Name: CEO Initiative 2023: Geopolitical Tensions
Uploaded: 2023-10-04
Duration: 15 min 31 s
Description: Ian Bremmer, Founder and President, Eurasia Group, GZERO Media Interviewer: Alan Murray, Chief Executive Officer, FORTUNE

Ian Bremmer, Founder and President, Eurasia Group, GZERO Media Interviewer: Alan Murray, Chief Executive Officer, FORTUNE

CEO Initiative 2023: Geopolitical Tensions

Conferences

All of, you know, we poll ceos on a regular basis at fortune. And one of the things we've seen in the last year is that geopolitics has risen pretty sharply on the priority list of most ceos. No big surprise given Russia's invasion of Ukraine. But, but also we know a lot of it is focused on China, what's happening in China, how should companies deal with what's happening in China? Uh uh and then of course, political pressures here at home as well. So uh all of these challenges and disruptions are leading companies to rethink their footprints, rethink their supply chains and it's creating uh uh uh some uncertainty for businesses as well. So how best to think about it uh to ensure resilience and success. We're going to do that with Ian Bremmer, who is the founder and president of the Political Risk Research and consulting firm Eurasia Group as well as uh G Zero media and is an independent voice on critical issues around the globe. Please welcome Ian Bremmer to the stage. Thank you. Hey man. Thank you. Good to see you. You're doing handheld today. Yeah, and you're always special. I don't know if I'd go that. So, uh, uh, uh, let's start with the news. We had Senator Mark Warner on the stage early this morning and he said, absolutely, we will get support for U Ukraine through Congress. He said that he did say that this morning. Why don't you tell people what's happened since then? Yeah, it looks a lot less likely. Uh, I mean, the vote is going on right now, right? Is he out yet? He's out? So mccarthy is out. Um And we saw eight Republicans uh that joined with the Democrats on that. And what does that mean? Well, first of all, it means that any uh anyone that replaces mccarthy understands what they face. Um if they try to push ahead with this Ukraine aid. Um And if they're at the mercy of those 10 Republicans, they're at the mercy. Uh And then assuming that they push forward eventually a budget uh that uh that does not include it. The Democrats and Senate have to decide if they're willing to shut down the government over it. But I mean, there's no question, this is, this is on the back of Zalenski in Washington being told fairly clearly that there is not going to be the support for a second counter offensive come next year. And that's not because Biden doesn't want it to happen. It's just because it, the, the, the capability uh to push that through, wasn't it? That was before mccarthy's? So that just got a lot worse. Um And there are a lot of other things that are problematic right now for Ukraine. There's the new uh Slovak PM that's gonna be forming a coalition who is strongly pro Russia and has said that they won't provide support for Ukraine anymore. Um There is, of course, the speaker of the parliament in Canada that was forced to resign ignominiously uh after uh lauding as a hero, someone that fought in a Nazi battalion in Ukraine in World War Two. Uh But I mean, all of this, this is the worst week that Lansky's had, I mean, post post invasion, right? There's no question about it changes the dynamic pretty dramatically. I wouldn't say dramatically in the sense that over the last nine months, uh the Russians have occupied roughly 18% of Ukrainian territory and that has not been changing. But the point is that it's not going to change. It's very unlikely that the Ukrainians can look forward now and say we believe that we're gonna be able to take significant additional territory back. So what does that mean going forward? That's what, that's a very big uncertain question. So let's look at the other side of the equation, which is Putin Vladimir Putin, how strong is he, how, I mean, we saw this weird, you know, sort of attempt to do something that, that with the Wagner group and Forgo June. That's right, which fell apart. So what's your sense of Putin's position. You've just described a, a somewhat perilous situation for he has to be feeling, I mean, it pains me to say this, but I mean, he has to be feeling better now than he's felt in a while. Of course, I mean, Putin is not a winner on the global stage. I mean, you see the impact on human capital fleeing Russia, you see the, the freezing of Russia's sovereign assets in Japan and Europe and the United States 12, there's about to be 12 rounds of sanctions. The eu is now debating the 12th round of sanctions. It will include taking some taxes off of money from oligarchs, they're frozen and some diamonds that are going to be taken off of the trading with Russia. I mean, they're, they're having a hard time finding additional things to sanction, right? Plus you've got the NATO expansion and the rest. But if you're Putin you now, absolutely