Rising geopolitical risks have been underscored by today’s multiple global crises — from a severe global credit crunch and financial tumult to serious energy and food challenges.

Add to that the international failure to stem the spreading scourge of terrorism and the specter of a renewed Cold War arising from the deterioration in relations between the West and Russia since Moscow’s August retaliatory military intervention in Georgia and subsequent recognition of the breakaway regions of South Ossetia and Abkhazia — actions that some portray as the 21st century’s first forcible changing of borders.

The world clearly is at a turning point, underscored by the ongoing tectonic shifts in political and economic power. Tinkering won’t help because the global crises cry out for fundamental changes in international rules and institutions.

That was the broad conclusion at the Oct. 6-8 World Policy Conference in Evian, France, attended by a number of heads of state or government, policymakers and intellectuals, including this writer. The common theme in many of the presentations was that the grave challenges the world faces today demand major fixes, including the revamping of the institutional structure.

If existing institutions are not adapted to the new power realities in the world, greater instability is likely to ensue. As French President Nicolas Sarkozy pointed out, a 21st-century world is saddled with 20th-century institutions. Consequently, there is great uncertainty over how to address the pressing challenges.

In addition to the imperative to enlarge the U.N. Security Council and the Group of Eight, the failing Bretton Woods system for governing monetary relations needs to be overhauled. The various crises have shown, as Russian President Dmitry Medvedev highlighted, that no single power or institution can claim exclusive rights to set the rules.

Changing the international institutional structure, however, is no easy task. The existing institutions were born of crises and now represent entrenched interests of some players. It will be difficult to reform or replace them until a serious, sustained crisis makes change inescapable. The financial meltdown could be one such crisis that facilitates an overhaul of the Bretton Woods institutions such as the International Monetary Fund at a time when Asia and the Middle East have emerged as the world’s main creditors.

As the futile efforts to reform the Security Council for more than two decades illustrate, revamping any institution is a Herculean task. Even reforming the International Energy Agency is proving daunting. Meantime, great powers continue to impose their will on weaker nations or limit their freedom of action.

For long, but especially since the end of the Cold War, democracy and markets have been touted as the twin answer to all ills, nationally and regionally. Today, both have come under serious strain.

Democracy is in retreat globally after the successes of the 1990s in spreading political freedoms to Eastern Europe and overturning dictatorships in Indonesia, South Korea, Taiwan and Chile. In fact, China’s dramatic rise as a world power in just one generation under authoritarian rule represents the first direct challenge to liberal democracy since the rise of fascism in the 1930s. The financial crisis, for its part, has helped turn free-market principles on their head.

After having dispensed one prescription to all — liberalize, privatize and emulate the Anglo-American practices of financial and corporate governance — the U.S. has taken the lead to precipitously embrace principles of financial socialism in the current crisis. The U.S. has swung from implicit faith in the power of markets to bailing out its troubled financial colossuses in a manner that seeks to keep the profits in private hands but nationalize the losses.

By palming off losses to the masses, the U.S. has not only backed away from its own model of capitalism, but also set in motion new practices that some European economies have been to quick to emulate. Nothing better illustrates the troubling turn of events than London’s use of an anti-terrorism law to freeze the British assets of an Icelandic bank.

The U.S.-government takeover of Fannie Mae and Freddie Mac, bailout of AIG and moves to partially nationalize some banks mark the end of America’s trust-the-markets capitalism. Henceforth, the U.S. will have no face to preach laissez-faire capitalism.

In fact, the global financial mayhem has resulted from the excesses of Anglo-Saxon capitalism, symbolized by unbridled risk-taking, which created a liquidity problem before manifesting itself as a solvency problem.

The lesson: High living on borrowed Asian money is just not sustainable.

The gap between principle and practice, unfortunately, has also extended to the political-diplomatic realm. The West, for example, has supported the inviolability of international borders while contradictorily backing the right of self-determination.

Having sponsored Kosovo’s self-proclamation of independence from Serbia in February 2008, the U.S. and some of its allies now find themselves in the awkward position of opposing the right of self-determination of the people of South Ossetia and Abkhazia — today self-declared independent entities under Russian protection. It is as if the legitimacy of a self-declaration of independence depends on which great power sponsors the action.

The present global fault lines and crises carry significant security risks. The most pressing challenges today are global in nature and thus demand international responses and solutions. Yet the representational deficit of the existing institutions and their inadequacy to play an effective and forward-looking approach has become glaring.

The events of September 2008 that set in motion the financial meltdown and now threaten global recession have proven no less significant than 9/11.

While 9/11 involved terrorist attacks on symbols of U.S. power, the events since last month are an insidious assault on U.S. financial might, which helps underpin America’s global strategic heft. Along with the other crises, they signal an end to the leadership role the U.S. has played economically and politically since World War II ended. The multiple crises are proof that America, with its own internal mess, is no longer able to play global guardian.

Until a new world order emerges, we will continue to live, to quote Sarkozy, in "a dysfunctional world with outdated set of rules." Only revamped institutions and new rules can deal with the root causes of the present crises, not just the symptoms.

Brahma Chellaney, professor of strategic studies at the privately funded Center for Policy Research in New Delhi, is the author, most recently, of Asian Juggernaut: The Rise of China, India and Japan.