Urbanization has already declared itself the mega-trend of the 21st century, with half the world’s population now living in cities for the first time in human history. While the implications for economic growth have been widely discussed, urbanization’s impact on diplomacy and sovereignty will be equally profound.

Consider just two major issues on the global agenda: security and climate change. After the 9/11 terrorist attacks on New York City and the November 2008 terror attack on Mumbai, both cities moved to strengthen their own security services and intelligence capabilities beyond what Washington and Delhi could provide and mandate. The Mideast’s iconic Dubai has long done the same beyond the shadow of federal Emirati capital Abu Dhabi.

Now look at climate change. Two decades of climate diplomacy have yielded little progress in devising a meaningful global framework to reduce carbon emissions. Instead, new regimes led by cities are emerging. Started by London mayor Ken Livingstone in 2006, the C40 initiative brings together over 60 cities and mayors to exchange best practices, transfer technologies, and promote public-private partnerships that reduce the urban carbon footprint. The standards set by C40 members in clean-energy buildings, waste management, and sustainable transport systems substantially exceed existing standards set by inter-governmental negotiation.

As cities continue to arrogate major diplomatic and economic functions, should we still be talking about international relations?

To appreciate the role of the city in 21st century, we must remember that cities are humanity’s first and most permanent fixed settlements, and arguably oldest diplomatic actors. Ancient Mesopotamian and Anatolian cities engaged in regular exchange of envoys to establish mutual recognition and merchants who conducted trade missions. Medieval and Renaissance diplomacy was similarly dominated by city-states, particularly in Italy and northern Europe with the Hanseatic League, whose intense diplomatic competition and interactions helped to undermine the Holy Roman Empire, while fueling the commercial revolution and voyages of exploration across the Atlantic and to Asia. Even after the 1648 Treaty of Westphalia, widely marked as the transition to sovereign nation-states, diplomacy remained a heterogeneous affair all the way until the post-Napoleonic Vienna Convention on Diplomatic Relations in 1815. From a “city” viewpoint, nation-states have only been the (nearly) exclusive diplomatic actors for less than two centuries.

Globalization itself is as much an inter-city phenomenon as it is about lowering national borders. According to a McKinsey Global Institute study, almost the entire world economy is represented by approximately 400 cities. Airline connections around the world depend on the development of robust “hubs” such as Chicago, London, Zurich or Singapore, which in turn magnify the reach of globalization inward to smaller cities in their regions.

For several years, Loughbourough University’s Globalization and World Cities research program (GaWC) has charted how global cities have been agglomerating integrated producer services economies and defining the evolution of cross-national financial connections together with the financial industry (and private sector more broadly). Stock exchange mergers testify to this changing geography of influence: the popularized link between New York and Frankfurt via the 2011 talks on the NYSE Euronext and Deutsche Boerse merger only hinted at a wider trend that, in the past two years alone, has seen negotiations between London’s and Toronto’s stock exchanges, and similar discussions between Sydney and Singapore, Chicago and Sao Paulo, Dubai and Mumbai or the Shenzhen-Hong Kong-Shanghai triangle, all of which indicate how global finance networks are being redrawn through emerging global cities.

Global equity analysts for investment banks often speak of the confluence of urbanization and a large youth workforce as a key driver of portfolio allocation into emerging markets. Indeed, the lion’s share of foreign direct investment received in such countries is concentrated in the one or two main cities. As numerous recent World Bank studies demonstrate, this emphasis on the city as the magnet for FDI has combined with urbanization to push the world back into conditions not witnessed in centuries: global inequality is now again predominantly within societies (particularly key cities and the hinterlands) rather than across them (between rich and poor nations). Again: those living in the world’s principal cities anywhere often have more in common with each other than with their own compatriots. Cities, then, need to be the center of our economic data collection around infrastructure investment and growth in consumer markets. (As one of us argued recently in Atlantic Cities, economic performance data should be indexed at the city level.)

Today, numerous cities have substantially more economic weight, international connectivity, and diplomatic influence on the world stage than dozens of nations. The rise of cities as transnational actors is thus driven not only by urbanization and globalization, but also a third nearly irreversible phenomenon: devolution. The period since the end of the Cold War has witnessed not only a major wave of new state births stemming from the collapse of the Soviet Union and disintegration of Yugoslavia, but a much broader entropy as sub-state and provincial authorities leverage the forces of transparency, identity, and connectivity to push for greater autonomy. Quebec, the Basque country, Flanders, Greenland, Scotland, and Catalonia are among the hundreds of examples of provincial entities asserting their domestic autonomy and international credentials. Australia and Canada have also witnessed the conspicuous rise of local councils such as the City of Sydney or Vancouver City Council, both now far more advanced in developing integrated environmental strategies than their respective federal governments.

Quite a few other non-capital cities such as Lagos or Mumbai have substantial international presence despite the dysfunction of their home nations. Over the past decade, most Indian and Chinese provinces have also set up their own trade and investment promotion offices worldwide, often as non-diplomatic and purely commercial ventures to attract tourism and investment. Taken together, the separatist movements mentioned above and the sub-national economic diplomacy conducted from within even great powers point to a growing desire of urban-regions to be identified more as “global cities” than as subservient to national states. (Only in very few cases, such as Singapore or Monaco, do these conveniently come together.)

The rise of the place-branding industry, which encompasses national Olympic bids, tourism and investment promotion, and increasingly city-specific public diplomacy campaigns, provides further evidence of how local governments and marketers are teaming up to boost their image beyond their national geographies. Increasingly this involves partnerships with blue-chip academic institutions. The widely discussed case of the Yale-National University of Singapore College for Liberal Arts, multi-metropolis business programs such as the TRIUM Global Executive MBA across Paris, London and New York, all signal how inter-city academic partnerships are forming the new basis of professionally relevant global education.

From climate change to economic growth to counter-terrorism, cities and city leaders are demonstrating their growing assertiveness as autonomous diplomatic units. The more international borders to migration diminish, the more the identity of a city—and identification with the city—will come to matter vis-à-vis national identity and citizenship. In their new book The Spirit of Cities, Daniel Bell and Avner de-Shalit argue for a post-national ideology of civicism whereby one’s loyalty to the city surpasses that to the nation, creating a new level of identity and agency beyond national citizenship.

As cities assert their experiences and leadership on the world stage, new mechanisms and networks could emerge. They are already in place: inter-city task forces, city-to-city development coordination, climate action and disaster relief, multi-city education and IT hubs. Importantly, such groupings must avoid succumbing to the protocol obsessed pathologies of inter-state diplomacy. Indeed, evidence from the climate change arena suggests that inter-city networks can be more entrepreneurial and effective than Westphalian diplomacy. As sustainable urbanization comes to be seen as a unifying global priority, cities must be empowered rather than restrained to become more active problem-solving agents.