UKIP is just a small part of a broader phenomenon spreading across the developed world that resembles a political backlash against globalization and interdependence.

A recent study showed that policy issues are secondary to potential UKIP supporters. (Only 7 percent of UKIP supporters say Europe is the single most important issue for them.) In focus groups, UKIP supporters reel off a litany of complaints, both imagined and real, about the cultural and social state of Britain. For example: Your school is not allowed to hold a nativity play; you cannot fly the flag of Saint George; you cannot call Christmas “Christmas” anymore; you cannot be promoted in the police force unless you are a minority; you cannot wear an England team shirt on the bus; you won’t get social housing unless you’re an immigrant; you cannot even speak up about these things, because you’ll be labeled a racist. “All of these examples,” says Lord Ashcroft, the study’s author, “make the point that the mainstream political parties are so in thrall to the prevailing culture of political correctness that they have ceased to represent the silent majority.”

It seems that UKIP’s support comes from a very similar constituency as the Tea Party in the United States, Geert Wilders’ far-right PVV in the Netherlands, Joerg Haider’s party in Austria, and Viktor Orban’s Fidesz in Hungary. Sunder Katwala of the think tank British Future described UKIP to me as “a cultural movement of angry white men over the age of 55.”

In essence, support for UKIP, like other populist parties in the West, is a cry by an empowered majority afraid of losing its position as a result of the economic, demographic and cultural changes of globalization. As power and wealth spread from west to east, an increasing number of people fear their children’s lives will be worse than theirs; and that the cultural makeup of their countries will change.

The winners in the Western world now feel threatened by the very things that were previously seen as opportunities. The cheap products and services that they enjoy consuming are now seen as destroyers of jobs. Easy travel is seen as an immigrant flood waiting to happen. There is a pervasive sense of victimhood among creditors and debtors alike. The more that globalization forces countries to bind together, the more citizens crave their independence.

So now, after two decades of watching borders come down across the world, a growing group wants to see the walls re-erected. It is no coincidence that a backlash against interdependence is happening at the same moment as a backlash against the elites who drove globalization in the first place. The appeal of the populist parties is that they offer a way of re-exerting control over lives at a time when economic policy is increasingly beyond national control.

Katwala says many mainstream European parties have cycled through a set of three inadequate responses: “They start by trying to change the subject;”he says. “When that fails, they often concede and echo the populist argument; and when that fails, they return to defending their liberal creed. And when that still doesn’t work, they often make their way back through the cycle again.”

Perhaps there is an alternative approach. Anthony Painter, in a thoughtful paper for the think tank Policy Network, put forward a trinity of strategies: to acknowledge the issues that drive potential support for the populist radical right; to develop a new national vision involving changes to jobs, welfare and housing; and to mobilize new voters to change the electoral demography.

This sounds remarkably like the approach that Barack Obama successfully used in the last U.S. election. America’s changing demography, its ability to insulate itself from global pressures and Obama’s political skills may help to keep these sentiments in check for a few more years. But there are reasons to fear it will be more difficult for Europeans to adopt the same approach. Through their membership in the European Union, Europe’s nations do not have the luxury of disentangling themselves from one another. At the same time, they have not yet developed the political habits and cultures to deal with sensitive issues that cut across borders.

For euro zone members, sensitive issues like public spending, retirement age and public-sector salaries have become entrenched in European politics. Even outside the euro zone, the global mobility of Europeans has become a political issue. Unfortunately, the leaders of Europe’s governments have tended to carry on treating the European sphere as if it were a technocratic realm, rather than focusing on gaining support for their individual policies. This has left the field free for the populists.

Britain has always been more open to free trade because it was the country that brought globalization to the modern world. The British economy continues to be disproportionately shaped by international trade and finance. The UK’s “first-past-the-post” electoral system has also squeezed an ever more diverse country into the straitjacket of a two-party system. In these circumstances, the Conservative Party has managed to absorb much of the support that would go to far-right parties in countries with more proportional electoral systems.

Ironically, it is the euro-hating Nigel Farage that is dragging British politics further into line with the European mainstream. British politicians will need to face up to the same political dilemmas as their continental counterparts. Unfortunately, they threaten to be equally ineffective.

PHOTO: UK Independence Party (UKIP) leader Nigel Farage poses for a photograph with a pint of beer in the Marquis of Granby pub, in Westminster, in London May 3, 2013. REUTERS/Olivia Harris

In many of the same French squares and streets that were occupied in the general strikes of 1968, a new generation has been re-inventing the art of protest for the age of Twitter. Their focus has been opposing a law that would legalize gay marriage, which is expected to pass a final legislative hurdle on Tuesday. Although the protests may be misdirected, they are a symptom of the crisis this generation faces in influencing its government and economy in France.

For a generation that is staring at a “lost decade” of economic stagnation and joblessness, this protest seems like a form of escapism to observers. With economic and political spheres surrendered to global markets and German politicians, the protesters may be trying to reclaim ownership of the cultural sphere by seizing on the gay marriage proposal. This desire for individuality within the euro zone was, in fact, the same effort that led the French government to introduce the proposal in the first place.

This predominantly Catholic revolution without leaders has spawned a new organization – le Printemps Français, or the French Spring – that compares the fight against gay marriage to the Arab Spring uprisings that began in 2010.

The majority of the troops in this culture war are the children of the 1968 generation in France. Le Monde has pointed to a new generation of right-wing activists taking to the streets of Paris and other French towns to declare war on their parents’ sexual permissiveness.

The Web pages for the movement mark the progression of demonstrations that have attracted hundreds of thousands of participants, as well as a petition that has attracted more than 700,000 signatures. Since November, they have been congregating nightly outside the French National Assembly building in Paris and have used social media to recruit members and spread word about the fight.

