American Interest

The Eight Great Powers of 2016: Iran Joins the Club

Mead and Zieve Cohen on the decline of the great powers

Ravenel B. Curry III Distinguished Fellow in Strategy and Statesmanship
Former Research Associate to Walter Russell Mead
(imagenavi/Getty Images)
(imagenavi/Getty Images)

Overall, 2015 was a year in which most of the great powers saw their ability to control events beyond and sometimes within their boundaries decline. With the exception of Iran, which gained strength during the year thanks to its diplomatic successes and the consequences of Russian intervention in Syria, 2015 was a year in which policy missteps and rates of relative decline had more of an effect on the power rankings than actual achievements and successes. These movements were encouraged and underscored by the collapse of the commodities boom, which has exploded the narrative that U.S. hegemony will imminently be undone by the inexorably rising BRICS without providing clear guidance about what might come next.

The country that fell the most in the power rankings was Germany; its failure to manage the deepening crises in the European Union did not just mean that the EU had another bad year. German leadership is also being called into question in a new way, and while no country is able to compete against Germany for the leading role in the EU, the danger is that German leadership will continue to falter in 2016 and that the EU will increasingly lack the ability to respond to its growing problems.

The most dramatic development in 2015 was that Iran catapulted into the ranks of the great powers, expanding their number to eight. Iran and Saudi Arabia are now engaged in a zero sum, no holds barred struggle to control the Middle East and its massive oil reserves. Falling oil prices create problems for both powers, but the combination of religious hatred and geopolitical competition ensures that both countries will give this competition everything they’ve got. In the end, either one of the two will emerge as the clear winner with a secure place on the list of great powers, or a third country (Turkey? Russia? The United States?) will capitalize on their rivalry and exhaustion to impose an order on the Gulf.

2015 was the year of grudge matches. Aside from India and the United States, the remaining great powers are struggling with each other. Russia tussles with Germany. The Saudis struggle with Iran. Japan confronts China. (India, of course, continues to face off against the second-tier power of Pakistan). In the coming year, these grudge matches, the effects of the commodities bust, and the China slowdown could be the big global stories to watch.

+Global Power Rankings for 2016+

1. USA

The United States remains at the top of the power ranking as much because other powers are struggling as because of any real gains or successes on its part. 2015 brought plenty of foreign policy missteps, and on the domestic side, the continuing failure American policymakers to find workable solutions to the country's troubling social and economic problems casts a shadow over the future. Yet the American economy remains dynamic and reliable, churning out new innovations faster than anywhere else and drawing investment from individuals, governments, and businesses around the world. The collapse in oil prices imperils American fracking companies, but the industry has kept fighting and the U.S. is poised to be a major energy exporter when prices eventually rise.

The biggest drag on American power these days is probably the growing perception in the international community that Americans have lost the ability to find and select good presidents. Both Bush and Obama are widely seen as ineffective, and the state of the current presidential race is not inspiring much confidence. World leaders probably would prefer Clinton first, Jeb second—both at least are known quantities. Candidates like Trump, Sanders, and Cruz give foreigners the heebie jeebies; nobody quite understands where they are coming from, what they would do, or why Americans think they have the skills to lead the country. As foreigners begin to pay attention to Trump in particular, their worries are likely to grow, along with their belief that erratic leadership and a dysfunctional political system will cause the United States to underperform in international politics.

In Asia, the United States continued to strengthen its alliances with Japan and India, and President Obama led Pacific countries to a landmark free trade agreement. But the U.S. struggled to respond to China’s aggression in the South China Sea, and has yet to come up with a comprehensive strategy to protect critical digital assets from Chinese hackers. Still, America’s Asia policy was relatively stable and productive compared to its’ Middle East policy, where U.S. power encountered substantial challenges from Russia. The conclusion of the nuclear deal with Iran has strained Washington’s relationships with the Sunni world and with Israel. Saudi Arabia has taken matters into its own hands, further exacerbating regional tensions. None of this bodes well for the American world order and the core strategy of suppressing competition between other great powers that has long been at its heart.

The United States faces other challenges too: the American-supported order in Europe is increasingly fragile, and the United States seems to have allowed itself to become irrelevant to the complex and difficult process of supporting the EU. Although the EU is hardly perfect from the American standpoint, Washington still wants and needs it to succeed. It is likely that the next administration will have to spend more time and energy dealing with Berlin, Brussels, London, Paris, Warsaw, and Rome.

