THANK YOU VERY MUCH FOR YOUR KIND INTRODUCTION. I AM VERY GRATEFUL TO HIS HIGHNESS PRINCE ABDULLAH AND HIS COLLEAGUES AT THE SAUDI ARABIAN GENERAL INVESTMENT AUTHORITY FOR DOING ME THE GREAT HONOUR OF HAVING INVITED ME TO COME TO RIYADH TO DELIVER THIS LECTURE, AS WELL AS FOR ARRANGING MANY OTHER APPOINTMENTS AND INTERESTING EXPERIENCES DURING MY VISIT.

I AM ALSO VERY GRATEFUL TO ALL OF YOU, MY AUDIENCE, FOR TAKING THE TIME OUT OF YOUR BUSY SCHEDULES TO COME HERE TODAY AND FOR DOING ME THE GREAT HONOUR OF LISTENING TO MY LECTURE.

BEFORE I BEGIN MY LECTURE, IT SEEMS TO ME THAT I SHOULD SAY A FEW WORDS ABOUT MYSELF AND ABOUT THE ECONOMIST. WHILE I HOPE THAT YOU WILL FIND MY REMARKS USEFUL IN THEIR OWN RIGHT, I THINK THAT ALL OF US BENEFIT FROM UNDERSTANDING THE BACKGROUND OF PEOPLE WE ARE LISTENING TO.

YOU HAVE HEARD ALREADY ABOUT MY BACKGROUND PERSONALLY: MY 20 YEARS AS A POLITICAL AND ECONOMIC JOURNALIST, SPENT IN BRUSSELS, TOKYO AND LONDON. THE ECONOMIST IS ALSO UNDOUBTEDLY A PUBLICATION WITH WHICH YOU ARE VERY FAMILIAR. YOU MAY, HOWEVER, NOT BE SO FAMILIAR WITH OUR HISTORY AND WITH OUR CURRENT READERSHIP, BOTH OF WHICH MAY PROVE HELPFUL.

THE ECONOMIST WAS FOUNDED 160 YEARS AGO, BY A SCOTTISH BUSINESSMAN, JAMES WILSON, WHO WAS ALSO A CAMPAIGNER FOR FREE TRADE. HIS PLAN WAS FOR A WEEKLY PAPER THAT WOULD PROVIDE COMMERCIAL AND POLITICAL INFORMATION TO READERS MAINLY AMONG BRITISH MERCHANT CLASSES, BUT WOULD ALSO STAND FOR SOME STRONG PRINCIPLES: BASICALLY, FOR THE IMPORTANCE OF FREEDOM, BOTH IN THE ECONOMIC SPHERE, FOR TRADE AND CAPITALISM IN GENERAL, AND IN THE POLITICAL SPHERE.

THAT CONTINUES TO BE TRUE TODAY, EXCEPT THAT OUR READERSHIP IS MUCH LARGER, AND IS NO LONGER MAINLY BRITISH. IN FACT, OF OUR 900,000 SALES EACH WEEK, ONLY 150,000, LESS THAN 20%, ARE IN BRITAIN. OUR LARGEST READERSHIP IS IN NORTH AMERICA: 400,000 EACH WEEK, OR 45% OF OUR TOTAL. WE ARE THUS INDEPENDENT OF ANY COUNTRY OR POLITICAL GROUPING, AND WE ARE OWNED BY A RANGE OF PRIVATE SHAREHOLDERS, WHICH MEANS WE ARE INDEPENDENT OF ANY PARTICULAR COMMERCIAL INTEREST.

THE ECONOMIST COVERS A BROADER SET OF SUBJECTS THAN IN WILSON´S DAY: MORE POLITICS AND FOREIGN AFFAIRS, MORE SCIENCE AND TECHNOLOGY, MORE ON BOOKS AND THE ARTS. BUT IT TAKES BASICALLY THE SAME APPROACH: OFFERING ANALYTICAL REPORTING ON BIG EVENTS AND TRENDS IN THE WORLD, SEEKING TO LAY OUT THE FACTS AND THEN TO DRAW RATIONAL CONCLUSIONS FROM THEM ABOUT POLICY AND PROSPECTS. WE CONTINUE TO STAND STRONGLY FOR FREEDOM IN ALL ITS ASPECTS.

COMPARED WITH OTHER PUBLICATIONS, WE ALSO TEND TO TRY TO TAKE A MORE LONG-TERM VIEW. THAT IS ALSO MY TASK IN MY LECTURE TODAY. THE TOPIC OF MY LECTURE IS THE FUTURE: WHAT WE CAN EXPECT IN THE WORLD OF THE 21^ST CENTURY.

THERE IS A FUNDAMENTAL PROBLEM WITH A TOPIC OF THIS KIND. THIS IS THAT NONE OF US—AND CERTAINLY NOT ME—CAN KNOW WHAT THE FUTURE ACTUALLY HOLDS. ANYONE WHO CLAIMS TO KNOW IS REALLY JUST DECEIVING US. JOURNALISTS OFTEN CALL SUCH PEOPLE FUTUROLOGISTS OR SIMPLY GURUS. INDEED, PETER DRUCKER, THE GREAT AUSTRIAN WRITER ABOUT BUSINESS AND SOCIETY WHO IS NOW OVER 90 YEARS OLD BUT STILL WRITING ACTIVELY, ONCE WROTE US A LETTER COMMENTING ABOUT JOURNALISTS´ HABIT OF CALLING PEOPLE LIKE HIM "GURUS".           HE WROTE THAT IT WAS HIS BELIEF THAT THE ONLY REASON NEWSPAPERS USE THE WORD GURU IS BECAUSE THEY CANNOT FIT THE WORD CHARLATAN INTO A HEADLINE.

