CERAWeek 2014 - The Future of Geopolitics: Turmoil and Transition

Daniel Yergin, IHS Vice Chairman and CERAWeek Conference Chairman, led the Friday morning panel discussion on "The Future of Geopolitics: Turmoil and Transition." Joining him were Angela Stent, Professor, Georgetown University and author of The Limits of Partnership: U.S.-Russian Relations in the Twenty-First Century; Nicholas Eberstadt, Henry Wendt Chair in Political Economy, American Enterprise Institute; Raad Alkadiri, Managing Director, Energy Insight, IHS; and James Clad, Senior Advisor for Asian Affairs, Center for Naval Analysis and former Deputy Assistant Secretary of Defense for Asia Pacific Affairs. The discussion focused on the Middle East, where turmoil has existed for some years; Ukraine, a site of recent upheaval; and East Asia, where tensions are high over South China Sea border disputes and North Korea's nuclear proliferation.

Kicking off the discussion on Ukraine, Dr. Stent attributed the recent turmoil there to a weak governing structure. Russia has taken advantage of the situation particularly because President Vladimir Putin has never viewed Ukraine as a "real country," she said. Dr. Stent pointed out that even if Crimea votes for independence, most countries will not recognize it. She noted that the US and European reactions to the crisis have been different because of Europe's energy dependence on Russia. She also identified Germany as a key to helping resolve this issue. Dr. Stent dismissed the idea of a new Cold War, since an ideological divide no longer exists. She added that Russia and the United States no longer have nuclear weapons pointed at one another, and most importantly Russia is now part of the global economy, which was not the case before.

Dr. Eberstadt offered demographic data to support this argument, noting that Russia's international trade is small relative to its size; life expectancy there is worse than in Haiti; and despite having a higher proportion of university-educated people, Russia's economic output is expected to be lower in the future.

Mr. Alkadiri began the Middle East discussion with Iran, where, he said, chances are better than ever for the lifting of sanctions. He noted that the United States needs Iran to be part of the international community, and Iran has internal drivers to deliver results to the voting constituency. Mr. Alkadiri expressed concern over Iraq, saying that the country is weaker than it was before former president Saddam Hussein's regime was toppled and that the country could go the way of Syria. Asked about bright spots three years after the Arab Spring, Mr. Alkadiri described North Africa generally and how monarchies in the Gulf are sturdier than many people thought.

Speaking of the Middle East in general terms, Dr. Eberstadt described a quiet revolution taking place. Falling birth rates (rapidly moving toward subreplacement levels), a flight from marriage, an aging population, and increasing numbers of women pursuing higher education will have implications for economic output, immigration, and society as a whole, with a mismatch between the old patriarchal system and the new demographic reality.

Turning to East Asia, Mr. Clad focusing on China's role in the region and globally. He said that although China believes the United States is turning neighboring countries into an anti-China alliance, sentiments toward China are largely due to the country's own behavior. Mr. Clad does not believe there will be war over the South China Sea border disputes and views North Korea's nuclear ambition as the most disturbing development in East Asia, as the country is slowly and methodically preparing for war with the United States on the Korean peninsula in hopes of eroding US alliances in the region. He expressed hope that China's economic interests will prevail in the response to North Korea, because a war in that region would be highly disruptive to trade. Following a question about China as a leading power, Mr. Clad said that a country's wealth does not necessarily translate into power.

Dr. Eberstadt added a list of challenges that China will face, including a shrinking labor force, an aging population, the collapse of family structure, and possible strife between citizens of coastal cities and peasant workers-essentially illegal immigrants in their own country-brought to urban centers to work in factories.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.