Like the Tea Party in the United States, the French protest movement has a religious undertone. Several of the Catholic blogs, such as Le Rouge et le Noir (“The Red and the Black”), carry a call to arms by Vivien Hoch, a media-savvy theology student, that was broadcast on the right-wing radio station Radio Courtoisie in early April. Hoch said, “France’s youth has suffered profoundly as a result of … May ’68. We grew up in a society with no bearings, norms or values in the throes of moral and intellectual collapse, with degenerate art … and a daily insult to the sacred.” Hoch calls for “a revolution in reverse” – a May 2013 movement that will mark a “progression to the divine” through its rejection of the protests of May 1968. The theme of personal suffering is picked up by Carol Ardent, who runs the Rouge et le Noir blog. She claims that many of the young demonstrators come from broken homes and grew up longing for the stability of a more present mother and father.

The growing frustration with the generation of 1968 was captured two decades ago by the controversial French novelist Michel Houellebecq, whose literary reputation has been built around a denunciation of the social effects of the hippie generation and the children – such as himself – who were abandoned by their parents. His extraordinary first novel, L’extension du Domaine de la Lutte, (“The Extension of the Struggle”) published in 1994, is a powerful denunciation of the effects of the Sexual Revolution. As he writes, the dynamics of the market spread to the sexual realm in the 1960s: “Sexual liberalism is … an extension of the domain of the struggle, its extension to all ages and all classes of society.” The main character explains that 1968 did not lead to the sexual communism – from each according to his ability to each according to his needs –but rather that the winners enjoyed rich and varied sex lives and the losers were reduced to a life of “solitude and masturbation.”

The paradox of the current demonstrations against gay marriage is that the law, if passed, is not intended to have the effects that the demonstrators say they are worried about. Rather than creating greater sexual liberation, the notion of gay marriage in France is about the re-regulation of a domain that was the most free from structure and norms. The law is designed to rein in sexual liberation by making available the institutions of heterosexual bourgeois monogamy to the gay community.

Regardless of that misunderstanding, the fact that the gay marriage law has proved to be such a mobilizing issue tells us something about France’s crisis and how its politics are evolving. The protests are not an “extension” of the struggle that Houellebecq describes, they instead point to a shrinking political realm. The fact that the generation of the financial crisis is being politicized by sexual politics shows how little hope they have of controlling economic decision-making. If no alternative is available on economic issues, politics will be reduced to symbolic battles about social issues. In that sense, France’s culture wars may be the ultimate product of German economic hegemony.

PHOTO: French gendarmes in riot gear stand guard as gay marriage opponents shout slogans after the “Manif pour Tous” (Demonstration for All) protest march against France’s planned legalisation of same-sex marriage near the Invalides in Paris, April 21, 2013. REUTERS/Gonzalo Fuentes

BERLIN ‑ Of the most dangerous sentences a politician can utter, one must be, “There is no alternative.” Or, as German Chancellor Angela Merkel says, the situation is alternativlos.

A group of German political activists who gathered this weekend to launch an anti-euro party is betting that Merkel’s refusal to countenance change will provide fertile ground for opposition. Although most people in Berlin think Merkel will be re-elected in the general election in September, a growing number of political forces are lining up to define an alternative to her policies in Europe.

Merkel has managed to contain the threat to austerity represented by international leaders such as François Hollande, Mario Monti and Mariano Rajoy. At home, in spite of growing hostility to the euro among the public, none of the mainstream parties dissent from Merkel’s dedication to the euro. Merkel’s more dangerous opponents come from outside the established political terrain.

Populist revolts have been capturing headlines in Europe for a while. The surprising electoral success and the unyielding stance of Beppe Grillo in Italy could force more political choices across the continent if he calls for Italy to leave the euro.

This revolutionary challenge is mirrored in Germany by a more unfamiliar movement: a revolt of the technocrats. This weekend 1,500 economists, lawyers and other members of the establishment gathered in Berlin’s Intercontinental Hotel to launch a head-on assault on the chancellor’s European policy. Calling itself Partei Alternative für Deutschland (Alternative for Germany), the nascent political party argues that the euro is dividing the European Union and claims that the re-introduction of the deutsche mark should not be a “taboo.” Its goal is an end to bailouts and an orderly dissolution of the euro.

Two-thirds of the supporters on the Alternative Party’s website have PhDs, and its leading figures make unlikely revolutionary leaders. The leader, Bernd Lucke, is a clean-shaven, wonkish economist in his 50s at a middle-ranking provincial university. With his strange sort of anti-charisma, he is no Che Guevara figure.

The group is a good illustration of Germany’s exceptionalism. Where in other countries the technocratic elite have been pro-euro, in Germany technocrats have blazed the trail of euro-skepticism. The biggest opponents of the common euro are among the ranks of economists (with an ideology that favors austerity), central bankers (many at the Bundesbank have been against banking union and the socialization of European debt), lawyers and judges (judges in the constitutional court have defended German parliamentary sovereignty). They have all been increasingly frustrated by the way the political class has remained united behind Merkel’s policies on Europe. Der Spiegel journalist Ralf Neukirch jokes that, “It is as though the professors of 1968, rather than the students, have now decided to revolt.”

Germany’s established parties, including Merkel’s leading Christian Democratic Union, have attempted to denounce the Alternative Party, pointing out, for example, that some of the slogans attacking “multicultural re-education” on the party’s website echo those of neo-Nazi groups. In a country that is suspicious of the wisdom of crowds, these sorts of attacks are usually enough to consign a political party to oblivion. As a result, party leaders are going to great lengths to distance themselves from the far right.

In gathering signatures for election, the party has managed to attract 7,000 members, but its leaders are weeding out former members of far-right groups. Party leader Bernd Lucke told Der Spiegel that he wants to make sure they are not attracting support from the “wrong side.”

There was excitement in early April when an opinion poll showed that up to 24 percent of German voters claimed they would consider voting for a euro-skeptic party. It is clear that a substantial proportion of the electorate feel under-represented by the leadership’s consensus on Europe. Several euro-skeptic books have sold millions of copies. Furthermore, with the rise and fall of the Internet-backed “Pirate Party” in recent months, German politics have become volatile.

