World view - Lindsey Hilsum glimpses the Next World Order

The 21st century, say US analysts, will not be American. It will belong to China and India, and it m

We're looking the wrong way again. While journalists focus on immediate, violent events and the short-term aims of passing politicians, we ignore tectonic moves in world politics and the economic order.

George W Bush's policy in Iraq and Israel grabs our attention, so we are missing the silent shift in the global balance of power. The United States is about to lose a lot of ground - and it is not its enemies who say so but its own intelligence analysts.

The National Intelligence Council, which pools thinking from all US intelligence agencies including the CIA and the National Security Council, has just published Mapping the Global Future, a report by the council's 2020 Project. Its main prediction is that the 21st century will belong to China and India.

The US "will see its relative power erode", says the report. "Rising Asia will continue to reshape globalisation, giving it less of a 'Made in the USA' character and more of an Asian look and feel." China already produces three times as many engineering graduates as the US and its economy is rapidly catching up.

Oddly, the report suggests that this global shift will bring a reduction in anti-Americanism - which is rather like saying that the upside of losing a war is that people stop shooting at you.

"This is not an essay portraying the decline in US power," says David Gordon, the council's vice-chairman. "In many ways the US is the best-placed country in the world to handle the challenges." None the less, all the futures outlined suggest that America will not be able to impose its will across the globe.

The authors of the report have chosen their words carefully, perhaps because their predictions expose the wishful thinking behind US confidence. The world economy, they say, will expand by 80 per cent, but the effect on the environment is dismissed in a few pages. "Fossil fuels will continue to dominate," it says, without clearly acknowledging the impact on our climate.

Nor does the report address the implications of Chinese power for foreign policy. The US and Europe might place human-rights conditions on arms sales or on big investments in Africa or poorer Asian countries, but the Chinese have no concern about such niceties. Their decisions will be based on economic criteria alone.

The report puts the most controversial ideas about the future in the mouths of fictional characters. One of the four scenarios contemplated is a Pax Americana where, despite losing its economic edge, the US still holds the global security ring. A fictional 2020 UN secretary general considers the impact of today's policies in Iraq: "Washington may not have been prepared for how a free and Shia-dominated Iraq began to swing the balance and raise tensions right in the region where most of the world's oil comes from." He adds: "Not an enviable position to be in for the Americans."

Indeed. The 30 January elections in Iraq will bring to power a Shia-dominated National Assembly, reducing the power of the Sunni minority which has long dominated Iraqi politics. For better or worse, that will change the balance of power in the Middle East, where for decades Sunni Saudi Arabia has glowered at Shia Iran across the Iraqi desert. Civil war may now be inevitable in Iraq, as factions and meddling neighbours try to increase their advantage. There is little the Americans can do - they had the power to start this chaos but not to guide its outcome. The 2020 report looks into the crystal ball, and sees danger.

Another scenario has a fiery young imam presiding over a cyberspace caliphate, commanding the loyalty of Muslims in many countries and terrifying North America and Europe.

"Can you imagine the look on their faces as Muslim athletes at the Olympics eschewed their national loyalties and instead proclaimed their allegiance to the caliphate?" asks the fictional grandson of Osama Bin Laden. Again, it predicts strife between Shias and Sunnis, and blames this on the intervention in Iraq.

"The tenuous peace inside Iraq that America had stitched together so laboriously came undone with the sudden reigniting of the Sunni insurgency; the insurgents proclaimed themselves the true caliphate and battled anew both Shia and American garrisons," writes OBL Jr.

It can only be good that the US has people at the heart of its intelligence structures who are both forward-looking and clear-eyed - proof there is thinking beyond ideology. But the outlook is bleak, however carefully couched.

Today's policies will reverberate for years to come, even as America fails to control consequent events. Many on the outside would cheer if the US lost its overwhelming power - but they might find that the world in 2020, with the US in decline, is even more frightening than the world in which we live today.

Lindsey Hilsum is the Channel 4 News international editor