Bruno Giussani: It's difficult to think clearly
of the Russian invasion of Ukraine,
because wars, while they unfold,
they're kind of shrouded in a sort of fog.
Information is abundant:
the millions of refugees,
the shocking suffering and the destruction, the politics.
But sense is lacking.
And that's going to be the focus of this Membership conversation
as we enter the third week of the war.
We won’t talk about the events of the day
but try to project a longer arc, a broader context.
Our guest is geopolitical analyst Ian Bremmer.
He's the founder and president of Eurasia Group,
and we asked him to lay the scene
by talking first about the geopolitical shifts
that have already been brought by the war in Ukraine.
And after, we're going to have a conversation,
including questions from TED Members who are participating in this call.
Ian, welcome.
Ian Bremmer: Thank you very much.
I'll start by saying that in my lifetime,
the most important geopolitical artifact is the fall of the Berlin Wall.
I mean, you see it
if you go into the new NATO headquarters in Brussels,
just built a few years ago.
And anyone that has a piece, something they're very proud of,
they know it affected their entire lives.
I think that in 30 years' time,
and I fear that in 30 years' time,
if we look back,
a second most important geopolitical artifact
will be a piece of the rubble of the Maidan in Kyiv.
I believe that the war that we are seeing right now
is no more and no less
than the end of the peace dividend
that we all thought we had
when the wall came down in 1989.
The idea that the world could focus more on globalization
and goods and services and people and ideas
going faster and faster across borders,
leading to unprecedented growth in human development
and a global middle class.
I think that this is a tipping point.
Won't end globalization,
but it does end the peace dividend.
It does mean that the Europeans overnight
will and must prioritize spending on defense policy,
on national security, coordination, on NATO.
And the speech that was given by Olaf Scholz,
the new chancellor, two weeks ago,
in my view, the most significant speech given by a European leader
in the post-Cold War environment,
precisely because it's now the post-post-Cold War environment,
sending weapons to the Ukrainians,
committing to over two percent of GDP spend on defense,
investing in a new fund for defense infrastructure.
But also recognizing that the way
that the Germans and the Europeans as a whole
looked at the world and looked at themselves was,
unfortunately for all of us, outdated.
A few other points I'd like to raise, just to kick off this conversation.
One:
One of the reasons I'm pretty negative about this,
and I'm not usually very negative, I'm usually an existential optimist,
I’m someone that’s just happy there’s water in the glass.
But when I look at this conflict, I’m much more concerned.
And that is because I do not see a scenario,
a plausible scenario, in the foreseeable future
where Putin emerges from this war
in anything less than a radically weakened position
compared to where he was before he announced the invasion.
And I believe that both in terms of his domestic political orientation,
how stable he is in his own country,
also, of course, Russia's economic position,
and finally, Russia's position in terms of global security
and European security:
ostensibly, the very reason that Putin began the war to begin with.
Second big point is that the decoupling that we are seeing from Europe
and the United States with Russia is, in my view, permanent.
And that would be true even if there were a negotiated settlement
and all the Russian troops were to pull out of Ukraine
and we had peace.
I still think that a lot of those companies would not come back
with Putin in power.
I'm convinced that the decisions by the Europeans
to ramp up their national security capabilities will be permanent.
Permanent deployments coming in the Baltic states, for example,
forward deployments in Poland and Bulgaria and Romania.
And also an unwind of Europe’s massive energy dependence:
coal, oil and most importantly, gas
on Russia.
That does not make Russia a global pariah
because you can't be a global pariah
if the soon-to-be most important economy in the world, China,
is actually your bestie on the global stage,
and that indeed continues to be true
despite China's efforts to portray themselves,
towards Europe at least,
as more neutral.
We are going to see the Russians as a supplicant economically,
in terms of energy flows,
financially, in terms of transactions,
and technologically, perhaps most important,
aligned with China.
That has big geopolitical implications long-term.
Also, a lot of other developing economies, like the Indians,
like the Gulf states, like Brazil,
are also not going to work with Russia as a pariah.
They'll continue to engage.
Are there any silver linings?
And I think there are a few.
Of course, there is a much greater renewed purpose and mission of NATO.
I mean, this is an organization that just a couple of years ago,
France President Emmanuel Macron referred to as “brain-dead.”
It was increasingly drifting in terms of its importance.
The Americans were focusing much more on Asia, the pivot.
Not today.
Today, NATO is purposeful,
it's aligned, it's consolidated.
it's going to get more resources, not less.
