Ian Bremmer

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Four Debate Questions for Obama and Romney
Ian Bremmer
OCT 22, 2012 01:22 UTC
2012 | AFGHANISTAN | ARAB SPRING | CHINA | DEBATES | ELECTION | IRAQ | OBAMA | ROMNEY | SYRIA
There will always be a wide gap between what candidates promise and what they deliver once elected, particularly when it comes to foreign policy. After all, this is an area where U.S. presidents have less control than either candidate will ever admit near a microphone. But this year, there are contradictions that cut straight to the heart of debates over American power and how it should be used. With that in mind, here are the questions I would like to see each candidate answer.
THE CHINA CONUNDRUM
China-bashing has figured into many a U.S. presidential campaign. As China’s economy and geopolitical importance has grown — and as U.S. manufacturing jobs have moved from U.S. swing states to China and other foreign countries — both sides have tried to score points by promising to “get tough” with Beijing. Given the economic interdependence of the two countries and continued Chinese willingness to loan money to the United States, voters are right to wonder how seriously they should take all this anti-Chinese rhetoric.
SYRIA AND THE MIDDLE EAST
President Obama cited moral concerns for the U.S.-led NATO intervention in Libya. Syria is a much more politically and logistically complicated problem for outsiders contemplating involvement, but the moral imperative — protecting citizens who are being killed by their government — appears the same. Where is the line in U.S. foreign policy between pragmatism and moral concerns?
Governor Romney has two principle criticisms of the Obama Middle East policy: The White House has refused to stand with U.S. allies in the region and has refused to stand with those who demand freedom. There are many ways to highlight the contradiction in these critiques, but the most efficient is to ask about Romney’s attitude toward the potential for pro-democracy demonstrations inside an authoritarian state that is also a crucial U.S. ally and the world’s leading producer of crude oil.
THE GLOBALIZED ECONOMY
Beyond the basic question of what role government should play in promoting U.S. business abroad, the next president will have to consider how U.S. companies can succeed on a global competitive playing field distorted by governments like China’s that use state-owned companies to achieve goals that are ultimately political.
Europe’s economic struggles continue to weigh on U.S. growth. But at a time when there is a focus on reducing U.S. government spending, what credible steps can and should the U.S. government take to bolster the eurozone?
WHAT’S WORTH FIGHTING FOR?
At times, Governor Romney has hinted at a willingness to use U.S. military assets in Syria and Iran. President Obama has taken a relatively pragmatic and risk-averse approach to foreign policy, particularly in the Middle East. Election season in general — and foreign policy debates in particular — invite a lot of high-minded rhetoric about support for freedom around the world and American exceptionalism. But what is actually possible for U.S. foreign policy at a moment when more Americans than ever tell pollsters that they want the United States to “mind its own business” internationally?
PHOTO: Students playing the parts of Republican presidential candidate Mitt Romney (L) and U.S. President Barack Obama rehearse on the set of the final U.S. presidential debate in Boca Raton, Florida October 21, 2012. REUTERS/Rick Wilking
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Romney’s only path forward: Back the way he came
Ian Bremmer
OCT 3, 2012 15:27 UTC
2012 | BARACK OBAMA | DEBATES | ECONOMY | ELECTIONS | FOREIGN POLICY | MITT ROMNEY
Six months ago, the U.S. election was about the economy, and little else. Nearly everyone agreed that for Mitt Romney to win, he’d have to exploit Barack Obama’s glaring weakness: an economy that was as stubborn as the Congress that refused to rescue it. Unemployment was high, Europe’s future was uncertain and the markets were volatile. Not coincidentally, polls showed the two men neck and neck.
But now Mitt Romney has kicked off the week of the first presidential debate – which is focused on domestic policy – with a foreign policy op-ed in the Wall Street Journal. Noting the recent protests over the Innocence of Muslims video and the Iranian nuclear program, Romney writes: “These developments are not, as President Obama says, mere ‘bumps in the road.’ They are major issues that put our security at risk.” Obama’s now just as vulnerable on foreign policy as on the economy, and Romney seems to realize it. So what’s the problem? Voters are still basing their decision overwhelmingly on the economy. Romney has flipped the electoral script, but it’s not a winning strategy. He would be wise to get back on message before it’s too late (which it already may be).
Over the past few months, the global and domestic economies have averted the double-dip disaster that seemed so imminent. The Europeans have made significant strides toward a stronger union, the Supreme Court upheld the Democrats’ healthcare law, Ben Bernanke moved forward with a new round of quantitative easing, the housing sector appears to be growing again, and consumer confidence is at its highest in the last four months. That unemployment remains high and GDP remains weak means that 81 percent of voters still think that the economy is “not so good” or “poor,” according to a Washington Post/ABC News poll. And yet that and other polls show that there’s an even split on which candidate voters think is best equipped to handle the economy.
