How to Run the World: Charting a Course to the Next Renaissance

• Introduction
• Remarks
• Questions and Answers

JOANNE MYERS: I'm Joanne Myers, director of Public Affairs Programs, and on behalf of the Carnegie Council I'd like to thank you all for joining us.

We are delighted to welcome back to our Public Affairs Program a political scientist who travels the world with his eyes wide open, Parag Khanna. If you take a moment to look at his C.V., you will understand why The New York Times Book Review referred to him as "a foreign policy whiz kid."

Today, many foreign affairs experts believe that the international system is undergoing a momentous transition. Some see it as an opportunity for change. Others only see the difficulties that lie ahead.

Our speaker, Parag Khanna, is part of the former. He is an optimist. He looks around the world and sees the transformation taking place as an opening for a new kind of diplomacy, one that will meet the challenges of tomorrow. For our speaker, this implies managing global problems that lie beyond the stalemates of business vs. government, East versus West, rich versus poor, democracy versus authoritarianism, free markets versus state capitalism.

In How to Run the World, Parag compares this period in history to the time of the Middle Ages, when decentralized power was the norm. But, just as that initial Dark Age ended with the Renaissance, he believes that our time too can become a great and enlightened age. "This can be done," he writes, "if we harness our technology and connectedness to forge new networks."

But how can we tackle our present-day problems and avert the crisis of tomorrow? The answer, Parag writes, is with a new kind of diplomacy he calls mega-diplomacy, and he sees his approach as being more inclusive than past efforts by diplomats.

It is diplomacy based on coalitions of governments, corporations, and civic actors, who can together quickly move global resources to solve local problems, whether it means making the global economy fairer; rebuilding failed states; combating terrorism; promoting good governance; or delivering food, water, health care, or education to those in need.

For the diplomat of the 21st century, this means that success will hinge on being proficient in many areas and having a familiarity with a variety of tools. Instead of diplomacy underscoring the differences among nations, Parag sees a more organic kind of unity as these various groups collaborate in infinite coalitions to find pragmatic solutions to each new crisis.

In the end, our speaker shows how his suggestion would be more than an ad hoc approach to running a world where no one is in charge, but instead a playbook for creating a stable and self-correcting world for future generations.

To learn more about this manifesto for a borderless world, please join me in giving a warm welcome to our guest today, Parag Khanna.

Thank you for joining us.

PARAG KHANNA: Thank you. Good morning. It's great to be back here again. We lost count if it was my third or fourth visit here, but either way it feels like home. It's always a very engaged audience, so I look forward to having an insightful conversation with you this morning.

I will kick it off, not only with an overview of this book, but beginning right in the middle of the book, which tackles the present-day headlines, which is of course the Middle East.

In chapter one of this book, right at the very beginning, I say: "Generation Y is getting the hold of social media tools, like Facebook and Twitter, and making autocrats nervous." I wrote that about a year and a half ago.

I wrote it as an extension of some observations I had in the Middle East, where I spent a substantial amount of time in Libya, Egypt, Saudi Arabia, Syria, and Jordan from 2005-2006 for my first book. I was traveling extensively in North Africa and the Middle East and observing first-hand the combination of the youth bulge, youth unemployment, massive overpopulation, creaking infrastructure—three generations into this post-colonial era, in which the same leaders were in power, the same type of leaders, who had delivered no new investment in public infrastructure or welfare, and then succession crises taking place one by one. The combination of these things would certainly lead to the collapse of these regimes.

I wrote way back in 2005-2006 that "Egypt is ripe for revolution." I was speaking about all the countries in the region when I wrote that. Again, it was obvious because of those initial conditions.

That doesn't mean that we shouldn't have been surprised by the scale, the scope, and the speed of what happened. No one predicted it in the same way, just as one couldn't have known exactly which day the Berlin Wall would crack. No one is so much of a prophet, at least not with that degree of precision. But the underlying conditions are things that we should have absolutely seen coming.

It is very often a succession crisis that tips these things off. For example, in Egypt it was something that has been going back and forth for a couple of years: Would Mubarak run again in 2011? His vacillating statements on that, including those of his son as to what role he would take, were inevitably going to foment a situation like this.But the fact that a Tunisian fruit merchant lit himself on fire and a WikiLeaks cable revealed corruption in that country—one could not have known exactly what combination of things would happen.

The deeper force at play—and this is very important—is to observe, not just that this revolution happened, but what is the deeper trend underpinning this. It is not just that we had corrupt regimes and we got rid of them. It is something that I talk about in the central part of this book, and that is post-colonial entropy.

A big part of this book deals with those countries in the world, which constitute most of the world—if there are 200 countries in the world today, about 100 of them were born after the birth of the United Nations, so within the last 60 years. Almost all of those countries are post-colonial countries, and almost all of those countries are experiencing post-colonial entropy: the fragmentation and decay of the systems that they inherited going back to the colonial period, in which no new investment, no new national paradigm, no sense of guiding national vision or ideology, has a compelling loyalty among the people.

