1. The United States of America

No surprise here: as it has for the last century, the United States remains the most powerful country on earth. America’s dynamic economy, its constitutional stability (even as we watch the Age of Trump unfold), its deep bench of strong allies and partners (including 5 of the 7 top powers listed below), and its overwhelming military superiority all ensure that the United States sits secure in its status on top of the greasy pole of international power politics.

Not that American power increased over the past year. 2016 may have been the worst year yet for the Obama Administration, bringing a string of foreign policy failures that further undermined American credibility across the world. In Syria, Russia brutally assisted Assad in consolidating control over Aleppo and sidelined Washington in the subsequent peace talks. China continued to defy the American-led international order, building up its military presence in the South China Sea and reaching out to American allies like the Philippines. Iran and its proxies continued their steady rise in the Middle East, while the Sunnis and Israel increasingly questioned Washington’s usefulness as an ally. Meanwhile, the widespread foreign perception that Donald Trump was unqualified to serve as the President of the United States contributed to a growing chorus of doubt as to whether the American people posses the wit and the wisdom to retain their international position. Those concerns seemed to be growing in the early weeks of 2017.

In the domestic realm, too, America’s leaders did little to address the country’s pressing long-term economic problems, nor did they inspire much confidence in the potential for effective bipartisan cooperation. The populist surge that almost gave the Democratic nomination to the Socialist senator Bernie Sanders and brought Donald J. Trump to the White House was a sign of just how alienated from politics as usual many Americans have become. Foreigners will be watching the United States closely in 2017 to see whether and how badly our internal divisions are affecting the country’s will and ability to pursue a broad international agenda.

Still, for all this gloom, there was good news to be had. Fracking was the gift that kept on giving, as the United States surpassed Saudi Arabia and Russia to become the country with the world’s largest recoverable oil assets and American businesses discovered new innovations to boost their output. The economy continued its steady growth and unemployment fell to a pre-financial crisis low, with the Fed’s year-end interest rate hike serving as a vote of confidence in the economy’s resilience.

As the Trump administration gets under way, the United States is poised for what could be the most consequential shift in American policy in several generations. On some issues, such as the shale revolution, Trump will build on the progress already made; in other areas, such as China’s maritime expansionism or domestic infrastructure, his policies may bring a welcome change; in others still, Trump’s impulsiveness could well usher in the dangerous consequences that his liberal detractors so fear.

But regardless of what change the coming year brings, it is important to remember that America’s strength does not derive solely or primarily from the whims of its leaders. America’s constitutional system, its business-friendly economy, and the innovation of its people are more lasting sources of power, proving Trump critics right on at least one count: America has never stopped being great.

2. China (tie) 

In 2016, China cemented its status as the world’s second greatest power and the greatest long-term challenger to the United States. In the face of American passivity, Beijing projected power in the South and East China Seas, built up its artificial outposts and snatched a U.S. military drone at year’s end. Aside from its own forceful actions, China also enjoyed several strokes of good fortune in 2016, from the election of a China-friendly populist in the Philippines to the demise of the Trans-Pacific Partnership, which will grant China a new opportunity to set the trade agenda in the Asia-Pacific.

China continued to alternate between intimidating and courting its neighbors, scoring some high-profile victories in the process. Most prominent was the turnaround from Manila, as the new Philippine president Rodrigo Duterte embraced China: in part because of his anti-Americanism, but also thanks to Chinese support for his anti-drug campaign and the promise of lucrative trade ties and a bilateral understanding on the South China Sea. Beijing also cannily exploited the Malaysian Prime Minister’s disillusionment with the United States to pull him closer into Beijing’s orbit, while pursuing cozier ties with Thailand and Cambodia.

Not all the news was good for Beijing last year. For every story pointing to Beijing’s growing clout on the world stage, there was another pointing to its inner weakness and economic instability. Over the course of the year, Chinese leaders found themselves coping with asset bubbles, massive capital flight, politically driven investment boondoggles, pension shortfalls, brain drain, and a turbulent bond market. The instinctual response of the Chinese leadership, more often than not, was for greater state intervention in the economy, while Xi sidelined reformers and consolidated his power. These signs do not suggest confidence in the soundness of China’s economic model.