And so Romney has moved to foreign policy. Over the past couple of months, all the news from the Middle East has been bad. The killing of Osama bin Laden has been overshadowed by a region that is once again restive. Shoddy embassy protection, a U.S.-China relationship that’s tenser now than at any point since the Cold War, broken diplomacy with Russia, cool relations with Israel, an intractable civil war in Syria, and rising attacks on NATO troops from Afghan security forces have all gotten more headlines than revised GDP figures.
Romney has tried to capitalize. Last week at the U.N. General Assembly, Obama offered an address, but skipped meetings with foreign leaders. Romney campaign officials and other Republicans questioned whether Obama’s light schedule meant he wasn’t taking foreign policy seriously. But what was the point in meeting with foreign leaders when there is, at this moment, so little that can practically be done with such obstructive partners? As my mom used to say, if you have nothing nice to say, don’t say anything at all.
The problem with Romney’s new tack is that even if he is successful in framing Obama as a naïve appeaser on foreign policy, few people are going to vote based on it. In a new Quinnipiac poll, 50 percent of voters say the economy is most important in this election, while 17 percent say healthcare, 13 percent the budget, and 7 percent national security.
Foreign policy, then, is just a distraction for Romney, no matter how tempting it may seem. If there is a way forward for Romney with one month to go – and I’m not sure there is – it is to go hard on unemployment, hard on the economy, hard on the deficit. That’s why he picked Paul Ryan to begin with. He was slightly behind in the polls, and he recognized that the big distinction with Obama he could make was on the most important issue of the election. The economy is all he should be talking about.
This essay is based on a transcribed interview with Bremmer.
PHOTO: Republican presidential nominee and former Massachusetts Governor Mitt Romney talks to U.S Senator Rob Portman (R-OH) (R) on his campaign plane en route to Denver, Colorado October 1, 2012, ahead of Romney’s first debate with U.S. President Barack Obama.   REUTERS/Brian Snyder
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Getting away with it while the world’s cop is off duty
Ian Bremmer
OCT 1, 2012 13:30 UTC
2012 | BARACK OBAMA | ELECTIONS | IRAN | ISRAEL | MITT ROMNEY | PALESTINE | UNITED NATIONS
As the world convened at the U.N. General Assembly last week, the willingness of the Obama administration to risk blood and treasure promoting democracy abroad was on full display: Barack Obama gave a stirring speech defending American values and asking other democracies to adopt them. But Obama’s rhetoric doesn’t tell the whole story. He didn’t deliver his speech until after an appearance on a daytime chat show, in obvious support of his re-election campaign.
Many foreign policy experts have criticized Obama for wasting time with Barbara and Whoopi on The View when he could’ve been engaging with foreign leaders on the East Side of Manhattan. But the experts’ takeaway from Obama’s priorities last week is no different than it has been from the administration’s response to months of civil war in Syria, the teeter-tottering of Libya, the reluctance to pose a credible military threat for Iran and the refusal to engage in the Middle East peace process.
The U.S. is willing to do less on the world stage than it has since the onset of World War Two. In the long term, this reset of foreign policy and military initiatives may yield the country a peace dividend. In the short term, there are three international issues where the situation on the ground is deteriorating rapidly and where, in the past, a U.S. president might have intervened. Let’s look at them:
1. Syria. The Assad regime has engaged in deplorable behavior. But the U.S. has been extremely reluctant to support the opposition without a clear identity, leader or mission beyond overthrowing the regime. Furthermore, nothing about the Libya experience has given the U.S. any reason to do anything differently. It’s completely unclear that U.S. intervention in Syria would put U.S. interests in any better shape in that country, or outside of it. The Iraq lesson was simple – that democracy building is very expensive. And Libya taught us more: Regime change itself hurts and can’t be done on the cheap. Furthermore, when it came time for the U.S. to garner international support for its limited Libya mission, Russia could not ignore Gaddafi’s bombast and promise to exterminate the rebels, and therefore could not block the necessary U.N. resolution. When it comes to Syria, Russia won’t provide international cover for a U.S. intervention. Assad gets a pass, despite his brutal war and the fact that it is beginning to reach into bordering states as well. The knock-on effect is more instability in the Middle East – but that seems to be something the Obama administration has decided it can live with.
2. Iran. Here, the U.S. has actually been doing a good job eliciting international pressure on the regime over its quest for nuclear weapons. Rightly so: This is a bigger, global problem. But how much pressure can be brought to bear on Iran, given what’s going on across the region? The Obama administration can say, “Iran, you can’t develop nuclear weapons, or else,” but the question becomes, “or else, what?” Setting out a thick red line is a big problem in this environment. The U.S., according to reports, is running a rather effective sabotage operation on Iran’s labs, but Israel’s current government is apoplectic that Uncle Sam is not sending in the cavalry. Israel, here, is at great risk of appearing to cry wolf, losing the support it has in the international community should the situation in Iran become worse. And Tehran would, it seems, be more willing to declare itself at war with the U.S. to distract the Iranian public from the pain of economic sanctions.