And in America’s own backyard, trouble is stirring. Brazil is in economic and political turmoil, Argentina is struggling to regain its footing under a divided government, and the imploding socialist government in Venezuela is on the verge of possibly violent civil conflict or state failure. In the recent past, the United States has not had to worry much about the stability of regimes in Latin America. That may change this year.

But as much as those hotspots pose challenges to the American order, they also underscore America’s place atop it. The commodities glut has not hurt the United States as much as it has hurt virtually everywhere else. Even with weak leaders, the American constitutional system remains stable and the economy is the envy of the other advanced countries. Compared to a very chaotic world, America’s prospects look reasonably good.

2. China

Thanks to Germany's problems with crisis-torn Europe, China moved up in the power rankings last year even as the country lost its aura of economic invulnerability. 2015 was not a great year for China. Domestic growth was down, and China’s political influence took a hit. Governments and businesses in Africa, Asia, and Latin America are the paying the price of their heavy bet on continued rapid Chinese economic expansion. Furthermore, the world community no longer is sure that President Xi Jinping’s government can properly calibrate the transition from heavy industry to services and consumption. Global observers are beginning to speculate on how the world might look if China's slowdown turns into a prolonged, Japan-style stagnation.

Even as its economy slowed, China pursued its long term regional goals. It aggressively built out its artificial island outposts in the South China Sea and made a point of highlighting its growing naval capabilities. Additionally, China continued to strengthen trade alliances in Central Asia and the Middle East, as part of its “One Belt, One Road” strategy.

The consequences haven't always been what Beijing hoped; indeed, 2015 saw some significant setbacks for Beijing's regional diplomacy. The victory of the historically pro-independence DPP in Taiwan's elections early this year testified to the failure of the mainland's effort to prop up the KMT. Japan and South Korea reached an agreement on the contentious and long-simmering “comfort women” dispute. Tokyo and Seoul only hug when they must, and it’s never good news for China when they do.

As usual, North Korea was a problematic ally. DPRK provocations undermined Beijing’s attempts to pull South Korea away from Japan. The picture of a menacing, out-of-control North Korea, backed by a China that is either too weak to hold it in check or is using the DPRK for its own dark purposes, powerfully reinforces the messages of leaders like Japan's Shinzo Abe and South Korea's Park Geun-Hye.

There were a few bright spots. The One Belt One Road strategy is paying dividends as China's influence expands at Russia's expense in Central Asia. The end of Iran sanctions opens the way for China to develop new economic and political links with a rising Middle East country even as the commodity crash reduces the cost of the raw materials China's creaking industrial machine continues to require.

Despite the much ballyhooed 'pivot to Asia', President Obama's response to China's island building spree has been low key. Given that, Xi doesn't seem to feel any need to rein in the navy. On the contrary: Xi has sent clear signals that, despite and perhaps to compensate for the slowing economy, he intends on continuing to militarize islands and improve Chinese naval capacity wherever possible.

3. Japan

Despite its lackluster economy, Japan had a good 2015 from a geopolitical point of view. Prime Minister Abe pushed through a remilitarization bill, and has worked hard to rally other countries in the region around his policy of opposition to China. The win by the pro-independence (and pro-Japan) DPP in Taiwan boosts Japan, and so does reconciliation with South Korea. Meanwhile, the Nork nuke tests strengthen hawks internally in Japan, making Abe’s job easier. As with North Korea, China’s aggression only helps Japan—for now. Every time Xi does something that worries Vietnam, South Korea, India, Malaysia, Indonesia or any other regional power, Abe gains.

Economically, Japan’s long term prospects remain strong if uninspiring, and it has weathered the storm of China's opposition reasonably well. Lots of advanced tech knowledge puts Japan in a strong position for the next century, as does a well-educated workforce. Japan faces its own blue model-like problems: inefficient bureaucracies, large, lumbering corporations and government agencies, and a system premised on manufacturing supremacy. Yet Japan may well maintain some of that manufacturing capacity, given that the industry’s future will involve sophisticated robotics, a Japanese specialty. Still, Japan needs to figure out how to return to sustained growth and it has to manage an aging population and low fertility rates—the same unique culture that gives Japan certain advantages also has some rather counterproductive elements.

