AT THE end of 2008 deep uncertainty about the economic future, a gradual but uneven transition towards greater multipolarity in world politics and hopeful expectations about the coming to power of president-elect Barack Obama in the United States are the dominant motifs in international affairs. Looming behind them is a more informed understanding that climate change demands radical and urgent action in 2009. Mistaken, belated or insufficient decision-making in these spheres will have very serious consequences for global stability, human development and public welfare.
This year has been indelibly framed by the tumultuous collapse of financial activity in its last four months and by the extended political ripple effects. In the richest and most developed parts of the world this is not an external shock comparable to the oil crisis of the 1970s or the terrorist scares in the early years of this century, but a crisis intrinsic to the very functioning of the capitalist system. Globalisation of financial transactions, the rapid growth of the international shadow banking industry based on highly leveraged products and elaborate selling on of debts have ended in a brutal reversion towards the status quo prior to these innovations.
We learned very quickly that such deep-rooted changes originating in and dominated by the Anglo-American model of capitalism (in which Ireland has been an enthusiastic junior participant) are certainly not decoupled from the real economy or from European and Asian regions with different systems of financial regulation and state-market relations. All parts of the world are now directly affected. The division of labour which saw American consumers borrowing $700 billion a year from Chinese savers in return for outsourcing manufacturing jobs to them, thereby funding the asset bubble which eventually led US credit to collapse, is coming to an end.
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What to replace it with and how to discover a more sustainable model to drive economic development are central preoccupations going into 2009. The informal power exercised by the Group of Eight leading economies is being broadened towards a Group of 20, including China. A transatlantic initiative linking the Obama administration's economic stimulus programme to more co-ordinated EU efforts could have a powerful impact in the new year. Mr Obama indicates he wants to see the United Nations given a more central role in US foreign policy. Unless this is linked to a convincing and binding international agreement on reducing carbon emissions at Copenhagen in 12 months time it will be stillborn. That in turn is related to a key aspect of his programme - making the transition to new, greener industries and technologies capable of reversing climate change over the next generation, re-equipping the US economy by making it more competitive.
Rarely have such great hopes and expectations been matched by such difficulties in delivering the change Mr Obama made a central theme of his campaign. He has immense international and domestic goodwill. He has a real ability to pace his response to change, can communicate the need for that and has selected a highly talented political and organisational team. A pragmatist on political means and policies, he must rapidly decide what priority to give domestic over international affairs; but he is well aware interdependence brings the two spheres together. His search for a more multilateral US foreign policy will certainly be linked to demands for greater European participation in Afghanistan, or for China to co-operate more closely on economic policy.
A key question is whether he decides to seek a fresh approach to an Israeli-Palestinian settlement and has the wit and courage to do that in tandem with an effort to engage Iran fully in the search for an overall Middle Eastern grand bargain as the US pulls out of Iraq. The weekend's explosion of violence in Gaza shows how necessary this will be. Mr Obama should not tolerate Israel's highly disproportionate response in Gaza in the same way as the Bush administration did when Israel attacked Lebanon in 2006.
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This year's hectic international agenda met its match over the last six months with Frances energetic EU presidency led by Nicolas Sarkozy. Whether on the Russian-Georgian conflict or on the fast-developing credit crunch and economic crisis of following months he galvanised the EU towards united action, showing it can be thereby more effective in projecting its values and interests. This puts Ireland in an unaccustomed and uncomfortable position after the Lisbon Treaty was rejected in last Junes referendum.
The treatys aim to strengthen the EUs foreign policy apparatus and political leadership was demonstrably frustrated by Irelands decision, just as these events reinforced the determination of other states to ratify. The economic costs and political consequences of the No vote were starkly highlighted this autumn although they were largely disregarded during the campaign. It is the greatest foreign policy challenge ever faced by this State.
Climate change, economic turbulence, food price inflation and growing inequalities between the richest and poorest peoples all cut across international relations understood only as the interaction of sovereign states. We live in one vulnerable and threatened world as well as in our separate national boxes. This year has brought that reality home as never before, exposing in the process the grave shortfall of international governing structures and capacity compared to the problems faced by the whole of humanity. It is to be hoped that gap can be addressed more effectively in 2009.