Pax Americana and the geopolitical interregnum

A survey on, and scenarios for, the future global order.

Europe under the Congress of Vienna, Carl Metzeroth, c1849, Bibliographisches Institut, Hildburghausen, Germany.

In this week’s Not in Dispatches, we want to expand on an idea that underscores much of our work: the concept of a “geopolitical interregnum”.

It’s the macro theme behind all our macro views: that we’re at the end of one stage of globalisation—Pax Americana—and transitioning through a period of flux before we enter the next.

Our chief strategist, Michael Feller, recently sat down with the Political Risk Podcast to discuss this idea in more detail. It’s well worth 30 minutes of your time. But to expand on it at a more tactical level—and to draw on a talk recently given by our CEO Damien Bruckard at the Alternative Investment Management Association in New York—we’ve partnered with our friends at Cygnal, named by the New York Times and FiveThirtyEight as one of the most accurate polling firms in the United States, to ask 1,500 American voters on 9-10 April what they think of the global order now and in the next five years.

More on the survey results below (and contact us if you want more), but first, let’s set out where we have come from and where we might be going.

End of Pax America

Much ink has been spilled about the liberal international order being under strain and in decline.

America has become weaker as other powers, especially China, have risen. The multilateral institutions at the core of this post-1945 rules-based order, from the UN to the World Trade Organization to the IMF, have become ossified and beholden to the increasing divisions between their members (much like the domestic institutions of many democracies). Economic openness is decreasing as the world fragments along geopolitical lines. And, as the US has stepped back from its postwar role as the global policeman, no other nation appears willing or able to fill the void.

Compared to any point during the last 80 or so years — also known as the Long Peace — the US is facing more challenges to its global leadership.

Adversaries, like Russia and China, explicitly talk about reviving a multipolar order. The countries of the so-called Global South are demanding a fairer system. Challengers, like Turkey and India, are engaging with the US on some issues, but are equally happy to run the risk of facing secondary sanctions by doing business with Russia and Iran. And even some of America’s core allies are ignoring its demands in a way unimaginable ten or fifteen years ago. Witness Benjamin Netanyahu’s rejection of Biden’s pleas for restraint over Gaza and Iran.

American voters apparently agree with this summation.

Cygnal’s exclusive questions for Geopolitical Strategy show that while only 12% of Americans are unsure about which country is the most powerful in the world today (56% believe it’s the US, 25% say it’s China), they are much less sure about which country will be the most powerful in five years’ time: only 49% believe it will be America, 25% think it will be China, but almost twice as many (21%) are unsure.

This is especially true in terms of an emerging cohort that Cygnal calls the ‘Ticked-off, Diverse, Young Working Class’.

This group may surprise you. It skews to women. It skews to Millennials. It skews to suburban parents in California and the southwest. And it skewed to Donald Trump in 2020, though not necessarily today. It's self-described as moderate, it’s neither Republican nor Democrat, and it's deeply worried about the economy and inflation. It's also seemingly worried about a decline in US power.

Of this group, only 47% think the US is the most powerful country today and just 38% think it will be the most powerful in five years (30% say China, 22% say they're unsure).

On issues like the war in Gaza, this group aligns with the left (only 20% say Israel's actions are justified), but on Russia the cohort aligns with the right (just 25% think Ukraine will win the war). If there's a base for independent Robert F Kennedy Jr, it's them (at 32% in a full presidential contest versus 9% for Trump and 11% for Biden). And if there’s a living embodiment of an interregnum generation, it’s them.

The last generation

What might be driving this angst? Let’s examine the period during which this cohort came of age.

While it is impossible to pinpoint a precise moment in history when Pax Americana died, the process began around the 2008 financial crisis.

