Ian Bremmer

After another year of panels, colloquia, summits, meetings, whispers and skiing, the Davos emissaries headed home with a few new connections and catchphrases (“Resilient Dynamism” forever!). After four years of gloomy predictions and summits dominated by post-financial crisis concerns, this year the mood was significantly more positive. While I would argue that the pendulum of sentiment has swung too far, there are reasons to be cautiously optimistic. Based on my observations at the 2013 World Economic Forum, here’s a power ranking of who’s up, who’s down and who’s off the radar—according to Davos attendees, at least.

UP

United States: The politics of Washington were all but forgotten. With the so-called fiscal cliff standoff resolved and no current budget battle hurdles (at least for the next few weeks), there were no urgent crises to distract Davos from the strong American economic fundamentals. Instead, the chatter was about insourcing, the energy revolution and the positive growth outlook this year – all sources of a (perhaps inflated) exuberance.

Eurozone: Almost every eurozone leader of merit turned up, and so the chatter was good. (Davos is an easy place to please, as long as you put in the effort.) Mario Draghi and Angela Merkel charmed, but Christine Lagarde was the belle of the ball. She stole the show with her keynote speech; one of her strongest messages was the need to narrow the gender gap, not only from an equal rights perspective but also because “it makes economic sense to improve the situation of women.” The Europeans, it was clear, had reached bottom, and are now quite ready to make their way back from whence they came. While they’re not there yet, they’re definitely closer than last year.

Japan: For the first time since I can remember, the Japanese delegation seemed to have a certain confidence and an admirable level of coordination. Prime Minister Shinzo Abe dialed in via satellite to give a brief address; Japanese representatives had their talking points in order; and Japan Night – a party 15 minutes from the Congress Centre (somewhat of a trek for the rarified air of Davos) – was a huge success, with 1,000 attendees. Most importantly, people seem, for now, comfortable with “Abenomics” and its reliance on government-supplied stimulus.

Sub-Saharan Africa: There were a record number of heads of state and ministers from Africa this year, and, unlike in the past, they played a central role. They were on all sorts of major panels and weren’t just consigned to talking about African issues. This year, many African players were seen as emerging markets in their own right.

Eurasia Group’s weekly 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 @EurasiaGroup or @IanBremmer.

1.”The confidential list of everyone attending Davos this year”

David Yanofsky, Quartz

The first step to assessing Davos and the World Economic Forum is reading up on who attends. Yanofsky answers that question in novel ways — particularly the regional breakdown and analysis. Two-thirds of attendees hail from North America or Europe. Less than 8% come from Africa and South America…combined. This piece seems to take the ‘World’ out of ‘World Economic Forum.’  

2. “Scenarios for the Russian Federation”

World Economic Forum

In this report, The World Economic Forum spells out possible long-term challenges that Russia faces. It focuses on three in particular: the “ongoing evolutions in the global energy landscape, the quality of Russia’s domestic institutional environment and dynamics of social cohesion within the country.” Lo and behold, Russian Prime Minister Dmitry Medvedev was in Davos– and he responded to the report in his keynote address. Whether he provided any revelatory answers is another story.

Another year, another Davos. Last year’s World Economic Forum was overwhelmingly about Europe’s existential crisis. But Europe has quieted down, at least for now, and so we’re entering the first non-crisis Davos in years. But that doesn’t mean things have settled into, as Mohamed El-Erian puts it, a ‘new normal.’ It remains difficult to find markets with good risk/return, or an area of the world without serious geopolitical tensions. 

Faced with this ‘new abnormal,’ where the only certainty is that shocks will arise from unexpected places, what is this year’s Davos about? 

Everything and nothing. The United States, the Middle East, emerging markets, Japan – all of these are on the agenda, but they’re not all necessarily connected. The emissaries at Davos are in the midst of their own locavore movement – their agendas are remarkably domestic.

Eurasia Group’s weekly 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 @EurasiaGroup or @IanBremmer.

Must-reads:

“Beijing is choking (and can’t hide it anymore)”

Avinash Godbole, Institute for Defense Studies and Analyses

The pollution in China’s capital is off the charts; it’s an issue that unites China’s wealthy and poor against the government. What can Beijing do about it? 

