The World in 2025- Analyzing the NIC predictions - 2009
Nadir Belarbi - 1/5
The World in 2025:
Discussing some NIC predictions
Sr Business & Innovation Manager
New York, USA – March 2009
Abstract-This article provides a general analysis of some of the
topics mentioned in the last National Intelligence Council
report on the World in 2025. A focus is made on China’s
potential and its impact on the US leadership with some
recommendation to maintain it.
I. Predictions & Accidents
The National Intelligence Council (NIC) released its new
Global trends report for the world at the 2025 horizon .
The 120 pages try to predict the state of the world in 2025
based of current trends. The geopolitical balances are
probably easier to predict than weather changes but still,
how can we accurately predict the state of the world fifteen
years from now?
Some predictions seem obvious because of the current
• The emergence of a multipolar world with regional
powers like China, India and Russia where China
will be the main US rival and a logical shift of
Wealth from West to East.
• The decrease of the US dominance and its influence
on the world.
• The raise of unprecedented conflicts related to
climate change and resource scarcity.
The remaining predictions encompass changes that may
strongly reshape the world depending on their magnitude:
• Energy transition from Oil and Gas to alternative
energies by 2025.
• Extent and intensity of the climate change.
• The continuation of Globalization and world trade or
a shift to more protectionism and internal markets.
• Domestic Political changes in Chine and Russia.
• Nuclear proliferation in the Middle East in general
and Iran in particular.
• The resolution of Israel - Palestinian conflict and the
stabilization of Iraq.
• The impact of demographic changes on Europe and
Predicting the future is a perilous exercise per se as
unexpected events may occur and change the context or
simply the extent of the consequences may exceed or not
reach the predictions. The last financial crisis in 2008 is a
good example; even if many financial experts warned
markets on risks posed by the multiplication of opaque and
complex financial instruments, few imagined the extent of
the crisis and its international ramifications in Iceland and
Overall, any unexpected political, social, technological or
environmental events may affect the course of history and
lead to new balances. Another major Earthquake, an Iranian
nuclear test, a conflict between India and Pakistan or a large
cyber-attack against vital on-line services, are examples of
unexpected events that may have important consequences.
The world future is a non-linear system where any small
event may have important repercussions.
The intent of this article is not to analyze all the details of
the NIC report but rather discuss some of key topics
highlighted by the documented.
II. The emergence of a multipolar world
The emergence of a multipolar world is probably the most
significant geopolitical change since the fall the Soviet
Union. After nearly 20 years of unchallenged power, the US
is confronted with new regional powers that seek a direct
control of their geographical surroundings. These new
contenders are growing economically and feel the need to
strengthen their positions to impose their economical
conditions and maintain an internal social and political
stability. The list of these contenders is the following and
mainly concentrated in the East: China, India and Russia,
where China is without a doubt the new US rival.
Unquestionably, the underdevelopment of China and India,
and at a certain extent Russia, has turned these countries
into fertile lands for low cost manufacturing and business
investments. Today’s world economy growth largely relies
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on the Indian and Chinese markets; the western ones being
saturated with weak growths.
With currently 36% of the world population, China and
India are catching up with the western world, reaching the
US GDP respectively in 2036 and 2050  . The size of
the Chinese and Indian population, the large differences
between the income levels of their workforce with those of
the developed countries will continue to attract foreign
investments, sustain outsourcing and fuel an organic
The state capitalism followed by these players will probably
continue to control their resources and insure a domestic
stability. Beside Russia, the social structures of China and
India in particular are very complex. The fast economic
growth mainly concentrated in large cities will have a lower
impact on rural areas leading to growing social tensions and
income disparities among the population . China and
India are living in a compressed time frame, their own post
industrial revolution eras. Half of a century is a very short
period of time compared to the two centuries that Europe
had to absorb these changes. China, India and at certain
extent Russia, are raw economic and military powers that
enjoy a steady growth because of their relative political
stability and their cheap labor force. With its large oil and
gas resources, Russia has a relatively important advantage
compared to India and China, which need to fuel their
growing economies with large energy supplies. This
geopolitical balance of the region will rely on the
relationships established among these protagonists.