Very few countries have made their way out of this. One thinks of Singapore and Malaysia, for example. Perhaps India is trying to climb out of that, but not necessarily entirely out of the woods yet. It's a very difficult trap that many of these countries are in, which has not created a compelling vision for their future.

These are also countries that suffer from the cartographic stress of having many of these arbitrary straight-line borders on the map which need to be rectified.

Take Libya today. Should Libya continue to exist just because it has existed? We don't really know. No one in this room today can answer the question as to what the future of Libya is. Is it going to be split into two or three and so forth?

I have been fairly outspoken in both my books and elsewhere about my acceptance of the principle of self-determination, the need to accept the constant mutations on the map, whether it's East Timor ten years ago, Kosovo a couple of years ago, South Sudan last month, Kyrgyzstan maybe in a few years, or Palestine in the next couple of years. There is a constant ongoing process of cartographic change.

Sometimes it means countries split apart. Other times it means countries fuse together. Sometimes it means supranational entities are formed, like the European Union. Many different changes can happen.

Our conservative weddedness to existing borders for the sake of it, for fear of a repeat of the Balkans, is more dangerous than potentially even accelerating that process in favor of actively attempting to resolve conflicts, even if that means recognizing new states.

It proved to be a very controversial point, not surprisingly, in the case of South Sudan. The active diplomacy—the involvement of the African Union, the United States, the European Union, the United Nations, and others, provides a fairly compelling model of how such a trajectory can go on moving forward.

But getting back to this point of post-colonial entropy, it's too easy to simply say that the trend is regimes are failing. The far deeper trend and process is this post-colonial entropy. What this book has tried to do is to step back and look at a deeper kind of process in political change.

What my last book dealt with, and what many books around the same time and subsequently talk about, is the rise of emerging powers, structural change—the shift in the world from one superpower to multiple powers. That's called structural change, when the number of units of power change.

What I'm talking about in this book is one level deeper than that, and that's systems change. Systems change is when you have a change in the nature of the unit itself, when the various authorities, powers, or entities that can harness technology and capitalcan assert themselves as authorities in the world, can claim a voice on the stage, and can participate in diplomacy. That's when you have systems change.

That's what brings us back to the Middle Ages, to this period in history before the rise of the modern nation state, before the Thirty Years War, before the Treaty of Westphalia, before modern international law. This was a world in which, even in just the European context, the Holy Roman Empire, the Byzantine Empire, city states, churches, mercenary armies, universities, monasteries—all of these played roles in the diplomacy of managing and governing Medieval Europe.

On the international stage there were tribal hordes—the Mongols, the great empires. The Song Dynasty of China was the most powerful civilization of the time. The Arab Islamic world was spreading, extending its influence all the way from North Africa to Central Asia. That was a multipolar world as well.

A lot of people tend to think that the 21st century is the first time we're experiencing multipolarity, with the rise of China, Europe, Russia, Brazil, India, and so forth. But it's not the first time that the world was multipolar.

It's also not the first time that we had a world system. The first time we had a world system, Globalization 1.0, was in fact 1,000 years ago.

The commercial revolution during the Middle Ages was the Silk Roads and the Crusades. It had its nice sides, the silks and spices, as well as religious wars. But it did forge a connectedness across East and West in a habituated, regular, constant sense, at least through the Black Death, which set it back. But, for the first time in history, that was actually Globalization 1.0, was 1,000 years ago.

What we have today is something like Globalization 5.0, having gone through the discovery of the New World, colonialism, imperialism, the rise of a world trading system, the decolonization of the Western hierarchical system towards a world of sovereign nation-states, and now a systems change in which we have to bring into account, understanding the world, new kinds of actors, such as corporations and NGOs.

Another reason why it is important to distinguish between systems change and structural change is because the date at which we would identify these changes varies based on how you analyze it.

If you think about the world only in terms of being comprised of nation-states and only nation-states matter, even though they are so incredibly unequal and they have such differential levels of power and authority, then you would say when the Cold War ended that's when this shift towards a multipolar world began—the Soviet Union fell away, China began to rise.

China wouldn't date its rise to 1991, would it? I don't think so. First of all, they would point to the Song Dynasty period and other historical periods of Chinese civilizational glory. But they would also point to 1978, naturally, the year in which their economic reforms began.

Another thing that one would point to if you are talking about systems change is the rise of the world trading system at the end of World War II; you would talk about deregulation, liberalization of economies; the rise of multinational corporations, which were written about so much in the 1960s and 1970s by great scholars, such as Susan Strange.

They wrote about triangular diplomacy. They said states and firms actually coexist, they depend on each other. She wrote that states are supplicants to firms because they seek and need their investment in order to survive. She foresaw this diplomatic structure in which firms played a very important role.

At the same time—the 1960s, 1970s, 1980s—what we would call soft issues or moral agenda started to creep up on the global diplomatic agenda: human rights and climate change.

How did those suddenly appear? It wasn't because the World Bank dictated it in a study. We saw the rise of new actors—NGOs, Greenpeace, Amnesty International; coalitions like the Club of Rome, great statesmen and economists who foresaw resource scarcity and the need to manage resources better. That goes back to the 1970s as well.