And despite the gains made from flexing its military muscle, there have been real costs to China’s aggressive posture. In 2016, Vietnam militarized its own outposts in the South China Sea as it watched China do the same. Indonesia began to pick sides against China, staging a large-scale exercise in China-claimed waters. Japan and South Korea agreed to cooperate on intelligence sharing—largely in response to the threat from North Korea, but also, implicitly, as they both warily watch a rising Beijing. And India bolstered its military presence in the Indian Ocean in response to China’s ongoing “string of pearls” strategy to project power there. For all its power, then, China is also engendering some serious pushback in its neighborhood.

The new year finds China in an improved position but also a precarious one, as its economic model falters and it seeks to break out of its geopolitical straitjacket.

2. Japan (tie)

Here at TAI we have long argued that Japan is a perennially underrated global power whose influence has been steadily increasing over the past few years. 2016 saw that trend continue, thanks to smart diplomacy from Prime Minister Shinzo Abe and a widespread anxiety over China’s aggression that drove many of its neighbors toward greater cooperation with Tokyo.

In 2016, Japan continued to be at the forefront of opposition to China, pushing back against Chinese incursions and pursuing partnerships with other Asian states that are similarly troubled by China’s rise. In its own neighborhood, in the East China Sea, Japan upped its deterrence posture and announced plans to deploy a tactical ballistic missile shield. Tokyo also took a firmer stance on the South China Sea dispute (to which it is not a party) as it sought to rally claimants who are similarly fed up with China’s aggression. The threat from North Korea also strengthened Japan, allowing Tokyo and Seoul to find common ground on missile defense and an intelligence-sharing pact that infuriated Beijing. Farther abroad, Japan inked a landmark civil nuclear deal with India and continued to lay the groundwork for a promising partnership with New Delhi.

Not every Japanese initiative paid off: despite much hoopla about the Putin-Abe summit, Japan made little headway with Russia in their decades-old islands dispute. But on the whole, Abe can claim a remarkably successful year in foreign policy. Abe’s nationalist outlook and push for Japanese remilitarization remain controversial at home, but his record-high approval ratings and the ongoing reality of Chinese aggression have vindicated him for now.

America’s erratic course in the Pacific created both problems and opportunities for Japan. Obama’s dithering, Trump’s irascibility, and the collapse of American support for TPP meant that both friends and rivals became wary of an increasingly unpredictable United States. America’s unsteady course pushed Japan toward a more visible leadership role in the region, and Japan’s role in the construction of a maritime alliance to balance China took on a much higher profile than before. Japanese nationalists welcomed the country’s newly assertive regional stance, but they worried about the reliability of Japan’s most important ally.

On the economic front, Japan’s year was less successful. Economic growth continued to be sluggish for much of 2016, despite a better-than-expected third quarter. The demise of the Trans-Pacific Partnership was another setback, dealing a blow to Japan’s economic strategy and its efforts to contain China. Still, Japan remains the world’s third-largest economy, and it shrewdly wielded its financial clout in countries like Myanmar and Sri Lanka as it sought to counter China’s checkbook diplomacy. All in all, Japan in 2016 continued to prove its mettle, acting not only as a powerful balance against China but as a major power in its own right.

4. Russia 

Russia rose in our power rankings this year as Vladimir Putin continued to punch above his weight, defying predictions of economic collapse and military quagmire. The country once dismissed by President Obama as a “regional power” acting out of weakness ran circles around the United States in Syria, held its ground in Ukraine, weathered an economic storm at home, watched cracks widen in the European Union, and inserted itself into the heart of the American presidential election.

Putin scored both tactical and symbolic victories in Syria, allowing Assad to retake Aleppo while repeatedly humiliating the United States in the process. Russia’s ability to sideline the U.S. in post-Aleppo peace talks only confirmed that Russia, not the U.S., has become the major power broker in the county. Meanwhile, Putin’s reconciliation with Erdogan, NATO’s most estranged ally, positions Russia well to drive a wedge between Turkey and the West while laying the groundwork for a favorable settlement in Syria.