While Russia has to face an aging population, the steady
growth of the Indian and Chinese economies will face a
structural problem. At the long term, outsourcing to China
and India will reach its limits. Revaluation of the Chinese
Yuan, increases in the labor force compensations as in
Bangalore and the likely increase of shipping costs with the
raise of oil prices will reduce arbitrage benefits. Other
underdeveloped countries as Indonesia, Philippines or
Vietnam will be become more attractive destinations for
outsourcing but they will nevertheless not offer the same
structured and stable environments as in China or India.
Conversely, the Chinese and Indian large internal markets
will continue to offer enough room for organic growths
through their internal consumption. While most of the world
economies, including Russia, strongly contracted in 2009,
India and China achieved respectively a 7% and 8.7%
growth. This accelerated growth is already creating
significant social tensions in China that will challenge the
central political authority of Beijing. In India the social
tensions have already morphed into political grievances
where states like Telangana seek more independence .
China remains nevertheless the most interesting protagonist
in the region and in the world. While India economy is
heavily relying on agriculture and services industry, China
is massively investing in advanced manufacturing, high tech
and education to sustain fundamental research. The recent
Indian achievements in the space launch technology and
satellites is more of a psychological step to confirm the
country new international status and a signal to its neighbors
that it is powering up its ballistic missile defenses rather
than a consequence of a broad development strategy.
"If you don't plan for the future, you will be distracted by
what happens in the short term," said Lu Yongxiang,
president of CAS, the Chinese Academy of Sciences at a
news briefing in 2008 when China announced its next
scientific strategy for the next 50 years. The roadmap covers
18 domains including agriculture, ecology and environment,
human health and ocean science . Energy is probably the
most important sector that China wants to secure in order to
sustain its fast growth. The oil consumption grew by an
impressive 11.9% in 2008 where the country produced an
average of 3,795,000 bbl/day while its consumption was
nearly the double at 7.999 million bbl/day . This
discrepancy is the Red Dragon Achilles’ heel shaping most
of its foreign policy and explains the different trade
agreements and diplomatic initiatives conducted in Africa.
Theoretically, China has a week of reserves in case of an
interruption of oil imports. In parallel, China is also
massively working on a new generation of nuclear plants
using an advanced pressurized water reactor (PWR) with a
55% localized part production, planned to be in production
In 2001, the strong willingness of global western
corporations to access large foreign markets, lead the World
Trade Organization to negotiate new agreements which
allowed China to become its 143rd member. As a result and
ten years after, the world economy has totally changed with
a brutal rebalance of economic powers from the West to the
East. With $2,399.2B in foreign currency reserves and
$894.8B of US Treasury Securities, China is unequivocally
the biggest winner of the last decade.
Unlike for the post second world war period, it's the free
trade not the military balances that shaped this new world.
But as the economic crisis lingers and the unemployment
rates are expected to remain high in most of the western
economies, for the next 3 to 4 years, the free trade
conditions and consequences will become unbearable.
Social pressures will weigh on political campaigns
requesting more protectionism and isolation from the world
affairs but at the same time, leading the populations to
support military actions when they will be the unique option
to regain an economic sovereignty.