This week the Bild Zeitung has the first official poll since the new party was launched, showing support at 3 percent. Few political pundits expect the “Alternative Party” to get the 5 percent of votes required to enter parliament. But this may not stop the party from having an impact. The political scientist Oskar Niedermayer told Der Spiegel that the party could determine the outcome of the election even if it secures only 2 percent of the vote. That could be enough to deny the governing coalition the chance to stay in power, particularly if it prevents the FDP (Free Democrat Party) from reaching the 5 percent it needs to remain in parliament.

Meanwhile, mainstream parties are changing their rhetoric to appeal to the substantial reservoir of skeptic voters. Last week, Germany’s foreign minister, Guido Westerwelle, told the Frankfurter Allgemeine Zeitung that a “red-green” coalition would be soft on deficit targets. Merkel will be under pressure to match his rhetoric and be tough in future negotiations – for example, if Slovenia needs a bailout.

All this shows that the politics of the euro crisis remain unpredictable. When the market pressure lessened last summer, many thought the worst was over. Despite polls showing that populist parties in the Netherlands and Greece would win majorities, voters in both countries ended up supporting pro-euro mainstream parties. The implication was that voters are happy to flirt with rebellion, but when they examine their consciences in the privacy of the voting booth they may accept that there is no viable alternative.

Then Grillo emerged as the surprise winner of the Italian election. And today in Greece and the Netherlands, the opponents of the mainstream outpoll the elected governments. These populist movements may put more pressure on Merkel than the Alternative Party will. If one of them wins an election, they may yet show that there is an alternative.

PHOTO: German Chancellor Angela Merkel visits the public transport company PVGS Personenverkehrsgesellschaft mbH in Salzwedel, eastern Germany, April 12, 2013. REUTERS/Ronny Hartmann/Pool 

Only 10 years ago, Europe and the U.S. were meant to be so different that not only did they have different views, but they viewed each other as if from different planets. Politically and militarily, the author Robert Kagan claimed, Americans were from Mars and Europeans from Venus. American commentators used to routinely denounce European economies for being closed, backward-looking and missing the wave of the future. Germany was still seen as the sick man of Europe, and it was the subject of ridicule for the way it was wedded to an industrial economy in a post-industrial age. What a difference a decade can make.

As a European in Washington, I have spent much of the past few weeks listening to pillars of the American foreign policy and economic establishments. I am struck by how many of today’s U.S. debates mirror those in Europe. These two giant economies are no longer as different as they once were.

In the foreign policy and security fields, no one seems to be coming from Mars anymore.  The U.S. is debating how to avoid war and how to save money. Everyone agrees that ‑ whether or not there is a sequester ‑ there will be deep cuts in the Pentagon’s budget, with tens of thousands of soldiers and marines facing decommission. On Friday, a seminar at the Brookings Institution, which gathered soldiers, senators and academics, seemed to agree that future administrations should not call on the armed forces to intervene directly in other countries’ civil wars, to build democracy or engage in lengthy peacekeeping operations. As Michelle Flornoy, a former Pentagon official who many people want in the sidelines behind Defense Secretary-nominee Chuck Hagel, said, “We don’t want to be the world’s policemen.” In the place of major ground wars, participants said they want to rely on drones, alliances and rapidly conducted offshore interventions.

Where the Clinton and Bush administrations were apostles of a flat world of financial and technological globalization, the Obama administration has a more nuanced position. While Obama does not advocate protectionism, he worries that trade with China has de-industrialized the American economy, hollowed out middle-class jobs and depressed wages. (This paper on the “China Syndrome” seems to be required reading in Obama’s economic circles.) As a result, administration officials are talking about energy independence, re-industrialization, re-shoring and fair trade. Where once the U.S. saw Germany as being trapped in auto parts and metal bashing at a time when high-tech services were the future, people in D.C. now talk about the German economy with reverence.

J. Robinson West, who advises most of the big energy companies as head of PFC Energy, predicts that the U.S. will be producing more energy than Saudi Arabia and Russia within two decades. But the Obama administration seems less excited about energy exports than the promise that cheap gas could lead to a manufacturing revival. The administration seems receptive to arguments put forth by Dow Chemical’s president, Andrew Liveris, that being cautious about granting export licenses could help create jobs in the U.S. Obama thinks a manufacturing revival is a key element of enhancing America’s ability to innovate – whether it is the chance to develop patents, innovations in production or create higher-wage technical jobs. Above all, Obama, influenced by the German example, thinks advanced manufacturing can create export-led growth.

The transatlantic trade deal knits the economic and geopolitical strands of the new Obama vision together. The idea of signing a free-trade deal with America’s most reliable allies should provide a more solid economic platform for the West’s attempts to support a liberal geopolitical order. Signing a deal with rich European Union countries that have high wages and even higher environmental standards accords with America’s new philosophy of globalization. Such a transatlantic deal – particularly if linked with hopes for trade deals in Asia (such as the TransPacificPartnership) ‑ will help the rich world to impose regulatory standards on rising powers by making access to this new mega-market dependent on meeting these standards.

People used to ask: What would bring the two sides of the Atlantic together – reminding them of their common interests or reinforcing the thick web of values that they share in common? The truth is that while values (guns, god and GMOs) and interests (Iraq, Israel-Palestine) have divided Europeans and Americans, it is austerity and the prospect of decline that have brought them back together.

This was obvious in one of Hillary Clinton’s last speeches as secretary of state, in which she explained that the U.S. is not planning to pivot away from Europe to Asia, rather with Europe to Asia. Her speech also illustrated the continuing differences between the European and American strategies for dealing with (relative) decline.

When it comes to global order, many Europeans distinguish between establishing a rules-based order and maintaining perpetual American primacy. They worry that Washington’s multi-partner strategy might prolong the latter at the expense of the former. One example is Washington’s nuclear deal with India, which allowed a great power that is friendly with Washington to break the rules. In spite of Washington’s new debate about austerity, there continue to be differences over how to deal with global economic imbalances.

