Opinion

Ian Bremmer

Chinese leader’s reforms are bad news for Hong Kong

Ian Bremmer
Sep 8, 2014 13:56 UTC

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In 1997, Britain returned Hong Kong to China after some 150 years of colonial rule. In exchange, China agreed to a set of principles: Hong Kong would maintain its capitalist system for half a century, by which point its chief executive and members of the legislature would be elected by universal suffrage. As the thinking went, “one country, two systems” would suffice in the interim; Hong Kong and the Mainland would surely converge on democracy in the half-century to come.

Not so fast. Recently, Beijing has been systematically moving in the other direction. The decision on August 31 to rule out democratic elections for Hong Kong in 2017 was just the latest example. Chinese leader Xi Jinping’s transformational reform agenda is driving this shift—and it does not bode well for Hong Kong.

Xi’s reform agenda has two parts: the first is economic liberalization. The Chinese leadership recognizes that it cannot rely on state-driven investment and cheap labor to provide growth indefinitely. Xi wants to make China’s economy more sophisticated and competitive. He is overhauling inefficient state-owned enterprises and focusing on changes in the financial sector in particular. It’s a top priority of the new leadership, and a requirement for a sustainable and dynamic Chinese economy going forward.

But a prosperous economy is simply a means to an end-goal. Xi is opening up the economy because, above all else, he wants to ensure the long-term survival and stability of the Communist Party leadership. He thinks economic reforms are a good bet despite the risks they will usher in. Over time, reform will require an enormous transfer of wealth from large domestic companies to demanding citizens and it will threaten the vested interests of many powerful elites who have prospered off the status quo. It will inject necessary competition into the economy, which could put jobs, companies, and sectors at risk.

So as Xi opens the economy and the Pandora’s Box that comes along with it, he is simultaneously clamping down on political dissent and consolidating power. Some Chinese citizens may think (or hope) that economic reform will usher in moves toward democracy. Make no mistake: Xi is engaged in political reform…it just doesn’t resemble our Western notion of what that entails. Xi has absolutely no interest in domestic political competition; in a time of economic change, political unity needs to be at its absolute strongest. This is the basis for his anti-corruption campaign, which has already led to some 40 powerful officials with the rank of vice minister or above being detained or investigated. Xi wants to scare China’s political and commercial elite into falling in line with his economic reforms, all while building popular support for his initiatives by attacking perceived corruption.

from The Great Debate:

Putin’s Ukraine invasion threat is more than a bluff — but not his preference

Ian Bremmer
Aug 7, 2014 00:47 UTC

A Ukrainian serviceman uses a pair of binoculars as he guards a checkpoint near the eastern Ukrainian town of Debaltseve

Ukrainian troops have made huge headway routing the separatists in the east. They are in the process of choking off the cities of Luhansk and Donetsk, to which many of the separatists have retreated. The Ukrainian military appears primed to besiege the cities. As Ukraine has gained, Putin has prepared Russia for invasion: as of Monday, Ukraine says there are 45,000 combat-ready troops are amassed at the border. The chance that Russia invades is certainly going up.

But it’s still Russian President Vladimir Putin’s Plan B. Here’s why that’s the case … and what could change his mind.

At all costs, Vladimir Putin wants to keep Ukraine in Russia’s orbit. That requires two guarantees: 1) that Russian influence over southeast Ukraine will remain intact, and 2) that Russia has a de facto veto over Ukrainian NATO membership. The way he gets these guarantees is through deep federalization, where Ukraine’s eastern regions can set their own foreign economic policy and veto approaches to NATO. Of course, Ukrainian President Petro Poroshenko is completely unwilling and unable to concede this. So Putin can get it the hard way (intervention), or the harder way (invasion).

Political risk must-reads

Ian Bremmer
Aug 1, 2014 15:50 UTC

Political risk must-reads

By Ian Bremmer

Eurasia Group’s selection of essential reading for the political risk junkie — presented in no particular order. As always, feel free to give us your feedback or selections by tweeting at us via @EurasiaGroup or @ianbremmer.