MY SOLUTION TO THIS PROBLEM ABOUT THE FUTURE IS SIMPLE: I PLAN TO TALK ABOUT THE PAST. OR, RATHER, I WILL TALK ABOUT WHAT I THINK THE PAST CAN TELL US ABOUT THE THINGS THAT MAY MATTER MOST FOR THE FUTURE. HISTORY CAN ALSO HELP US GET EVEN THE PRESENT INTO PERSPECTIVE: IT TELLS US HOW TODAY COMPARES WITH YESTERDAY, HOW WE GOT HERE FROM THERE, AND WHETHER ON CERTAIN MEASURES THINGS ARE IMPROVING OR GETTING WORSE.

WINSTON CHURCHILL, MY COUNTRYMAN, WHO WAS A PROLIFIC HISTORIAN AS WELL AS A STATESMAN, ONCE WROTE THAT "THE FURTHER BACKWARD YOU LOOK, THE FURTHER FORWARD YOU CAN SEE". AND I THINK THERE IS MUCH TO THAT APPROACH.

THIS APPROACH PRODUCES, AT LEAST IN ME, A FAIRLY OPTIMISTIC VIEW ABOUT THE FUTURE. CERTAINLY IT IS MORE OPTIMISTIC THAN THE VIEWS OF MANY PEOPLE IN THESE TURBULENT TIMES, WHETHER HERE IN THIS REGION OR IN EUROPE, ASIA OR AMERICA. TODAY, AT LEAST IN THE WRITTEN AND SPOKEN WORD, THERE IS A CONSENSUS FOR PESSIMISM.

I CAN SEE PLENTY OF JUSTIFICATION FOR THAT PESSIMISM. EVEN IF YOU STAND BACK FROM OUR CURRENT PROBLEMS, CONCERNING IRAQ, TERRORISM, AFGHANISTAN, ISRAEL AND PALESTINE, NORTH KOREA AND ALL THE REST, ONE CAN COME UP WITH QUITE A LIST OF TROUBLES.

THE WORLD´S POPULATION HAS JUST PASSED SIX BILLION, AND COULD WELL PASS NINE BILLION BY THE MIDDLE OF THE CENTURY.

ALTHOUGH SOMETHING LIKE ONE BILLION OF THOSE LIVE IN WHAT IS COMMONLY KNOWN AS THE RICH WORLD, THAT LEAVES FIVE BILLION IN THE POORER WORLD. OF THOSE, SOMETHING LIKE 2.8 BILLION LIVE ON INCOMES OF LESS THAN $2 A DAY, ACCORDING TO THE WORLD BANK. OF THOSE, 1.2 BILLION LIVE ON LESS THAN $1 A DAY.

AS WELL AS SUCH WIDESPREAD POVERTY, DISEASE TOO REMAINS WIDESPREAD. THE ONSET OF HIV/AIDS HAS BROUGHT A NEW SCOURGE, ESPECIALLY TO AFRICA. BUT THERE ARE ALSO SERIOUS PROBLEMS POSED BY OTHER DISEASES SUCH AS MALARIA AND TUBERCULOSIS.

INEQUALITY IS ON SOME MEASURES MORE SEVERE THAN AT ANY TIME IN HISTORY. ACCORDING TO THE WORLD BANK, IN 1870 THE WORLD´S RICHEST COUNTRIES HAD AN INCOME PER HEAD ROUGHLY NINE TIMES AS HIGH AS THAT OF THE POOREST COUNTRIES. BY 1990, AMERICA´S INCOME PER HEAD WAS 45 TIMES THAT OF THE POOREST. THE AVERAGE INCOME IN THE WORLD´S RICHEST TWENTY COUNTRIES IS 37 TIMES THE AVERAGE IN THE POOREST TWENTY, AND THE GAP HAS DOUBLED IN THE PAST 40 YEARS.

MEANWHILE, DESPITE CONSIDERABLE ECONOMIC PROGRESS IN MANY PARTS OF THE WORLD, AND DESPITE THE TRIUMPH OF CAPITALISM IN COMPETITION WITH THE COMMUNIST SYSTEM, OUR ECONOMIES CONTINUE TO SUFFER FROM INSTABILITY. FINANCIAL CRISES ABOUND—IN RECENT YEARS ALONE IN LATIN AMERICA, EAST ASIA, RUSSIA, JAPAN AND NOW PERHAPS EVEN THE UNITED STATES ITSELF.

THE END OF THE COLD WAR WAS SEEN BY MANY AS THE FAILURE OF COMMUNISM. I WOULD SUGGEST THAT ALTHOUGH THAT OBSERVATION IS TRUE, IT MISSES THE MORE IMPORTANT POINT. WHICH IS THAT COMMUNISM DEVELOPED DURING THE 20^TH CENTURY FROM A MERE IDEA TO A POLITICAL REALITY BECAUSE OF THE FAILURE OF CAPITALISM. THE CONTINUATION OF INSTABILITY TELLS US THAT CAPITALISM STILL HAS THE CAPACITY FOR FAILURE—WHICH COULD BRING WITH IT POLITICAL AND SOCIAL DISILLUSIONMENT BUT ALSO REVOLUTION.

THEN THERE IS THE ENVIRONMENT, WHICH CAUSES INCREASING CONCERN, ESPECIALLY BUT NOT ONLY IN THE RICH COUNTRIES. ECONOMIC DEVELOPMENT BRINGS WITH IT POLLUTION OF THE AIR AND WATER, THE USE OF MORE AND MORE RESOURCES, AND NOW CLIMATE CHANGE, AS WE HAVE COME TO REALISE DURING THE PAST TWO DECADES.