Interestingly, the next world on the rise is likely to be
shaped again by military conflicts allowing to void an
unacceptable economic situation and a heavy financial
burden. In this context, military power will remain an
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important deterrence factor even for economic and financial
III. The decrease of the US dominance and influence on
The US has without a doubt, the strongest brand image in
the world, associated with power and success. The influence
of the US culture and way of life will continue in the next
decades, largely thanks to a powerful entertainment
industry, ambassador of the country all over the world. This
intangible value, represents a goodwill which will continue
to attract talents to the US, foster startups and innovation
and position the country as technological leader among the
The economic crisis and the slow recovery will nevertheless
slow the investments, keep the employment rates high and
hinder the consumption which represented in 2009, 71% of
the of the United States Gross Domestic Product. As
discussed in the previous section, the distribution of powers
in the current world is largely due to a new economic
balance created by the free trade. The public debt and the
federal burdens carried by the country will definitely limit
the renaissance of the economy and the US influence in the
world. A scenario where the triple A credit of the US would
be demoted by Moody’s Investors Service is unlikely but it
is sending the wrong signal to the world . Since end of
2008, the image of the US abroad took a hit, showing for the
first time that the colossus is vulnerable. The soft diplomacy
of the current US administration is unfortunately
accentuating this perception by the way which the Iranian
and Chinese issues are tackled. Diplomacy is perceived as a
weakness and countries like Brazil do not hesitate now to
publicly oppose US policies as recently on Iran.
The US will certainly remain the major military force for
the next decades but its reach will be limited by the
economic situation of the country. Large military operations
and deployments will face more public resistance and may
experience budget limitations. The choice to withdraw
90,000 US troupes from Iraq by December 2011 to focus
more on the war against Al Qaeda in Afghanistan is a sign
that supporting two fronts is too complex.
Moreover, nuclear weapons have changed the nature of
military balances. Today it's probably more important for
most emerging powers to have nuclear deterrence
capabilities than an organized and structured military force.
Iran’s race to build a first nuclear weapon is a race to secure
its regime rather than develop a thorough nuclear program.
Large conflicts between nuclear powers have almost
disappeared and conflicts have become short and localized
involving state military forces and/or small and
disseminated guerrilla groups. In this aspect, the US old two
wars doctrine is not applicable anymore, as many enemies
need to be simultaneously engaged and US forces need to be
present in several hot spots around the world. Human and
technical intelligence techniques associated to an increased
use of unmanned aerial vehicles will allow targeted strikes
supporting tactical operations. The ability of the US military
forces to exhibit both traditional large-scale deployments
and small mobile tactical interventions in a very short lapse
of time is essential to maintain the US superiority and
Conversely, sustaining a worldwide influence exclusively
with military capabilities is unrealistic in this globalized
economy. Developed countries represent economic nodes
that attract talent, capital and innovation. They are able to
finance technologic breakthroughs and stay ahead of the
curve. In terms of deterrence, technology plays a major role
in designing the next weapons and systems that can provide
a superiority advantage to any nation. The Chinese and
Indian economies are benefiting from temporary economic
arbitrage situations. Massive outsourcing programs to these
countries by western companies has fueled their economies
with a capital that enabled them to invest in different
research programs to acquire and produce new technologies.
The aggressive intelligence collection by the Chinese
organizations through economic or cyber espionage has
accelerated this transmutation and allowed Beijing to
quickly catch up with the western standards . The large
Chinese Diaspora present worldwide and the different
University exchange and common scientific programs have
also “legally” sustained this trend. In this perspective, a
large and thorough cyber policy is critical to protect US
assets and intellectual capital. But besides only protecting
the countries assets, it is essential for the US to continue to
During the last decade, the shift of the mass production to
the East and the transformation of China in the world
workshop lead western economies to focus more on
financial services. But the recent financial crisis showed the
limits of such specialization and the risks of heavily
relaying on non-tangible economic assets. If manufacturing
goods with the current means of production costs less in
China and India then there are only two ways to maintain
the US superiority over these emerging powers.
Either design enhanced manufacturing techniques to allow
lower production costs than in Asia and/or manufacture new
products that Asia can’t manufacture because of technical
limitations. In both cases, innovation is the key concept to
maintain a competitive advantage. To enable that national
innovation programs combining government and private
interests need to initiate profound changes in the way the
country produces cars, planes, electronic devices, etc. In a
nutshell, Detroit needs to be converted to a Silicon Valley.