believe, yes, the Ukrainians have gotten all this incredible support. Yes, they're technologically, more sophisticated, advanced. But you Russia have the ability to wait these people out and take more pain, which was always the calculation they would be in better shape and, and is he secure at home? You know, uh we will, he's secure until the day he's removed, right? I mean, no, no one in this room is gonna have any visibility on that. But let us remember that at the moment that he was existential, threatened by the failings of Wagner troops led by pro goin on the way to Moscow. That's a weird day in June, right when that happened, um, there wasn't a single minister, a single general, a single oligarch that came out publicly against Putin, no defections that tells us a lot about the ability of Putin to maintain a very strong grip on power from where you sit, he looks pretty secure and he's in it for the long term and, and it's gonna be harder and harder for Zelinsky to resist. And, and the last week, uh in many ways, I would say uh increases that level of security and if Putin wins. So I want to be clear, I think that we are right now. Let, let's see, two weeks ago, I fear that we will look back in a year and say that two weeks ago, it was peak NATO. Um and, and peak NATO has been fantastic to watch. It's been extraordinary consolidation of all of these very divergent, political and military positions and economic positions and the Europeans taking a lot of pain economically. Um But II, I don't see, I'd be stunned if it stays at this level of consolidation. And what are the implications of that? Um Well, uh one implication is that you're going to see a, are you going to have a harder time keeping European countries feeling like they are as aligned with, as supportive of the United States? So I'll give you one example that's going to be interesting. I would say that the, that the Europeans right now are 90% aligned with the Americans on Russia policy. Broadly speaking, I would say they are about 60 to 65% aligned with the US on China. That's gone up a lot in the last couple of years. One implication is that it's gonna be really hard to maintain that. 60 65. Yeah. So let's, let's let's talk about that because the China issue for business is a much bigger issue. The implications are much greater. Absolutely. Implications are, are, are uh much greater. Uh same question about G that I asked about Putin, how in your view, how secure is he in the course he's on? Um So it's interesting that uh there have been a number of high level resignations slash disappearances over the past few months, we've now not heard from the Minister of Defense. Um In the last several weeks, the Chinese government continues to say that it's, it's for medical reasons which for now by now, it's probably true, probably now true. It's a little dark I know. Um but uh but, but let's keep in mind that when she became a chairman of the Chinese Communist Party, the first major policy he put in place was anti corruption focused on the military. And, and, and these are high level people that are involved in corruption. And the Chinese government is saying that you know, we we need to redouble our efforts. This is this is not acceptable. So there's there is a level of weakness and question as to the loyalty, the capacity of the Chinese military today, which is meaningful when you start playing out scenarios of 10 dash line, South China Sea Taiwan, all that kind of stuff. Um but more broadly, uh the level of the consolidation of power around Xi is is so great that I think the concern is less about social or political instability. And you saw that with just how quickly they were able to shut down post opening zero COVID policy. Um but but also that um the Chinese are just gonna have uh a real hard time getting good information about what is truly happening on the ground economically and and the willingness of people to say, well, actually, uh Mr Chairman, this isn't going as well as you think and you need to take a more a more bold set of policies to deal with the ever ground situation. For example, I think that's the big. Yeah, so something I think you and I talked about in January in Davos. Yeah, so she has consolidated power, but we're also looking at a China that looks economically much less formidable than it did 23 years ago. I mean, I think that in some ways the pandemic underscored the shortcomings of its policy, obviously, the economy is not growing nearly as fast, the real estate debt problems are coming into focus. It just doesn't look like the juggernaut and the, and the notion that was taken for granted for two decades in this century, that they would eventually pass the US as the leading economic power. I don't think people believe anymore. So how does that affect the equation? Well, if we look back in a year and say we just had peak NATO, we might look back in 10 and say actually our views on China have shifted dramatically, peak China as well. Peak, it's hard to say peak China because the country is still going to