Closer to home, Russian troops continued to forestall any lasting peace in Ukraine, rendering any talk of EU or NATO integration a moot point. Russia-friendly leaders were elected in Georgia, Estonia, and Moldova, while the EU was buffeted by the shocks of Brexit, Eurosceptic populist insurgencies across the continent, and an ongoing stream of refugees, created in large part by Russia’s actions in Syria.

Putin’s fortunes took another upturn in November, when the United States elected Donald Trump, who has consistently promised to pursue friendlier ties with Moscow. The post-election uproar over Russia’s hacking of the DNC, and the dubious assertion that Trump will be Putin’s Manchurian candidate also played right into Putin’s hands, creating an impression that the all-powerful Putin holds the American electoral process in his hands.

When faced with these victories, it is worth remembering Russia’s many underlying weaknesses. Russia remains a weakly institutionalized state, subject to the whims of its strongman leader, and torn by long-simmering ethnic divisions and vast inequality. Its economy is resource-dependent and highly vulnerable to price shocks. Its military capabilities are laughably out of sync with the superpower image it attempts to project around the world. None of these realities changed this year, and all of them undermine Russia’s long-term potential as a great power. But 2016 showed that in a world of weak opponents, Russia can punch well above its weight. In the country of the blind, the one-eyed man is king.

5. Germany 

Germany was ahead of Russia in last year’s power rankings. This year, their positions are reversed. Partly, this is because Putin had a good year; partly, it is because Germany, and Germany’s project in Europe, had a bad one.

As we wrote last year, Germany is locked in a long-term fight with Russia over the future direction of Europe. Germany wants a Europe in which European policies and laws are decided by EU institutions without outside interference. Germany’s dream is Russia’s nightmare; for hundreds of years Russia has had a say in almost every important question in Europe. Russia’s most important economic interests and, historically at any rate, its most important security concerns are European.

The idea that a bunch of bureaucrats in Brussels can decide what rules Gazprom must obey, or how Russian minorities in the Baltic states are to be treated strikes many Russians (even many of Putin’s opponents) as unacceptable. Russia wants to be involved in European decision making about defense, about trade, about migration and about the Middle East. It wants a veto over NATO and EU expansion, and it wants a larger say in how these institutions work. It wants to bring power back into European politics, and to revive the old fashioned games of balance of power. Russia wants to tear down the edifice that Germany is trying to build.

In 2016, the wrecking ball gained on the construction crew. It wasn’t just the Brexit vote, though that vote was a profound shock to the European system and its rippling aftershocks continue to shake the foundations of the EU. There were also the continuing gains in public opinion polls of parties (both on the right and on the left) who oppose the current version of the European project in countries like France, Italy and the Netherlands—all among the six original founding members of the EU.

It was the continuing rise to power of “illiberal democrats” in countries like Poland and Hungary. It was the continuing impasse over the euro and the corrosive fallout of the eurocrisis. It was the shock of Syrian and North African migrants, flocking into Europe and setting the EU countries against one another, even as Chancellor Merkel weakened her authority at home and abroad by a poorly thought out if warm hearted response to the crisis. It was the abrupt deterioration in EU-Turkish relations, and the painful realization in Brussels and Berlin that the EU will have to swallow its pride and concerns for human rights in order to prevent Turkey’s emerging strongman from blackmailing Europe with the threat of opening the floodgates for migration from Syria, Afghanistan and other troubled Islamic countries.
Europe was less united, less confident and less strong at the end of 2016 than it was at the beginning. With the election of Donald Trump, a man whose sympathies seem to lie more with the wrecking ball than with the construction crew, Europe’s prospects could darken still more. And with them, Germany’s clout could diminish further.

6. India 

Like Japan, India is often overlooked in lists of the world’s great powers, but it occupies a rare and enviable position on the world stage. India is the world’s largest democracy, home to the second-largest English-speaking population in the world and boasting a diversified and rapidly growing economy. On the geopolitical front, India has many suitors: China, Japan and the United States are all seeking to incorporate India into their preferred Asian security architecture, while the EU and Russia court New Delhi for lucrative trade and defense agreements. Under the leadership of Narendra Modi, India has deftly steered its way among these competing powers while seeking to unleash its potential with modernizing economic reforms.