3. Israel and Palestine. While Israel might look like a loser when it comes to Iran, it’s a winner when it comes to its own territorial dispute, no matter who wins the U.S. election in November. Mitt Romney is on the record as saying the Palestinians don’t seem to want peace. When, if ever, has a major party presidential candidate uttered a statement like that? Neither he nor Obama, in other words, intend to use any political capital on another meaningless accord. The message from U.S. politicians to Jerusalem: “We’re done trying to fix this. No more pressure on settlements, or anything else. Good luck.” Israel gets a nearly free hand to deal with Palestine, because there are enough crises in the world that set off anti-American demonstrations, and there’s little need to create another. What that means for Palestinians, though, is the end of American support for their claims, and possibly the end of restraint by Israel.
What all three situations come back to is that the foreign policy implications of the 2012 election are virtually nil. Americans are consumed by domestic issues like the economy and unemployment. Despite the fact that Romney paints Obama as an apologist, a declinist, an unpatriotic leader-from-behind, both are peddling roughly the same foreign policy. Romney is setting a theme and a tone to attack Obama, but it’s mere background music. Whichever candidate is elected will, for different reasons, tell the military “you’re not going to bomb that.” All the rest is posturing.
This essay is based on a transcribed interview with Bremmer.
PHOTO: U.S. President Barack Obama addresses the 67th United Nations General Assembly at U.N. headquarters in New York, September 25, 2012.   REUTERS/Mike Segar
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Goodbye Department of Commerce, hello Department of Economic Statecraft
Ian Bremmer
AUG 22, 2012 16:03 UTC
COMMERCE DEPARTMENT | GLOBALIZATION
Whether it’s Barack Obama or Mitt Romney who wins the next election, there is already a vacancy to fill in the president’s Cabinet. With the resignation of John Bryson in June, thanks to a hit-and-run accident apparently caused by a medical issue, the Department of Commerce is being led by an acting secretary, Rebecca Blank. Yet after the initial scandalmongering about Bryson’s departure died down, nary a peep has been uttered in the media about the department’s fate or future.
In other words, the Department of Commerce’s real problem is not a lack of leadership, but a lack of mission-a weakness that means Commerce isn’t making the most of its roughly $10 billion budget. In today’s world, everything – geopolitics, national security, foreign policy – is increasingly being viewed through the lens of our economic interests. The United States has a powerful bureaucracy devoted to international diplomacy and a gargantuan one devoted to national defense, but a near-total vacuum when it comes to global economics.
For a long time now, as conservatives have tried to scale back the size of the government, they’ve also argued that America’s businesses need to be unencumbered from government regulation. They worry about how the government’s intrusion into business will harm our competitiveness abroad. However, the idea that’s been neglected is that the government, through industrial policy, can protect and advance the interests of the private sector abroad, too. The global, U.S.-led economic institutions that arose from the ashes of World War Two have truly become global. Thus they’ve stopped protecting America’s interests abroad. Structurally, our business sector has little to no support from the government when it comes to finding customers outside of our borders. To remain competitive, especially with the state-run economy of China, that has to change.
Again, the three-legged stool of United States interests abroad – diplomacy, defense and business – is currently missing a leg. Is it any wonder that the country has remained influential and militarily superior, even as its economy cratered during the financial crisis and has only sluggishly and half-heartedly recovered? While the Department of State attracts the best and brightest minds, and the Department of Defense is unrivaled in the world, Commerce has not exactly been a haven for global economic thought or leadership.
What I’m suggesting is not, however, a government-sponsored think tank for global commerce. The Department of Economic Statecraft should be staffed and run by those in our country with the most impressive resumes in the private sector. They should be given the tools of government to serve the business community they came from. Presidents have long recruited business leaders to join White House economic councils and working groups, and to informally offer their advice, but it’s time to go beyond that into actual executive and policy powers.
When you consider the might of the U.S. in defense and diplomacy, you can understand that in these realms the U.S. can often achieve its goals by “going it alone.” For better or worse, consider the prosecution of two wars over the past decade, with scant help from our allies. But when you think about business, going it alone is not an option. We need trading partners to sell our goods to. And we need to foster a robust domestic economy to ensure that we can buy goods from others. While our capitalist system has proved to be the greatest in the world, we need only look toward China to understand how some limited economic coordination can lead to booming, sustainable growth. The U.S. has, for a long time, refused to learn anything from any other country’s example. Often it can afford to do so because of its pre-eminence in the world. Here, though, is one example where the government’s structure is behind the times and could stand to learn a thing or two.
This essay is based on a transcribed interview with Bremmer.
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National candidate’s European vacation: Why Mitt should’ve stayed home
Ian Bremmer
AUG 7, 2012 16:18 UTC
ECONOMY | MITT ROMNEY
Poor Mitt. Despite the listless U.S. economy, the aftermath of the Arab Spring and the abyss the euro zone still faces, his campaign is showing the world that it’s hard to go up against an incumbent, even one who is as potentially vulnerable as President Obama. Team Romney had to hope that the jobs report that came out on Friday would be very bad, so it could continue to pin the country’s economic malaise on Obama’s policies. Instead it got a mixed report – good hiring, but an uptick in the unemployment rate – that made it hard for Republicans to present a clear message to the American people.
