- The Washington Times - Wednesday, November 19, 2008

The top U.S. intelligence panel this week is expected to issue a snapshot of the world in 2025, in a report that predicts fading American economic and military dominance and warns of a nuclear arms race in the Middle East.

The predictions come from the National Intelligence Council (NIC), part of Director of National Intelligence Michael McConnell’s office.

The NIC report, a draft copy of which is titled “Global Trends 2025: A Transformed World,” is slated for release as early as Thursday.

The report also predicts “a unified Korea” is likely by then, and that China will be the world’s second-largest economy and a major military power.

“The United States will remain the single most powerful country, although less dominant,” according to a “working draft” of the document obtained by The Washington Times. “Shrinking economic and military capabilities may force the U.S. into a difficult set of tradeoffs between domestic and foreign-policy priorities.”

A senior intelligence official said some details have changed in the final report, but “the thrust is the same.”

The draft says:

“The next 20 years of transition toward a new international system are fraught with risks, such as a nuclear arms race in the Middle East and possible interstate conflicts over resources.”

“We see a unified Korea as likely by 2025 and assess the peninsula will probably be denuclearized, either via ongoing diplomacy or as a necessary condition for international acceptance of and cooperation with a needy new Korea.”

Thomas Fingar, deputy director of national intelligence for analysis and chairman of the NIC, said Tuesday that the report “should not be viewed as a prediction.” Even “projection” is not entirely correct, he said, though he used that word several times during a luncheon at the Washington Institute for Near East Policy.

“It’s a stimulative document,” he said, adding that its release was meant to coincide with the transition to the administration of President-elect [Barack Obama], before policymakers get “consumed by events.”

Mr. Fingar declined to discuss details of the report until its official release, but he said its preparation took about 18 months and “engaged hundreds of people around the world in solicitation of ideas.”

The NIC’s last such report, issued four years ago, sought to look at the world in 2020.

One major difference between the two projections is that the new report for the first time makes the “assumption of a multipolar future.”

In addition to China, India and Russia, “Indonesia, Turkey and a post-clerically run Iran - states that are predominantly Islamic, but which fall outside the Arab core - appear well-suited for growing international roles,” it says.

A second major change from the previous report involves energy. The 2004 text predicts energy supplies “in the ground” are considered “sufficient to meet global demand.”

In contrast, the latest NIC report “sees the world in the midst of a transition to cleaner fuels.”

It says that an energy transition — from fossil fuels to alternative sources — is inevitable, and “the only questions are when and how abruptly or smoothly such a transition occurs.”

“We believe the most likely occurrence by 2025 is a technological breakthrough that will provide an alternative to oil and natural gas, but with implementation lagging because of the necessary infrastructure costs and need for longer replacement time,” the draft says.

Saudi Arabia, it adds, “will absorb the biggest shock” created by the decreased need for oil and gas, “as its leaders will be forced to tighten up on the costs of the royal establishment.”

In Iran, it projects that a drop in oil and gas prices resulting from alternative fuels “will undermine any populist economic policies” and that the “pressure for economic reform will increase, potentially putting pressure on the clerical governing elite to loosen its grip.”

On the demographic front, the report cites recent projections that the world’s population will grow by about 1.2 billion between 2009 and 2025 — from 6.8 billion to about 8 billion people. It says that India’s population will “overtake China’s around 2025.”

“If current trends generally persist, by 2025 China will have the world’s second-largest economy and will be a leading military power,” it says. “At its current growth rate, Russia is on a path … to become the world’s fifth-largest economy in 20 years, and the oil boom could catapult it there by 2017.”

The report envisions widespread appeal of “state capitalism, a loose term to describe a system of economic management that gives a prominent role of the state.”

“Rather than emulate Western models of political and economic development, more countries may be attracted to Russia’s and China’s alternative development models,” it says.

It warns that the U.S. dollar “could lose its status as an unparalleled global reserve currency and become a first among equals in a market basket of currencies, forcing the U.S. to consider more carefully how the conduct of its foreign policy affects the dollar.”

Mr. Fingar said that almost nothing in the forthcoming report is inevitable. He urged policymakers to ask themselves, “What do I have to do now to keep things on a positive trajectory?”

Leaders can “shape events,” he said, and “the future is subject to influence.”

Asked about the future of terrorism, which is not addressed in great detail in the report, Mr. Fingar said that al Qaeda’s ideology has a “waning appeal.” However, the draft says that terrorism is “unlikely to disappear by 2025.”

The text also says that conflicts over resources could re-emerge, because “perceptions of energy scarcity will drive countries to take actions to assure their future access to energy supplies.”

“In the worst case, this could result in interstate conflicts if government leaders deem assured access to energy resources, for example, to be essential for maintaining domestic stability and the survival of their regimes,” it says.

Barbara Slavin contributed to this article.

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