Oscar Wilde once famously joked that England and America are divided by a common language. But today, though Americans sound more German by the day, it is Washington and Berlin that seem divided by their common concepts (which may explain why Kerry began his journey in London rather than Berlin).

In spite of these differences, there does seem to be a remarkable convergence of views across the Atlantic, and a real chance to move beyond tactical cooperation on issues such as Libya and Syria toward a joint strategy. It is certainly better to be divided by a common language than living on separate planets.

PHOTO: John Kerry is pictured after being sworn-in as U.S. Secretary of State by U.S. Vice President Joe Biden during a ceremony at the State Department in Washington, February 6, 2013. REUTERS/Jason Reed

With his State of the Union address, President Obama combined the two most powerful tactics of modern politics – big speeches and big data – to spur political action.

President Bill Clinton’s aides once talked about a “permanent campaign,” but that seems laconic compared to Obama’s fusion of campaigning and governing. The group Organizing for America held  a conference call with Obama’s supporters after the speech, and Obama set  off on a three-city tour to North Carolina, Georgia and Illinois, all states that have Republican governors. The point of this flanking campaign is not to change minds but to mobilize voters.

This tactic, which seems to be the preferred one for his second term, is to frame the policy choices in a way that allows him to build a governing coalition. Each of his carefully chosen priorities – minimum wage, climate change, immigration, infrastructure, women’s rights, education and gun control – is designed not just to satisfy diverse interest groups but also to create a unified interest group out of the isolated individuals who make up modern America.

Armed with the latest thinking on behavioral psychology, political marketing and analytics, Obama’s campaign has moved toward a new era of micro-targeting. As Sasha Issenberg brilliantly shows in his book The Victory Lab, Obama’s team knows not only where its supporters live, shop and worship but even on which bus routes they travel, which video games their kids play and which TV personalities they respect.

After his first election in 2008, the Obamaniacs were demobilized and the databases were handed to the Democratic National Committee, which shifted focus to the midterm elections. This time, Obama has tapped the organizing genius Jon Carson, former director of the Office of Public Engagement in the White House, to create a permanent mobilization under the banner of “Organizing for Action.”

The intellectual roots of this new type of politics lie in part in the work of Obama’s former colleague at the University of Chicago, Cass Sunstein, who worked in the White House until last year. Together with Richard Thaler, he wrote the influential book Nudge, which sets out an alternative for encouraging particular behaviors in citizens and consumers. Their key idea is that it is easier to change people’s behavior than it is to change their minds. They argue that the “architecture of choice” matters as much as the deliberate preferences of individuals. In other words, decisions are influenced as much by how choices are presented as they are by data for or against each option. A simple example of the “nudges” they discuss is placing healthy foods in a school cafeteria at eye level, while putting less healthy foods above or below the eyeline. Children can still eat what they want, but the choice has been framed in a way that nudges them toward healthy food.

Obama’s team seems to be applying these ideas not just to the political process. It has tested many ways of delivering messages and of using peer pressure to get people out to vote. But it seems to be heading toward framing arguments on policy to appeal to existing biases rather than changing minds. In this world, the purpose of a big speech like last night was to use jobs and pay, women’s rights and other kinds of identity politics to frame the architecture of choice.

Ivan Krastev, one of Europe’s leading public intellectuals, has analyzed what this phenomenon could do to democratic politics in his brilliant e-book In Mistrust We Trust. Krastev argues that in these new conditions, political combat is no longer about content but about engineering the architecture of choice. He argues that this new kind of politics has “expelled ideas and visions from politics and reduced electoral campaigns to the processing of big data and the application of distraction, customer targeting and simulating real political change while ultimately retaining the status-quo.” The net result, according to Krastev, is the paradox that the citizen has been simultaneously empowered (because her views are being listened to) and marginalized (because she can exist only as an atomized individual to be manipulated rather than as a potential agent of collective action).

Many commentators have bemoaned the lack of bipartisanship in Obama’s rhetoric, citing his speech as further evidence of America’s broken politics. But it is not politics that is broken, it is society. The big shapers of our everyday lives – the market economy and communications technologies – are destroying the old cohesive communities and replacing them with increasingly individualistic consumers. But to promote a progressive politics – where people are willing to pay for one another’s healthcare, education and security – Obama must try to counter the centrifugal forces at work in society. With his big speeches backed by “big data,” he has emerged as a master and a shaper of a new political environment. The data he uses allows him to knit together atomized individuals behind a collectivist agenda. It is about trying to engineer a sort of virtual community to replace the dying communities that used to emerge in factories or neighborhoods. As society shrinks, the data engineers are the only people capable of identifying interested parties. And it is the new role of the elite to stitch them together into patchwork coalitions on every issue.

As Obama set out his legislative agenda in perfectly formed stanzas last night, building up to a crescendo with his invocation of the victims of Newtown, he was doing more than appealing to his base. He was creating it.

Watching the State of the Union address – a European in Washington – I could not help thinking that I was witnessing a reinvention of representative democracy. The behavioral scientists have given us the theory, the analysts have created a technological basis for the new politics and Obama’s rhetorical brilliance covers the messy seams and lends beauty and elegance to this mechanical process.

PHOTO: U.S. President Barack Obama delivers his State of the Union speech on Capitol Hill in Washington, February 12, 2013. REUTERS/Kevin Lamarque

With the speech, British euro-skeptics are denied an immediate referendum on EU membership, and pro-Europeans in Britain will lose their voice in the debate about Europe’s future while their country’s energy is wasted on renegotiating existing powers. Meanwhile, the rest of the world will have to deal with a quest for special treatment rather than have a reliable British partner at a time of uncertainty. Worst of all, Cameron’s promise to go for a cosmetic renegotiation followed by a campaign to stay in the EU is designed to obscure rather than resolve the fundamental dilemma facing his compatriots – a choice between two radically different British futures.