Of course, what we’re seeing in this campaign is that Romney hardly needs the Department of Labor’s help when it comes to presenting mixed messages. If Romney were a smarter candidate, or had a smarter team around him, he’d absolutely hammer Obama on the economy, to the exclusion of any other issue. That’s right – no talk about healthcare, immigration, gay marriage, contraception in Catholic hospitals or Osama bin Laden. Romney’s campaign, if he wants to win, should be all economy, all the time.
Any college kid getting a poli sci degree could tell Romney that. So why on earth did his campaign just waste a week in the UK, Israel and Poland? Those three countries are American allies, to be sure, but they also don’t matter nearly as much as they used to. As such, leaving aside his constant stream of gaffes while on his tour, he didn’t get much out of his trip. Sure, Poland and the UK were happy to flatter him (to the extent that they could, given the foot he had in his mouth about the London Olympics and his shutting out of the press throughout the trip,​especially in Warsaw). His stop in Warsaw may have had some impact on Polish-American swing-state voters, while Israel was important to large chunks of his American constituency, especially super PAC funder and casino magnate Sheldon Adelson.
For Romney to have taken an international trip that would matter, there’s one place he might’ve considered going: Japan. Between Japan’s economic efforts and its rebuilding after the tsunami and Fukushima disasters, it’s an extremely relevant country to U.S. interests that would’ve welcomed him with open arms. Unfortunately, it would also have required him to buy into the Obama administration’s pivot toward Asia. For someone who doesn’t have a ton of foreign policy credibility yet, it could also have made for even more disastrous gaffes than did the trio of countries he ended up visiting. So, in the end, why take the trip at all? Romney should’ve stayed home.
Instead of visiting the most important countries to U.S. interests, he picked a safe trio of “Avis” countries. As second-tier allies, “they try harder” to compete for U.S. attention, but there’s little to gain for a U.S. politician in rewarding them with it. As Obama and his Secretary of State Hillary Clinton do a very good job (most analysts believe) in meeting the challenges facing the world in the 21st century, Romney visited a trio of countries that epitomized the challenges of the last century. As icing on the cake, the press couldn’t stop making comparisons with then-candidate Obama’s 2008 trip to Iraq and Afghanistan. Where Obama casually drained a 3-point shot in a military gym, Romney had to vehemently deny he would stick around to watch his wife’s horse compete in Olympic dressage, otherwise known as “horse ballet.”
Romney’s visit exposed a number of awkward truths about the candidate: his fantastic wealth, his catering to the wishes of his super PAC benefactor with his trip to Israel, and his peculiar temperament, as shown by his skepticism about the ability of London to have successful Olympic games and his press secretary’s outburst at a Polish war memorial. If Romney wants to win the presidency, his best bet is to run a 21st-century version of a “front porch” campaign: Stay close to home, and hammer away at the idea that Obama has mismanaged the U.S. economy. Romney must become a single-issue candidate to win the election. Any other use of his time will likely mean he’ll wind up with plenty of spare time – and a permanent vacation come November.
This essay is based on a transcribed interview with Bremmer.
PHOTO: Republican presidential candidate Mitt Romney is pictured before delivering foreign policy remarks at Mishkenot Sha’ananim in Jerusalem, July 29, 2012. REUTERS/Jason Reed
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In a G-Zero world, Syria’s civil war will drag on and on
Ian Bremmer
JUL 27, 2012 17:55 UTC
BASHAR AL-ASSAD | G-ZERO | SYRIA
“Syria: Towards the Endgame” was the headline the Economist splashed across one of its most recent covers. But as we’ve seen with this week’s assault on Aleppo, the end of the Assad regime is, in all likelihood, not even close. Let’s unpack why and enumerate the ways:
1. China’s and Russia’s vetoes
The two countries vetoed the most recent U.N. Security Council resolution, which would have authorized sanctions against Assad’s government as a result of its repeated failures to adhere to promises to bring peace to the nation. While the result is disappointing for the Syrian people, the effect of the vetoes of China and Russia is twofold. First, the U.N. obviously has been robbed of one of the tools it uses to protect citizens of oppressive regimes. But second, the impact of the veto, coming from two countries that have up-and-down relationships with the U.S., serves to turn any American interventionism into an international incident.
Let’s be clear: This is playing politics on a global, humanitarian scale. We always knew that Russia and China would not support a U.S. intervention in Syria, not even in the way they grudgingly did when it came to Libya. But ultimately, the bloodshed there is not just on their hands. While Obama has cover for his hands-off foreign policy thanks to the veto, U.N. resolutions have hardly stopped or even influenced U.S. foreign policy in the past, especially when it mattered.
