January 5, 2011 / 12:30 PM / 8 years ago

Eurasia chief sees leaderless "G-zero" world

LONDON (Reuters) - Forget the G20 as a source of global leadership. Senior political risk analyst Ian Bremmer says the next decade will be that of the “G-zero” — an increasingly rudderless world of growing international tension.

When the Group of 20 emerging and developed nations began holding summits at the height of the financial crisis in 2008, many analysts saw it as a new global governance forum supplanting the Western-dominated G7/G8.

Others saw the rise of a “G2” relationship between China and the United States. But Bremmer, founder and president of risk consultancy Eurasia Group, says such talk misses the point.

“People keep on asking: who is going to be in charge? Is it going to be the U.S., is it China?” he told Reuters in a telephone interview. “No one is going to be in charge. That’s what makes it so dangerous.”

Eurasia Group picked out the “G-zero” world as the leading political risk to markets and corporations in 2011, followed by continuing problems in the euro zone and the rise of cyber security threats fueled by growing international tension.

Rivalries over relative currency strengths, dubbed “currency wars” by some policymakers last year, were an early indicator of this worsening environment, Bremmer said, with trade and global growth likely to suffer as a result.

This economic friction was also making it more difficult to resolve trouble spots such as North Korea.

Bremmer argues the financial crash that followed the 2008 bankruptcy of U.S. investment bank Lehman Brothers effectively concealed the emergence of a “non-polar” world order by bringing temporary — and somewhat illusory — unity at the 2009 London G20 summit. World leaders agreed then on a broad program to stimulate and regulate the global economy.

But that moment has passed. The new emerging powers — most importantly the BRIC countries of Brazil, Russia, India and China — have less aspiration to exercise U.S.-style global responsibility, he said.

Meanwhile, developed powers such as the United States, Japan and European countries are distracted by their own problems in adjusting after the financial crisis.


“We haven’t seen this kind of global environment in most people’s living memory,” he said. “You could say it was the case in the first half of the 20th century — and that was the bloody half. I think that sense of uncertainty is one of the reasons so much money is still being held back on the sidelines by corporates and investors.”

While he saw little imminent risk of armed conflict outside the Korean peninsula, Bremmer said the nature of war appeared to be changing, with dividing lines between economic and national security policy breaking down.

He argued in a book last year entitled “The End of the Free Market” that the rise of state capitalist economies such as China and Russia was a game changer for Western corporates, putting them at a disadvantage if they did not learn to adapt.

State-backed cyber attacks and corporate espionage were early signs of this trend, as were hints of protectionism.

“What you’re seeing is a rolling back of globalization,” he said. “It’s going to be a particularly difficult environment for Western corporates, although there will be first mover advantages for those that adapt.

“Often, they are going to need to find more support from governments — maybe more than one government.”

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