HONG KONG – The eighteenth-century German military strategist Carl von
Clausewitz defined war as the continuation of politics by different means, and, like the
ancient Chinese strategist Sun Tzu, believed that securing peace meant preparing for
violent conflict. As the world becomes increasingly tumultuous – apparent in the
revival of military struggle in Ukraine, continued chaos in the Middle East, and rising
tensions in East Asia – such thinking could not be more relevant.
Wars are traditionally fought over territory. But the definition of territory has evolved
to incorporate five domains: land, air, sea, space, and, most recently, cyberspace.
These dimensions of “CLASS war” define the threats facing the world today. The
specific triggers, objectives, and battle lines of such conflicts are likely to be
determined, to varying degrees, by five factors: creed, clan, culture, climate, and
currency. Indeed, these factors are already fueling conflicts around the world.
Religion, or creed, is among history’s most common motives for war, and the twenty-
first century is no exception. Consider the proliferation of jihadist groups, such as the
Islamic State, which continues to seize territory in Iraq and Syria, and Boko Haram,
which has been engaged in a brutal campaign of abductions, bombings, and murder
in Nigeria. There have also been violent clashes between Buddhists and Muslims in
Myanmar and southern Thailand, and between Islamists and Catholics in the
Philippines.
The second factor – clan – is manifested in rising ethnic tensions in Europe, Turkey,
India, and elsewhere, driven by forces like migration and competition for jobs. In
Africa, artificial borders that were drawn by colonial powers are becoming untenable,
as different tribes and ethnic groups attempt to carve out their own territorial spaces.
And the conflict in Ukraine mobilizes the long-simmering frustration felt by ethnic
Russians who were left behind when the Soviet Union collapsed.
The third potential source of conflict consists in the fundamental cultural differences
created by societies’ unique histories and institutional arrangements. Despite
accounting for only one-eighth of the world’s population, the United States and
Europe have long enjoyed economic dominance – accounting for half of global GDP
– and disproportionate international influence. But, as new economic powerhouses
rise, they will increasingly challenge the West, and not just for market share and
resources; they will seek to infuse the global order with their own cultural
understandings and frames of reference.
Of course, competition for resources will also be important, especially as the
consequences of the fourth factor – climate change – manifest themselves. Many
countries and regions are already under severe water stress, which will only intensify
as climate change causes natural disasters and extreme weather events like
droughts to become increasingly common. Likewise, as forests and marine resources
are depleted, competition for food could generate conflict.
This kind of conflict directly contradicts the promise of globalization – namely, that
access to foreign food and energy would enable countries to concentrate on their
comparative advantages. If emerging conflicts and competitive pressures lead to, say,
economic sanctions or the obstruction of key trade routes, the resulting balkanization
of global trade would diminish globalization’s benefits substantially.
Moreover, the social unrest that often accompanies economic strife could cause
countries to fragment into smaller units that fight one another over values or
resources. To some extent, this is already occurring, with Iraq and Syria splintering
into sectarian or tribal units.
The final key risk facing the world concerns currency. Since the global economic
crisis, the expansionary monetary policies that advanced-economy central banks
have pursued have caused large-scale, volatile capital flows across emerging-
economy borders, generating significant instability for these countries and fueling
accusations of “currency wars.”
The extra-territorial use of regulatory and tax powers – particularly by the U.S., which
has the added advantage of issuing the world’s preeminent reserve currency – is
reinforcing the view that currencies can be wielded as weapons. For example, the
U.S. has effectively balkanized global banking by requiring all foreign banks
operating there to become subsidiary companies and requiring international banks
with US-dollar clearing accounts to comply fully with U.S. tax, regulatory, and even, to
some degree, foreign policy (for example, refraining from trading with U.S. enemies).
Hefty fines imposed by U.S. regulators for breaching the rules – notably, the recent
US$8.9 billion settlement by BNP Paribas – are already causing European banks to
re-think their compliance costs and the profitability of operating in the U.S.
Meanwhile, American courts have forced Argentina into another national default.
But perhaps the strongest message is being sent via targeted sanctions on Russia’s
oil, finance, defense, and technology industries, as well as on Russian officials. With
this approach, the U.S. and its allies are sending a clear message to anyone who
may disagree with U.S. policy: avoid using the dollar and dollar-denominated bank
accounts. Some financial activity has already been driven into the shadows, reflected
in the use of Bitcoin and other currencies that are beyond the reach of U.S.
regulators.
A recent example of the disaffected seeking an alternative to U.S. leadership is the
establishment of a New Development Bank and a contingent reserve arrangement by
the BRICS (Brazil, Russia, India, China, and South Africa). The problem for the U.S.
is that, in this case, the disaffected are five of the world’s major emerging economies,
wielding combined resources that exceed those of the Bretton Wood institutions. It is
highly unlikely that BRICS bank transactions will be denominated in US dollars.
In a recent speech, U.S. President Barack Obama declared that the question is not
whether the U.S. will lead, but how it will lead. But, as creed, clan, culture, climate,
and currency cause the world to become increasingly alienated from the U.S.-centric
international order, such declarations may be excessively optimistic. Indeed, in the
coming CLASS war, no one seems quite sure whom to follow.
A version of this article appeared in Project Syndicate, 14 August 2014
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