2. Even without vetoes, the U.S. has no stomach for intervention
It’s messy. It’s expensive. There’s no domestic constituency for it. The U.S. is still reeling from the price tag of the Iraq war, and still extricating itself from Afghanistan. But more important than whether we have the stomach for an overseas campaign is our lack of a solution or an exit strategy. It’s not clear at all who could successfully replace the Assad regime. We don’t know what would come after him. There’s always the possibility that some internal assassination or bombing could take him out. But as long as he has his military apparatus, he’s going to be able to smash any attempt by opposition forces to gain strength against him. There’s simply nothing rising up in Syria that might take Assad’s place. So, the question of freedom for Syrians turns very sadly pragmatic indeed: What, exactly, would we be fighting for?
3. The civil war in Syria has begun, and it’s dragging the region with it.
As in countries across the Middle East, the civil war here is rooted in ethnic identity: Shiite vs. Sunni Muslims. The Shiite minority holds power. The Sunni population has been oppressed. The answer to the question of who should be running Syria, other than that it should not be a murderous dictator, is entirely unclear. What is clear is that other countries are experiencing tensions and internal strife thanks to the bloodshed there. Turkey and Qatar have interests in the outcome. China and Russia, and the United States, have investments and interests in the area. By proxy, U.S. relationships could also face further deterioration as the Syria conflict drags on.
There was a time when the U.S. would race to the rescue, playing world cop on the global stage, and attempt to intervene and end strife. It would lead a peloton of countries toward the outcome it thought was most desirable, and it would commit, in blood and treasure, whatever it took to get the job done. Whether for better or for worse, in our new G-Zero world that sort of thing just doesn’t happen anymore. We can blame the U.N., Russia, China, and Syria itself all we want, but the reality is, the U.S. has decided it’s just not getting involved.
This essay is based on a transcribed interview with Bremmer.
PHOTO: Syrian soldiers celebrate after their entry to al-Midan neighborhood in Damascus, July 20, 2012. REUTERS/Stringer
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Are state-led economies better?
Ian Bremmer
JUL 3, 2012 16:16 UTC
CHINA | EUROPE | LEADERSHIP | REUTERS MAGAZINE | STATE CAPITALISM
This piece originally appeared in Reuters Magazine.
As Europe’s leaders struggle to restore confidence in the single currency and America’s economy limps ahead at a painfully slow pace, China’s economy continues to power forward at its now characteristically strong clip. For the past three decades, China has been the world’s fastest growing economy—and within the next several years, the People’s Republic will overtake the United States as the world’s largest. Some economists have even argued that, measured by purchasing-power parity, China has already pulled ahead. Such prognostications, accurate or not, have led to dire warnings that liberal capitalism’s best days are behind it, that the future lies with authoritarian market managers who are able to relocate populations and move mountains by decree. For the moment, at least, state-managed capitalism appears to be triumphant.
Such appearances, however, are misleading. The appeal of state capitalism lies in its ability to withstand the occasional crises that afflict market systems, thus shielding the general population from politically inconvenient disruptions. It is a system in which the state uses state-owned enterprises, national champion firms, sovereign wealth funds, and politically loyal banks to dominate the process of domestic wealth creation. To be sure, this is not communism; significant segments of state capitalist economies are in private hands. But the state plays the largest role in ensuring that market forces serve political ends—by ensuring that, profitable or not, businesses invest in projects that bolster social stability and protect the ruling elite’s political control.
China is not the only state capitalist economy producing impressive results. As the Arab world continues to contend with the risks of political turmoil, Saudi Arabia and the United Arab Emirates have stockpiled the cash they need to maintain stability by controlling much of the wealth produced by national oil companies. Even some emerging democracies have begun to flirt with limited forms of managed capitalism. Brazil’s private sector remains crucial for the country’s expansion, but its government leans on state-owned energy firm Petrobras and privately owned mining champion Vale to help create jobs. President Dilma Rousseff’s government won’t milk cash from these firms as President Hugo Chávez has done with state-owned oil company PDVSA in Venezuela, but Petrobras is already at risk of becoming a much larger, less efficient, and thus less profitable company.
State control is not the future of capitalism. It is a dead end from which China will have to free itself if it is truly destined to dominate the world economy. As a system and by design, state capitalism ensures that wealth creation does not threaten the leadership’s hold on political power. Its ability to stimulate growth and general prosperity is a secondary benefit. Forced to choose between public wealth and political survival, state capitalists will always protect their own interests first. In China, as elsewhere, commercial activity depends on access to information, and the Internet provides the best and most efficient access to it. Yet if the Internet threatens to enable popular resistance to China’s authoritarian government, and if political officials have the means to shut the Internet down, even temporarily, they will do just that.
State capitalism’s greatest weakness lies in its intolerance of “creative destruction,” a process that invests liberal capitalism with vital self-regenerating momentum. The liberal capitalist model makes it possible for the workers, resources, and ideas invested in a dying industry to spontaneously recombine in novel configurations to produce goods and services that satisfy emerging demand. But the economic engineers of state capitalism fear any form of destruction that develops beyond their control. This is why state-owned companies, which build influence within government over time, often succeed in resisting the need to adapt to changing times.