“Gaffe-prone Merkel rival drags down centre-left as vote looms”

Erik Kirschbaum, Reuters

Angela Merkel has done an outstanding job juggling the demands of her constituents and the crisis-riddled eurozone at large. It’s no wonder her approval ratings are sky-high and her reelection prospects are bright.  Opposition candidate Peer Steinbrueck? Not so much. His amusing gaffes make headaches for his party – and life easier for Merkel.  

Isn’t it nice to finally emerge from the last four years of financial crisis? Oh, you didn’t notice? Are all the pundits’ discussions of fiscal cliffs, debt ceilings and deficit emergencies making you think we’re still in the midst of a never-ending crisis? 

Well, they’re wrong. We’ve spent the last four years so conditioned to crisis — The banks are imploding! The dollar is ending! The double-dip recession is coming! — that now, away from crisis, we’re still feeding off it. But note that few of the apocalyptic scenarios came true. The United States didn’t nationalize its banking sector, the primacy of the dollar is unquestioned, and it was England, not the States, that returned to recession. Granted, America did ”suffer” a debt downgrade, but that didn’t lead to disaster: It sent investors scrambling into the safest trade they knew — U.S. treasuries.  

These doomsday scenarios didn’t play out as predicted because the United States is actually much more stable than it initially seemed. But the countries leading the world’s growth — emerging markets such as China, India, South Africa, etc. — are far less stable. These are the countries we should be worried about, not our own. Emerging markets make up two-thirds of the world’s economic growth, but they’re countries in which the politics matter as much as the economics. One revolution, one coup, or one sanction can turn growth into risk. This is the precarious global economy in which we now live.

Eurasia Group’s weekly 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 @EurasiaGroup or @IanBremmer.

Must-Reads

1. “The New Power Map: World Politics After the Boom in Unconventional Energy,” Aviezer Tucker, Foreign Affairs

Unconventional energy plays in North America are fundamentally changing energy markets – and, therefore, international politics. Instead of focusing on the good news for the US and Canada, Tucker makes a compelling case that Russia is in big trouble.

It was a close call at times, but we made it through 2012. Now we’re set to encounter a new set of risks ‑ but not in the world’s advanced industrialized democracies, which are much more resilient than feared. This year, with the global recession on the wane, attention shifts back to emerging markets, the economies that are usually the ones that pose the most political risk. You can read the whole report from my political risk firm, Eurasia Group, here, but an executive summary of this year’s top 10 risks, in video and text, is below:

10.) South Africa: Africa overall looks like it will continue its recent growth. But South Africa, one of the continent’s most complex and important economies, is floundering. Its dominant political party, the African National Congress, is resorting to populism to maintain its base among the urban and rural poor. That means more state intervention, more labor unrest and more assertive unions. We’re not predicting a fundamental political crisis, but the country is moving along a path that offers little reason for optimism.

9.) India: We’ve all read the predictions that India is poised to become the world’s next infinite-growth country. Not so fast. Despite initial optimism, the 2009 election hasn’t freed Prime Minister Manmohan Singh to reform the country as anticipated, with the tough choices continually being kicked to the next parliamentary session. (Americans should find this familiar.) Corruption continues to reign, and as we’ve seen in the rape protests of the past few weeks, there are fundamental cultural issues that India has yet to resolve. As general elections draw closer, the government’s ability to execute robust economic policies will decline even further.

A few days ago, I took a quick, informal survey around Eurasia Group, the political risk outfit I lead, on power and global politics. The question: Who are the world’s most powerful people? We defined power as a measure of an individual’s ability to singlehandedly bring about change that significantly affects the lives and fortunes of large numbers of people.

Here’s what we came up with, in descending order:

1- Nobody – In a G-Zero world, everyone is waiting for someone else to shoulder responsibility for the world’s toughest and most dangerous challenges. The leaders you’ll see named further down this list are preoccupied with local and regional problems and don’t have the interest and leverage needed to take on a growing list of transnational problems.

2- Vladimir Putin – In Russia’s personalized system, Putin is still the person who counts. He isn’t as popular as he used to be, and his country has no Soviet-scale clout or influence, but no one on the planet has consolidated more domestic and regional power than Putin.