Must-reads

Flirting with default, Argentina enjoys oil drilling boom — John Kemp, Reuters

In its comprehensive assessment of global shale resources, published in 2013, the U.S. Energy Information Administration estimated that Argentina has the world’s second-largest resources of shale gas (after China) and fourth-largest shale oil (after Russia, the United States and China).

Political risk must-reads

Ian Bremmer
Jul 22, 2014 17:16 UTC

Political risk must-reads

By Ian Bremmer

Eurasia Group’s selection of essential reading for the political risk junkie — presented in no particular order. As always, feel free to give us your feedback or selections by tweeting at us via @EurasiaGroup or @ianbremmer.

Russia Writes Off 90% of Cuba Debt as Putin Meets Castros” — Olga Tanas and Anna Andrianova, Bloomberg

Putin’s charity act has just saved the Cuban economy almost $32 billion… but Russia has its eye on lucrative energy contracts.

What MH17 means for Russia-Ukraine

Ian Bremmer
Jul 18, 2014 20:52 UTC

Armed pro-Russian separatist stands on part of the wreckage of the Malaysia Airlines Boeing 777 plane after it crashed near the settlement of Grabovo in the Donetsk region

MH17 is an alarming escalation of the Ukraine conflict.

In the wake of a surface-to-air missile taking down a Malaysian airliner over Eastern Ukraine, everyone is pointing fingers. Kiev blames the pro-Russian “terrorists,” with Moscow responsible for providing them with intelligence and weapons. The separatists deny involvement and accuse Kiev of planning the attack, citing the Ukrainian military’s accidental shooting of a Siberian Airlines flight in 2001. Moscow blames the Ukrainian government for pushing the rebels into this violent situation — even if Russian President Vladimir Putin stopped short of pinning the airliner attack on Kiev. Despite the confusion, it’s clear what MH17 means: dramatic escalation and an even more combustible conflict.

Some analysts and pundits are viewing the downed flight as an opportunity to force Putin into tempering his support for the separatists. While clearer proof of pro-Russian separatist guilt does, in principle, provide the Russians with a reason to do so, it’s highly unlikely that Russia will seize the chance. The underlying fissures have not gone away — in fact, MH17 makes them even more pronounced.

Putin continues to view his country’s influence over Ukraine and the power to keep it from joining NATO as a national security interest of the highest order — the same way Israel wants to deter Iran from obtaining a nuclear weapon. Recent events haven’t shifted Putin’s interests in the slightest. In fact, the three biggest changes coming out of the MH17 crash point to more escalation.

World Cup chants reveal true state of U.S.-German relations

Ian Bremmer
Jul 17, 2014 14:53 UTC

 Germany's national soccer players acknowledge their fans after their win over the U.S. at the end of their 2014 World Cup Group G soccer match at the Pernambuco arena in Recife

As Germany basks in its World Cup victory, it’s easy to forget that one of the most telling geopolitical moments of the tournament came during the Germany-U.S. game. As American fans chanted “U-S-A! U-S-A! U-S-A!” the Germans countered with, “N-S-A! N-S-A! N-S-A!”

In the weeks since, relations have crumbled. After it learned that a German intelligence officer allegedly spied for the United States, Germany expelled the CIA station chief in Berlin — a rare move by a close American ally.

This isn’t a sudden reversal in relations. The fallout from surveillance scandals has been sharp and steady over the past year. In 2013, Germans grew wary about the extent of U.S. espionage after Edward Snowden leaked documents showing that the United States had been monitoring German Chancellor Angela Merkel’s cell phone since 2002. A German parliamentary committee asked Snowden to provide testimony for an inquiry on foreign intelligence activities. The request, which Snowden rejected, was sure to rankle the United States, but Germany pushed forward anyway: One country’s traitor was another’s key witness.

Political risk must-reads

Ian Bremmer
Jul 11, 2014 20:34 UTC

Political risk must-reads

By Ian Bremmer

Eurasia Group’s selection of essential reading for the political risk junkie — presented in no particular order. As always, feel free to give us your feedback or selections by tweeting at us via @EurasiaGroup or @ianbremmer.