Then there is the question of openness. Within autocratic state capitalist systems, government-owned companies like China National Petroleum Corporation and some of the Arab world’s sovereign wealth funds shun the transparency that long-term resilience and adaptability demand. This opacity can benefit a country’s ruling elite by hiding unsuccessful investment decisions, but it is very harmful for the system’s long-term health. When such institutions can hide their failures, they are free to inflict much more lasting harm than they otherwise could.
Managed capitalism also falls short when it comes to exploiting innovation, though government-directed investment can play an important role in the development of new technologies. The Internet arose from a U.S. government subsidized defense project, but it was profit-driven companies that developed and reimagined the Internet and thus transformed the world. History shows that over time state officials never value assets and allocate resources as efficiently as market forces can.
Even in China, state officials understand that citizens are the engine of economic vitality. That is why the state has embarked on an historic and ambitious plan to shift wealth from China’s largest companies to the country’s consumers. China’s leaders know that the next generation of economic growth must be less dependent on exports to Europeans and Americans; creating domestic consumer demand is crucial. Thus the process of empowering Chinese consumers will undermine state capitalism’s appeal even within the country that has made this system so seductive.
 
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Democracy doesn’t make miracles for Greece or Egypt
Ian Bremmer
JUN 27, 2012 15:25 UTC
ARAB SPRING | DEMOCRACY | EGYPT | EUROZONE CRISIS | GREECE
For months now, the world has been waiting for the results of the momentous elections in Greece and in Egypt. In Greece, it was hoped that citizens would reject candidates who called for the breakup of the euro zone, or a Greek exit. In Egypt, the stakes were simpler, but larger: It was hoped that the election itself wouldn’t be a sham and that the country’s people would get their first true taste of the power of democracy.
It felt like everyone was holding their breath for the results in these two troubled countries, but it turns out neither country had the “disaster election” that some pundits feared. No, what both countries had was a “kick the can” election: For very different reasons, neither Greece nor Egypt is going to transform into a flourishing, liberal, fiscally sound nation overnight. And the task of governing in either country, therefore, is no big prize to either Greek Prime Minister Antonis Samaras or Egyptian President Mohammed Mursi. A lot of chips have to fall in their favor before they can even begin to get beyond the basic duties of simply showing up to work in the morning and keeping the lights on in government. But again, each country’s situation is different and bears a different explanation of the reality on the ground. Let’s take Egypt, with its internal threats to stability, first.
While the election of Mursi, the incoming Egyptian president, is a signal achievement that goes a long way toward instituting a tradition of civil rather than military rule, he alone will not get the economy to stand on its feet. The Egyptian tourism industry, its most important, has been absolutely crushed. The economy is in a shambles as the thread that was holding it together – Mubarak’s dictatorship – has been pulled from the fabric of Egypt, and the country is a long way from convincing anyone that it has recovered. While Mursi was the better choice for Egypt, he comes from the Muslim Brotherhood, basically a civic organization with no experience or expertise in macroeconomic management. The brotherhood is an important social organization: It’s a lot of things to a lot of people in Egypt, but it’s not an incubator of technocratic economic thinking or governance. That’s what the country will need to get back on its fiscal feet.
And as long as Egypt’s economy is struggling, the civilian leadership will face a threat from the country’s military leaders, the Supreme Council of the Armed Forces. The SCAF supported Mursi’s opponent, Mubarak’s former prime minister, Ahmed Shafiq. Mursi will have to go a long way to get out from under the SCAF’s thumb, and it’s unclear what resources he’ll have to do that, with his narrow win. One thing is for sure: A “kick the can” strategy will look enticing in this environment. Mursi will most likely postpone fixes for long-term problems to brighten the nearer-term outlook. Take subsidy reform. Right now Egypt spends almost 10 percent of GDP on subsidies, mostly for food and fuel – a situation widely recognized as inefficient and unsustainable – but 51.5 percent of the popular vote is no mandate for Mursi to take on the unpopular task.
In Greece, the general problems of its debt crisis and need for austerity measures to persuade the Germans to bail it out, have been discussed to death in the media. Samaras has taken over from a caretaker government, and he’s got his work cut out for him. But things did not get off to the best start, as his technocratic finance minister, Vassilis Rapanos, has already bowed out of the job due to health problems. With Samaras himself also in the hospital recently for emergency eye surgery, Greece is quite literally laid up right now, hoping it has more time to figure out its next economic move.
Don’t expect much, in other words, from the governments of Mursi and Samaras. While the elections went as well as they could go, nothing fundamental has changed about the pickle both nations find themselves in. Both leaders need fixes that appear to be far outside of their control. Mursi needs to figure out how and whether he can work with the Egyptian military to begin turning his country around. Samaras may have had a say in appointing the new finance minister, Yannis Stournaras, but the real issue is out of his hands: He needs Germany and the euro zone to accept a renegotiation of the existing loan package for Greece, which, over the long run, it cannot afford. The best thing that can come out of both of their tenures is some stability, which would, one hopes, beget even more stability, shoring up the democratic sovereignty of both countries.