Diplomacy began to change in that period and not just be about technical negotiations over armistices and war and peace, but a whole host of other issues. That required that diplomacy and diplomatic negotiations bring in the kind of academic, technical, and scientific expertise that governments alone didn't have.

So the broadening of expertise, the rise of new issues on the agenda, the rise of multinational corporations and international supply chains—all of these contributed to the kinds of systems change that we see in a full-blown sense today. There is no issue in the world really—not even an intervention in Libya, not even arms control and nuclear proliferation, not even terrorism—not a single issue in the actual, de facto, real world, not the theoretical world—the real activity, the real diplomacy, the real dialogue today, on many levels, in many places—in all these cases, how to deal with these issues involves many different kinds of actors: charitable foundations, diasporas, NGOs, companies, and so forth. It's not for nothing that the Pentagon last year created the Office of Business and Stability Operations for Afghanistan, saying: If we have just a military approach alone, we'll never actually stabilize or get out of Afghanistan. Let's bring in Western executives and CEOs to see where they might invest in a project, build a road, and employ some Afghans.

One way or the other, in the short term or the long term, it does today come back to harnessing the resources that exist beyond simply the intergovernmental/interstate realm alone to solve these problems.

But diplomacy in its formal, legalistic sense of those relationships among sovereign state authorities and conceptually, in terms of understanding systems change, has obviously not yet caught up. That's where this book jumps in, because for anyone who studies systems change and looking in the grand sweep of history of thousands of years, you have to be actually a lot more agnostic about the state form, as we would tend to be living as 20th-century creatures.

You would appreciate that historically cities have been very dominant actors in diplomacy. Today, we are moving into an urbanizing world in which more than 50 percent of the world's population lives in cities, where most of the world's entire economy is based on the activity and the corporations housed in just a couple of hundred cities around the world. Cities gaining authority, practicing their own diplomacy, managing their own budgets, and deciding whom they trade with is going to be an important part of the diplomatic landscape.

Companies play such an enormous role not only in shaping our own foreign policy even as a powerful sovereign state, but an even greater role in shaping the domestic policy and the governance of foreign countries.

I have a section of this book that traces the history of Royal Dutch Shell in Nigeria. The standard narrative of Shell in Nigeria is that there is a corrupt government, oil is found, bring in the Western firm that has the technical competence and knowhow to extract that oil, take a bribe from them, keep all the money, put it in Swiss bank accounts, people suffer, oil company commits human rights violations.

I'm not going to dispute most of that. I'm not here to defend that. What I am here to point out is that there have been periods in very recent history where the Nigerian government required financial assistance from the Shell Corporation to pay off certain debts. Otherwise it might have declared bankruptcy and it might have gone into sovereign default.

So instead of looking at this relationship between the two as a competent, coherent, existing sovereign state known as Nigeria, which happens to be the most populous country in all of Africa, and an oil company, think of it much more as a co-governance. Such a tremendous share of Shell's revenues come from Nigeria. They need Nigeria.

What would Nigeria be without Shell's oil? Why do we persist in seeing it as some kind of a hierarchy, when in fact they are so utterly co-dependent? Shell in Nigeria, as well as so many oil, mining, extractive, or even manufacturing companies that operate all over the world provide a quantifiable share of public welfare, whether it's the schools, hospitals, clinics, or other types of benefits; their lawyers help countries write their own laws, help them negotiate on the international stage, and even provide technical assistance to their trade delegations and finance ministries.

Employees of American companies do this abroad to help those countries become worthy and competent states. But that doesn't fit into the model of diplomacy as we know it today. The governance of many of the post-colonial countries, which is most of the countries of the world, actually operate in this fashion. But we don't think of it that way because we are so wedded to the idea that states call the shots.

Look at what is happening in the Middle East today. Are all states really created equal? If we had 200, and soon 300 countries in the world, are we still going to believe that all of these governments are equally competent sovereigns capable of managing the world, or making rules in that way? I don't think so.

If we were to grasp this concept of systems change for what it is, we would appreciate that we are much better off thinking about a world in which we have to find a way of harnessing, managing, and creating accountability systems around these different actors and the roles they play, rather than attempting to put it all back in a box and create a really neat and tidy, parsimonious model and talk about how if we nation-build these 100 or so countries that really need it, then one day we could have this state-centric coherent world order again.

It never really existed. It existed on a map; it didn't exist in reality. It will continue to fragment and to fall apart. Even the powerful states, even G20 countries, in which Argentina belongs—I'm sorry if anyone is from Argentina—but again, they are, even within the G20, not all are equally powerful or capable. There are a few truly strong states that are there, and we do live in a world of certain states that are growing stronger and stronger—Brazil, India, and China.

We have structural change, but we also have systems change at the same time. We don't have a diplomatic system that actually harnesses them, which is where this idea of mega-diplomacycomes in.

I shouldn't have to put "mega" in there at all, because for students of diplomacy there's a joke: Diplomacy is the second-oldest profession. It has been around since before the state.

