Stratfor's Rodger Baker on the Rebalancing of World Politics and Asia

Podcast music: Blindhead and Mick Lexington.

DEVIN STEWART: Hi, I'm Devin Stewart here at Carnegie Council in New York City, and today I'm speaking with Rodger Baker. He leads Stratfor's analysis of Asia-Pacific as vice-president of strategic analysis at Stratfor in Austin, Texas. Mr. Baker also looks at South Asia and guides the company's forecasting process.

Rodger, thank you so much for speaking with us today.

RODGER BAKER: Thank you for having me.

DEVIN STEWART: Tell us a little bit about Stratfor. What does it do, and how does it do it? I understand it looks at geopolitics and gathers geopolitical intelligence. How does it go about doing that?

RODGER BAKER: Stratfor is a geopolitical analysis and intelligence company. We look at the world through the lens of geopolitics. In other words, we basically use the study of the intersection of place and organize people over time to understand how countries have developed and what are the underlying pressures that are beyond the individual leaders that in many ways shape countries, and that builds our framework of understanding the interactions of the world system.

We then use traditional tools of intelligence in the sense of how to disassemble questions, how to target specific pieces of information to help you build back up your understanding, and use those to test our models of the world system and constantly challenge the way in which we see what's going to be happening next. Ultimately it's a process that is identifying future trends.

DEVIN STEWART: What is Stratfor's view on the big-picture geopolitical situation right now?

RODGER BAKER: If we look at the big picture, it really is the readjustment and rebalancing of the world system that we see going on. The post-Cold War pillars of the world system—the United States, the European Union, and China—really have cracked from those positions after the 2009 global economic crisis. The United States is still the single strongest country in the world, but it certainly is not going to be the global player, the one that dominates the entire global system. It's not a global hegemon, and therefore the world is trying to adjust to balance the dominance of U.S. power, but also in many ways the places where the United States is starting to step back or take a lesser role, and we're watching regionalism and regional balances reassert themselves and new unofficial blocs starting to form. This is creating a world that is a lot less obvious in the way in which it is structured, and may see a lot more instability over the coming years.

DEVIN STEWART: The cracks in the current system—what caused those cracks?

RODGER BAKER: Some of it was trying to understand how to build a world after you had what in some ways was a stability of the Cold War. In the Cold War system there were a lot of places in the world squeezed between the U.S. and the Soviet blocs that in many ways were held in check. Yes, there was war and insurgency going on, but it was balanced by these two superpowers that ultimately kept things from escalating into a global conflict.

When the Cold War ended, the United States found itself as the sole superpower in the world. It had a past behavior during the Cold War of intervention in instability because instability could throw off the balance between the United States and the Soviets. That was not necessarily the driver anymore, but the United States continued to intervene in places that were unstable as the reaction to instability in and of itself.

At a certain point, those areas that had been between the U.S. and the Soviet spheres really got back to their normal behavior, and you saw breakups from Yugoslavia and Kosovo all the way up, spreading through the Middle East. We've seen things in parts of East Asia, we see some potential instability in Central Asia that is emerging as well.

The United States now, after well over a decade of extensive conflict in the post-9/11 period, is doing what it does after large overseas expansions of conflict, and that is it is starting to pull back, take a slightly more domestic focus on itself. It doesn't mean the United States is isolationist, but it means that the United States is taking less of a role internationally. When we had the global economic crisis what happened was that the United States was just about starting into that mode of pulling back a little bit.

China was particularly hit because they were nearing the need for a transition in their economy anyway, but when the European economy went down, that pulled the rug out from underneath the Chinese, and the crisis in Europe emphasized that the ideals of European integration were probably three steps beyond what geopolitical reality would hold. As the economic stresses rose in Europe, we started to see the pushback against the complete unity of Europe, and that we're continuing to see. For our view, it's very hard for Europe to hold to its broad concepts of multilateralism, and we're probably going to continue to see some of this disintegration of the European Union.

Those stable patterns of the world system have broken down, and that's what puts us into this new space where everybody is trying to find the new balance.

DEVIN STEWART: My understanding is that your company also looks at political risks—I think you call them "threats"—in terms of each region. What would you say are the main risks to look out for in Asia-Pacific?

RODGER BAKER: When we're looking at Asia-Pacific, I think the defining characteristic is this continued adjustment of China's position. China is, despite its economic problems at home, an emerging regional, if not transregional, power, and that by default changes the standing balance. It doesn't necessarily mean the United States is inherently weaker or that the other countries in the region become weaker, but it is going to alter the status quo.