That's also true of the European Union as a whole,
even when we talk about countries like Hungary and Poland
that have been much less aligned in terms of rule of law,
in terms of an independent judiciary,
much more aligned in terms of the importance
of common values of Europe
compared to that of what we're seeing in Moscow.
I mentioned the German security and policy shift.
The UK-EU relationship is much smoother and more functional
than at any point since Brexit process actually started.
And even the United States.
I mean, if you watched the State of the Union
for a brief moment in time, five or 10 minutes,
when all of the Democrats and Republicans were standing and applauding together,
you could be forgiven for believing that the United States
had a functional representative democracy.
Now I'm not sure how long this is going to last,
but at least as of now,
leaders of the Democratic and Republican Party
see Putin as much more of a threat, an enemy,
than they do their opponents across the aisle in domestic politics.
And two weeks ago, that was not true.
That's significant.
Final silver lining, and I wish it was more of one,
but the Chinese,
as much as they are strategically aligned with Russia
and with the person of President Putin,
they do not want a second Cold War.
And they would rather a negotiated settlement.
They're not willing to push very hard for it.
But they certainly do not see a radical decoupling of the Russian,
and potentially the Chinese economy,
from the rest of the world, from Europe,
from the US, from the advanced industrial democracies,
as in any way in their interest.
And ultimately, that does create at least some buffer,
some guardrail on how much this is likely to escalate as a conflict going forward.
BG: I want to make a step back and unpack some of that,
maybe starting with a question that relates to your last point
and is probably on the mind of many.
And it is:
Is there still some real space for negotiation?
Is there still a potential relationship between Russia and Ukraine?
IB: The foreign ministers of Russia and Ukraine just met recently in Turkey.
It was as much of a non-event
as the three preceding negotiations of more junior representatives
of their teams on the Belarus border.
The one thing that has been accomplished to a small degree
has been humanitarian corridors,
extending out of a number of Ukrainian cities
that are being pounded by Russian military.
That's because the Ukrainians are interested in protecting their civilians,
and the Russians are interested in taking a lot of territory
without necessarily having to kill so many Ukrainians,
that could cause problems for them internationally
as well as domestically inside Russia.
But that is nowhere close to a negotiated settlement.
Now, I mean, everyone I know
that's involved in the negotiations right now
responds that the President Putin himself is hell-bent on taking Kyiv
and on removing Zelenskyy from power.
Now I think, and by the way, they're getting quite close
to being able to accomplish that militarily on the ground.
I think within the next couple of weeks, certainly, it looks very likely.
A couple of points here.
One, there is no reason to put any stock in anything
that the Russians are saying publicly in terms of their diplomacy.
They lied to the face of every world leader
about the invasion that they said they were not going to do into Ukraine.
And then just today,
Foreign Minister Sergey Lavrov publicly said,
well, the Russians didn't attack Ukraine.
I mean, this is Orwellian stuff, right?
So first of all, do not report on Russian public statements
as if they bear any semblance to reality on the ground.
Secondarily, this looks like a huge loss for Putin right now.
He understands it, and I think he would have a hard time,
even with his control of information, spinning this to his public
without removing Zelenskyy,
without the “de-Nazification,” as he calls it --
which is an obscenity in an environment
where the Ukrainian president is actually Jewish --
the disarmament of Ukraine,
and of course, the ability of the Russians
to change how they feel about Ukraine as a threat to the Russian homeland.
BG: What level of support can we give Ukraine militarily,
intel, economic,
before Putin considers taking a strike on a NATO country?
IB: Well, it’s interesting the way you framed that, Bruno.
Because I mean,
I think that Putin is already considering strikes on NATO countries.
I mean, there were massive attacks,
cyberattacks and disinformation attacks,
by Russia against NATO countries with reckless abandon
over the course of the past years.
And in fact, when President Biden met with Putin in Geneva back in June,
it seems like years and years ago at this point,
Biden set the agenda.
Ukraine was largely not discussed,
but what was discussed was cyberattacks on critical infrastructure.
Because you may remember Bruno,
that meeting came right after the cyber attacks
against the Colonial Pipeline.
And the Russians after that indeed pulled back
on supporting those attacks by their criminal cyber syndicates.
I expect those attacks to restart in very short order
against NATO countries.
I also believe that the fact that the West is sending weapons to Ukraine
and is providing real-time intelligence reports
on the disposition of Russian troops on the ground in Ukraine
to better allow the Ukrainians to defend themselves
and blow the Russians up,
that is considered by the Russians to be an act of war,
and they will retaliate.
And how they retaliate is the question.
I don't think they're going to send troops into Poland.