Not that Modi’s economic reforms are going all that well; the public backlash resulting from Modi’s hasty demonetization policy this year showcases the perils of overzealous reform. And India’s rapid growth trajectory has brought other crises that the government has been ill-equipped to address, India’s accelerating air pollution being the most visible example. Meanwhile, the escalation of the Kashmir conflict with Pakistan threatened to edge two bitterly opposed nuclear powers to the brink of war.

Despite these internal problems and the Pakistan scare, India found its footing elsewhere in 2016. Long hesitant to pick sides, New Delhi took several clear steps this year to deter a rising and aggressive China, announcing that it would fast-track its defense infrastructure projects in the Indian Ocean, amid fears that China was trying to encircle India with a “string of pearls.” Likewise, Modi explored new naval cooperation with both the United States and Japan, and signed a host of defense deals with Russia, France and Israel to modernize the Indian military. From the Middle East and East Africa to Southeast Asia, India is making its presence felt in both economics and security policy in ways that traditional great powers like Britain and France only wish they could match.

7. Iran 

The proxy wars between Saudi Arabia and Iran continued unabated throughout 2016, and as we enter the new year Iran has confidently taken the lead. Saudi Arabia remains a formidable power, but it was Iran that pulled ahead in the last 12 months.

Throughout 2016, Iranian proxies were on the march across the Middle East, and the Shi’a Crescent seemed closer to reality than ever before. In Lebanon, Tehran rejoiced at the growing clout of Hezbollah and the election of Shi’a-friendly Michel Aoun, while the Saudis bitterly cut off aid in a sign of their diminishing influence in Beirut. And in Syria, Shiite militias helped to retake Aleppo and turn the tide for Assad. Iran was also gaining ground in Iraq. More disquieting than all this, from the Saudi perspective, were developments in Yemen. Iran-backed Houthi rebels took the fight to the Saudi-backed government in a war that has already claimed 10,000 lives.

Meanwhile, the fruits of the nuclear deal continued to roll in: high-profile deals with Boeing and Airbus sent the message that Iran was open for business, while Tehran rapidly ramped up its oil output to pre-sanctions levels.

2017 may be a more difficult year for Tehran; one of the mullahs’ most important assets, President Obama, is no longer in office and, as far as anybody can tell, the Trump administration seems more concerned about rebuilding ties with traditional American allies in the region than in continuing Obama’s attempt to reach an understanding with Iran.

8. Israel 

This year there’s a new name on our list of the Eight Greats: Israel. A small country in a chaotic part of the world, Israel is a rising power with a growing impact on world affairs. Although 2016 saw the passage of yet another condemnation of Israel at the United Nations, this time in the Security Council thanks to an American decision to abstain rather than veto, overall the Jewish state continues to develop diplomatic, economic and military power and to insert itself into the heart of regional politics.

Three factors are powering Israel’s rise: economic developments, the regional crisis, and diplomatic ingenuity. Looking closely at these tells us something about how power works in the contemporary world.

The economic developments behind Israel’s new stature are partly the result of luck and location, and partly the result of smart choices. As to the luck and location factor, large, off-shore discoveries of natural gas and oil are turning Israel into an energy exporter. Energy self-sufficiency is a boost to Israel’s economy; energy exports boost Israel’s foreign policy clout. In 2016 Erdogan’s Turkey turned on most of its NATO and Western allies; ties with Israel strengthened. Turkey’s Islamist ruler wants gas, and he wants to limit Turkey’s dependence on Russia. Israel is part of the answer.