On the one hand, the euro-skeptics, who have held Cameron hostage in parliamentary votes on Europe, have a clear agenda. They have set out a modern argument that is very different from the blimpish isolationism of past decades. In the place of old arguments about European super-states destroying British sovereignty, they have an entirely new narrative of a Britain “tethered to the corpse” of the euro zone. They claim that the single market ties British business in red tape; the Customs Union holds Britain hostage to the protectionist lobbies of all member states; and the free movement of people is flooding its labor market with immigrants. The EU seems a fossilized relic of the 20^th century in a new digital world. What matters to the skeptics, in the words of conservative columnist Matthew d’Ancona for GQ, is “not post-colonial reach or the ability to fight alongside America in military interventions, but the real freedom to trade globally.” He concludes: “What is so bad about being a new Singapore off the shore of Europe?”

The new euro-skeptics think that the modern era transcends geography, uniting the world economically and politically in the cloud. The countries they admire the most – such as Australia, Dubai and Singapore – have successfully managed to carve out a global role without being hung up on trying to shape the world. What the new skeptics want flows naturally from former Prime Minister Gordon Brown and Cameron’s foreign policy of trying to pull back from what Cameron saw as the “over-reach” of the Blair era.

The “Brameron” era has been characterized by a move away from both Washington and the EU, a sense of the primacy of economic diplomacy, and a greater interest in the troops in Afghanistan and aid workers in Africa than the pursuit of traditional influence. The intellectual rationale for this move is that while Britain may enter a “new Elizabethan age” where it retains a global outlook, it should refuse to be drawn into disputes about the shape of the euro in Europe’s backyard, in which it has little interest.

To diplomats and statesmen, the location of the skeptics is cloud cuckoo land. They see the new “Little Britain” credo that “small is beautiful” as a betrayal of Britain’s historic role and a needless emasculation of the influence that had been won back so painfully after the Suez. As one very senior official said to me: “For the last few centuries, Britain has been in the cockpit of global affairs. For the next few we will need to get used to life on the margins.”

At the end of November, former Prime Minister Tony Blair returned to the political scene to argue that pro-Europeans also need to radically recast the case for Europe to counter the false claims of the skeptics. “Sixty-six years ago when the [European] project began, the rationale was peace. Today it is power,” he said. Blair argued that as power shifts in the world, the only way for Britain to avoid irrelevance is to combine with other Europeans – uniting the world’s biggest market and the considerable political, diplomatic and military resources of Europe’s nations behind a common voice.

This is in fact the best way – maybe the only way – to gain access to new markets and to have a voice in shaping the rules of engagement in the multi-polar world of the 21^st century. Rather than contracting out the big decisions to Washington and Beijing, Europeans should unite in an attempt to build a G3 world.

Blair is banking on the fact that his compatriots – whose country at one point or another has controlled all but 14 of the 200 nations in the world – have not lost the will to power. In one of the more narcissistic and revealing passages in his memoir, A Journey, he writes: “I always reckoned that even the ones who didn’t like me (quite a few) or didn’t agree with me (a large proportion) still admired the fact I counted, was a big player, was a world and not just a national leader.”

For the last 50 years, British foreign policy has been a two-legged affair, balancing the “special relationship with the United States” with membership in the European Union. Today, both these pillars are collapsing. President Barack Obama gives flesh to many European fantasies about American leadership, but he leads a country that is pivoting its energy and attention from the Atlantic to the Pacific. At the same time, Europe is recasting its institutions and projects.

The two questions for Europe are whether the EU will integrate enough to put the euro on a sustainable footing – and whether this can be done in a way that does not destroy Europe’s three other political projects: the single market, pacification of the European neighborhood, and the projection of global power. For Blair, Britain cannot afford to sit out these big debates in a passive outer tier of the EU.

Britain can attempt to help write the rules of the 21^st century as an engaged and leading force in the European pole of an increasingly multipolar world. Or it can aspire to a future as a global financial center – a new Singapore – that seeks to take advantage of the openings in a global system run by others. Both prospects are viable, but they involve tough choices that go to the heart of Britain’s national character.

The tragedy of Cameron’s Europe speech is that the British people will be denied the chance to choose between these options. Rather than joining with other members of the EU in a debate about our common future, he will launch a chimerical quest to renegotiate obscure powers. The uncertainty this will create for global business is troubling, but equally worrying is its effect on Britain’s standing in the world.

As the rest of the continent grapples with questions about currencies, political union, and the global balance of power, the British political class will engage in a solipsistic debate about which aspects of the common fisheries policy or the working-time directive they should opt out of. Instead of offering a choice for a European future that Britain can play a role in shaping, Cameron is trying to renegotiate the past.

PHOTO: Britain’s Prime Minister David Cameron delivers a speech on the European Union and Britain’s role within it, in central London January 23, 2013. REUTERS/Suzanne Plunkett

There has been a remarkable stabilization within the euro zone since European Central Bank President Mario Draghi’s intervention in the summer of 2012. But even as the euro zone integrates, the politics and economics of the wider European Union are likely to diverge. In practice, the measures toward an integrated banking union, increased parliamentary accountability and more incentives for reform could go hand in hand with the de facto economic and political disintegration of the EU. Economically, as Sebastian Dullien argues in a paper, “Why the euro crisis threatens the EU single market,” there is a significant risk of a gradual unraveling of the EU’s single-market system. A full euro zone breakup would shatter the euro, while a great leap toward political union could see shrinkage of the single market, as countries such as the United Kingdom withdraw from the heart of Europe.

Even muddling through the crisis seems likely to diminish the depth of the single market. In recent months, banks in the euro zone have withdrawn from trans-border business. Even poorly-managed German companies are paying significantly less interest on capital than well-managed Spanish companies. These new barriers between euro zone members will lead to a renewed focus on domestic markets. For Europe, this means less competition, less growth and higher prices for consumers.

Europe’s economic unraveling will be matched by a new political geography. The continent is already seeing a reshuffling of its elite, as the traditional political forces in many countries – from Greece to Italy to Finland to Austria – find themselves besieged by an emerging anti-political class of populists from left and right. There is also a renegotiation of the relationship between the “core” and the “periphery” – with many EU member states, including larger nations such as the UK, Poland and Spain, deeply concerned that integration is forcing them to the periphery of the European project.