Japan continues to build relationships with other regional heavyweights. A Japan–India partnership continued to deepen with Tokyo offering assistance on both military and domestic infrastructure projects to Delhi. As in 2014, Japan leveraged its relationships with India and others to stare down Beijing—no small feat, and one that bodes well for its future. The world continues to underestimate Japan, but 2015 may have seen a turning point: whatever is happening to the demographics and to GDP, for now Japan is a rising power in Asia, and the most powerful prime minister the country has had in many years continues to steer a strong course.

4. Germany

2015 wasn’t a good year for Germany. Yes, Merkel managed to hold the EU together and stave off a Grexit. But her “moral vision” on refugees turned out to be short-sighted and impracticable. And now she faces a real possibility of a Brexit, and the Schengen Agreement may not last out the year.

It is getting harder to hold Europe together, and Germany may not always have the will or the resources for the task. Italy is openly opposed to the German roadmap for Europe; Poland has turned Eurosceptic; the British are preparing for a vote on their exit. Geopolitically, Germany is locked in a fight with Russia over the future of Europe. Germany wants a law-bound, bureaucratic and steady Europe that moves towards an ever-closer union in a close transatlantic alliance. Russia wants something more like the classic European state system of great power competition, and would like to reinsert itself into the heart of European politics.

In one sense, the contest is over whose vision melts the fastest. Will immigration, nationalism, bitterness over the euro debacle and continuing corruption in much of the union erode Germany’s ability to push the union down the old, familiar path? Or will Russia’s economic weakness spawn the kind of domestic dissent that forces Putin to focus his resources inward or forces him from power altogether? Both scenarios are plausible, but timing remains obscure.

The gloom should not be overdone. Europe will continue to be a major power for the foreseeable future, and no country is able to replace Germany as Europe’s leader. But the international environment is getting more difficult, and Germany will struggle to chart a workable course.

5. Russia

Russia’s economy is about the size of Italy’s, far less diversified, and collapsing under the weight of falling oil prices. Yet thanks to Putin’s bombastic machinations, Moscow wields outsize influence in global affairs. By filling the vacuum in Syria and keeping his thumb on Ukraine, Putin ensures Russia’s seat at the table of great powers.

Russia has other important advantages, of course: most of the countries which border it are powerless and pose Moscow no threat, Putin’s government has a virtual monopoly on power at home, and, of course, a large nuclear arsenal makes Russia one of the small group of powers capable of destroying the world. In 2015, analysts were surprised by Russia’s military conventional prowess. The weapons the Kremlin put on display in Syria demonstrated that Russia’s military is no slouch—hardly the Soviet-era dinosaur many expected. This should not be overestimated; the Russian military suffers most of the problems that afflict the country's institutions. Nevertheless, in Syria Moscow has demonstrated an ability to project power that has not been seen since the Cold War.

A great deal of Russia’s present strength comes from the way Putin has exploited the power vacuum in the Middle East and in Eastern Europe. In a time of cautious Western leaders, Putin is daring and a risk taker. In the long-run, his strategy may well backfire. Russia’s economy can’t withstand low oil prices indefinitely, and economic pain will cause more unrest in the country. China's New Silk Road strategy would essentially displace Russia as the predominant power in much of Central Asia; it is not clear that Russia has an effective strategy for resisting China's westward drive. Similarly, Russia faces a grave threat from Sunni jihadis. In Chechnya, Ingushetia and Dagestan in the turbulent Caucasus, simmering discontent with Russian rule is promoting the radicalization of youth. Russia's intervention in Syria and its cooperation with Shia Iran have also attracted the ire of militant Sunnis.

It's easy for westerners to list Russia's problems and conclude that we don't need a real Russia policy; we just need to kick back in our recliners as we watch the inexorable laws of history crush the Putin regime. But if 2015 taught one lesson about Russia, it’s that the West shouldn’t underestimate Putin’s ability and willingness to create a lot of chaos. Regime survival is a better guide to understanding Putin's foreign policy than Russian nationalist fervor; if Putin thinks an aggressive and dramatic foreign policy props him up at home, he will look for more opportunities like the seizure of the Crimea and the intervention in Syria.

6. India

India has been the 'country of the future' almost as long as Brazil has. Between the country's democratic government, the high quality of India's cyber capabilities, the dynamic performance of some of its leading corporations, and the presence of the second-largest English-speaking population in the world, there are lots of reasons to be optimistic about India’s long-term prospects. With China’s economy slowing down, Prime Minister Modi has made no secret of his hopes that India can fill the void and attract investment which is being pulled not only from China, but also from the emerging markets built to feed it. The commodities bust is good for India in other ways: India uses a lot of energy, and imports a lot of raw materials. From 10,000 feet, it all looks good.