be growing at 3% ish going forward. There are lots of reasons to believe they can do that. But but I mean, one thing that I would really seriously focus on are us export controls on semiconductors because in some ways, this is a declaration of economic warfare. Long term by the U SI mean, if, if the Americans maintain present levels of export controls, don't tighten them, the Chinese will not be able to develop future A I generations. They can't do chat GP T five or six. I know you've been talking about A I a lot here for those of you that believe it's truly transformative in all of your firms and in every sector. And I believe that a present American policy will prevent the Chinese from being a part of that. And and this is happening at a time when Chinese leadership has actually responded to the Chinese private sector in loosening the way they treat their own. So chat great. So now you've painted a very clear picture. Xi consolidating power. You have the Chinese economy weakening, you have us policy threatening his ability to make progress on semiconductors. And you have this country right offshore, that is the leading manufacturer of of semiconductors for the world. How does it affect the equation about win? Because I do think the question has always been when not weather to take over Taiwan Iii, I spend less time thinking about imminent military conflict because well, uh first of all, because the ability of the Chinese to do that without destroying TS MC and the Taiwanese economy and also the enormous difficulties of launching a 100 mile maritime invasion. Like those are not, those are not things that I think the Chinese are seriously considering in the near term. But even if even without the US being a participant in that, uh even without the US being a president of that battle. But II, I would also say that um it's going to be very interesting to watch the upcoming November A PE C summit between Biden and Xi, which is now being planned, that will include a track 1.5 on A I not so another working group, but this time involving the private sector that the Chinese have informally already said they're prepared to do. Now, they want to do it because they want a road map for what are the ways that we might alter our behavior that would allow us to actually change this us technological warfare against China? How might we be able to have access to some of these chips where everything is dual used such as um, well, I mean, for example, what are the ways that they might be willing to provide transparency into how their um their own A I uh models work? You really think we're headed in that direction? I am, I really think that the Chinese are deeply concerned. They have a problem that they, they know they have a problem and they can't and they can't fix it by taking over Taiwan and they also can't fix it by hitting the world on critical minerals. I mean, gallium germanium, like these are marginal things. They don't want to be in a fight with the US, the Japanese and the Europeans simultaneously. So look, historically, when the Americans put that kind of leverage against the country, there is an internal willingness to say, is there anything we can do to lower the number? I'm not suggesting that there's a deal to be made here, but I am absolutely, that's where their interests are, that a deal is going to be at least preliminarily discussed. So I expect that the She Biden meeting is going to surprise on the upside, the actual meeting, the actual meeting. I feel quite confident about that, but that doesn't mean a lot. And you, you, you wrote an entire book about the economic models, the difference between our economic model and, and theirs. Uh um And now we've made this big headlong dive into industrial policy. We've talked about this some today. Do you actually think we can pull it off? I mean, because that's got to be part of Xi's calculation too. Hey, can they really do this? Well, you ask me what's gonna happen if America pulls away from Ukraine aid right now, the US has a very strong relationship with Ursula. There is more alignment around industrial policy, not just on semiconductors, but also on transition energy. Um You know that that is that gonna last for another two years even never mind. Five. That's an open question on us industrial policy. The US when, when the US decides to put its foot on the gas, it is the biggest accelerant in the world. But that doesn't mean that the US does so consistently. And with the right ecosystem from my perspective, chips. Absolutely the right piece of policy but too small and not only too small uh but also ecosystem challenges. Are you getting the visas? Are you building the stem education? Where do, where are the Americans gonna be on all of this in 10 years time? I and everything you have said in the last 20 minutes convinces me that geopolitics is not going down on the priority list of the people sitting in this room anytime soon. I feel that's true. Well, thank you for that warning. Great to have you here. Thanks so much to see you. Thank you.