Most worrying is the fragmentation of the core itself, with possibly irreconcilable differences emerging between Paris and Berlin over the future shape of the EU polity.

The Middle East could also become divided like never before in 2013. In the past two years we have seen political action unite the Arab world with an “awakening” that has spread from capital to capital through social media, satellite television and the infectious promise of change. But the story of the year ahead will focus more on the splits.

Syria’s civil war is becoming the epicenter of a regional sectarian conflict, bringing the threat of wider destabilization. It has already sharpened sectarian tensions and reinvigorated dormant Sunni jihadi forces, putting Iran and its allies on the defensive and providing space for Kurdish ambitions. The febrile atmosphere in Kurdish areas is opening cracks between Ankara and its de facto allies Saudi Arabia and Qatar, and reverberations are spreading into northern Iraq.

A story with enormous global resonance is the growing tension between a strong Chinese society and a weak Chinese state, as it drives the new Asia apart. Many in the Chinese elite think their country needs to enter a new era of political and economic change. After Mao’s political revolution (China 1.0) and Deng Xiaoping’s economic revolution (China 2.0), they are calling for a major re-orientation toward a China 3.0.

Now that China’s populace is becoming increasingly affluent, how does the state deal with issues like growing inequality, the need to rebalance its economy and its increasing exposure to the global economy? How does the Communist Party retain stability in a time of unrest within Chinese society that includes half a billion “netizens” on the Web? And how does China take on the burden of being a Great Power as it develops interests in every continent on the planet?

In September, China’s 18^th Party Congress anointed leaders whose views are more aligned with the past than the future. As the political system becomes more rigid and its foreign policy more aggressive, there is a risk of growing tension between China’s strengthening society and its weakening political system. These tensions are already having an impact on the wider Asian system.

Asia’s economic map has been redrawn over the past 15 years as increasing intra-regional trade, investment and supply chains have driven deep interdependence (all done largely without the United States). But tension and weakness in the Chinese state seem to be driving the nation to take ever more worrying steps toward neighbors such as Japan, the Philippines and Korea. Since 2010, a more aggressive China has increasingly threatened to pit the “economic Asia” that was uniting without the United States against a “security Asia” that is demanding an American pivot to balance against China’s rise.

All of the above are linked to the question of American leadership, or its absence. At the moment, America’s political class wonders whether there will be a deal made as Congress hurtles toward a fiscal cliff. But for the first time in decades, a dramatic question at the heart of the most powerful nation in the world is met outside with curiosity and concern rather than existential angst.

The fiscal cliff drama does not show America at its best – its law-makers seem divided and disconnected from economic reality. But there is an even more shocking development about the events on Capitol Hill: the fact that that the stakes for the rest of the world seem so low. It is a sobering reminder that – although no power has emerged to replace the United States– American leadership will not be able to stop the great unraveling. In fact, to the extent that America will continue to lead the world, it will be pioneering a focus on internal rebuilding rather than foreign adventures.

PHOTO: The logo of the European Union and the word recession are displayed on the screen an iPad and a LCD monitor in Zenica November 16, 2012. REUTERS/Dado Ruvic

Benjamin Netanyahu is trying to show that nothing has changed. Israel will defend its citizens just as it did before the Arab Spring. The language of Israel’s politicians, the brutal efficiency of its bombing campaign and the asymmetrical death count all echo Israel’s campaigns in the past. But the political dynamics surrounding this assault could not be more different.

The American president – rather than spending his time in the White House Situation Room – is flying around Asia planning his “pivot” from the Middle East. Egypt’s President Mohamed Morsi, rather than sealing the border, sent his prime minister to Gaza for a display of solidarity. And regional leaders from Qatar to Tunisia and Turkey are putting themselves in the middle of the skirmish. But rather than responding to this changed environment with a creative diplomatic strategy, Israel’s government seems to be doubling down on tried and tested techniques.

On my last visit to Israel, I noted that officials speak about how their government in recent years has moved from making peace to “managing conflict.” They have built a wall to pen in potential terrorists, while launching periodic attacks to disrupt the military operations of Hamas and Hezbollah. (One official referred to these repeated attempts to defang Hamas as “cutting the grass.”) Every nation is entitled to defend itself. But unless violence is part of a political strategy, it rarely creates real security. The problem with these repeat military operations is that they create a growing pool of anti-Israel resentment in the neighborhood while eroding Israel’s international standing.

Israel under Netanyahu is indulging in a form of triple escapism – defensive, geopolitical and economic ‑ that takes the nation further and further away from engaging directly with the Palestinians.

The almost 30-foot-high concrete walls that dot Israel’s security barrier do not simply shield Israelis from terrorist attacks. They also shield them from the reality of their occupation, and have led the Israeli government to avoid the sorts of negotiations that are necessary for any lasting peace.

Many Israelis are now against substantive talks with the Palestinians until the latter recognize Israel’s right to be a “Jewish state.” A senior military intelligence officer said, “We used to think of this a territorial dispute, but now we realize it is actually a conceptual one about the legitimacy of Israel’s existence as a Jewish state.”

Yitzhak Rabin used to say he would pursue the peace process as if there were no terror and would fight terror as if there were no peace process, but Netanyahu has only ever been interested in the second half of that equation.

The second dimension of Israeli escapism is geopolitical. The elite are concerned about the effects of the Arab uprisings, but they tend to see the expressions of solidarity from new leaders for the Palestinians as empty gestures. However, Daniel Levy, a former adviser to Israeli Prime Minister Ehud Barak who is now a researcher at the European Council on Foreign Relations, said: “It is dangerous and misguided to assume that Arab states have taken economic sanctions and military responses off the table for all time.”

One reason Israelis do not take the risk of meaningful action by its neighbors seriously is that many can see that their dispute with the Palestinians is being overshadowed by more pressing conflicts such as those between Shia and Sunni Muslims or reforming regimes and counter-revolutionary ones.