AND, IF THAT CATALOGUE OF WORRIES WERE NOT ENOUGH, WE NOW FACE INTERNATIONAL TENSIONS, TERRORISM AND EVEN WAR. THE 1990S SAW MANY WARS IN AFRICA, A LONG WAR IN THE BALKANS, FIGHTING OVER KASHMIR BETWEEN INDIA AND PAKISTAN, THE CONTINUED TRAGEDY OF VIOLENT CONFLICT IN THE MIDDLE EAST AND IN SRI LANKA, AS WELL OF COURSE AS THE FIRST GULF WAR. ALREADY IN THIS DECADE, AS WELL AS AN INTENSIFIED MIDDLE EAST CONFLICT, WE HAVE HAD WARS IN SUDAN, SIERRA LEONE AND CONGO. FOLLOWING THE TERRORIST SLAUGHTER OF SEPTEMBER 11^TH WE HAD THE WAR IN AFGHANISTAN. AND NOW WE WAIT TO FIND OUT WHETHER WE WILL HAVE A SECOND GULF WAR IN IRAQ, AS WELL AS WHAT WILL HAPPEN OVER NORTH KOREA´S EJECTION OF INTERNATIONAL NUCLEAR MONITORS. SOME IN THIS REGION, I KNOW, FEAR THAT A NEW GULF WAR COULD TURN INTO A WIDER CONFLICT.

ALL THIS IS HAPPENING WHILE TECHNOLOGY PROCEEDS APACE, IN SUCH A WAY AS TO MAKE IT EASIER TO ORGANISE TERRORISM, AND EASIER TO DEVELOP AND DEPLOY NUCLEAR, CHEMICAL AND BIOLOGICAL WEAPONS.

THE WORLD, PLAINLY, IS IN A MUCH WORSE AND MORE UNSTABLE STATE THAN ANY OF US WOULD LIKE IT TO BE. THERE IS NO SHORTAGE OF PROBLEMS TO PREOCCUPY US.

SO HOW CAN I POSSIBLY BE OPTIMISTIC? WITH THIS BACKGROUND, I SHOULD SURELY BE A DEEP PESSIMIST.

I DO NOT THINK SO. I BELIEVE THAT ALL THESE PROBLEMS CAN BE SEEN IN A DIFFERENT LIGHT, IF A LONGER-TERM, MORE HISTORICALLY AWARE PERSPECTIVE IS USED. LET US EXAMINE ALL THE PROBLEMS I HAVE LISTED IN THAT MORE HISTORICAL WAY.

FIRST POPULATION. POPULATION GROWTH DOES POSE CHALLENGES, OF EDUCATION, OF SOCIAL STABILITY, OF PRESSURE ON RESOURCES. BUT WE SHOULD RECOGNISE THAT IT IS A CONSEQUENCE OF SUCCESS, NOT FAILURE: A CONSEQUENCE OF INCREASING LIFE EXPECTANCY, THANKS TO BETTER NUTRITION AND HEALTH CARE, WHICH IN TURN ARE THE RESULT OF TECHNOLOGICAL PROGRESS AND ECONOMIC DEVELOPMENT. A HUNDRED YEARS AGO, AVERAGE LIFE EXPECTANCY AT BIRTH WAS A MERE 20-40 YEARS IN THE POORER COUNTRIES OF THE WORLD. NOW IT HAS RISEN TO 50-60 YEARS. MOREOVER, ALTHOUGH THE WORLD´S POPULATION IS STILL GROWING, THE PACE OF GROWTH IS SLOWING DOWN AS FERTILITY RATES FALL, EVEN IN MANY POOR COUNTRIES. THE WORLD COULD STILL HAVE A POPULATION OF NINE BILLION BY 2050, BUT THAT REPRESENTS A DROP FROM PREVIOUS PROJECTIONS OF TEN BILLION OR MORE, AND COULD STILL PROVE AN OVER-ESTIMATE.

IF SO, POPULATION GROWTH WILL CONTINUE TO BE A SERIOUS PROBLEM FOR SOME COUNTRIES AND REGIONS, INCLUDING THIS ONE. BUT IT IS UNLIKELY TO POSE A TRULY GLOBAL PROBLEM.

WHAT ABOUT POVERTY AND INEQUALITY? WITH MORE PEOPLE THERE IS MORE POVERTY. OF THAT WE SHOULD HAVE NO DOUBT. WE SHOULD, THOUGH, RECOGNISE THE SUCCESS OF THE WORLD´S TWO MOST POPULOUS COUNTRIES, INDIA AND CHINA, IN REDUCING POVERTY AMONG THEIR TWO BILLION PEOPLE DURING THE PAST 30 YEARS. THEIR GROWTH AND RISING LIVING STANDARDS MEAN THAT HUNDREDS OF MILLIONS OF PEOPLE HAVE BEEN FINDING WAYS OUT OF POVERTY. THEY ALSO MEAN THAT, ALTHOUGH THE NUMBERS OF PEOPLE LIVING ON $2 A DAY HAVE RISEN, THE PROPORTION OF THE WORLD´S POPULATION LIVING IN SUCH POVERTY HAS NOT IN FACT RISEN. INDEED, IT MAY WELL HAVE FALLEN, DURING THE PAST 30 YEARS.