The economics of people on the move

Immigration Is Changing Much More Than the Immigration Debate” — Ben Casselman, FiveThirtyEight

As the U.S. deals with the recent spike in child migrants, immigration from Asia has surpassed immigration from Latin America in recent years. How can we explain the disconnect between perception and reality in the country’s immigration debate?

Obama isn’t the only one with a passive-aggressive foreign policy

Ian Bremmer
Jun 19, 2014 14:36 UTC

 China's President Xi speaks during his meeting with U.S. President Obama, on the sidelines of a nuclear security summit, in The Hague

America and China are the world’s two major powers, with the largest economies and militaries. The stakes are high for them to practice what they preach on foreign policy: their words and actions influence the global economy, as well as the behavior of allies and enemies.

The problem: Xi Jinping and Barack Obama want to have their foreign policy cake and eat it, too. For both leaders, international engagement isn’t top of mind: they want to downplay their global leadership roles in order to focus on more pressing concerns at home.

But at the same time, they have certain priorities that they’re willing to pursue unilaterally and aggressively abroad. This inconsistency gets them both in hot water. It leaves other countries guessing, it undermines global collaboration, and it allows crises like Ukraine and Iraq to burn hotter, for longer, more often.

How far can Modi take India — and how fast?

Ian Bremmer
May 20, 2014 22:38 UTC

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As a result of last week’s parliamentary election in India, three of the world’s strongest and most transformational leaders are now in Asia: Japan’s Shinzo Abe, China’s Xi Jinping, and India’s Narendra Modi. They control a fifth of the global economy and govern two-fifths of its citizens. All have active plans to shake up their societies.

The expectations and the stakes are sky-high for each of these leaders, but none more so than Modi. Last week, Modi won the world’s largest-ever democratic election in a decisive fashion, with his party converting 31 percent of the national vote into 52 percent of the seats in parliament — the first absolute majority in the lower house of parliament since 1984. Meanwhile, the reigning National Congress Party — which has ruled India nearly without a break since its independence from Britain — turned in its worst-ever performance, losing three-quarters of its seats.

Why do Indian voters find Modi so appealing — or, depending on your outlook, Congress’ leadership so repulsive? As chief minister of Gujarat, his state of 60 million people, Modi unlocked economic gains reminiscent of China. During his 12-year tenure, Gujarat’s per capita income outpaced the national average, rising almost fourfold. Modi put his money where his mottos were — “less government and more governance” and “no red tape, only red carpet” —  paring back suffocating state inefficiencies to unlock business potential and competitiveness. This is precisely what the Congress party has been unable to solve at a national level, with high inflation, lagging economic growth (at least by historical standards), and legislative gridlock that makes America’s Congress look like a well-oiled machine.

Japan’s path forward, in five steps

Ian Bremmer
May 9, 2014 20:28 UTC

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On the surface, Barack Obama’s recent Japan visit struck all the right chords for Tokyo. For the first time ever, an American president stated that the U.S.-Japan security treaty extends to the Senkaku/Diaoyu islands dispute, the most combustible geopolitical conflict between Japan and China. And Obama and Japanese Prime Minister Shinzo Abe announced a “key milestone” for negotiations on the Trans-Pacific Partnership (TPP), the trade deal that encompasses 12 countries and more than 40 percent of the world’s economic output.

But there was less to the visit than meets the eye. Obama’s Senkaku pledge was a restatement of existing U.S. policy. The “key milestone” on TPP was never identified; in fact, it seems that the 40 hours of bilateral discussions between the U.S. and Japan led to no breakthrough at all. And while the trip was a big win for Obama — he managed to placate Tokyo without provoking Beijing — it didn’t offer any solutions for how Japan should deal with a rising China.

With the United States disengaging on foreign policy and China rapidly expanding its influence, Japan is caught in a dire geopolitical position. But Tokyo still has options. Here are five foreign policy priorities for Japan.

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