The landscape of the workforce will need to be gradually
changed with more workers specialized in advanced
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technologies as IT, Nanotechnologies and Biotechnologies
for example. If the country is able to produce better goods at
lower prices, the attraction for outsourcing will decrease and
the flow of capital to China and India will follow. The
regeneration of the US industry as a high tech focused
industry will stimulate the financial systems and boost stock
markets as these new technologies will offer tangible
present values with understandable risks compared to
complex finance products.
The key factor to enable this transformation of the US into a
knowledge society is education. U.S. data indicate that
college-educated workers are three times as productive, and
a high school graduate is 1.8 times as productive, as a
worker with less than a ninth-grade education . Since
1998, China is following an aggressive education state
sponsored program that lead in the four years to 165%
increase in high education enrolments and 152% increase in
students studying abroad. This continuous trend may add up
6 percentage points to the country's annual economic growth
The last years, several report confirmed the decline of the
US in several international education rankings done by the
Organisation for Economic Cooperation and Development
(OECD). In a survey done in 2006, the US ranked 21th,
behind countries like Croatia, the Czech Republic, and
Liechtenstein, and ahead of just five other OECD countries
. A tremendous effort has to be made to enhance the
public educational system and make private universities
IV. The raise of unprecedented conflicts related to
climate change and resource scarcity.
For the next decades, oil will remain the main source of
energy on earth. The steady increase in worldwide
consumption is likely to be offset by new oil fields
discoveries as in the Gulf of Mexico or Uganda and the
exploitation of untapped reserves in Iraq, Iran, Russia and at
a lesser extent, Alaska and the Arctic Circle. Moreover, as
the oil prices will continue to increase with economic
recovery, the use of oil shale reserves will become a viable
About two thirds of the oil consumed in the US is used by
the transportation sector. This trend will be gradually and
partially offset by the introduction of new hybrid electric
and hydrogen engines. Pre 2008 summer scenarios on the
impact of hybrid sales on the US oil consumption were at
best showing 2.5% decrease for 1 million hybrid cars
predicted to be sold by 2025. In fact, this number was
reached in February 2009 for the combined Toyota Prius
and Lexus hybrid cars sales in the US . The inevitable
increase of the world oil demand mainly driven by China,
fostered by financial markets speculations, will certainly
lead oil prices to cross again the $100 threshold and
maintain this trend.
According the NIC report, only six countries: Saudi Arabia,
Iran, Kuwait, the UAE, Iraq (potentially), and Russia are
projected to account for 39 percent of total world oil
production in 2025. Five of these countries are located in the
Middle East, reinforcing the feeling that oil supplies will
increasingly originate from a region with high degree of
political instability. A nuclear Iran neighboring an instable
Iraq with continuous guerilla operations orchestrated by ex-
members of the Baath party, Shia factions, Al Qaeda and
other players in the region may be a potential source of
disruption for the oil world supply. Moreover, the
nationalization trend observed of oil and gas production
companies will spread, increasing the possibility of having
these countries using these resources as an economic and
political weapon. In this perspective, seeking new oil and
gas reserves as well as alternative energies will be critical
for the US to maintain an economic independence and an
On the climate changes impacts, interestingly the NIC report
only analysis long-term effects of the global warming with
potential water supply shortages and new lands and
waterways resulting from an increase of temperatures.
Nevertheless at the short term, regular abrupt climate
changes are already disturbing the world economy with
different extent. As an example, the bad weather in Europe
during the 2005, 2006, 2007 and 2008 summers had
important impacts on the price of the wheat with
consequences on the price of the milk and of dairy products.
A report prepared by the FAO in 2008, showed that that the
world cereal production fell by 3.6 percent in 2005 and 6.9
percent in 2006 due to bad weather in major producing
countries . As consequence, stock levels in 2007/08
reached their lowest level in three decades. More recently,
record-breaking snows which fell across the U.S. East Coast
in January and February 2010, may have shaved as much as
2 percent off all sales which nevertheless grew by 4.1% in
In the next decades, unexpected and short-term climate
changes will definitely have an impact on local economies
through decreases in production, consumption and increases
in the amount of damages caused by floods and hurricanes.