INEQUALITY, THOUGH, REMAINS A BIG PROBLEM AND ISSUE, BOTH WITHIN SOCIETIES AND BETWEEN THEM. BUT THERE TOO THE STATISTICS MISLEAD IF THEY ARE NOT SEEN IN A PROPER PERSPECTIVE. FIRSTLY, THEY MISLEAD BECAUSE THEY SEEM TO SUGGEST THAT THE POOR ARE GETTING POORER. THAT IS NOT SO. THE POOR ARE MORE NUMEROUS, BUT NOT POORER, AS A GENERAL RULE. INEQUALITY HAS RISEN BECAUSE THE RICH HAVE GOT RICHER, AND BECAUSE THE POOREST HAVE BEEN LEFT BEHIND. THE READIEST SOLUTION, THEREFORE, WOULD BE FOR THE RICH TO GET POORER. BUT THAT WOULD HELP NOBODY.

IT IS ALSO SOMEWHAT MISLEADING TO MEASURE INEQUALITY AS SIMPLY THE GAP BETWEEN THE RICHEST AND THE POOREST. THE RAPID GROWTH, OVER A LONG PERIOD, IN THE ECONOMIES OF CHINA, INDIA AND EAST ASIA MEAN THAT ACTUALLY THE GAP HAS NARROWED FOR A MASSIVE NUMBER OF PEOPLE. THERE ARE FAR FAR TOO MANY PEOPLE LEFT BEHIND. BUT ANOTHER OPTIMISTIC POINT IS THAT CHINA, INDIA AND EAST ASIA HAVE SHOWN THAT IF COUNTRIES DO WANT TO NARROW THE GAP BETWEEN THEMSELVES AND THE RICHER WORLD, IT IS POSSIBLE TO DO SO—AND POSSIBLE WITHOUT DEPENDING CHIEFLY ON HANDOUTS FROM THE RICH.

THE THIRD PROBLEM IN MY LIST WAS FINANCIAL OR ECONOMIC INSTABILITY, AND I ARGUED THAT IT CONTINUED TO RAISE FUNDAMENTAL QUESTIONS ABOUT CAPITALISM´S FUTURE.

HERE, OUR INEVITABLE IGNORANCE OF THE FUTURE MAKES IT IMPOSSIBLE TO BE COMPLETELY OPTIMISTIC, OR COMPLACENT, ABOUT WHAT COULD HAPPEN. IN THE 20^TH CENTURY THERE WAS ONLY ONE TRULY CATASTROPHIC PERIOD OF ECONOMIC INSTABILITY, AND THAT WAS THE GREAT DEPRESSION OF THE 1930S. THERE HAS BEEN NO SUCH EVENT SINCE, EVEN WHERE THERE HAS BEEN A FINANCIAL CRISIS, SUCH AS EAST ASIA, RUSSIA OR LATIN AMERICA. BUT ONCE IN A CENTURY IS ENOUGH TO HAVE HUGE CONSEQUENCES.

NEVERTHELESS I REMAIN CAUTIOUSLY OPTIMISTIC. ECONOMIES DURING THE PAST FEW DECADES HAVE BEEN STRIKINGLY RESILIENT IN THE FACE OF SHOCKS. THERE HAS BEEN INSTABILITY. BUT THERE HAS ALSO BEEN, IN GENERAL, FAIRLY RAPID RECOVERY FROM EPISODES OF ECONOMIC COLLAPSE, SUCH AS THE EAST ASIAN CRISIS OF 1997-98, OR THE MEXICAN CRISIS OF 1995, OR RUSSIA´S DEFAULT IN 1998. THE DEVELOPED, RICH ECONOMIES OF JAPAN, GERMANY AND THE UNITED STATES HAVE ALL SUFFERED ECONOMIC BOOMS AND BUSTS DURING THE PAST 10 YEARS. BUT THE DAMAGE HAS BEEN LIMITED. WHY? PROBABLY, BECAUSE GOVERNMENT SPENDING AND MONETARY POLICY PLAYS A BIGGER ROLE THAN IN THE PAST. PROBABLY, ALSO, BECAUSE CAPITAL IS FREER TO FLOW ACROSS BORDERS AND WITHIN MANY COUNTRIES THAN WAS THE CASE IN THE PAST. ALTHOUGH THIS CAN BRING ABOUT A CRISIS, WHEN INVESTORS PANIC, IT ALSO MEANS THAT CAPITAL IS ABLE TO RETURN QUICKLY TO BUY UP CHEAPER ASSETS ONCE THE CRISIS HAS OCCURRED, WHICH HELPS TO RE-STABILISE MANY SITUATIONS.

THIS FREEDOM IS SUPPLEMENTED BY THE WILLINGNESS OF COUNTRIES AND INTERNATIONAL INSTITUTIONS TO STAGE RESCUES, THROUGH THE IMF. THOUGH MUCH CRITICISED, AND CERTAINLY FAR FROM PERFECT, THESE RESCUE PLANS HAVE, IN GENERAL, HELPED TO LIMIT THE CONSEQUENCES OF INSTABILITY. COMPARED WITH THE PAST, IN OTHER WORDS, WE HAVE LEARNED HOW TO MITIGATE THE CONSEQUENCES OF CAPITALIST INSTABILITY. THERE ARE EXCEPTIONS TO THIS JUDGMENT, OF COURSE. BUT THEY ARE NOT THE RULE.

