The world is like an archipelago -- fragmented in many ways and vastly different today from what it was after the end of the Cold War, and it’s a more uncertain and world as well, according to Nader Mousavizadeh, CEO of Oxford Analytica, a global analysis and advisory firm.
“We’re living in an age where it’s impossible to understand politics without economics and economics without politics,” said Mousavizadeh in a keynote address Tuesday, kicking off a three-day Napfa conference in New York.
As an illustration, he cited the Arab Spring, which caught the world by surprise. “We’ve seen regimes topple, introducing a degree of risk and volatility that’s very significant at the macro level,” said Mousavizadeh.
Anyone doing business on a global scale, he said, must understand “the political, economic and social drivers of the larger environment.”
Mousavizadeh, a magna cum laude graduate of Harvard University and a Rhodes Scholar at Oxford University, was founder of Archipelago Partners, a geo-strategic advisory firm. He is also an alumnus of the financial industries M&A group of Goldman Sachs in New York and Europe. Before entering the private sector, he served at the UN as special assistant to former UN Secretary-General Kofi Annan and also was a UN political officer in Bosnia-Herzegovina.
Mousavizadeh, in his address, took his audience through a number of broad themes, changes, challenges and possibilities around the world. His goal was in part to put the United States in context to the rest of the world.
The political movements such as the Arab Spring are not necessarily for democracy, but for legitimacy and accountability, according to Mosavizadeh. He said politics in the Middle East are “converging rather than diverging around basic movements.”
There has been a total divergence away from energy economies in countries there toward a political leadership more responsive to popular demand. Regarding Saudi Arabia, for instance, he said, “The biggest risk is that (the kingdom) may end up like Iran in 1979.”
There has to be a change of mindset in which the U.S. envisions itself as continuing to play a role as a world leader, but not as a sole leader, according to Mousavizadeh. He said he found troubling “the disconnect between the old structure of dealing with the world order,” which incorporated political entities like NATO, the International Monetary Fund and the UN, and the current world.
“We’re not in a world where we’re setting the rules alone,” said Mousavizadeh. “It’s going to be about setting the rules together. We have to think about a different playing field … where we may have to partner with rising economies, such as Brazil, China and India, and those countries have to have a place at the table. We’re obviously in a different economic environment.“
Brazil in particular, he said, has enjoyed extraordinary success over the last 20 years. Turkey is a growing economy as well. Angola is a model for governance in Africa.
In Europe, he said that problems with Greece represent not so much an economic problem as a political problem. One danger, he said, is that Germany’s commitment to unity is “beginning to decline.”
“The biggest problem in Europe is not Greece but Italy,” Mousavizadeh said. “As a political leader, Silvio Berlusconi, has zero credibility. He’s not going to step down, so they’re going to muddle through.”
Then in Asia, he said, China is the biggest single open market in the world, but “there is a total disconnect from politics at the local level to politics at the senior level,” and a distrust of the government. He said the example of the Arab Spring has made Chinese leaders “paranoid” about the possibility such change could come to China.
Another concern, he said, is that protectionism is growing worldwide, which is a threat to the free market. One danger, he said, is that China “will respond aggressively to protectionist measures.” In the U.S., Congress is grappling with Chinese policies related to exchange rates and trade policy. For leaders in Beijing, a big danger, he said, is the huge numbers of Chinese who have access to the Internet.
In response to an audience question, Mousavizadeh said U.S. policymakers, such as economist Lawrence Summers, have an inherent belief that “what’s good for Wall Street is good for Main Street.” That’s not necessarily true, he said, as evidenced by the Occupy Wall Street movement, which “has more substance than people think.”
“There is an enormous recognition that we can’t continue on this path,” he said. “We have to prioritize.” He added 9/11, and ten years of wars in Iraq and Afghanistan have been “a major distraction for the U.S.”
Among other challenges going forward in a world that is fragmenting, he said, are economic disparities between the “haves” and “have nots,” and unemployment, especially among the young, around the world.