The greatest theoretical error we make—and I wrote my entire Ph.D. on this—is that we think of diplomacy as being about relations strictly among states. If so, how could diplomacy be the second-oldest profession? How could we have books that I sat in the New York Public Library reading for months on end about Babylonian diplomacy and Greek diplomacy at times when we didn't have modern nation-states and modern international law?

Diplomacy is about the relationship between authorities, not sovereignties. For the last several hundred years we have lived in a codified, legalized realm in which states have dominated diplomacy. But that doesn't mean that that is all of what diplomacy is.

Throughout all of history, diplomacy has been about the relationships, dialogue, and negotiations among authorities. A think-tank is an intellectual authority. A church is a religious authority. A corporation is a financial or resource authority. A university is an educational and knowledge authority. There are so many different kinds of authorities. A state is very much a legal and military authority.

How is it that we have 13,000, according to a recent Tufts University study, paramilitary groups that operate around the world today, that are recognized? One can recognize their brand, their insignia, and the number of troops they have under control. That's more than the number of countries we have, isn't it?

We have to recognize that this is an incredibly chaotic landscape of authorities and we should embrace and understand that rather than oversimplifying it right out of the gate. It is the negotiation among those authorities that is the sum total of diplomacy today.

We think of diplomacy as being relations between states, but that is one of three kinds of diplomacy. There are two other kinds in the typology.

The second is public/private relationships. Who in this room doesn't know the term public/private partnerships? You can't even open a newspaper today without seeing it. It has become part of our vernacular.

There are public/private partnerships that operate all over the world, such as oil companies in Africa. There is a negotiation and agreement going on in how those relationships will be structured and constituted. That is a kind of diplomacy.

What the Gates Foundation does abroad is not set up a parallel apparatus in which it invades a poor country with its army and sets up its own hospitals to the detriment of a national health system, because that is the narrative that you very often hear from critics. But really, 80 percent of the Gates Foundation's money goes to public/private partnerships. There is one famous example after the other.

One of the seminal ones is Botswana, where, together with UNAIDS, Merck (the pharmaceutical company), the Botswanan government, and the Gates Foundation crafted an entire scheme, the Africa Comprehensive HIV-AIDS Partnership, that together harnessed resources and created a division of labor among them to combat the incidence rate of AIDS in that country. It's a remarkable example of a successful multi-actor/multi-stakeholder partnership.

The number of those is absolutely innumerable, at this point almost infinite, in the areas of health, environment—Forestry Stewardship Council, Marine Stewardship Council; the certification schemes that make sure that blood diamonds don't get exported from African countries, or that timber doesn't get over-extracted or logged from forests in Indonesia or Brazil, or that protect marine fisheries. You have NGOs certifying the companies that are doing the fishing and then local governments that participate in those schemes as well.

The world is full of such public/private partnerships that actually do the governing.They don't just give suggestions as to what international law might look like in these areas, where no international law yet exists—and even if it did, would it work, would it be enforced?—they do the governing. There are so many of them that you can't exclude them from your diplomatic model.

Then the third kind of diplomacy is private/private. Public/public is what we have traditionally had.

When private actors negotiate, transnational or otherwise, they too are conducting a certain kind of diplomacy and making rules.

There are industries that have self-governance codes as to how they will manage their industry. There are groups, like the International Chamber of Commerce, that have their own court to arbitrate commercial disputes. There are groups like the World Economic Forum that has the annual meeting in Davos that brings together, to a large extent, private actors to launch their own initiatives and schemes internationally.

A good example would be the recent partnership by Walmart, the world's largest retail company, something like the 22nd largest economy in the world if you take it in and of itself, and the Environmental Defense Fund, which has set up an office next to Walmart to work on greening its supply chain. There is a very concrete private/private relationship that is going to contribute to reducing greenhouse gas emissions, improving labor conditions, and other sorts of things in the world's largest, most extensive supply chain. I don't recall any government being involved in it whatsoever.

Does it not count? It counts a lot, because you could have summits in Bali, Kyoto, Copenhagen, or Cancun—or pick the next sunny resort where climate negotiations will take place—and not have a globally binding treaty on greenhouse gas reductions. You won't have the actual reductions, which are more important than having the treaty, which we may not have unless you harness these kinds of partnerships.

The other thing you won't have it without is technology. What really matters to the industrializing countries—China, India, Brazil, and others—is not that they go and negotiate in good faith or go to reject overly ambitious caps on their emissions. What they want is technology. They will never sign on—next year, the year after, or ten years from now—to any treaties because, unlike some countries, they might actually take them seriously and view them as binding; they won't sign on to these unless they have the technology to do so, until they are well on their way to reducing those emissions. Then the treaty will be the icing on the cake.

How will they get that technology? They won't get it from going to Cancun, negotiating, and sipping piña coladas. They will get it when technology companies either invest in themselves or governments subsidize their investment in those technologies, the costs are reduced and transferred to those countries, and integrated into their economies. Then maybe you will see a reduction in emissions coming from those countries, and then maybe they will sign on to the treaties.