But even with that good outcome, which is far from assured, each country will still firmly be in kicking-the-can territory. It will take years before affairs in Greece and Egypt get back to anything like normal. Just as in Germany’s takedown of the scrappy but overmatched Greeks in Euro Cup play this weekend, there will be no miracles this time around.
This essay is based on a transcribed interview with Bremmer.
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The good, the bad and the global economy
Ian Bremmer
JUN 18, 2012 12:37 UTC
CHINA | EUROZONE CRISIS | GLOBAL ECONOMY | RECESSION
Everyone knows the world’s economies are becoming ever more intertwined, but we’re only just starting to understand the ripple effects.
Welcome to the new global economy: One guy sneezes, and someone else gets a cold. That’s what we’re seeing in the slowdown now happening in the U.S., in Europe and in emerging market countries all around the world. Barring some kind of radical decoupling, the tight correlation in fates between these economic titans is a phenomenon we had better get used to, and understand, because it’s not going away. Indeed, this fact by itself – that our world is operating more and more like one big system every day – is not all bad news. However, a word of caution: Where interconnectedness yields benefits, it also creates pitfalls. Let’s look at a few examples of how this global system is actually working in our favor.
First, take the recent drop in U.S. Treasury yields. This is the more important macroeconomic story in America right now. Can any politician, with a straight face, continue to claim that getting the Simpson-Bowles recommendations passed into law was any kind of imperative for Congress or the president? The continual driving down of lending costs for the U.S. has made a mockery of credit-rating agency warnings and any perceived threat that a downgrade once held for the U.S. economy. Indeed, it takes some of the air out of the big debt-ceiling showdown that is set to take place between Democrats and Republicans in January 2013, when the $110 billion-dollar budget reduction is set to take automatic effect. It becomes increasingly hard to argue that reducing the deficit is priority number one to getting the country back on track when the cost of lending is so incredibly cheap and when the world’s investors are telling the U.S. they want more, not less of it.
Now, the low cost of lending today is not to say that the U.S. should be running up the debt, nor does it mean Washington can avoid addressing its structural spending issues – it very much can’t. But is now the right time to do that? For those who claim we should be listening to the signals the markets give us, it’s clearly not the right time to be cutting back on spending.
But now let’s consider the U.S. debt ceiling in light of the never-ending drama that is the euro zone crisis. There’s a growing sense in the U.S. and on the Continent that America has wasted its financial crisis. Its banks are bigger and seemingly more powerful than ever. (See Jamie Dimon’s Senate testimony, where he mostly had our public servants, some ofwhom are his former employees, wrapped around his little finger.) Meaningful financial regulatory reform still feels ephemeral at best, the economy is recovering only in fits and starts, and yet the entire country seems indignant that the whole thing isn’t moving along faster. In Europe, to the contrary, nothing is healed, and little has been reformed, and politicians there, led by Germany’s Angela Merkel, continue to insist that no zone-wide bailouts are coming until the peripheral countries set their own fiscal houses in order.
In other words, we’re seeing two very different approaches to the same basic problem of structural, long-term overspending play out in the US and Europe (though the two crises are very distinct on a number of levels). It’s too early to tell if the European approach will work better than the U.S. one, but the Europeans have already managed to install technocratic governments in Italy and Greece, force austerity measures on to much of the periphery, and change the very tone of the discussion from a short-term bailout to a long-term structural fix. It seems that although it was Rahm Emanuel urging President Obama to never let a crisis go to waste, his message actually reached the ears of Merkel and Italian Prime Minister Mario Monti instead.
Here’s the thing: Even if the tables were turned, and the U.S. was squeezing banks incrementally while Europe took on a trillion-euro bailout in one fell swoop, neither economy would likely be much further along on recovery than it is today. These things simply take time – national economies, like aircraft carriers, don’t turn on a dime, and the crossover effects from one economy to the other might take years to manifest themselves. In that way, there’s a measure of safety in our mutual crises and the journey out of them, as the worst (and best) outcomes are softened.
But remember those potential pitfalls of our newly interconnected world?
The economy that should scare us the most right now is the Chinese one. The country is slowing down, and that’s precisely because of the halting recovery and weakness in the U.S. and European systems, and the fact that the sputtering has been going on for some time. The U.S. and Europe can wait out our own recoveries. Our advanced economies are resilient. Even in the depths of our crises, the economic suffering, though real, has been muted. But China, despite its rapid modernization, is still, structurally, an emerging market. It’s far more vulnerable to economic shocks. And its political system, already facing turmoil in advance of that country’s leadership changeover later this year, is far more unstable than those in the West. If the developed world stops buying the stuff that China makes, it will force China to turn inward and double-down on state capitalism.