THE ENVIRONMENT IS PERHAPS THE MOST STRAIGHTFORWARD PROBLEM TO BE OPTIMISTIC ABOUT. WITH THE SINGLE AND IMPORTANT EXCEPTION OF GLOBAL WARMING, THE FACTS ABOUT THE ENVIRONMENT ACTUALLY PROVE THE OPPOSITE CASE. THERE IS TOO MUCH POLLUTION OF AIR AND WATER. RESOURCES ARE OF COURSE BEING CONSUMED. BUT IF YOU LOOK OVER A LONGER PERIOD, LEVELS OF AIR AND WATER POLLUTION HAVE ACTUALLY DECLINED MARKEDLY IN THE RICH WORLD´S CITIES. THAT DOES NOT HELP IF YOU LIVE IN CAIRO, MEXICO CITY OR BEIJING, IN ALL OF WHICH POLLUTION IS A MUCH BIGGER PROBLEM. BUT THE EXPERIENCE OF THE RICH WORLD, OVER THE WHOLE OF THE 20^TH CENTURY, SHOWS THAT AS COUNTRIES GET RICHER, SO THEY FIND WAYS TO REDUCE POLLUTION, PARTLY THROUGH TECHNOLOGY, PARTLY THROUGH BEHAVIOURAL CHANGE, PARTLY THROUGH GOVERNMENT REGULATION. THERE IS A VAST PATTERN OF EXPERIENCE FROM WHICH TO LEARN. NATURAL RESOURCES ARE OF COURSE FINITE, BUT THERE IS NOT THE SLIGHTEST SIGN OF ANY OF THEM RUNNING OUT. MORE ARE BEING FOUND, AND TECHNOLOGY IS BEING DEVELOPED TO EXTRACT THEM MORE EFFICIENTLY, AS WELL AS TO USE THEM MORE EFFICIENTLY.

ENVIRONMENTAL PROTECTION STILL NEEDS TO BE DONE, AND BE FOUGHT OVER. BUT I AM OPTIMISTIC BECAUSE THE PAST SHOWS THAT THE BATTLE CAN BE WON.

GLOBAL WARMING IS THE BIG EXCEPTION. SO FAR, NOTHING SIGNIFICANT HAS BEEN DONE TO HELP EASE THIS PROBLEM, EITHER IN THE UNITED STATES, EUROPE OR JAPAN—THE RICH COUNTRIES WHICH ARE SO FAR, OF COURSE, THE SOURCE OF THE PROBLEM.

I REMAIN OPTIMISTIC, HOWEVER, BECAUSE GLOBAL WARMING IS A LONG-TERM PROBLEM. IT IS NOT GOING TO BITE US OVERNIGHT. GIVEN THE WILL, ESPECIALLY THE WILL TO USE LESS COAL AND TO FIND CLEANER WAYS TO BURN OIL AND GAS, THIS PROBLEM CAN BE CONTAINED OR EVEN SOLVED.

HOW, THOUGH, CAN THERE BE THE POLITICAL WILL TO SOLVE SUCH A PROBLEM, INVOLVING AGREEMENTS BETWEEN MANY COUNTRIES OF THE WORLD, IF THE WORLD REMAINS RIFE WITH WARS, TENSIONS, TERRORISM AND WEAPONS OF MASS DESTRUCTION? HOW CAN ONE BE OPTIMISTIC ABOUT THAT?

MY ANSWER IS THAT I REMAIN ALWAYS PARANOID ABOUT THE THREAT OF WAR, OF TERRORISM, EVEN OF THE USE OF NUCLEAR WEAPONS. MAN HAS SHOWN MANY TIMES IN THE PAST THAT HE HAS A REMARKABLE CAPACITY FOR DESTRUCTION, INCLUDING SELF-DESTRUCTION. HE ALSO HAS A REMARKABLE CAPACITY TO RECOVER FROM DESTRUCTIVE PERIODS, BUT THAT IS LITTLE COMFORT, ESPECIALLY WHEN NUCLEAR WEAPONS ARE NOW AVAILABLE.

AND YET I BELIEVE THERE IS CONSIDERABLE CAUSE FOR OPTIMISM.

THE BIGGEST CAUSE FOR OPTIMISM IS AT A GEOPOLITICAL LEVEL. IT IS THAT WE HAVE A WORLD IN WHICH THERE IS JUST ONE SUPERPOWER, THE UNITED STATES OF AMERICA; A WORLD IN WHICH NO OTHER COUNTRY CURRENTLY LOOKS TEMPTED TO CHALLENGE THAT SUPERPOWER; AND A WORLD IN WHICH, MOREOVER, THE UNITED STATES IS WILLING AND CAPABLE OF INTERVENING TO MAINTAIN OR RESTORE THE PEACE. IT WILL NOT DO SO ON EVERY OCCASION, OF COURSE, OR EVEN ON MOST OCCASIONS. BUT IT IS THERE TO DO SO.

DURING THE 20^TH CENTURY WE SAW THE CONSEQUENCES OF GREAT POWER CONFLICT ON MANY OCCASIONS. RIVALRY BETWEEN THE EUROPEAN POWERS, AND THEN BETWEEN JAPAN AND OTHER POWERS IN ASIA, CAUSED DEVASTATING CONFLICT AND INSTABILITY. AS BRITAIN DECLINED IN RELATIVE STRENGTH, THERE WAS NO COUNTRY WILLING OR ABLE TO MAINTAIN THE BALANCE.

THERE NOW IS, AND SINCE THE FALL OF THE SOVIET UNION IN 1991 IT IS ESSENTIALLY UNCHALLENGED.

MANY PEOPLE SEE THE UNITED STATES NOT AS A SOLUTION BUT AS THE PROBLEM ITSELF: AN IMPERIAL POWER, INTERFERING IN OTHER COUNTRIES´ SOVEREIGNTY, DESTABILISING REGIONS, SELFISHLY GRABBING RESOURCES, PROMPTING OTHER COUNTRIES AND EVEN TERRORIST GROUPS TO RISE UP AND CHALLENGE IT.