But don't take the cart before the horse. Don't think that the interstate diplomacy, or even the risk of regulation on a global level, of which there is effectively none, is actually having impact on this issue. It is, if anything, the pressure from academics, scientists, NGOs, and some governments who are being role models, like European governments, and then certainly from the technology sector that sees this as a profit opportunity. I put as much or more weight on what those actors are doing in climate change than I do on the IPCC [Intergovernmental Panel on Climate Change] negotiations.

It is very important to remember that there are many sides to each and every one of these global issues and that the solution doesn't really lie with the traditional architecture that we have thought of.

This applies very much to the domain of international security, where in both my books I try to focus very much on the idea of regionalism.

There is a missing level here. I'm not talking so much about multi-stakeholder diplomacy as one of the other principles in this book, which is devolution or decentralization. Successful diplomacy or the management of global problems today doesn't hinge on creating new organizations with headquarters in New York, London, or Paris; it hinges on distributing resources as widely as possible to the places where those are necessary.

Let's take the example of peacekeeping, which is one of the most important aspects of the United Nations' work. There are over 100,000 peacekeepers actively deployed around the world. Some people question and second-guess the validity of those missions, but they are acting under the mandates that states have given to them, and very often if they fail it's because the mandate is poorly defined or circumscribed. I hold nothing against them.

If we want to live in a stable world it shouldn't be a world in which the resolution or intervention in certain conflicts, in local places in Africa or Asia, hinges on the agreement of the Security Council, which we know is a very anachronistic body, that many hold to be very illegitimate and unrepresentative—it hasn't been expanded in 30 years, with no genuine prospect in sight—but rather on strengthening regional security organizations, something that is foreseen and called for in the UN Charter but has never been diligently pursued until now.

What's happening in Africa is the African Union is coalescing more and more. ECOWAS [Economic Community of West African States in West Africa] have several peacekeeping operations/interventions that they have launched. ASEAN [Association of Southeast Asian Nations] is talking about a peacekeeping force.

All of these are really good examples of how, rather than talking about strengthening the center, better global governance will ultimately come from strengthening the periphery, from allowing people to solve their own problems, from, very simply, helping others help themselves, teaching someone to fish.

There are many clichés to capture this spirit, which we haven't really applied to our diplomacy because the bureaucratic instinct is always: "How can we bring this to us? How can we create a global environmental organization? I don't know what it would do, but let's just create one anyway."

We have to have a new bureaucratic and new process mindset that focuses not on centralizing power and authority, but on decentralizing it to those who need it.

What we find is that some of the greatest revolutions in how we tackle certain issues—I mentioned private innovation on energy conservation, clean technology—but also just take micro-credit as an example of a poverty-alleviation instrument.

That didn't begin either with any kind of central study. It was an experiment that began in a number of countries, not least Bangladesh, and has spread around the world. It didn't require that there be a central organization. But lessons are learned sideways. Some of the innovations come from the bottom up, not from the top down, and this is a very good example of that.

I have a lot of confidence and faith in that. These kinds of things, from issue to issue—whether it is human rights, climate change, or poverty alleviation—we will find that some of the best practices and lessons really occur at the bottom and spread sideways, and that we should harness that and decentralize resources to those in need, and that that will lead to a better global governance model.

The final ingredient of it is not only the inclusion of these actors, and decentralizing power and resources. The third ingredient of smart mega-diplomacy—and I'll end on this—is the idea of mutual accountability, because one of the final hang-ups that we have psychologically is the idea of democracy. We want international democracy. We want to democratize international institutions without any exact, clear road map or plan as to what that would actually look like, but we definitely believe that democracy has got to be democratic.

I struggle, and so does every other political scientist, to figure out exactly what that means on the international level. How do you have democratic international institutions that are also effective at the same time? How do you apply those apples to oranges when you are talking about a world of systems change in which non-political entities, like NGOs and corporations, are involved in this mix?

You can accuse NGOs of not being democratic all you want, but that's not what they are. They are not political units after all. There are many forms of accountability that they face and that corporations face—reputational, financial, peer, and the force of shame, which I write about a lot in this book. Shame and peer pressure have been responsible for quite a few norm shifts. Most recently, the rise of the corporate citizenship movement can be partially attributed to the power of shame.

There are many ways in which actors can be held accountable. The highest principle in governance, whether it's domestically or internationally, is not democracy, it's accountability. There are many ways to achieve accountability. A combination of these ways, including democratic elections where you can have them, will result in better accountability.

At the international level, we have to be more creative. We have to think about, in a public/private partnership, in a multi-actor setting, how do you have mutual monitoring. Mutual monitoring really stems from a deep suspicion. This is not a book about how everyone should all just get along towards our common goals. I'm not utopian at all. This derives from a very deep suspicion of the notion that states will always see the best interest in the public welfare—because they don't, not even here, and not in many parts of the world. Very few governments really deserve to be praised with that stereotype.

