By Nirmal P. Acharya

The US is currently mired in a debt crisis, bitter partisan battles, the Russia-Ukraine conflict, and domestic immigration riots. Recently, it even launched a surprise attack on Iran's nuclear facilities. It seems that the US has not learned the lesson from its experience in Afghanistan. In short, the US has entered its twilight years as an empire, and its hegemony is hard to sustain. The world has been living under the US hegemony for decades and has become accustomed to it. What will happen if the US hegemony comes to an end?

If American hegemony gradually declines, the world will undergo a profound restructuring of order. This process contains both opportunities and risks, with its core characteristics unfoldable from the following six dimensions:

1. Deconstruction and Reorganization of the International Order

The current UN-centered multilateral system will face severe shocks. Institutions long dominated by the US, such as the World Bank and IMF, may lose their authority. Developing countries will push for reforms in voting rights allocation, while emerging institutions like the BRICS New Development Bank and the Asian Infrastructure Investment Bank (AIIB) will gain greater say. The scramble for international rule-making power will intensify, with US-China competition over standards in digital trade, space governance, and other fields potentially forming “parallel systems”. For example, if the US withdraws from the WTO dispute settlement mechanism, global trade rules might split into two blocs represented by the CPTPP and RCEP.

2. Trend Toward Geopolitical Fragmentation

Regional hegemonic struggles will escalate. Europe may accelerate defense integration, with Germany potentially becoming the military core of the EU. In the Middle East, a dual rivalry between Iran and Saudi Arabia will take shape, while Turkey and Israel compete for regional dominance. India will attempt to integrate South Asia and intervene in Indo-Pacific affairs, while regional powers like Brazil and Mexico may emerge in Latin America. This "fragmented" landscape could lead to more proxy wars, with patterns like the Russia-Ukraine conflict potentially repeating in regions such as the South China Sea and the Taiwan Strait. NATO's cohesion will weaken significantly, and while European defense budgets may double, a unified strategy will be hard to form in the short term.

3. Multipolar Games in the Economic System

While the US dollar hegemony is not collapsing, its status continues to weaken. According to IMF data, the dollar's share in global foreign exchange reserves has dropped from 72% in 2000 to 59% in 2023, while the proportion of non-traditional reserve assets like the RMB and gold has risen. Digital currencies may be key to breaking the deadlock, with competition between China's Cross-Border Interbank Payment System (CIPS) for the digital yuan and the US central bank digital currency (CBDC) reshaping the international settlement system. Global supply chains will exhibit “friendshoring” characteristics, with the US-promoted “Chip 4 Alliance” and China-led Regional Comprehensive Economic Partnership (RCEP) forming counterbalances.

4. Power Reconfiguration in the Technological Revolution

"Technological decoupling" between the US and China in artificial intelligence, quantum computing, biotechnology, and other fields may intensify. The US restricts technology exports to China through the CHIPS and Science Act, while China’s breakthroughs in 5G, new energy, and other sectors could form alternative ecosystems. The militarization of space is irreversible, with the US, China, and Russia potentially establishing bases on the Moon and Mars to compete for control of the “high frontier”. Competition over technological standards will impact global governance, such as in debates over autonomous driving rules and cross-border data flows.

5. Dilemmas of Fragmented Global Governance

Governance of global issues like climate change and public health will become more difficult. If the US withdraws from the Paris Agreement, the EU may assume partial leadership, but it cannot replace US financial and technical inputs. Pandemic response may see an upgraded version of “’vaccine nationalism”, further narrowing developing countries’ access to medical resources. International cooperation on cybersecurity may stall, with unbridgeable divides between the US and China on issues like critical infrastructure protection and cyberattack attribution.

6. Pluralistic Coexistence of Civilizational Forms

As US cultural output declines, Bollywood films, Korean dramas, and Arab streaming platforms will capture larger market shares. Ideological competition will shift from “democracy vs. authoritarianism” to “rivalry between development models”, with concepts like China’s “whole-process people’s democracy” and India’s “Alliance for Diversity” potentially forming new value systems. International mobility in education will diversify, with Chinese students possibly favoring European and Southeast Asian universities more, relatively weakening the global influence of top US universities.

This transformative process will be fraught with uncertainties. Historical experience shows that hegemonic transitions often carry the risk of war, as seen in how US-Germany competition in the late 19th century led to WWI. However, the deterrence of modern nuclear weapons and deepened economic interdependence may push major powers to prefer “cold rivalry” over “hot conflict”. The collective rise of emerging nations could give birth to a new international order of “multipolar governance”, but its realization depends on the strategic restraint and institutional innovation capabilities of major powers.

In my humble opinion, the decline of the US hegemony based on sea power is objectively beneficial to Nepal, as it is a landlocked country. If China, which initiated the Belt and Road Initiative, gains more influence, it will be objectively advantageous to land power countries like Nepal. We must seize this opportunity.