Israelis talk about their fear of Iran’s nuclear program, but they also hope anti-Iranian sentiment may reshape the politics of the region. The artificial states constructed by the West after World War I might now collapse and be replaced by new entities drawn around tribal and sectarian lines. “It is not impossible to imagine that with chaos in the region,” according to one Knesset member, “Iraq, Syria and Jordan might disappear and Palestinians might re-affiliate with new entities.”

For some intelligence analysts who focus on the Middle East, it seems like an absurd idea to fixate on a two-state solution based on the 1967 borders at precisely the moment when the borders and governance of all states in the region are up for grabs. But this misses the point. Whatever borders are settled for other states, the Palestinians will demand their rights as citizens.

Israel’s political sphere today has economic escapism at its center. The country’s governing elite have created a new founding myth for a time of consumerism: that of a “startup nation” of entrepreneurs who came to the desert to create high-tech companies. This country of 7 million people ‑ in a state of war since its founding, with no natural resources ‑ has more new companies listed on the Nasdaq than Japan, China, India, Korea, Canada or the UK, according to Daniel Senor and Saul Singer. However, the parties of the left claim that the economic reforms that have driven this growth have seen this aggressively egalitarian country become very unequal, with rising prices and cuts in services increasingly hitting the middle class. This is why last year there was a protest ‑ dubbed the “Tentifada” ‑ about the cost of living. Where Israel’s first generation was involved in founding the state, and the second in heroically defending it from external aggression, today’s Israelis are focused on house prices and the cost of staple foods like cottage cheese.

The paradox is that Israel has retreated from the world at a moment when the long-term prospects for the its survival have never been more insecure. The current operation is called “Pillar of Defense.” Ironically, it comes at a time when the four real pillars of the country’s security are eroding: the memory of the Holocaust; its status as the only democracy in the Middle East; nuclear and conventional military superiority; and American protection. The nightmare scenario for Israel would be to be out-victimed by the Palestinians, out-democratized by the Arabs, outgunned by the Iranians and outside America’s main focus of interest as it shifts its attention from the Middle East to the Pacific.

If Israel tries to protect itself by retreating into a world where it imagines that conflict can be “managed” and where demographics and settlements make a two-state solution impossible to negotiate, the pillars of Israel’s security are even more likely to crumble. Therefore, despite all the complexities on both sides of the conflict  that make a two-state solution so difficult to achieve, Israel cannot afford to wait until a more convenient partner or a more stable situation emerges. It needs a deal sooner rather than later. That is the only way to defend the security of its citizens.

PHOTO: Israel’s Prime Minister Benjamin Netanyahu (C) gestures during his meeting with U.N. Secretary-General Ban Ki-moon (R) in Jerusalem November 20, 2012. REUTERS/Lior Mizrahi/Pool

While the U.S. election promises a nail-biting finish, the results are likely to be predictable. In Beijing, the next leader – Xi Jinping – was ordained several years ago to be appointed General Secretary of the Chinese Communist Party at the Party Congress this week.

In the economic realm, the two countries’ trajectories are at odds. While Washington is suffering from an austerity crisis, China is coming to grips with a crisis of affluence. In the U.S., as Thomas Byrne Edsdall argues in his book The Age of Austerity, “The two major political parties are enmeshed in a death struggle to protect the benefits and goods that flow to their respective bases, each attempting to expropriate the resources of the other.”

In China, leaders have the resources to stimulate another decade of double-digit growth. However, they know their economic model, based on cheap exports and domestic investment, is unsustainable in the long run. They know they need to end artificially low interest rates and build a social safety net to encourage Chinese citizens to consume more. The problem is that they do not know how to rebalance the economy without harming the interests of the crony capitalists who support it or the middle class that has benefited from China’s rise. China’s pursuit of affluence could become a trap from which it may struggle to escape.

While both nations are focused on their global standing, they have opposing problems in the foreign policy realm. In Washington, neither President Barack Obama nor Governor Mitt Romney dares talk about the decline of American prominence in the global economy, but they grapple with the challenges of reconciling America’s will for power with the war-weariness of its citizens.

China, on the other hand, is struggling to manage a surge in its global influence. For more than a generation, Beijing’s foreign policy has been based on the idea of eschewing leadership in exchange for an invisible rise ‑ “hiding brightness and nourishing obscurity,” as Deng Xiaoping put it. But it is hard to downplay your influence when you have the second-largest economy in the world, double-digit rises in military spending and companies spread across the globe. It is even harder when you have hundreds of millions of nationalist citizens who want an assertive foreign policy to match China’s rising heft. As a result, it is proving impossible to avoid other Asian states joining hands with the United States in an anti-China coalition.

American politics has been defined by a crisis of disunity. The extreme partisanship of the Beltway has made the country practically ungovernable. Since Obama was elected in 2008, the Republicans have been more interested in dragging him down than in passing any legislation. The Democrats may be less unified and ideological, but they would surely stop a Republican president from implementing many of the ideas in the Tea Party imagination. Whoever wins the election, it is hard to imagine much change.

China, on the other hand, suffers from the opposite problem. Since the Tiananmen Square massacre in 1989, its elites have been so afraid of unrest that they have tried to suppress any hint of dissent. But today the country is becoming ever more complex and conflicted about where it should go.

When a battle of ideas burst out last year between the charismatic leftist governor of Chongqing, Bo Xilai, and his more liberal counterpart, Wang Yang, in Guangdong, party elders moved quickly to calm things down. (Bo was expelled from the party; Wang has become more quiescent). A big question is whether this push for control at the highest levels and at the grass roots will stop China from making the radical decisions it needs, and in the process fuel a potentially violent backlash. Professor Sun Liping, of Tsinghua University, thinks it will: “The ultimate outcome of the massive stability preservation project”, he is quoted as saying in my new book, “China 3.0,” “is in fact the intensification of social tensions”. Sun, one of China’s leading sociologists, was also the Ph.D. supervisor of one Xi Jinping – the future president of China.