Not all corporations are focused only on the race to the bottom line and on extracting maximum value from minimum expense. Not all NGOs are just hapless do-gooders who aren't resourced and don't know what they are doing.

It's a deep mutual suspicion among these actors that will lead to this model of mutual oversight and mutual accountability. It will take many different kinds of shapes and forms. There isn't one perfect model for it.

But if we open our imagination to a mega-diplomacy of mutual accountability, we will have a much more realistic, accurate picture of what is happening in the world, and it will probably get us one step closer to a better management of the world.

I'll close on that. Thanks very much.

QUESTION: Susan Gitelson.

That was a most insightful and fascinating presentation. Thank you. But there are certainly questions at both ends.

At one end, traditionally, the balance-of-power system has existed and been recognized in terms of a war. There was Athens and Sparta, or the First World War, the Second World War, and that's when the largest states fought it out and redefined who is in control of the largest level.

How do you deal with this, and especially now, with nuclear proliferation, where Iran or North Korea might use a bomb, and this is going to force responses from the great powers and others?

On the other end, in your title you talk about the next Renaissance. I haven't yet heard the word "Renaissance" come from your mouth, and I bet you'd like to talk about Renaissance.

PARAG KHANNA: That's true. I wanted to wrap up and didn't get to that.

I wanted to make clear that it's up to all of you to bring about this "Next Renaissance." The transition from the Middle Ages to the Renaissance was slow and almost imperceptible. In a very important book about Renaissance-era diplomacy, the author, a scholar, points out that really the differences were so, not trivial, but imperceptible, that it's hard to distinguish when the High Middle Ages ended and the Renaissance began.

In that same spirit we won't know we're in the new Renaissance until we're in it. I would certainly hope that it wouldn't take centuries, but rather maybe a few decades, and that it would be derived from this sense of empowerment and liberation of communities in the world, whether it is groups that seek self-determination, whether it is new kinds of identity—digital, generational, and corporate—a sense that there is an interdependence and an equilibrium among them. That is my goal.

When we are in such a Renaissance it would look like that world. But again, I don't know how long it will take to get there. It really does hinge on changing the way we think about and operate in diplomacy.

Which really gets to your first question about great power politics and the management of world order.

"World order" strikes people as a sort of normative term, meaning world order is global governance, it is this balanced, stable system. But it isn't. "World order" is just a technical term. It means the distribution of power around the world.

Right now we are in something of a disequilibrium. Power is spreading rapidly across a whole set of actors.

Some people say that we're moving towards a G2 world, China and the United States. Even the "G" term is meant to connote certain normative stability, like G20. This is the committee that will run the world. They're not doing such a good job of it. A G2 would be even worse, because the last time I checked, the United States and China can't really agree on a whole lot. So if world order and stability depended on the Gs, then we're in big trouble.

What we are seeking prior to World War III, which is—as your question implies, usually wars help sort out the international hierarchy—is a global governance system or a geopolitical management system prior to the outbreak of a conflict that will manage those differences.

It would at the very least be a G3. It would include the European Union as a very important economic center, as a normative leader, and a power in many different dimensions, in which you could have this dialogue about what are common rules.

Or it would take the form of regional spheres of influence, in which regional leaders, like Brazil in South America help to create regional stability, and therefore you have the sum total of that being global stability, a world of different European Union-type zones. Only the European Union is as far along as it is.

But there are multiple scenarios where you could imagine a global balance of power or a global distribution of power that, even though it is multipolar, doesn't immediately lead to some kind of conflict. We should be working on those models. People have written about it for some time now, but the urgency is there as much as ever before.

On the question of Iran and proliferation, just because a country has nuclear weapons, that doesn't make it a country that upsets the global order. Whether North Korea, Pakistan, Israel, or Iran have nuclear weapons, that doesn't make them superpowers, first of all, and it doesn't mean that the global balance of power has been upset.

I don't believe that Iran should get nuclear weapons, simply because I don't think it's going to destabilize the whole world, but the principle of deterrence still applies very much to countries that have acquired nuclear weapons and that it would apply in many ways to Iran should it acquire them.

What is missing is this regional dimension, whereby in the Persian Gulf region you have a Gulf Cooperation Council with several members who are only Gulf Arab states, and you have the Arab League, which is only Arab countries. There is no regional security instrument or mechanism.

The parts of the world that are able to manage their internal differences in a stable way are regions that have stronger regional security institutions. That part of the world does not have them. There is no one organization that brings together Iran, Turkey, Israel, Saudi Arabia, and Egypt into any kind of common dialogue, nothing even like the ASEAN Regional Forum, which is a non-legally-binding body that at least brings together countries in the area—Japan, China, Korea, and ASEAN members—to at least share information, to create some minimal amount of transparency about what's going on, or at least bring them around the same table, in a way that doesn't really happen today.

Right now we're very much in denial that these countries even live in the same neighborhood. Look at our Iran policy; we have a long way to go.

The answer to Iran doesn't rest at that global level. It rests at that regional level where we create a regional security organization, or at least that's part of the solution. We haven't really even contemplated that yet.