But you know,
when the Americans under Reagan were providing that kind of support
to the mujahideen
to help them defeat the Soviets in Afghanistan,
the Soviets saw that as an act of war,
and they engaged in acts of terrorism against the mujahideen in Pakistan.
And I absolutely think that that is on the table
in terms of front line NATO countries especially,
like Poland, like the Baltic states, like Bulgaria, Romania.
Would that be considered an Article V attack?
Would that force NATO countries to strike the Russians back?
I'm not sure it would.
Not directly, not militarily.
So I mean, I do think that the fact that the NATO countries see
there is some sort of a big red line between sending troops in, for example,
and doing a no-fly zone because that could cause World War III,
but everything short of that is just a proxy war.
The Russians don't see it that way.
And that gives the Russians some advantage tactically
in terms of their willingness to escalate.
BG: You're describing a spiral of escalation here
that will touch the globe and not only Ukraine,
not only the eastern flank of Europe,
which means that not only this war has ripple effects everywhere,
but this is also starting a sort of realignment
of the global geopolitical situation and context.
To me, it has been very striking how Europe and the US
have kind of moved very fast in a cohesive way.
And it has chosen, after years of prioritizing the economics
in their international and global dealings,
it's chosen to put politics over markets.
It has adopted sanctions that will hurt Russia,
but will also hurt Western businesses.
It’s the discussion about decoupling that you put forward before,
an active kind of fencing out of the Russian economy.
Talk to us about how do you see this decoupling playing out.
IB: Yeah, I mean, I do think that for the Europeans,
this is a permanent move.
I mean, I've spoken to top leaders in the German government
who tell me that Nord Stream was a strategic mistake,
and they understand it.
Who say that, you know,
Scholz making this speech from the Social Democratic Party
on the center left
is the equivalent of Nixon going to China.
No one else could have made that move.
But having made it, everyone is on board.
The popularity in Germany,
even given the massive economic consequences,
is extraordinary and is across the board.
And what they need to do now
is ensure that the diversification of fossil fuels in the near term
away from Russia,
towards Qatar and Azerbaijan and even, you know,
sort of the United States for LNG,
can be done as fast as humanly possible.
And that further, even though it’s going to cost a lot,
some of it will be uneconomic,
the move towards renewables actually picks up and is faster.
The Italians, Mario Draghi,
I think his shift in strategic orientation that they will do,
this is his "whatever it takes" moment.
He had that in response to the 2008 financial crisis
as the head of the European Central Bank,
and that made him “Super Mario.”
This is making him Super Mario as the Italian prime minister.
This is the "whatever it takes" moment for the Italians
who never make public statements that undermine their economic,
their commercial interests like this in such a strategic way.
The French, of course, have less to be concerned about
in the sense that most of their energy comes from nuclear power and is domestic.
So they are not as affected directly by a cut-off from Russia.
And also because Macron fancies himself,
especially as the leader of the European Commission this year,
the rotating leadership, occupying the presidency,
but also with his elections coming up,
and just given his personal belief that he can drive diplomacy,
I believe that even after Kyiv falls
and after Zelenskyy is either killed or forced out
that the Americans will not want to engage in direct diplomacy,
the Germans probably won't.
The French will.
And by the way, the Chinese will too.
And I do believe that there is a potential,
and this is a danger for the cohesiveness of the West,
that the Chinese and Macron end up being the post-Kyiv Normandy format
of diplomacy.
That's something that the Americans and the Germans right now
are starting to worry about quite a bit.
Now that's the European shift.
And I think, as I said, I think it's permanent.
I believe the UK is in that camp as well.
I'm not so sure the United States is going to be as committed
for as long a term.
It doesn't affect the Americans as much economically,
it doesn't affect the Americans as much in terms of a direct security issue.
None of those refugees are coming to the United States.
But also American inequality,
American political polarization and dysfunction is so much greater
than what you experience on the continent in Europe.
So the potential that in six months' time or in two years' time,
as we're thinking about the 2024 election,
that the Americans have largely forgotten about this Russia issue instead,
are focusing once again on domestic political opponents
as principal adversaries,
which deeply undermines NATO,
much more than anything that would come from the Europeans,
I think that is a real open question going forward
that is perhaps as significant as the question of where the Chinese go.
BG: Let me pick up on the point you made about energy,
because somehow Putin's calculus can really change
if Russian oil and gas stops flowing to Europe,
if it becomes part of the sanctions, right?
And this war indeed can kind of be read
as a war about energy.
Selling energy funds it for Russia,
being dependent on Russian energy makes the European response more constrained.
Rising energy insecurity, rising energy cost
may or probably will destabilize European politics and economy
in the coming months.