NOW, AS A JOURNALIST, I BOW TO NO MAN IN MY ABILITY TO BE CYNICAL OR SUSPICIOUS OF GOVERNMENTS OF ALL KINDS, ESPECIALLY WHEN THEY ARE IN A POSITION OF GREAT POWER. AND THAT CERTAINLY INCLUDES THE UNITED STATES. AMERICA HAS THE CAPACITY TO DO ILL AS WELL AS GOOD. SOMETIMES, IT HAS CERTAINLY DISPLAYED THAT CAPACITY.

IT IS ALSO COMMONLY SEEN AS RECKLESS, THOUGHTLESS, NAÏVE, UNSOPHISTICATED IN ITS FOREIGN-POLICY ACTIONS. I AM SURE THIS IS SOMETIMES SO. IT IS, THOUGH, A FAR FROM NEW CRITICISM. INDEED, IT IS A TRADITIONAL CRITICISM FROM US POMPOUS, KNOW-IT-ALL EUROPEANS.

BRITAIN´S GREATEST 20^TH CENTURY ECONOMIST, LORD KEYNES, FOR EXAMPLE, WAS APPARENTLY SHOCKED WHEN HE VISITED WASHINGTON IN 1941 TO NEGOTIATE THE TERMS OF AMERICA´S SUPPORT FOR BRITAIN´S WAR EFFORT. ACCORDING TO LORD SKIDELSKY, HIS BIOGRAPHER, HE FOUND AMERICAN GOVERNMENT TO BE INCOMPETENT, CHAOTIC, DIVIDED, AND LACKING ANY CLEAR LEADERSHIP. HE WROTE TO A FRIEND THAT "I ALWAYS REGARD A VISIT TO THE UNITED STATES AS IN THE NATURE OF A SERIOUS ILLNESS, TO BE FOLLOWED BY A CONVALESCENCE."

EVEN WINSTON CHURCHILL, ROOSEVELT´S CLOSEST COLLABORATOR DURING THE SECOND WORLD WAR, SUMMED UP HIS VIEW OF AMERICA WITH A WRY JOKE:

YOU CAN ALWAYS RELY ON AMERICANS TO DO THE RIGHT THING, HE SAID. ONCE THEY HAVE EXHAUSTED ALL THE ALTERNATIVES.

AND IT CAN CERTAINLY DO THE WRONG THING. IT COULD HAVE DONE THE WRONG THING AFTER SEPTEMBER 11^TH BY HASTILY RETALIATING IN AFGHANISTAN, OR ELSEWHERE. IT COULD HAVE DONE THE WRONG THING BY ATTEMPTING A UNILATERAL INVASION OF IRAQ, WITHOUT REGARD FOR ALLIES, NEIGHBOURS OR THE UNITED NATIONS. IT COULD HAVE DONE THE WRONG THING BY STAGING A BOMBING RAID ON THE NUCLEAR FACILITIES WHERE NORTH KOREA IS RESTORING ITS NUCLEAR PROGRAMME IN VIOLATION OF A 1994 AGREEMENT, AS A PRE-EMPTIVE STRIKE OF THE SORT OUTLINED IN ITS RECENT NATIONAL SECURITY STRATEGY.

IT MAY STILL DO SOME OF THOSE THINGS, OR OTHERS. WE CANNOT KNOW IN ADVANCE. BUT WHAT WE CAN BE REASSURED BY ARE SEVERAL THINGS:

1.     THAT DURING ITS PERIOD OF WORLD DOMINANCE IT HAS SO FAR SHOWN NO SIGNS OF WANTING TO BUILD A TRADITIONAL EMPIRE. IT WITHDREW FROM JAPAN AS RAPIDLY AS IT COULD, IN THE CIRCUMSTANCES OF THE TIME. IT SHOWS NO SIGN OF WANTING TO RETURN THE WORLD TO THE COLONIALISM DISPLAYED BY BRITAIN, FRANCE AND OTHERS IN THE PAST.

2.     ITS OWN DOMESTIC POLITICAL SYSTEM MAKES IT BIASED ON THE SIDE OF RELUCTANCE TO ACT OVERSEAS, RATHER THAN ON THE SIDE OF INTERVENTION. THE SCARS OF VIETNAM HAVE NOT FULLY HEALED. THE CHECKS AND BALANCES OF ITS CONSTITUTION ARE ONE SAFEGUARD; THE OPENNESS OF ITS MEDIA AND ITS POLITICAL DEBATE ARE ANOTHER; A THIRD IS THE FACT THAT ALTHOUGH IT IS MILITARILY POWERFUL, IT IS NOT ACTUALLY ECONOMICALLY DOMINANT, GIVEN THE STRENGTH OF EUROPE AND GROWTH ELSEWHERE. DURING THE 1990S, IT WAS MORE OFTEN GUILTY OF UNDUE HESITATION THAN OF EXCESSIVE INTERVENTION.

3.     ITS GOALS ARE FUNDAMENTALLY GOOD: FREEDOM, HUMAN RIGHTS, THE PREVENTION OF THREATS TO PEACE. ALTHOUGH THERE IS MUCH RESENTMENT OF AMERICAN INVOLVEMENT IN SPECIFIC CONFLICTS, ESPECIALLY THAT IN THE MIDDLE EAST, I WOULD SUGGEST THAT THERE IS STRIKINGLY LITTLE RESENTMENT OF ITS ULTIMATE GOALS. THIS MEANS THAT AMERICA IS ACTUALLY TRUSTED TO ACT AND INTERVENE TO A SURPRISINGLY HIGH DEGREE. THAT TRUST IS NOT IMMUTABLE, NOR UNLIMITED, NOR SHARED BY ALL. IT COULD EASILY BE LOST BY A FOOLHARDY, UNSUCCESSFUL OR NAKEDLY SELFISH ACTION. BUT AS LONG AS AMERICA´S NATURAL RELUCTANCE PROTECTS IT FROM THOSE ERRORS, IT WILL BE ABLE TO ACT.