QUESTION: James Starkman.

Quite manifestly, Georgetown and the Kennedy School of Government have gotten it in terms of this thinking, because you are a very distinguished graduate.

To what extent do you feel that the State Department and the administration get it, in terms of this thinking? You were an advisor to President Obama in his campaign. What grade would you give him and the State Department on these issues?

PARAG KHANNA: Let me separate the two out, because this is something extremely important.

We tend to give these grades based on one man, one personality, one vision, one policy, and that's a great mistake. I always want to distinguish between the individual and bureaucracies.

So many people invested their hopes and dreams in Barack Obama as a transformational figure, not only for the United States, in terms of this need for us to bootstrap, and have a new vision for the future and America's role in the world. They assumed that his election would automatically lead to the transformation of American policy in that regard.

I was on the campaign, along with several hundred other people. I was different in not actually believing that that would happen, because, as much as people hate to talk about bureaucracy, everyone wants to be an armchair grand strategist—which is great, so do I, and that's why I write these books—but I also appreciate the stagnating or the stopping power of bureaucracy.

I truly appreciate Barack Obama. I genuinely believe that he is the first American president who grasps that we live in the multipolar world and that we need burden sharing, division of labor, new institutions, and more efficient collaboration. He gets it.

How come things haven't changed that fast? Because our bureaucracy hasn't evolved. I don't want to give Obama the same grade as I give the State Department or bureaucracies, because they are unbelievably change-resistant.

He is still a man who believes in change. I absolutely think so. He is so much more intelligent, quite frankly, than a lot of his advisors.

A lot of people who work in the administration, for better or worse, really had their heyday in the 1990s, in the Clinton Administration. That was this post-Cold War unipolar world. Everyone was waiting for America to come back, or everyone should be waiting for America to reclaim that 1990s position, which is that it was the de facto leader of the world.

But in fact no one is waiting. This is why I spend all my time traveling to hundreds of other countries, because it becomes devastatingly clear to me that no one is waiting for America to come back and lead on anything.

Everyone is doing their own thing. That was exactly what my entire last book was about. They will continue to do their own thing no matter who is president of the United States. They will leverage it, they will maybe increase the deal flow with us on a variety of things, but everyone will play all sides. That's what happens in a multipolar geopolitical marketplace.

Getting back to the second part of your question on the State Department and other bureaucracies, I have written about that in a very concrete section of this book. I spend a fair bit of time with friends and colleagues from around the government talking about this, and I see that the uptake on this is incredibly slow.

There's a very concrete three-step process to harnessing the diversity of resources that America has at its disposal to implement its foreign policy agenda and we have barely gotten past step one.

Step one is what's called "whole of government." Everyone knows this term by now. It's a cliché, even though we don't do it very well—"whole of government," "all elements of national power."

If you spent your days reading the kinds of policy papers that I did, you'd keel over for the number of times you read "whole of government" "all elements of national power," all these kinds of things, "interagency process." We don't do it very well. We talk about it so much more than we do it.

There is a joke in Washington about how you can always have your first interagency meeting but never the second.

That's step one. It would be nice if we could get that right, because there are 25 different U.S. government agencies that have an impact on international affairs, whether it's the Department of Commerce, the Department of Energy, the CIA, Defense Department, or the State Department.

Step two is what Anne-Marie Slaughter, the outgoing head of the Policy Planning Department, called the multi-partner approach. What are our allies doing? What are other countries doing? We're not the only ones operating in Africa, Asia, Latin America, and elsewhere.

That's why we've woken up to China being so present in Africa; building so much infrastructure, trading so much, and investing so much there. We're not the only show in town.

Are we understanding what other countries are doing—Europeans, Chinese—and finding ways to partner with them because we alone don't have the resources to do so? Not all that well.

There are too many stories, even just amongst the Western clique of countries, of never coordinating aid policy. Ask any beleaguered African minister. He will tell you that he has to have 40 meetings a day with 40 different aid ministers because even the OECD countries won't coordinate their aid policies.

That would be step two, if only we were to actually do it.

Step three would be—and this is my contribution—saying that we need this public/private approach as well. Where is the knowledge and competence within the U.S. government to understand exactly what the footprint of American society is?

American universities, 40 or 50 of them now with campuses operating across the Middle East, are having an impact on local education and perceptions of women's rights. Things that we could only have dreamed that we would achieve through official diplomacy are starting to happen despite the American government, despite our visa policy after 9/11, which basically compelled these universities to go abroad and set up overseas. It has turned out to be very lucrative for them, which is great. But it's our private actors, our private universities, that are having that impact.

Charitable giving from the United States per capita is the largest of any country in the world. Diaspora remittances flows from the United States are larger than from any other country in the world. That's a huge force for development.

Where is the grasp of how those networks operate and how does the government leverage them, because what is the foreign assistance budget? Trivial, minimal, nothing, insufficient to have a systemic impact.

America the society, America the country, is far greater than America the government. But the American government doesn't capture that and doesn't understand how to fully leverage it to have a more effective foreign policy.