It accelerated when Bashar Al Assad stepped over Obama’s “red line”, by using chemical weapons against civilians in 2013, and it bolted into view with Brexit and the (first) election of Donald Trump. It then became starkly obvious with how countries handled COVID-19. Vladimir Putin’s invasion of Ukraine was the final nail in the coffin, or at least will be if Russia wins (as 46% of American voters believe, according to Cygnal).

And while some may trace the beginning of the interregnum – and the ticked-off generation’s stolen youth – to 9/11 and the wars in the Middle East, in our view it’s been the last 15 years of so that have really marked a transition between one form of world order to another. And for those who have begun their families and careers in this time — which has also been a period of rapid social, economic, and technological change — it’s been the era of the iPhone, social media, and Xi Jinping, not the era of the iPod, Friends, and Britney Spears, that has been the most disconcerting one.

For those a bit younger, the Gen-Zs who may be voting for the first time or have yet to turn 18, the interregnum is likely to continue. And while it’s uncertain what new order will emerge at the end, if history is any guide, the transition may be longer and more violent than one might hope.

Transition lenses

The first major geopolitical transition if the modern era — from the rather anarchic days of feuding Catholic and Protestant estates in Europe to the modern system of international relations — was of a particularly long and bloody sort.

It took almost a century of fighting — in the Eighty Years’ War between Spain and the Dutch, and then the German phase of the Thirty Years’ War that followed — before a peaceful accommodation was found that Europe’s princes could live with.

Between 1644 and 1648, representatives from 96 different entities spent four years in a series of negotiations. What resulted is known as the Peace of Westphalia – a deal that included the then-radical notions of state sovereignty, territorial integrity and religious freedom.

Similarly, the second major geopolitical transition — to the nineteenth-century balance of power system of international relations shaped by spheres of influence — only came about after twenty-five years of war fought by the Austrians, Prussians, Russians and British against revolutionary and Napoleonic France (1792 to 1815).

This period, known as the Concert of Europe, ushered in the long peace known by many in the Anglosphere as Pax Britannica. In some ways, it was a period of globalisation that almost rivals the Pax Americana that’s just come to a close. It was an order that lasted for almost precisely a century until 1914, when the European powers, driven by rival alliances and the rise of nationalism, stumbled into the First World War — an international conflict unprecedented in the slaughter, carnage and destruction it caused.

A third geopolitical interregnum took place over the next two decades in the interwar period of the 1920s and 1930s. Here, there was a gradual shift from the nineteenth-century system of balanced imperial powers to a bipolar order of two, led by the US at one pole and the Soviet Union at the other.

But before we got to Cold War in 1945, the world had to transition through an interregnum of intense ideological and political rivalries between democratic, fascist and communist powers. The leaders of the time had little clue what world order would emerge — a Nazi-led imperial order, a Soviet Union-led communist order, an Anglo-dominated democratic alliance, or some balance of power arrangement between the three competing systems.

Ultimately, the transition from the nineteenth-century Concert of Europe system to the Cold War order was resolved by force, a world war killing some 75 million people, the radical shift from America’s traditional isolationist foreign policy to a full-throated engagement with the world (following Japan’s attack on Pearl Harbor), and the invention and use of nuclear weapons.

The world order that followed, from the end of World War II to the present day was marked by the absence of major wars between the great powers (despite tensions that would occasionally threaten annihilation), the steady march of a globalisation, and the creation of international institutions promoting the “universal” (aka American) values of democracy, human rights and free commerce.

Only once — the ending of the Cold War and the ushering in of the American “unipolar moment” — has a geopolitical transition been quick and peaceful. The Soviet Union collapsed under the weight of its internal contradictions and voluntarily rescinded its global leadership role, leaving only one power, the US, to fill the void. This ‘End of History’ moment was, so far as geopolitical interregna go, a historical anomaly.

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Fast-forward to today, and it is clear we are living in another transition point between eras. Neither at the beginning nor the end of one era, we are in the midst of change. While it is impossible to predict what will follow, four scenarios for the future of world order seem plausible.