How would you look at this from the perspective of energy,
and is there any likelihood
that Russian oil and gas is going to stop flowing,
either because Putin cuts it or the Europeans sanction it?
IB: Yeah, or because it's blown up in some of the transit in Ukraine?
I mean, keep in mind,
so much of the gas transit is going through large pipeline networks,
which have some redundancy across all of Ukraine.
But there's a big war that's going on right there,
and lots of people that could have incentive to create problems.
The Americans, of course, the Canadians,
have said that they're cutting off oil import from Russia,
but those are nominal numbers,
so they don't matter very much to the markets.
The Europeans, as I said,
want to decouple themselves as quickly as possible,
but they believe that doing that this year would be economic suicide.
So there isn't, despite everything we see from Russia,
they're using thermobaric weapons now against the Ukrainian people,
the Americans are warning
that they could use chemical, biological weapons against Ukraine.
I mean, you know, you even have some people saying,
what if they use a tactical nuclear weapon?
I mean ...
God willing, none of these things come to pass.
But it is very hard to see a military scenario in Ukraine
that leads the Europeans
to completely cut off their inbound gas from Russia this year.
It's very hard to see.
And also, I would say, it's very hard to see any level of economic sanction
that would change the mind of the Russians
in terms of their military decision making
on the ground in Ukraine.
Now, I think there are a lot of things that the West is doing
in terms of providing weapons for the Ukrainians
that are having an impact on the ground.
A lot more Russians are getting killed.
It won’t prevent them from taking to Kyiv, again in my mind
I feel quite confident about that.
But it's quite possible, perhaps even likely,
that the west of Ukraine will remain in Ukrainian hands,
which means that, you know, after this fighting is "over,"
that a rump Ukrainian state in exile exists in the West, run by Zelenskyy
or someone that's aligned with him,
and that they continue to get enormous economic and military support
from all of the NATO countries.
So even though I don't think
that the energy situation will become so parlous
that it would affect Putin's decision making,
I do think that the West's response does matter on the ground.
BG: The war is kind of having radiating economic shock waves around the world now,
ripple effects on food markets, for example and food security.
We talk a lot about energy security,
what about food security?
IB: Well, you have the largest grain producer in the world
invading the fifth largest grain producer in the world
on the back of a two-year pandemic that's still ongoing.
We don't talk about it much anymore, but it's still there.
And of course, this hit the poorest countries in the world the hardest.
The level of indebtedness
and the unsustainability of paying that debt off
was already becoming a massive problem
for so many of the developing countries in the world.
And the IMF provided a lot of relief in special drawing rights and direct aid
over the course of the past 12 months,
but that money is now running to an end.
And what happens when commodity prices spike up
and we have severe supply chain challenges with energy and food,
and those things are obviously very related.
What happens is that a lot of people die.
What happens is we see a lot more starvation.
The World Food Organization says about 10 million people a year die of starvation.
That number in the next 12 months is going to be a lot higher
than it otherwise would have been.
The number of people who are food stressed in the world
is going to go way up in sub-Saharan Africa, in Yemen,
in Afghanistan, in Bangladesh.
It's going to go way up.
And you know, it's horrible to think about,
but the massive impact of this Russia crisis
is going to be much more global inequality.
And this is, of course,
a direct consequence of the end of the peace dividend more structurally.
That over the last 30 years of globalization,
what did you have?
A lot of people were left behind,
but the biggest thing you had
was the explosion of a single global middle class.
On the back of the pandemic
and now this Russia-Ukraine war
and the decoupling of the Russian economy from the West,
which doesn't matter so much in terms of the size of the Russian economy,
but it matters immensely in terms of commodities globally and supply chain,
those two things are going to seriously unwind
the growth of this global middle class,
and they're going to stress developing countries to a much greater degree.
They will lead to financial crises in countries like Turkey, for example,
that will no longer be able to service their debt.
You'll see more Lebanons out there.
You'll see some in Latin America, you'll see some in sub-Saharan Africa.
Those are the knock-on effects and so,
so many people that have been saying over the last few weeks,
"Why are we paying so much attention to Ukraine?
It's because they're white people, because they're European.
We wouldn't pay that much attention if they were Afghans
or if they were, you know, Afghanis or if they were Yemenis.
We wouldn't."
I mean, first of all, you've got millions and millions of Ukrainian refugees,
and we're not paying as much attention to them
as we did to the Syrian refugees precisely because of race,
precisely because the Europeans are more willing to integrate
millions and millions of "fellow Europeans" into Europe.