By 2030, the world food demand is predicted to increase by
50% challenging low agricultural prices policies and
pushing for an increased use of genetically modified crops.
At this scale, any climate effect on a local food production
may have global consequences on the world supplies.
V. Demography, pandemics and others.
Some regions of the world are aging faster than others.
Europe, Japan, Russia will face a major challenge in
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financing their pensions and avoiding immigrants to feed
their labor force. As a consequence, the European
percentage contribution to global GDP is predicted to
plummet from 21% to 5%, in a generation . Yet Europe
prospects of a better life will remain a strong attraction for
the large and young African unemployed population. In
such less favorable economic context, the European
countries like France, Spain and Italy will face serious
challenges in assimilating African populations and avoiding
social troubles. Interestingly, Japan will face a serious
dilemma between accepting more immigrants and
preserving its national identity. Tough economic and
cultural choice will have to be made to encourage parents to
have more children.
Finally, the last bird flu and H1N1 pandemics had
fortunately limited consequences on the world economy and
the number of victims. But the possibility of a global and
virulent pandemic remains present. The absence of an
adequate vaccine and the general lack of immunity may
trigger a hundred of millions of contamination that may
result in tens of millions of deaths . More than ever,
science and medicine performance will be critical to find a
cure in a short time frame while keeping populations alert.
The different challenges raised by the latest NIC 2025
Global Trends report underline more then ever the need for
the US to address some real issues that are pending since
several years. Priorities will have to be made and tough
decisions will be necessary. But above all, a large consensus
and national unity will be necessary around the new elected
president to enable this positive transformation; a necessary
change to offer better tomorrows for our children.
 Global Trends 2025: A Transformed World, National Intelligence
 Goldman Sachs, Economics paper No 99, Dreaming With BRICs: The
Path to 2050, 2003.
 Goldman Sachs, Economics paper No 152, India’s Rising Growth
 Social Unrest in China, CRS Report for Congress, Thomas Lum, May 8
 India Telangana separate state protests turn violent, BBC News, 20
 China issues 50-year science strategy, SciDevNet, July 6, 2009.
 CIA Online Factbook: China, cia.gov, march 7, 2010.
 Analysis: Greek financial crisis coming to America? By Niall Ferguson,
FT.com, February 12, 2010.
 Capability of the People’s Republic of China to Conduct Cyber Warfare
and Computer Network Exploitation, Prepared for The US-China
Economic and Security Review Commission, Bryan Krekel ,October 9,
 PISA 2006: Science Competencies for Tomorrow’s World, OECD
briefing note for the United States, December 4th
 "Toyota and Lexus Hybrids Top One Million Sales in the U.S.". The
Auto Channel. 2009-03-11.
 $123,000,000,000,000: China’s estimated economy by the year 2040.
Be warned, Robert Fogel, Foreign Policy, Jan/Feb 2010.
 High food prices: Impact and recommendations, Paper prepared by
FAO, IFAD and WFP for the meeting of the Chief Executives Board for
Coordination on 28-29 April 2008, Berne, Switzerland.
Nadir Belarbi received a Master Degree in Networks and
Telecommunications from Paris V University & Sup Telecom Paris, France
(1994), studied 3 years of studies and research on Intelligent Networks
during a PhD program (1997) and received an Executive MBA from the
Chicago University, Booth Graduate School of Business, USA (2008). He
has worked for IBM, Air France, Groupe Danone. He currently leads
Business & Innovation projects at Dannon.
Nadir Belarbi’s research has spanned a large number of disciplines,
emphasizing information technology and telecommunications with a focus
on emerging technologies. As a manager with multi-cultural skills
speaking five languages, he worked in an international environment where
he specialized in the coordination and lobbying of global organizations.
His political and social experience ranges from heading the corporate work
council to participating in political and geopolitical organizations and think
tanks. With a major interest in Intelligence, Technology & Energy roles in
Geopolitical, Military & Security issues, he is now managing a LinkedIn
group on Business, Innovation & Geopolitics.