As that happens, China is finding itself both expanding its interests and needs for access to markets and resources, but also finding itself having to assert its political and—what we're starting to see—military influence to preserve and protect these extensive economic relationships. So that restructuring of the region is a very important component and a very important risk there.

Paralleling it is the reassertion of Japan to take on not only an economic and a political role, but to take on a military role as it sees the expansion of Chinese activity and behavior as starting to push against Japan's interests.

So we're watching a region that has two large powers asserting themselves as the United States is standing slightly back from that, and that creates a very different dynamic, particularly for the countries that are in between; the Southeast Asian countries, and even the Korean Peninsula.

DEVIN STEWART: Are there worst-case scenarios that your company thinks about when looking at Asia?

RODGER BAKER: The two that I would say are the "possible" worst-case scenarios—because I think there are a lot of "worst" worst-case scenarios one could come up with—one is that in the South China Sea you have the movement by fishing fleets that ultimately triggers a conflict or confrontation between two or three of the powers there, particularly between, say, China and Vietnam, something that expands outward and that is not necessarily driven by the intent of the nations, but it is driven by competition over maritime resources, by exploitation of nationalism, and it ultimately draws into conflict in the maritime space, and that is a tremendous disruptor to economies.

The second is a potentially very rational drive in the next two or three years toward U.S. military action in North Korea as North Korea feels that it absolutely can't give up its nuclear and missile programs and as the United States feels it cannot accept moratoria any longer and needs to finally stop this program from achieving what would be a more effective deterrent by the North Koreans. With few viable options to change the North Korean behavior, we could end up seeing conflict there.

Again, you must look at not only the economic costs and the disruption to three of the biggest economies in the world—and certainly the biggest economies in Asia—and their trade patterns, but also the human cost and the infrastructure destruction.

DEVIN STEWART: What would you say has been the impact of the election of Donald Trump as president of the United States?

RODGER BAKER: I think the biggest impact particularly in Asia-Pacific has been the concept of uncertainty. There is not a clear and concise policy identified from the administration, at least by both allies and competitors alike, and that means that there is a lot more uncertainty. Uncertainty, if the United States were just a small peripheral country, is manageable; uncertainty when the United States is such a large and impactful country becomes very difficult to manage.

So we see countries throughout the region trying to both balance the idea of how do they prepare if the United States is going to be more assertive on trade policy or less active in defense and security in the region, or contrarily, if the United States is going to simply ignore them or become more interventionist. They are not sure where that is going, and that is making it difficult for countries to shape their own national policies and their relations with their neighbors.

DEVIN STEWART: When you speak with your clients are you able to give them a sense of which path the United States will go in terms of its relationship with Asia?

RODGER BAKER: Our view is that there is—with this U.S. administration or without it—a general path of the United States to get its regional partners to take a stronger role in managing the day-to-day security of issues in the Asia-Pacific region, and that would be Australia, Japan, more and more trying to draw India into that space, and then the secondary roles of countries like Singapore in certain subregional areas. So we do see that as a space where the United States is pulling back a little bit.

There are some trade challenges that are going to be taking place. We see the United States moving more toward revisions of multilateral trade deals and pushing toward more bilateral trade arrangements and agreements, and even renegotiating trade arrangements. This is in general the direction that we are perceiving, but there are those slight wild cards, again, that can draw the United States in in a more distinct manner, whether that be in the South China Sea or whether that be on the Korean Peninsula.

DEVIN STEWART: Rodger, thank you so much for your comments today.

One last question: When you're speaking with your clients and other stakeholders about uncertainty that has come from the current administration in Asia-Pacific, what's your overall advice for dealing with that uncertainty?

RODGER BAKER: One of the big things is to try to understand the constraints on the United States and on these other powers for making radical changes in policies. The reality is that the bigger the country, the harder it is to have a significant or immediate change in policy. That means watching for what are the things that prevent or delay some of these more extreme concepts that people are concerned about, and then looking at how this administration is setting its priorities. If you understand where the administration priority is versus where things are pushed down to the bureaucracy, it can help you better understand where we are going to see more significant adjustments to patterns than we've seen before in the past.

DEVIN STEWART: Thank you. Rodger Baker is vice-president of strategic analysis at Stratfor in Austin, Texas. Rodger, thanks again for speaking with us today.

RODGER BAKER: Thank you.