But we are paying much more attention to the Ukraine crisis and we should,
because the impact on the poorest people around the world
is vastly greater
from this conflict than anything that we've seen
in any of those smaller economies with less impact,
despite all of the human depredation that’s happened over the past 30 years.
BG: Ian, I want to talk for a second about climate
because another crisis that has, kind of, disappeared from the headlines
is the climate crisis, right?
Ten days ago, the IPCC released a report
that the secretary general of the UN described
as an "atlas of human suffering,"
if I remember correctly.
And it has been basically ignored.
Over the last several years,
much of the world had started to embark, with more or less enthusiasm,
on a process of transitioning away from oil and gas
and into kind of a clean energy future.
And now the war comes in
and we look at what you just described, the unraveling of global supply chains,
the dependency on energy and so on.
And there are kind of two schools of thought here.
One says this war is going to accelerate the adoption of clean energy
because we need to diminish dependence from Russia and these fossil fuels.
And the other says, the other school of thought says
it's going to derail the transition to clean energy
because suddenly the priority is no longer decarbonization,
suddenly the priority is energy security, energy supply.
IB: The Europeans are largely in the first camp,
and they will move towards faster decoupling and investment accordingly.
The Americans are largely in the second camp,
and they will move towards
"Let's focus more on fossil fuels and partisan divide on this issue,"
accordingly.
The Chinese,
who are the largest carbon emitter in the world by a long margin,
though not per capita and not historically,
but still in terms of every year totals,
they will continue on the same path they've been on,
which is a net-zero target
but without yet a very strong plan on how to get there
and not feeling a lot of pressure to provide that plan,
because they think the Americans are completely incoherent
and incapable of effectuating a strategic long-term plan
on climate themselves.
So I mean, what we have is a lot of progress on climate and, of course,
technology around renewable energies and around electric batteries
and supply chain
continue to get cheaper and cheaper
as more money is being invested in it.
And that does make me long-term more optimistic that by 2045,
a majority of the world's energy will probably be coming from renewables.
And five years ago, I wouldn't have said that.
But still, I mean, when the news today
is that the Americans are sending a high-level delegation to Caracas
to figure out if we can reopen relations with Venezuela
to get them to produce more oil again.
With the Iranians,
let's do any deal possible to get back into the JCPOA, the nuclear deal,
so that we can get that oil on the market.
Calling the Saudis, calling the Emiratis,
and they’re not willing to take Biden’s phone call on this issue
while they're talking to Putin.
Those are warning signals that in the near term,
we've got some big challenges
and a lot of those challenges are going to be filled with fossil fuels
and fossil fuel development.
And so I do think that the fact
that both of the answers to your question are true in different places
on net-net is more negative for how quickly we can transition.
BG: Let's talk a bit about China.
Brigid, I think, who’s listening in asks,
"What do you believe Xi Jinping is learning
from the world's response to the crisis, to the Ukrainian war?"
IB: Well, certainly learning that this was a red line for the West.
And I think that this would have surprised,
it obviously surprised Putin,
I think it would have surprised Xi Jinping as well.
Xi Jinping saw Afghanistan.
He saw that Merkel was out.
He saw that Macron is focused on strategic autonomy.
He sees Biden as much more focused on China and Asia.
I think that this is a surprise to Xi Jinping.
But Xi Jinping also sees
that a lot of the world is not with NATO on this issue.
141 countries, if I remember correctly,
voted to censor the Russians for their invasion of Ukraine
at the United Nations General Assembly.
But very large numbers of that 141
are not on board with all of these sanctions against Russia.
They're happy with the diplomatic censure,
but they need to continue to work with the Russians.
The Chinese see that too.
The Chinese see just how much more fragmented the global order is.
I thought the most significant thing that we've seen from the Chinese so far
two issues.
The first is, of course, when Putin went to Beijing
and Xi Jinping made the public announcement
that “this is our best friend on the global stage,
and we will work much more strategically with them economically,
diplomatically and militarily going forward."
And Xi Jinping knew very well where Ukraine was heading at that point
and also knew that the likelihood of an invasion was coming.
Didn't stop him from making that announcement in the slightest.
And then after the invasion, and it's going badly,
I mean, if you watch Chinese social media,
the fact is that the censorship is all about Ukraine.
I mean, the Chinese media space
is pursuing a relentlessly pro-Putin policy.
They have media embedded with Russian troops
on the ground in Ukraine.
Now, publicly, the Chinese government wants to be seen
as: “We’re neutral, we like the Russians,
we like the Ukrainians,
we still want to work with everybody."
But the fact is that China feels no problem
being publicly completely aligned with Putin,
despite the fact that they are invading a democratic government
with 44 million people in the middle of Europe.
