WASHINGTON, Nov 21: Fading US economic and military power will lead to the decline of America as the dominant global power, predicts a US intelligence report.

But America’s decline will not enable another power to occupy the central stage. Instead, it will lead to a multi-polar world with many regional players calling the shots in their spheres of influence.

By 2025, the world will also live under daily threat of nuclear war, environmental catastrophe and water scarcity.

The predictions come from the US National Intelligence Council, a government body that works under the Director of National Intelligence. The NIC report, titled “Global Trends 2025: A Transformed World,” was released on Thursday afternoon.

The report projects China, India and Russia as new world leaders by 2025 but notes that there will be other major players as well.

“Indonesia, Turkey and a post-clerically run Iran — states that are predominantly Islamic, but which fall outside the Arab core — appear well-suited for growing international roles,” the report says.

By 2025, China will be the world’s second-largest economy and a major military power.

“The United States will remain the single most powerful country, although less dominant. Shrinking economic and military capabilities may force the US into a difficult set of tradeoffs between domestic and foreign-policy priorities.”

The report, based on a global survey of experts and trends, is more pessimistic about America’s global status than previous outlooks prepared every four years. Analysts drawn from across the US intelligence community warn that the financial crisis on Wall Street is the beginning of a global economic rebalancing.

The US dollar’s role as the major world currency will weaken to the point where it becomes a “first among equals”.

“The international system will be almost unrecognisable by 2025, owing to the rise of emerging powers, a globalising economy, a transfer of wealth from West to East, and the growing influence of non-state actors. Although the United States is likely to remain the single most powerful actor, the United States’ relative strength – even in the military realm – will decline and US leverage will become more strained.”

The report has been prepared in time for Barack Obama’s entry into the White House on Jan 20, where he will be faced with some of the greatest challenges of any newly elected US president.

Nuclear weapons

“The likelihood that nuclear weapons will be used will increase with expanded access to technology and a widening range of options for limited strikes,” the 121-page assessment warns.

The analysts draw attention to an already escalating nuclear arms race in the Middle East and anticipate that a growing number of ‘rogue states’ will be prepared to share their destructive technology with terror groups.

The report warns that global warming will aggravate the scarcity of water, food and energy resources. Citing a British study, it says that climate change could force up to 200 million people to migrate to more temperate zones. And future wars may be fought over water, food and energy resources.

The US intelligence community expects that terrorism would survive until 2025, but in slightly different form, suggesting that Al Qaeda’s “terrorist wave” might be breaking up.

“Al Qaeda’s inability to attract broad-based support might cause it to decay sooner than people think.”

On a positive note, the report points out that the world is already in the midst of a transition to cleaner fuels and predicts that an alternative to oil might be in place by 2025.

An energy transition – from fossil fuels to alternative sources – is inevitable, and “the only questions are when and how abruptly or smoothly such a transition occurs,” the report notes.

“We believe the most likely occurrence by 2025 is a technological breakthrough that will provide an alternative to oil and natural gas, but with implementation lagging because of the necessary infrastructure costs and need for longer replacement time.”

Saudi Arabia, the report adds, “will absorb the biggest shock” created by the decreased need for oil and gas, “as its leaders will be forced to tighten up on the costs of the royal establishment.”

In Iran, it projects that a drop in oil and gas prices resulting from alternative fuels “will undermine any populist economic policies” and that the “pressure for economic reform will increase, potentially putting pressure on the clerical governing elite to loosen its grip.”