The world in the next five years: A dystopian view

These are uncertain times. Whether it’s the anti-globalization backlash in the US, or the probable break-up of the European Union (EU), or, closer home, the increase in terrorist activity in Pakistan, we’re badly in need of a crystal ball that will tell us how these disturbing trends pan out.

And what better crystal ball than the one used by the Director of National Intelligence of the US.

Last month, the US National Intelligence Council, which says it “supports the Director of National Intelligence in his role as head of the Intelligence Community (IC) and is the IC’s centre for long-term strategic analysis”, brought out a report, Global Trends, Paradox of Progress, which maps trends in the world over the next five years and also over the next 20 years.

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This is probably the best forecast that money can buy, given the resources that American intelligence agencies command.

Since forecasting how things play out over 20 years is a joke, let’s look at the report of the next five years, which has better odds of getting at least some predictions right.

The picture painted by the report is one of unrelieved doom and gloom. It doesn’t beat about the bush, it doesn’t mince its words. Right up front, it says, “The next five years will see rising tensions within and between countries.”

Global economic growth will slow, making life difficult for governments, who will come under increased pressure to deliver jobs and welfare.

Governance will become more difficult. Real wages have been stagnant in the West, and this will lead to increased populism and dissatisfaction with globalization.

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Both the US and Europe will turn inward. Stresses in societies will increase as they fragment along religious and cultural lines, aided and abetted by the echo chambers of social media.

Geopolitical risks will rise, as ambitious new powers such as China and Russia seek to expand their presence.

Non-traditional forms of warfare, such as cyber-warfare and terrorism, will gain prominence. Environmental stress will increase.

The report continues with this litany of woes.

One of the reasons for the doom and gloom, from the American viewpoint, is the demise of Pax Americana and the emergence of assertive new power centres which are not enamoured of democracy.

The old rules of the game are being rewritten.

What can the US do about it?

The report’s answer is revealing: “It will be tempting to impose order on this apparent chaos, but that ultimately would be too costly in the short run and would fail in the long. Dominating empowered, proliferating actors in multiple domains would require unacceptable resources in an era of slow growth, fiscal limits, and debt burdens.”

Simply put, the US can’t do anything about it.

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What does the report say about India?

India will be the world’s fastest growing economy in the next five years. However, “internal tensions over inequality and religion will complicate its expansion”.

More worryingly, it says that Pakistan, unable to compete in economic growth with India, will increasingly turn to “asymmetric means”.

Towards that end, it will seek to enhance its nuclear arsenal and delivery capabilities, using “battlefield nuclear weapons” and sea-based options.

As if that isn’t enough, “Violent extremism, terrorism, and instability will continue to hang over Afghanistan, Pakistan, and the region’s fragile communal relations”.

The report says that populism and sectarianism will intensify if Bangladesh, India, and Pakistan fail to provide employment and education for growing urban populations and officials continue to govern principally through identity politics.

It quotes an estimate that India alone will need to create as many as 10 million jobs per year in the coming decades to accommodate people of working age in the labour force.

Increasing urbanization will mean that providing services for burgeoning city populations will be a huge challenge for resource-strapped governments in South Asia, and that may “create new social, political, environmental, and health vulnerabilities”. Already, more than 20 cities in India alone have air quality worse than Beijing’s.

And, finally, the report warns, “The perceived threat of terrorism and the idea that Hindus are losing their identity in their homeland have contributed to the growing support for Hindutva, sometimes with violent manifestations and terrorism. India’s largest political party, the Bharatiya Janata Party, increasingly is leading the government to incorporate Hindutva into policy.” It says that this could increase social tensions in the region.

This analysis by the US intelligence community is, of course, not the last word.

The report itself says that its opinions are not cast in stone and good policies could change these dire predictions.

Also, it was US intelligence that thought Saddam Hussein had weapons of mass destruction; so, they are far from infallible.

While many of these predictions are eminently plausible and are an extension of current trends, few people are buying into the doom and gloom.

You only have to look at the global stock markets to see that there’s still a lot of optimism around.

Also, the report says that India’s will be the fastest growing economy in the world in the next five years; so that alone should support investment in this country.

The value of the report, however, lies in it being a wake-up call.

Its message is that the world is now a more uncertain and dangerous place, which makes pursuing the right policies all the more important.

For India, the lesson is that the leadership’s focus must be on providing jobs for the masses and improving the delivery of services to them, while at the same time doing all it can to ensure peace, including communal peace, in the region.

It’s a very tall order.

Manas Chakravarty looks at trends and issues in the financial markets. Respond to this column at manas.c@livemint.com.

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