That's a pretty astonishing statement from the Chinese.
And there's no question that they have learned
that they're in a vastly better economic position than they used to be,
and that gives them influence.
They are a government who projects its power
primarily through economic and technological means,
as opposed to Russia that projects it primarily through military means.
And the Chinese believe
that there is a level of decoupling that is already going on
as the Americans focus on more industrial policy,
as they focus on America first for American workers.
A US foreign policy for the American middle class, as Biden put it,
is one that really pushes a lot of capital to leave a country like China,
which had served as the factory for the world,
but at the expense of a lot of labor
coming out of advanced industrial economies.
And now, yes, there are definitely some dangers
that come from the Chinese being perceived as too close to Russia,
and they won't want that,
and they'll want to make sure that they're engaging diplomatically
with the Europeans to try to minimize that damage.
But I thought it was very interesting,
and I'm not sure this is public yet,
that the Chinese ambassador to Russia recently, in the last few days,
organized a meeting of a lot of the top investors
Chinese investors in Russia, saying,
"This is a unique opportunity, the West is leaving,
we should be going in and doing more.
Because they're going to be completely reliant on us going forward."
That is not a message that the Chinese ambassador delivers
unless he is told directly to from Beijing.
BG: Ian, I'm going to jump from topic to topic
because there are several questions in the chat.
Nancy is asking about whether Putin can be removed from power.
There's been a lot of discussion lately about regime change in Russia,
either endogenous, like a palace coup,
or provoked by sanctions and other policies.
And so she asks,
"How likely is that Putin will face a challenge from inside Russia,
whether a popular uprising, a coup or other?"
IB: It's very, very unlikely until it happens.
(Chuckles)
I mean, in the sense that there is absolutely no purpose
in trying to say, oh, I mean, you know,
there are rumors that Defense Minister Shoigu is unhappy and, you know,
he might be making a move.
And I’ve seen these from relatively credible analysts,
I'm like, no, no, if there are such rumors,
then we know it's not happening
because that's the end of Shoigu and his family.
But it's very clear that there is more pressure on Putin now
than at any point since he's been president.
Domestic pressure on Putin.
About 10,000 Russians have been arrested so far, detained,
most of them have been released,
for nonviolent anti-war protests.
The Russians have shut down all the Western media.
They've shut down all the Russian opposition and independent media.
So Putin has control of the space,
though if you look at Russian conversations on Telegram,
you'll still see a bunch of people that are seriously, seriously anti-war.
But, you know, once the economy starts truly imploding
and you can't find goods on shelves in Russia in major cities,
and this is coming, you know, very soon, this is a matter of days,
in many of these cities,
those demonstrations will likely become greater,
some of them can become violent.
You know, that'll increase the pressure.
Then you have the issue of how the Russians are fighting on the ground.
I mean, what happens if you get a lot of desertions?
We haven't seen that so far.
What happens if you get orders to bomb Kyiv
and a whole bunch of Russian fighter pilots, bomber pilots,
decide not to and they defect to Poland, to Germany.
That would have a big impact on morale.
That has not happened so far.
I mean, do be aware of the fact
that the Ukrainians are winning the war on information,
and that means that the information that you are getting in the West
about the war
is much more pro-Ukrainian --
morale, enthusiasm,
how well the military is doing --
than what's actually happening on the ground.
And also be aware of the fact
that the Russians completely control the war on information inside Russia.
BG: Exactly.
IB: They're not getting a balanced view.
They're getting a completely pro-Putin view.
And most of them actually believe it
in the same way that most people that voted for Trump in the US
believe that the election was stolen and Trump is still president.
I mean, it's much worse in Russia in that regard
than it is in the United States,
and I think that that's underappreciated in the West.
So even though I think there's pressure,
I really don't think that it's super likely
that Putin is out anytime imminently.
BG: Ed is asking whether you see any off-ramp for Putin.
IB: I think that the most likely off-ramp for Putin is after Kyiv is taken
and Zelenskyy is removed one way or the other,
at that point,
the possibility of the Russians accepting a frozen conflict
or a cease fire that could lead to ongoing negotiations
is a lot higher
because Putin can sell that as a win back home much more easily.
But also because further Russian attacks at that point
serve much less purpose for the Russians,
are much harder to bring about,
and potentially have much more negative consequences.
So for me, that would be the near-term potential break
where we could at least freeze issues largely where they are.
Now whether that could then eventually lead to a climbdown or not,
I mean, the Russians have been very happy with frozen conflicts on their borders
for years and years and years.