So there is a three-step process where we've barely begun. Therefore it does not a very high grade.

QUESTION: Warren Hoge, International Peace Institute.

Parag, I want to ask you about the other half of the G2. You've had a good question about the G1 and whether they get it. I want to ask you if China gets it.

Here's the context. A lot of us amateur futurologists—I think of you as a professional futurologist—have always thought that as the Chinese middle class grew, as they became more prosperous, their people would demand the kinds of rights that we associate with prosperity. That seems not to have happened so far. The Chinese model came through the economic crisis much better than Western models did.

Listening to you today, I'm wondering if China can react to a diplomacy that strengthens peripheries, that decentralizes power, and that deals in mutual accountability. It strikes me that they probably cannot.

PARAG KHANNA: Well, neither can we, right? The point is that none of us have gotten there yet. In that sense, it's a model. But it remains to be seen which powers will contribute to it and which ones won't. Or maybe it will be more of a regional model, in which case China plays a tremendous role.

First of all, the fact that it was a mistaken assumption that Chinese people would immediately demand democracy when their per-capita GDP and PPP terms crossed $6,000 or $7,000 income—the fact that it failed to materialize doesn't mean that it should have happened and therefore it was a flawed model. In the same way, believing that Japan was going to be a global military superpower in the 1980s, or a superpower in general, was a flawed mistake. It doesn't mean that we are wrong about China just because we were wrong about Japan. A lot of things can go wrong in making those kinds of predictions.

An understanding of Chinese culture and history would lead to an understanding that there are still a great many Chinese alive—we know they're an aging society, so there are many hundreds of millions of Chinese people alive today, maybe not that many, who remember the Great Leap Forward and the Cultural Revolution and don't necessarily want to just topple the existing system because they remember what periods of chaos looked like and the number of casualties that result from those periods.

The inherent conservatism at a time when things are going good, when the state is delivering welfare and economic growth, despite the enormous dislocations that are taking place on a daily basis in China—there is still this acceptance that right now there isn't some other off-the-shelf model that one can simply point to and say, "Out with these guys, in with the new model," in a country of 1.5 billion people. There is an inherent conservatism about that.

Secondly, the Party, in authoritarian capitalist fashion, has done a good job of co-opting other centers of power, whether it is business elites, mayors or leaders of provinces that are prospering, and so forth. It has managed to stay in power and be more powerful than it has ever been before.

Then there is the youth class that seems to have been—there is a lot of reportage about this—kind of bought off and is well kept and therefore doesn't necessarily seek to overturn the existing order.

The best outcome for everyone is that the system evolves. A lot of people think democracy is a four-letter word in China. But actually people talk about it. You have Chinese leaders, academics, and journalists talking about it.

But it's how they talk about it. They say it would be interesting to evolve to a more democratic system. They study European parliamentary models of democracy way more than they study our model of democracy as something that might be appropriate for them. There are a lot of scholars who work on how you would map that onto a Chinese context. There are even road maps as to how China might get there.

But it would be better that they gradually evolve in that direction if there be some state collapse, which would obviously have an enormous impact on us.

So the second part of your question, are they prepared for this world—they are contributing to it. They have been the prime beneficiaries of globalization and the devolution of economic power away from the G7. They are one of the most trade-dependent economies in the world. They subsist on, thrive from, globalization and global trade, and will continue to do so. They are bought into this.

One of the debates, though, that is very important in the international relations community today is: Does China signing onto global governance institutions—the World Trade Organization, for example—does that mean that they inherently support the Western-led order and architecture that has existed for several decades?

There I'm not so sure. When a country joins an international organization, they're not doing it as a symbol of saying, "We salute and respect you and the order you have created and will play by your rules."

Very often, you can join an international organization precisely to undermine part of the agenda, because if you don't join it, you can't veto things. Russia would have a harder time vetoing certain things that NATO wants to do if there wasn't a joint NATO-Russian Council where Russia can make very clear that it seeks certain expansions not to happen.

China joined the WTO, and since that time, you haven't seen much movement on intellectual property regulation. You can't have that voice on certain agendas unless you are inside the organization. Yet you can benefit a lot from being inside and getting market economy status from any number of countries—though not yet from us—and having those relationships.

There is, on a case-by-case basis, China saying, "How can we use membership in these organizations and our growing weight in these organizations to serve our own interests?"

There is one area where some people say that China is out in front in crafting what everyone should agree is a better model for them, and that is obviously in the global monetary system. They are publishing papers saying they are contributing financially to the IMF, to credit lines for emerging markets in distress. They are publishing papers and saying there should be one global reserve currency and it shouldn't be the Chinese yuan. They are talking about diversifying the currency reserve basket towards SDRs, special drawing rights.

It's going to be issue by issue. There isn't a wholesale answer to, "Does China get it/does China not get it?" because then you would have to apply the same logic to us, and we don't necessarily get it on all issues or not get it on others either.

JOANNE MYERS: Unfortunately our time is up. I thank you for being diplomatic.

PARAG KHANNA: Thank you.