The problem is that little else has changed in India to make it more hospitable for foreign investors. Modi’s most ambitious economic reforms remain stalled in India’s Parliament. Corruption remains high, taxes and regulations confusing and often restrictive, and legal barriers to foreign investment are still firmly in place.

As usual, much of India's geopolitical energy is spent on Pakistan and threats from Islamist militants in the northern states who most Indians believe are funded by Pakistan. After Modi visited Pakistan in the final days of 2015, four gunmen attacked an Indian airbase on the first day of 2016, erasing any hopes that the relationship between these two longtime enemies would improve. In the longer term, there is a question as to whether India's Muslims will remain largely free of the jihadi madness and whether the militance of Hindu nationalists will call forth a radical response from India's 150 million Muslims.

Despite its internal problems and the question of Pakistan, India played a bigger role in Asia’s Game of Thrones and on the global stage in 2015 and looks likely to continue to do so this year. Last year saw a raft of agreements for infrastructural and military cooperation with Tokyo and already this year, India announced plans to help Vietnam with a satellite operation. New Delhi also solicited bids from a number of European arms manufacturers in 2015; it's hoping to make some big military upgrades. Meanwhile, India has been drawing attention from Russia and will benefit from the opening of Iran—in addition to India's need for oil, there's a long history of Persia–India trade relations. So even if India does not fill in for China economically in 2016, it is set to play a more decisive role in geopolitics than it has since the collapse of the Mughal empire.

7. Saudi Arabia/Iran

The biggest change in the list of great powers this year is the arrival of a newcomer: Iran, the most powerful Shia country in the world. With its allies in Iraq, Syria, and Lebanon, Iran had a claim to the title of preeminent power in the Middle East even before the developments of 2015. But as long as Tehran remained isolated by sanctions, its reach and capabilities were limited. The nuclear deal orchestrated by Washington allowed Iran more geopolitical reach: the unfrozen funds alone amount to 20–25% of Iran's 2014 GDP according to some estimates, and lifting the international sanctions regime will boost the economy even more.

Western inaction in Syria has also been a major boon for Tehran—keeping Iran’s client Assad in power and leaving the road through Damascus to Beirut clear so that Tehran can supply its friends in Hezbollah. Throw in Iran's growing influence in Iraq, and it's clear that the balance of sectarian power has been shifting in favor of Shias lately.

Saudi Arabia, which had an economy about 40% larger than Iran's before sanctions were lifted, has been furiously pumping oil in an effort to keep prices low and Iran's economy depressed. The Saudis are putting everything they have into the competition, but the Iranians are circling the wagons and empowering their own hardliners—many of whom are bitter about the Iran Deal.

The Saudis are arming rebels in Syria while Iran arms rebels in Saudi-allied Yemen. Sectarian lines are hardening elsewhere too, pulling Sudan over to the Sunni side and leading the Turks and Qataris to make friendly noises toward Saudi Arabia—their old rival. The empowerment of Iran has created some strange bedfellows, with Israel now leaning toward the Sunni camp. How this will all shake out is anyone’s guess, but it certainly won’t involve Sunnis and Shias making up and agreeing to put their differences aside anytime soon.

The competition between Saudi Arabia and Iran is also likely to keep oil prices low. The Saudis can’t afford depressed prices forever, but they have the resources to keep pumping for some time and have demonstrated that they're willing to make deep sacrifices if doing so will hurt Iran. Yet the more cash Riyadh burns through propping up Iran, the more unstable Saudi Arabia’s political situation could become. The Saudis have historically been ultra-cautious in the world of foreign policy, and the shift to a more active stance is testing their institutional capabilities and political will. If Iranian hardliners push Riyadh to take further risks that would in turn destabilize the region even more.

Saudi Arabia and Iran may not be the greatest of the Great Powers, but the grudge match between them, with its consequences for oil prices and stability in the Middle East, looks set to generate more headlines (and headaches) than any other geopolitical story in 2016. Ultimately, the number of great powers will fall back to seven; the Middle East can only support one significant global player. Both Iran and Saudi Arabia right now seem absolutely determined to prevail, and compromise between them seems unlikely. The prize is considerable; should either side achieve a decisive victory and become dominant across the Middle East, the victorious country would be a formidable global force.