But beyond luck, Israel’s newfound clout on the world stage comes from the rise of industrial sectors and technologies that good Israeli schools, smart Israeli policies and talented Israeli thinkers and entrepreneurs have built up over many years. In particular, Israel’s decision to support the rise of a domestic cybersecurity and infotech economy has put Israel at the center of the ongoing revolution in military power based on the importance of information control and management to 21st century states. It is not just that private investors all over the world look to invest in Israel’s tech startups; access to Israeli technology (like the technology behind the Iron Dome missile system) matters to more and more countries. It’s not just America; India, China and Russia all want a piece of Israeli tech wizardry.

Other, less glamorous Israeli industries, like the irrigation, desalinization and dry land farming tech that water poor Israel has developed over the decades play their part. Israel’s diplomatic outreach to Africa and its deepening (and increasingly public) relationship with India benefit from Israel’s ability to deliver what people in other countries and governments want.
The second factor in Israel’s appearing on our list is the change in the Middle Eastern balance of power that has transformed Israel from a pariah state to a kingmaker. On the one hand, Syria, one of Israel’s most vociferous enemies and biggest security threats in the old days, has now been broken on the wheel. What has happened in Syria is a terrible human tragedy; but in the cold light of realpolitik the break up of Syria further entrenches Israel’s military supremacy in its immediate neighborhood.

Egypt hates Hamas, ISIS and Islamic Jihad as much as Israel does; never has Egyptian-Israeli security cooperation been as close as it is today. Even more consequentially, the rise of Iran and its aspirations to regional hegemony on the one hand and the apparent support for its dreams from the Obama administration made Israel critical to the survival of the Sunni Arabs, including the Gulf states, who loathe Iran and fear a Shia victory in the religious conflict now raging across the Middle East. The Arab Establishment today has two frightening enemies: radical jihadi groups like ISIS on one side, and Iran on the other. Israel has a mix of intelligence and military capabilities that can help keep the regional balance stable; privately and even not so privately many prominent Arab officials today will say that Israeli support is necessary for the survival of Arab independence.
Finally, Israel has managed, uncharacteristically, to advance its global political agenda through effective and even subtle diplomacy. Just as Israel was able to strengthen its relationship with Turkey even as Turkish-U.S. and Turkish EU relations grew distant, Israel has been able to build a realistic and fruitful relationship with Russia despite Russia’s standoff with the west over Ukraine, and Russia’s ties with Iran. The deepening Israel-India relationship has also required patience and skill. Israel’s diplomatic breakthroughs in relations with African countries who have been hostile to Israel since the 1967 war were also built through patient and subtle diplomacy, often working behind the scenes. That behind-the-scenes outreach diplomacy has also helped Israel achieve new levels of contact and collaboration with many Arab countries.

It is not, of course, all sweetness and light. Hezbollah has tens of thousands of missiles aimed at Israel and, thanks to Iran’s victories in Syria, it can now enjoy much more reliable supplies from its patron. The Palestinian Question is as far from a solution as possible, and even as they fragment and squabble among themselves, the Palestinians continue to fight for Israel’s delegitimation in the UN and elsewhere. Israeli politics are as volatile and bitter as ever. The kaleidoscopic nature of Middle East politics means that today’s hero can be tomorrow’s goat. While the breakdown of regional order has so far been a net positive for Israel’s security and power, things could change fast. In ISIS coup in Saudi Arabia, the collapse of Jordan, the fall of the Sisi government in Egypt: it is not hard to come up with scenarios that would challenge Israel in new and dangerous ways.

Former President Obama and his outgoing Secretary of State, John Kerry (neither widely regarded these days as a master of geopolitics), frequently warned Israel that its policies were leaving it isolated and vulnerable. This is to some degree true: European diplomats, American liberals and many American Jews are much less sympathetic to Israel today than they have been in the past. Future Israeli leaders may have to think hard about rebuilding links with American Democrats and American Jews.

But for now at least, Israel can afford to ignore the dismal croaking of the previous American administration. One of a small handful of American allies to be assiduously courted by the Trump campaign, Israel begins 2017 as the keystone of a regional anti-Iran alliance, a most-favored-nation in the White House, and a country that enjoys good relations with all of the world’s major powers bar Iran. Teodor Herzl would be astonished to see what his dream has grown into; David Ben-Gurion would be astounded by the progress his poor and embattled nation has made.
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