I'm thinking about Nagorno-Karabakh between Armenia and Azerbaijan,
which basically stayed in place until the Azeris,
over the course of a decade got enough military capacity
that they could forcibly change the situation on the ground.
Which, by the way, the Ukrainians might also be eventually thinking about
because the West will be supplying them with advanced weapons all the way through.
I'm thinking South Ossetia in Georgia.
I'm also, of course, thinking about the two pieces of Ukraine
they took back in 2014.
So be aware of the fact that a negotiation that creates a cease fire
does not mean you're anywhere close to a resolution
or an end of the fighting that we're seeing.
BG: Someone else in the chat, who didn't sign by his or her name,
is asking about the nuclear fear that hangs over the conflict.
How should we think of that?
IB: Yeah, we don't like it when Putin uses the N-word,
and there's no question,
I mean, he and his direct reports have rattled nuclear sabers
on at least five times that I've seen in the past few weeks.
I think that ...
In 1962, I wasn't alive, we had the Cuban Missile Crisis.
There was a real possibility of nuclear confrontation
between the world's two superpowers.
At least for the last 30 years, there’s been no chance of that.
Functionally, no chance of that.
I think we're now back in a world
where a Cuban Missile Crisis is again a reality.
Now, that doesn't mean that I think nuclear war is likely or imminent.
I don't.
And in fact,
there is active deconfliction going on even today:
the Americans and Russians with a new hotline,
the secretary general of the UN,
with the Russian defense minister
engaging in deconfliction measures with UN
offices being invited to Moscow.
So as bad as it is right now,
people that have been doing this for a long time
are trying to avoid nuclear war.
But that's the point.
Is we're now in a situation
where the conflict that we're going to experience
needs to be actively managed
because of the danger of nuclear confrontation.
So it now becomes a risk on the horizon that we must be continually aware of,
even if only at a low level,
as we take and consider further actions,
as we consider diplomacy,
as we consider escalation.
It is now on the table in a way that frankly is so debilitating.
I mean, as human beings all on this call,
one of the most painful things to think about
is the fact that we still have these 5,000 nuclear warheads in Russia
and 5,000 the United States that are still pointed at each other,
and they still have the potential to destroy the planet.
And we haven't had any real lessons that we've been able to learn
institutionally from 1962.
BG: 5,000 being a generic figure, not the exact figure,
but we are kind of in that order of magnitude.
Then of course, there is the question of civilian nuclear,
so the two power plants, nuclear power plants,
that have been seized by the Russians.
One has been slightly damaged by a bomb,
the other has been turned off.
But those are also potentially gigantic nuclear problems just waiting to happen.
IB: Chemical weapons, biological weapons.
I mean, look, we have had two million refugees from Ukraine in two weeks.
As this continues, you're looking at five to 10 million refugees.
I mean, it is hard --
Just take a step for a moment just as a human being.
Imagine what it would take for a quarter of your country's population
to say: “I am not living here anymore.
I am leaving everything because of the condition of the country,
because of this unjust war
that has been imposed upon you by your neighbor."
That's what we're looking at.
And again, it's important for us to, you know,
not lose the humanity of this crisis
and the extraordinary hardship
that is being visited upon 44 million Ukrainians
that have done nothing wrong, they have committed no sin
other than their desire to have an independent country.
BG: One other country
that has not yet taken a very clear position is India.
IB: Well, they're a member of the Quad,
and their relationship with China is pretty bad, and that’s mutual.
But in terms of Russia,
there's been a longstanding relationship,
trade relationship, defense relationship
between India and Russia
that the Russians are not going to jettison,
and they see no reason to jettison it.
And as long as you've got a whole bunch of other countries out there
that are substantial, that are willing to say,
we're going to keep playing ball with the Russians
then the Indians will too.
And that's why you've got the abstention in the United Nations vote.
And that's why you've had very careful comments
as opposed to overt and strong condemnation
coming from the Indian leadership.
BG: Phil in the chat is asking,
"Will this cause a fragmentation of the financial system
with kind of a Western system and an Eastern system?”
So two different SWIFT-like systems, two different credit card systems,
crypto, what's the role of crypto in all this?
IB: I hope not.
I mean, I will tell you that before the invasion started,
if you talk to most Western CEOs,
and I'm talking across the entire sweep of sectors,
so it's finance and it's manufacturing and its services and it's tech,
most of them would have told you that they did not in any way plan
on reducing their footprint in China,
and a lot of them said
that China was their most important growth market in the world.
Not a surprise.
China is going to be the largest economy in the world in 2030.
So, you know, a world that you're decoupling
is not a good world
when China is going to be number one economically.
