow national interests. It seems that all the leading players, Russia including, seek to defend their own interests yet avoid playing a responsible global role. This kind of ambition and objective preparedness still exists, perhaps, in a part of the US establishment. However, the US elite is deeply divided today. Russia is able to offer this design because of the variety of already existing national political and social models. It is known that diversity reduces entropy. The ideological unification of countries as the world socialist system or the liberal world order has failed. One needs not become disappointed in their ideals but cannot but admit that heterogeneity has proved once again to be more stable than homogeneity. In the meantime, polycentrism without multilateralism, i.e., without global governance, violates the rules of world order. The world has become more dangerous both from military and political and from financial, economic, technological, and climatic perspectives. It is no wonder that the Bulletin of Atomic Scientists moved the Doomsday clock forward by 20 seconds [22]. Figure 9 clearly shows a sharp increase in internationalized intrastate conflicts in the 21st century, 75 years after the end of World War II. This, of course, necessitates an effort to reduce the current risks of destabilization. In the longer run, the key goal is to find a new design for world order. I propose the formula of multilateral responsible leadership. Below I list its constants. • Universal application of the principles of international law and rejection of double standards in the choice of foreign policy priorities. • Abandonment of strategies to export one's own development models into third countries. Conflicts between states and nonrecognized entities • Ensuring the right to disseminate truthful information and recognizing information wars as a dangerous prelude to the escalation of interstate conflicts and violence. From my point of view, this formula looks better that the other realistic scenarios: a new bipolarity, Trump's chaotic jungle, or a China-led unipolarity. These are the outlines of the four world-order scenarios used in the IMEMO's next strategic forecast until 2040. Multilateral responsible leadership does not contradict much the European Union's approach to fostering rule-based multilateralism, which names the United Nations as the cornerstone [23] . The only point that raises objection in this document is the old topic about "responsibility to protect," which has discredited itself in Iraq, Libya, and Syria. Apparently, world development has reached a threshold when it has become imperative to adjust the old institutions and norms and design new ones to ensure inclusive world development. United Nations Conference on Trade and Development (United Nations Forecast of the Development of Fuel and Energy Sectors in the World until 2035 (IMEMO RAN China's crude oil demand seen peaking at 705 mln t around 2030-CNPC research, Reuters Russian Federation's Energy Strategy Project for the Period until 2035 (Revised of The New arrogance of power: Global politics in the age of impunity, Fulbright Lecture Will autocratic leadership styles spill over into business? How money laundering is poisoning American democracy Tightrope: Americans Reaching for Hope Quarterly Report on Household Debt and Credit. 2019:Q2. Released People like us by Hashi Mohamed Review-room at the top? Not now? National Defense Strategy of the US World-Economic-Outlook-October-2019-Global-Manufacturing-Downturn-Rising-Trade-Barriers-48513 START-3 Treaty elimination: Who benefits? World 2035. Global Forecast Beijing orders state offices to replace foreign PCs and software? The author thanks his colleagues from the Primakov Institute of World Economy and International Relations, Russian Academy of Sciences, F.G. Voitolovskii, A.G. Arbatov, I.V. Danilin, V.Yu. Zhuravleva, S.V. Zhukov, G.I. Machavariani, S.V. Utkin, and A.P. Guchanova for discussions and assistance in preparing this report.