Pax Americana redux

One is the return to Pax Americana.

In this world, Western powers return to preeminence, the US regains its confidence, the world listens to it once more, and business returns to the globalisation of the 1990s with the dominant norms of democracy, human rights, and free-market capitalism. In this scenario, the US dollar would continue to reign supreme as the world’s reserve currency, trade agreements would flourish, and the global economy would become ever more interconnected, marked by free trade and minimal protectionist barriers.

Multilateral institutions would be revitalised, international law would be respected, and technological innovation and the digital economy would be driven by Western tech giants, shaping the global digital landscape in accordance with legal and ethical standards set in Washington and Silicon Valley. In such a world, environmental issues would be tackled through international accords, which are not only ambitious but enforced. The spread of democratic governance would lead to a reduction in autocratic regimes. And the international economy would return to greater predictability and stability.

So far, so good, but such a scenario appears unlikely.

American power will naturally wane as other powers — like China and India — become relatively more powerful, assertive, and demanding of an equal say on global governance. Few trends point towards a resurgence of the West, with its poor demographics, rising debt, and slow economic growth. And the American populace — tired of ‘forever wars’, sceptical of foreign entanglements, and wanting its leaders to focus domestically — appears less willing to hold up an international system.

Atlas Shrugged

Cygnal’s polling backs up this analysis.

The majority of Americans (65%) believe the country is headed off on the wrong track. Voters are most concerned with domestic issues, especially inflation and the economy (27%), and effectively shutting the country’s borders to curb illegal immigration (25%).

Further, it appears that the election is very much Donald Trump’s to lose. According to Cygnal’s anslysis, he is now leading by 2 percentage points (47% to Biden’s 45%). And this lead has been steadily growing all year.

Picking up these voter sentiments, both Biden and Trump are also signalling a retreat from active global American leadership.

Historians may view Biden’s mishandled withdrawal from Afghanistan and reluctance to send troops to Ukraine, or the Middle East (or even Haiti) as the end of the era of American foreign entanglements. And a Trump victory in November — with an explicit mandate for a more isolationist, nationalist and transactional approach to foreign policy — would almost certainly hasten the end of Pax Americana, even if Trump’s more muscular foreign policy may ultimately make America more powerful on the traditional metrics of military, diplomatic, and economic heft.

Blade Runner

A second scenario is the emergence of a China-led order, which was last seen — at least in its immeditate region — some time before the end of the Ming dynasty (1368 to 1644).

In this world, the Belt and Road Initiative would expand China’s influence across Asia, Africa and into Europe and Latin America, creating a vast network of dependencies through infrastructure, trade, and digital connectivity. The Renminbi would challenge the US dollar as the world’s reserve currency, altering the dynamics of global finance. China, militarily strong, would be in a position to take Taiwan by force if it so chose, with little resistance from the West. And the international system would be reshaped around Beijing’s interests and values, just as the prior order was shaped around America’s.

A seriously strengthened China, vis-a-vis the US, would lead regional powers to align with Beijing, leading to a shift in military alliances and spheres of influence. And the ‘China Model’ of governance — blending authoritarian control with economic dynamism — would become a template for other nations, especially those disillusioned with the West’s prescription of liberal democracy.

In such a world, digital standards perfected in China would become global standards. The internet would further splinter into spheres of influence. And global institutions would adapt to accommodate China’s leading role, just as new ones — like the BRICS, the Shanghai Cooperation Organization, and the Asian Infrastructure Investment Bank — would be created to reflect the new power dynamics, often sidelining the Western-dominated UN and Bretton Woods organisations, headquartered in Washington and New York.

Hidden dragon

While such a scenario is plausible, a peaceful transition to a Chinese-led order is also unlikely.

China has its own troubles — economic, demographic and political — and even if it didn’t, China simply doesn’t act like it wants to lead the world.