I mean, that obviously is going to hurt the West in a big way.
So there are strong incentives against that,
and there remain very strong and powerful entrenched interests
in the United States and Europe that will resist direct decoupling.
Despite the fact that there are these more incremental moves
towards friendsourcing and insourcing
because, you know, Chinese labor is more expensive,
you don’t need as much labor to get capital moving,
given robotics
and big data, deep learning all of those things.
But I do think that the Russia conflict
risks a level of second-order decoupling.
Because if the Russians end up financially integrated with China
in their own,
not-as-effective SWIFT system,
and all of their energy ends up going to China
and the Chinese build that infrastructure and they get a discount on it,
and Russia's technology and their military industrial complex gets serviced
by Chinese semiconductors and Chinese componentry,
well, I do think that there will be knock-on decoupling
that will be longer term and more strategic
from the United States, from the Europeans
and even from Japan and South Korea.
So that is a worry,
and I think the Chinese are highly aware of that.
And over the coming months, they will do everything they can,
both with the Europeans in particular,
but also, I expect at least with some of the Asian economies,
to try to limit the impact of that.
Now, keep in mind,
we haven't talked at all about Asia yet outside of China.
The new Japanese Prime Minister Kishida is at least as hawkish
in his orientation towards China and Russia as Abe was.
He is providing support for the Ukrainians,
including some military capacity --
unheard of for the Japanese.
He's allowing Ukrainian refugees --
unheard of for the Japanese.
And yesterday, the South Koreans had a very, very tight election,
and Yoon is now in charge.
He is on the right, and he is the guy that is strongly anti-China,
was talking about South Korea having nuclear capabilities,
wants a new THAAD missile defense system for the South Koreans
and wants to rebuild the relationship with Tokyo.
That matters.
And that's a big strategic change in the geopolitical map
that will look more problematic on the decoupling front
from Beijing's perspective.
BG: Three final quick questions that all come from the chat, Ian.
One is, because you mentioned the rest of Asia outside of China,
"What about the rest of the world?
What about Africa and Latin America?
How do they factor into this conversation or don't they?"
IB: They factor in.
I mean, those that have significant commodities do well
because the prices are going to be so high.
Those that don't are going to be under massive pressure
for reasons we already talked about,
but they are not going to be forced to pick a side on this one.
I just don't see it.
In the same way that if you were Colombia in the last couple of years,
you know, you found,
even though you're working very closely with an American ally,
you're still dealing with Huawei and 5G.
This is knock-on effects of all of this.
These are countries that are not going to take on
significant economic burden,
given how much they're suffering right now geopolitically.
BG: Another one is about sanctions.
How do we even know when and how,
at what point we start rolling back sanctions?
IB: I think that as long as Ukraine is occupied
by the Russian government
for the foreseeable future and Putin is there,
I can't see these sanctions getting unwound.
Now, if a rump Ukrainian government that is democratically elected
were prepared to sue for peace and retakes most of Ukraine,
but they give away Crimea and they give away the Donbass,
could you see in that environment some of these sanctions unwound?
Sure.
But I mean, I am suggesting
that I think that many of these sanctions are functionally permanent.
They reflect a new way of doing business.
And when people ask me what’s going to happen when this is over,
my response is, what do you mean over?
What's over is the peace dividend.
We are now in a new environment.
BG: And one of the figures of this new environment
and I want to close with that, is President Zelenskyy of Ukraine,
who was not taken very seriously when he was elected,
he has come out as a significant figure in this war.
What do you make of President Zelenskyy?
How do you read this character?
IB: He's very courageous.
I'm obviously inspired by his ability to communicate and rally his people
and take personal risk in Kyiv while this invasion is going on.
But I'm very conflicted
because I think many of the steps that Zelenskyy took
in the run-up to this conflict
actually made the likelihood of conflict worse.
He was unwilling to take the advice of the Americans and Europeans seriously
in the months leading up to the conflict.
He was unwilling to mobilize his people
to ready them for the potential of conflict.
He was certainly unwilling to give an inch
in terms of Ukraine's desire to be a member of NATO,
even though he knew completely
that no one in NATO was prepared to offer a membership action plan,
let alone actually bring them in as members.
And part of that is a lack of experience
and lack of any business being in that position
in the run-up to this crisis.
So I’m very deeply conflicted in my personal views on Zelenskyy,
given the way he behaved before the invasion,
compared to the extraordinary leadership that he has displayed to all of us
over the last two weeks.
BG: Ian, thank you for taking the time,
for sharing your knowledge, and your analysis with us.
We deeply appreciate it. Thank you very much.
IB: Good to see all of you.
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