Although they look like opposites, the United States and China suffer from the same problems: They are introspective, self-destructive and interdependent. China’s ying is often the cause of America’s yang. Its bond buying fuels America’s consumption; its surge in power threatens American leadership; and the decisiveness of its closed political system in the financial crisis caused leading Americans to question the sustainability of America’s open society. The big question facing the world this week is whether either leadership transition will bring relief from the multiple crises the two nations face.

Unfortunately for the world’s most powerful nations, the answer will depend on events on the other side of the Pacific. America and China are fated to sink or swim together.

PHOTO: Paramilitary policemen hold their fists in front of a flag of Communist Party of China as they attend an oath-taking rally to ensure the safety of the upcoming 18th National Congress of the Communist Party of China (CPC), at a military base in Hangzhou, Zhejiang province November 5, 2012. REUTERS/China Daily

Yang Dacai is just the latest focus of an electronic herd whose activism and anger appear in sharp contrast to the staid and controlled official politics in China. The regularity with which these scandals erupt helps explain why an opinion poll in China 18 months ago revealed that 70 percent of senior Chinese officials live in a state of “Internet terror.”

Over the last few years, officials at all levels of government in China have fallen prey to electronic vigilantes who have exposed corruption by looking at the value of officials’ possessions or the misdemeanors of their relatives. This is what makes the effect of the Internet on Chinese politics so paradoxical: It could seriously lengthen the life of China’s one-party state. In much the same way that the market has saved the country’s Communist Party, China’s state-controlled Internet could save its leadership.

Deng Xiaoping, one of the reformers of the Communist Party in China, feared the destructive power of unfettered markets. He envisioned “socialism with Chinese characteristics” as an incremental attempt to harness the power of the market while maintaining control of the commanding heights of the economy. Although officials live in terror of the Internet, the party has developed a sophisticated approach that gives citizens a chance to air their views even as it retains control of the servers.

The Internet reaches 538 million people in China, and approximately half of them are on Sina Weibo, which is often called China’s Twitter. Sina Weibo seems to operate as a public sphere where netizens exchange news and views on a range of issues far too sensitive to be covered by the China mainstream media (as the case of Yang Dacai makes clear). Although it is possible to air grievances against party officials and policies on the network, China’s Internet is only a semi-free environment.

A Chinese Internet executive – speaking on condition of anonymity – explained that the idea of the “Great Firewall of China” has given Westerners a misleading idea of how Chinese censorship works. It is true that the government blocks access to certain websites and the use of some keywords, but these are relatively easy hurdles for most users to get around. China’s government is not worried about information from the outside coming into China. Its big fear is of Chinese citizens organizing collective action against the government. As a result, most of the censorship is no longer a massive ministry of truth with a single list of banned words. It is, rather, “insourced” to companies and individuals to maintain a balance in public discourse.

Chinese blogger Michael Anti describes the state’s approach to the Internet as this simple premise: “block and clone.” China’s government blocks Western companies like Google, Twitter and Facebook, but it allows the development of Chinese variants of these platforms – with the condition that they keep all their servers in Beijing. There, the government can access and control all data and messages flowing through these iterations of social media, while offering a more complex communication channel for members of society to vocalize opinions. The government has the ability to block data with surgical precision and take action against those it chooses.

A study by a group of researchers at Harvard led by Professor Gary King casts a light into the murky world of Chinese censorship:

Unlike in the U.S., where social media is centralized through a few providers, in China it is fractured across hundreds of local sites, with each individual site employing up to 1,000 censors. Additionally, approximately 20,000–50,000 Internet police and an estimated 250,000–300,000 ‘50 cent party members’ (wumao dang) are employed by the central government.

The researchers estimated that approximately 13 percent of all social posts are removed by censors in China. They explain that the goal of censorship is not so much to prevent criticism as to prevent collective action:

They seem to recognize [that] looking bad does not threaten their hold on power so long as they manage to eliminate discussions with collective action potential.

The Internet has rapidly become an integral part of the governing strategy of the Communist Party. Every official begins every day with a stack of comments showing the main themes and discussions from the Internet. The party’s selective opening and blocking of information has been used to powerful effect; but the effects are often most harmful to local government officials who need to be reined in. Because the servers belong to the central government in Beijing, local and provincial governments are powerless to control flows of information. According to Anti, this allows the central government to use the absence of censorship as a political tool.

As the Harvard researchers show, social media has become “an effective governmental tool in learning how to satisfy, and ultimately mollify, the masses … a theoretically optimal strategy for a regime to use social media to maintain a hold on power.”

After a tragic train crash in Wenzhou in 2011, the government allowed 10 million critical messages about the Chinese railway minister – who was the object of the ire of even top officials at that point – to be aired on social media over five days.

Later there was an even more dramatic and relatively free Internet debate about Chongqing party head Bo Xilai from February to April of this year. There is speculation that lurid rumors about Bo and his wife, Gu Kailai, were deliberately encouraged by the party to sap the legitimacy of a very popular leader to the point where he could be purged.

Although the technology of the Internet is very new in China, the political dynamics it is unleashing are very old. The electronic crowds being mobilized are playing the same role as the Red Guards in China’s Cultural Revolution.

One reason that planned economies fail is that they are unable to access information that may help avoid being outperformed by free markets. There is a parallel explanation for why democracies often outlive autocracies. Many regimes collapse when they miscalculate public opposition to particular policies or because their citizens stop bringing grievances to a state they no longer regard as legitimate. Allowing criticism may legitimize the state and help the regime maintain power.

Today’s rulers in China recognize that they are playing with a river of fire that can be channeled but never fully controlled. It is not impossible that China’s technology-driven cultural revolution could strengthen the political hold of the Communist Party on Chinese society in the same way that Xiaoping’s market revolution strengthened its hold on China’s economy. The Internet could lend greater legitimacy and resilience to the one-party state. However, China’s officials will never stop fearing a technology that could sweep them away.

PHOTO: A man holds an iPhone as he visits Sina’s Weibo microblogging site in Shanghai May 29, 2012. REUTERS/Carlos Barria