That would be dangerous for U.S.-China relations for a dozen reasons. Here are two of them: If China increasingly looks to state capitalism to sustain its growth, it will put it more at odds with free-market capitalism abroad – and thus, the United States. On top of this, any domestic instability could lead to a more bellicose Chinese foreign policy to drive nationalistic sentiment. The bottom line: We’d see an economic problem start to turn into a political one. The West can limp along, in other words, for some time. It can bungle parts of the recovery, make mistakes, watch job numbers grow and shrink, and still, in all likelihood, come out all right in the end. But when Europe sneezes, it’s not the other developed economies in the world that will fall ill. What we haven’t yet seen happen in this truly global crisis is the contagion spread from the developed world into still-developing economies. Europe and the U.S. might be sneezing, but if they don’t get themselves on the mend, it’s China – the single biggest buyer of U.S. debt, mind you, that might end up contracting the flu. And that’s just one, knowable risk of our new global economy. Who knows what others there may yet be?
This essay is based on a transcribed interview with Bremmer.
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Egyptian democracy’s predictable unpredictability
Ian Bremmer
JUN 6, 2012 16:55 UTC
AHMAD SHAFIK | ARAB SPRING | EGYPT | MOHAMED MORSI
Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” – Winston Churchill
In a little less than two weeks, Egyptians will choose their first new president since Hosni Mubarak took office in 1981. Before we talk about the contenders as selected by Egyptians in the first round of voting in May, let’s pause to consider how far Egypt has come in an incredibly short period of time.
Egypt has seen its thousands of years on the planet pass by without a democracy. Then, over the course of 18 days, it found itself with a revolution partly fueled by digital tools like Twitter that deposed a president (since sentenced to life in jail). Objects of the world’s attention, the protesters found themselves splashed across the pages of Time magazine, a symbol of the power of change that even oppressed citizens can have when they make the most of their moment and refuse to give up. So why the recent disappointment?
For starters, take the outcome of the first round of voting: The two remaining candidates aren’t exactly the liberal-minded leaders the West had been hoping for. One, Ahmad Shafik, idolizes the deposed Mubarak – whom he briefly served as prime minister – calling him a “role model.” The other, Mohamed Morsi, comes from the Muslim Brotherhood, the moderate (for Egypt) Islamist association that for years has run something like a social services agency combined with a religious militia, but is now evolving into a political organization. That’s a key understanding of the Brotherhood – generations of Egyptians may have fond feelings for it, but it’s nascent as a party or electoral force, since Mubarak and the military ruled the state for so long.
While outsiders could argue that the two finalists are the worst possible choices from the first round, the reality is, shockingly, Egyptians didn’t much care about this vote. Turnout, for a country we might think would leap at the chance to exercise democracy, came in at an anemic 46 percent. Most Egyptians aren’t actually clamoring for the kind of radical change we in the West might expect. Some may actually welcome the return of a Mubarak-like figure – kleptocracy worked perfectly fine for a sizable chunk of the population. Tourism was booming, bread was on the table, and the ideology and value set of the government – at least as espoused, if not as practiced – was consistent with commonly held beliefs.
For that reason, no matter which candidate wins, what we’re likely to see is a conservative-leaning but largely ineffectual government. But that government will, to every appearance, have been fairly elected. Now, if you’re wondering why the Egyptians would make such timid-seeming choices after their momentous revolution, that’s an altogether different question. Consider the state of the electorate. There is an elite – and there is everyone else. The middle class in Egypt is far behind the middle class in other developing economies in the world, like Brazil and Mexico. There’s no need for politicians to court them, because they can win on a conservative platform with just the support of the elite and the rank and file. It will take years for the middle class to become a potent political force, a voting bloc that can decide an election, and push leaders to more moderate, open policies. And depending on the shape of the government and reforms there, such a change may, of course, never happen at all.
In short, while no one is particularly thrilled with the aftermath of the revolution in Egypt, it’s not the worst realistic outcome either. A country that has been ruled by autocrats for years – “presidents” that have swiped power from each other as if the country were little more than a backdrop for Game of Thrones or some minor Shakespearean play – is on the cusp of a democratically elected government. Just because it’s not the government the world thought Egypt would elect does not mean it’s not the right government for Egypt, for now. Only time, and the actions of Egypt’s next president, can answer that question for the world. And Egypt is about to learn the sage truth of Prime Minister Churchill’s quote.
This essay is based on a transcribed interview with Bremmer.
ILLUSTRATION: Elsa Jenna/REUTERS
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Ian Bremmer is the president of Eurasia Group, the leading global political risk research and consulting firm. Bremmer created Wall Street's first global political risk index, and has authored several books, including the national bestseller, The End of the Free Market: Who Wins the War Between States and Corporations?, which details the new global phenomenon of state capitalism and its geopolitical implications. He has a PhD in political science from Stanford University (1994), and was the youngest-ever national fellow at the Hoover Institution.
ANY OPINIONS EXPRESSED HERE ARE THE AUTHOR’S OWN.
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