4.     THE NUMBER OF DEEP-SEATED OPPONENTS OF AMERICA AT THE LEVEL OF NATIONS IS STRIKINGLY SMALL. IN THE FUTURE, CHINA MIGHT EMERGE, BUT IT IS NOT AT THAT POINT RIGHT NOW. RUSSIA SEES MUCH MORE TO BE GAINED BY CO-OPERATING THAN BY CONFRONTING. THE EUROPEAN UNION MAY GRUMBLE, BUT IT GENERALLY SHARES AMERICA´S GOALS. PRESIDENT BUSH´S SLOGAN IN LAST YEAR´S STATE OF THE UNION SPEECH ABOUT AN "AXIS OF EVIL" CAUSED A LOT OF ANGER, RESENTMENT AND EVEN SNEERING. BUT WHAT ALSO OUGHT TO HAVE CAUGHT THE EYE WAS HOW FEW COUNTRIES HE INCLUDED IN HIS LIST: YOU CAN DISPUTE WHETHER THEY SHOULD BE THERE, BUT THERE WERE AFTER ALL ONLY THREE ON HIS LIST. IF THERE ARE ONLY THREE TRUE OPPONENTS, THINGS CANNOT BE TOO BAD.

5.     NUCLEAR, CHEMICAL AND BIOLOGICAL WEAPONS PLAINLY POSE A BIG THREAT. BUT ALSO, IN THESE CIRCUMSTANCES OF GEOPOLITICAL STABILITY AS REGARDS THE GREAT POWERS, THE THREAT POSED IS TOWARDS ALL THE GREAT POWERS, NOT JUST ONE OF THEM. THERE IS THEREFORE GREAT INCENTIVE FOR COLLABORATION BETWEEN THOSE POWERS TO TRY TO DEAL WITH SUCH THREATS. THAT DOES NOT MAKE DEALING WITH IT SIMPLE IN THE SHORT TERM. NOR IS IT GUARANTEED TO WORK: INDIA AND PAKISTAN COULD PROVE THAT AT ANY TIME, AS MIGHT NORTH KOREA. BUT IT MAKES SUCCESS LIKELIER.

6.     SINCE THE END OF THE COLD WAR, TWO PHENOMENA HAVE SPREAD MORE WIDELY THAN EVER BEFORE. DEMOCRACY AND GLOBALISATION. NEITHER OF THOSE TRENDS IS EVER GOING TO SUIT EVERYONE, AND NOR SHOULD IT. BUT WHAT HAPPENED IS THAT THE END OF THE COLD WAR MADE THE OPTION OF OPENING UP ECONOMIES AND OF MOVING TOWARDS DEMOCRACY AVAILABLE TO MORE AND MORE COUNTRIES. MANY TOOK ONE OR BOTH OF THE OPTIONS. THIS IS, IN MY VIEW, GOOD NEWS FOR THE FUTURE. AS CHINA, INDIA AND EAST ASIA HAS SHOWN, GLOBALISATION DOES OFFER PATHS TOWARDS ECONOMIC DEVELOPMENT AND THE REDUCTION OF POVERTY, IF COUNTRIES WISH TO FOLLOW THEM. AND DEMOCRACY ACTS TO SOME DEGREE AS A RESTRAINT ON CONFLICT BETWEEN COUNTRIES. IT IS NOT A PERFECT RESTRAINT JUST AS DEMOCRACY IS NOT A PERFECT SYSTEM. IT, TO REPEAT, IS NEVER GOING TO BE A SYSTEM TO SUIT ALL COUNTRIES. BUT EVEN THOSE COUNTRIES, LIKE SAUDI ARABIA, THAT CHOOSE NOT TO ADOPT DEMOCRACY OUGHT, IN MY VIEW, TO BE REASSURED IF OTHERS DO SO. IN 1980, OF THE WORLD´S THEN 121 COUNTRIES, ONLY 37 HAD DEMOCRACIES, AND THEY TOGETHER ACCOUNTED FOR A MERE 35% OF THE WORLD´S POPULATION. BY 2000, ACCORDING TO FREEDOM HOUSE IN AMERICA, SOME 120 OF THE BY THEN 192 COUNTRIES HAD SOME SORT OF ELECTORAL DEMOCRACY, MAKING UP ABOUT 60% OF THE WORLDS POPULATION. MANY OF THOSE DEMOCRACIES ARE IMPURE, SOME UNSTABLE. BUT, AS A GENERAL TREND, I WOULD SUGGEST THAT IN THE LONG RUN THE SPREAD OF DEMOCRACY IS LIKELY TO BRING MORE STABILITY TO THE WORLD RATHER THAN LESS.

MY OPTIMISM IS, QUITE CERTAINLY, LEFT STARING STRAIGHT IN THE EYES OF THE TWO ISSUES WITH WHICH THE WORLD HAS FOUND A NEW INTEREST SINCE 2001, NAMELY GLOBAL TERRORISM AND IRAQ, AND AT THE IMPORTANT ISSUES THAT HAVE NOT GONE AWAY AND WHICH HAVE CERTAINLY NOT GOT ANY BETTER: THE MIDDLE EASTERN CONFLICT, THE STRUGGLE OVER KASHMIR, THE QUESTION OF NORTH KOREA.