While it sees itself as the Middle Kingdom, will become the biggest economy in the world in nominal terms, and is already a leader in various technologies, China has so far demonstrated no serious intention of being the global policeman in a similar fashion to how the US has kept the peace since 1945. China may want dominance, but it also wants to avoid being overstretched.

History suggests that a China-led order may only come about through winning a war against the US. As the ‘Thucydides Trap’ thesis goes, declining powers tend not to give up primacy voluntarily or without a fight — and the closer China and America become in power, the more likely one will vie for supremacy through force.

The outcome of any war, of course, would be highly uncertain. Cygnal’s polling of American voters bears this out: most believe America would ‘probably’ win a war against China (61%), a minority believe China could win (16%) but — most tellingly — 23% are unsure.

Chinese policymakers may well have similar views, making a war for hegemony a risky proposition. Thus in the absence of an obvious, more peaceful means of transitioning to a China-led order, two other scenarios should be considered.

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Mad Max

Worthy of consideration is a third scenario of global anarchy — or, perhaps more accurately, a global power vacuum caused by disorder — characterised by widespread instability and conflict, with each power centre having control and fighting over ‘badlands’.

In a sense, this would be a longer-term continuation of interregnum (think the Eighty Years War, rather than the six of World War II).

The continued erosion of multilateral institutions would generate a world with no clear leadership, and no cooperative mechanisms to address international crises.

In this imagined world, nationalism and protectionism would keep rising, leading to a breakdown in global trade networks, and a retreat into economic isolationism. Technological warfare and cyber-attacks would become more commonplace, as states and non-state actors exploit the interconnectedness of the digital age to undermine rivals. And environmental degradation would accelerate, as international efforts to combat climate change and preserve biodiversity collapse, leading to a tragedy of the commons writ large: resource wars over water, arable land, and energy sources.

In this chaotic world, failed states and humanitarian crises would proliferate, with mass migrations and refugee flows destabilising entire regions. Global security would be perpetually under threat from terrorism, regional conflicts, and the proliferation of weapons of mass destruction. And, most fundamentally, the risk of war between the major powers would be an ever-present danger, with the world always on the precipice of global conflict.

Anarchy may be plausible.

Some believe World War III may have already begun. Disorder is everywhere and there are so many flashpoints — from Taiwan to the South China Sea to the Middle East — where the great powers could, like their early twentieth-century forebears, sleepwalk into war.

But most likely, in our view, is the emergence of a stabler, multipolar world.

Game of Thrones

The emergence of a truly multipolar world, akin to the nineteenth-century Concert of Powers — with the great powers (the United States, Europe, China, Russia, and India) each having a sphere of influence — may be an unpalatable notion to most Western policymakers.

But there’s safety in numbers and a sturdy table has several legs (not one or two). Indeed, some powers are already acting this way.

Certainly, Russia is with respect to Ukraine, which it manifestly considers to be in its sphere of influence.

China, while it has not yet resorted to military force, also has a sphere of influence mentality with respect to its immediate neighbourhood. France is trying to retain its influence in West Africa. And elsewhere, we are already beginning to see bloc-like operations: the Europeans by and large act in concert; AUKUS is the re-emergence of the Anglosphere; India has become more assertive over the Indian Ocean and its near abroad; China is building a more sophisticated system of influence in its Southeast Asian backyard. In the Middle East, we are seeing a similar development in microcosm, with a shadow contest being played out between Iran, Saudi Arabia, Turkey, and — to a lesser extent — Israel and the UAE.

History suggests that some new, explicit compact would, at some point, have to be drawn up between the major powers for an interregnum to end and for a new and more stable multipolar order to begin. And history also suggests that such terms tend to come into existence only after serious conflict: after all, only once with the dissolution of the Soviet Union has a geopolitical order gone out with a whimper rather than a bang.

Judging from the answers in Cygnal’s survey, and based on the analysis above, perhaps the most important task for leaders today is how to get there without a fight.