BUT I THINK BY TAKING A LONGER VIEW I HAVE NARROWED DOWN THE FIELD OF CONCERN. AND I DO THINK ONCE THAT FIELD IS SEEN AS MORE NARROW THAN MANY REALISE, IT OUGHT TO BE SEEN AS LESS WORRYING AND MORE MANAGEABLE.

I, AND THE ECONOMIST, HAVE SUPPORTED THE AMERICAN POLICY TOWARDS PRESIDENT SADDAM HUSSEIN IN IRAQ, BOTH IN 1990-91 AND TODAY. THE SITUATION IS DANGEROUS. IT HAS THE POTENTIAL TO EXACERBATE THE PROBLEM OF EXTREMIST TERRORISM OF THE SORT DISPLAYED BY AL-QAEDA AND ITS ASSOCIATES. BUT WE SUPPORT THE AMERICAN POSITION FIRSTLY BECAUSE WE FEEL THE ALTERNATIVES ARE WORSE: CONTINUING WITH SANCTIONS, NO-FLY ZONES AND THE REST OF THE CONTAINMENT REGIME; OR GIVING UP THE EFFORT TO ENFORCE UN RESOLUTIONS AND JUST WAITING TO SEE WHAT SADDAM HUSSEIN WILL DO ONCE HE HAS "WON" AND BECOME EVEN MORE OF A HERO THAN HE ALREADY IS IN SOME QUARTERS.

DONE PROPERLY, THROUGH THE UN PROCEDURE AND WITH THE PUBLIC REVELATION OF EVIDENCE OF HIS ILLICIT WEAPONS PROGRAMMES, WE THINK THE DISARMAMENT OF SADDAM HUSSEIN AND HIS REPLACEMENT BY A NEW REGIME CAN BE DONE WITHOUT CAUSING GREAT INSTABILITY AND DEADLY CONFLICT. I WELCOME THE PROPOSAL THAT, IF A WAR LOOKS INEVITABLE, THE ARAB NATIONS BE GIVEN A CHANCE TO PERSUADE SADDAM TO GO INTO EXILE. I AM THUS OPTIMISTIC THAT THE PROBLEM OF SADDAM HUSSEIN CAN BE DEALT WITH WITHOUT BRINGING ABOUT A HUGE, CATACLYSMIC CONFLICT, AND WITHOUT CAUSING WIDESPREAD INSTABILITY IN THIS REGION.

I ALSO BELIEVE, BEING AN ETERNAL OPTIMIST, THAT FOLLOWING SUCH A RESOLUTION OF THE SITUATION IN IRAQ, PROGRESS CAN AND WILL BE MADE CONCERNING THE CONFLICT BETWEEN ISRAEL AND PALESTINE. GIVEN THE PAST HISTORY, NO ONE CAN FEEL CONFIDENT ABOUT THAT. BUT WITH SAUDI ARABIA AND THE UNITED STATES BOTH PRESSING FOR A PEACEFUL, TWO-STATE SOLUTION, AND WITH BOTH PARTIES IN THE CONFLICT REALISING THAT A DEAL MUST BE DONE, I BELIEVE IT WOULD BE POSSIBLE.

WHAT THIS MEANS IS THAT I AM OPTIMISTIC BOTH ABOUT THE SHORT TERM AND ABOUT THE LONGER TERM.

I AM OPTIMISTIC ABOUT THE LONGER TERM BECAUSE I THINK THAT AMERICA IS THERE TO KEEP THE GLOBAL PEACE, AND BECAUSE I THINK CAPITALISM IS SUFFICIENTLY RESILIENT AND ADAPTABLE TO DEFEAT ITS OWN TENDENCY TOWARDS FAILURE. GLOBALISATION OFFERS THE CHANCE, FOR THOSE WHO WISH TO TAKE IT, TO EXPLOIT AND EXTEND CAPITALISM´S BENEFITS FOR ECONOMIC DEVELOPMENT.

I AM OPTIMISTIC IN THE SHORTER TERM BECAUSE I FEEL THAT BOTH THE TENSION OVER SADDAM HUSSEIN AND THE STALEMATE OVER MIDDLE EAST PEACE ARE CAPABLE EITHER OF RESOLUTION OR OF CONSIDERABLE IMPROVEMENT THIS YEAR. I AM HIGHLY REASSURED BY THE EVIDENT DESIRE OF SAUDI ARABIA TO PLAY ITS PART IN SUCH RESOLUTION. THIS OPTIMISM ALSO EXTENDS, THEN, TO THE ISSUE OF EXTREMIST TERRORISM. IT CANNOT BE SOLVED ALTOGETHER. BUT IT CAN BE QUELLED, ESPECIALLY IF THOSE OTHER BIG ISSUES REVOLVING AROUND AMERICA´S ROLE IN YOUR REGION CAN BE DEALT WITH OR AT LEAST IMPROVED.

MANY EVENTS OR SURPRISES COULD PROVE ME WRONG. BUT MY SENSE, AS I WROTE IN MY NEW BOOK, 20:21 VISION, IS THAT THE RIGHT ATTITUDE IS THAT OF WHAT I CALLED THE PARANOID OPTIMIST. BE EVER PARANOID ABOUT RISKS AND THREATS. BUT DO NOT LET THAT OVERSHADOW A BASIC, WELL-FOUNDED OPTIMISM ABOUT THE PROSPECTS FOR THE WORLD.