Eurasia Group’s Ian Bremmer: Biggest Threat to World Is Rogue Actors – From Putin to Musk

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1:09ADDY IGNATIOUS, Editor-in-Chief of Harvard Business Review Welcome to the new world of work. I am Adi Ignatius, Editor-in-Chief of Harvard Business Review, and we are broadcasting today live from the World Economic Forum in Davos. So that means I have less makeup on, but I do have the official badge. My guest today is a really appropriate guest for a show from here, but before I introduce him, I want to read a letter from, I mean, we want to hear from our friends at Unisys. Where some see barriers, Unisys sees breakthroughs. Unisys pushes what's possible across digital workplace, app modernization, cloud, and beyond.

1:47Unisys, keep breaking through. One other thing, if you like the content like this, I urge you to check out our leading podcast, the IdeaCast. Find it wherever you get your podcasts. I also want to ask you if you have questions for our guests today, put them into the chat. I'll try to get to questions later. And now I will introduce our guests. So that is Ian Bremmer, the political science and the founder and president of Eurasia Group, who is a political risk research and consulting firm based in New York City. Ian is a prolific author, including in the pages of Harvard Business Review. And the weekly newsletter that he and his Eurasia Group colleagues put out every Monday is among the best-read newsletters in the circles that I travel in.

2:32So, Ian, welcome.

2:34Ian Bremmer:Hey, Adi. Great to see you, man. So it's great to have you here. And like I said, you're kind of the perfect guy to talk to on Davos Week. And, you know, these are your people. So why don't we start? Tell me, you've been here probably for a few days. What's your highlight of the first few days of the World Economic Forum? Maybe two highlights in the sense that they've been very interesting to me. The first was kicking off on Monday. I spent an hour and a half with sort of a curtain raiser for the congressional delegation that the United States has brought over, Republicans and Democrats, a bunch of senators, a bunch of House reps.

3:10Ian Bremmer:was nice to see here just how much constructive relationship building is happening on key issues, on industrial policy, on trade, on immigration. I mean, the kind of things that you would never suspect from headlines in cable news or if you listen to your crazy uncle. And of course, there's some self-selection going on with the people that are bringing themselves to Davos. I mean, it's not the far right or the far left, but still it's absolutely bipartisan. And that was, as an American and as someone who has lived through the last several years of enormously dysfunctional and partisan governance, it was nice to see.

3:50Ian Bremmer:The second thing I would say was the vice chair from China, Lu He, his opening statement, and then some of the private comments he made afterwards. This is a guy who overwhelmingly is trying to send the message, sell the message that China is open for business again. And, you know, he didn't 20 minute speech with with Klaus on the main stage, did not mention COVID once doesn't exist anymore. Everyone's already gotten it. It's in the rear of America. No need to talk about that. You know, part of it is how much do you believe that he actually has power? And part of it is how much do you believe he's really telling the truth?

4:36Ian Bremmer:And I'm not sure about either of those things, but it was a very, very different message than we've been hearing from Chinese officials over the course of the past several years. Yeah, well, this is great, unless you're the crazy uncle, in which case we could discount all of that. So Ian, HBR's audience is primarily made up of business executives. And this episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

5:11Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Hey, Chicago. Class it up with Crocs. You know back to school is coming in fast. So why wait to find your new fave footwear? Step into a local croc store and step into your new look. Try it. Style it. Make it yours. Because the right pair doesn't just show up. It shows off. First day fits, handled. Walk out ready for whatever's next. Visit your nearest croc store today. I know you guys do reports on the business risks around the world, but if you had to pick one thing, and obviously we have a global audience, But one thing that's in your sort of view as possibly the biggest business risk for 2023, what would that be?

6:08Ian Bremmer:Probably that rogue actors are becoming so much more powerful and disruptive. And when I mean rogue actors, Adi, what I'm talking about are a group of individuals that have almost complete control over the institutions they're in. They're surrounded by yes men. They don't get great information, especially about the second and third order effects of the decisions they take. And they have virtually no checks and balances. And so, of course, I'm talking first and foremost about Vladimir Putin, whose enormous misjudgment, the biggest misjudgment of any major leader on the global stage, really, in decades.

6:47Ian Bremmer:And so it's not just that he wanted to invade Ukraine and that no one could stop him. It's also that he had no idea how his army would perform. He had no idea how the West would respond. I mean, that's why this is such a massive disruptive risk is because it's not just that he wanted to be crazy, but that he was capable of being so crazy. I worry that geopolitically there are a number of actors like that on the global stage. We've known about Kim Jong-un for a long time, of course, the Iranian supreme leader, but also increasingly Xi Jinping, not because I think he's crazy, but because he's consolidated so much power around him.

7:27Ian Bremmer:And therefore, it is no longer as possible to oppose a decision that he is aligned with. And of course, so it's as consolidated as it was under Mao. But in the Mao days, businesses didn't have that kind of exposure to China. China didn't have that kind of impact in global markets. And since I'm talking about people with incredible control over their institutions and no checks and balances, I would also add to that Mark Zuckerberg, I'd add to that Elon Musk. They're not dictators in countries, but they do control, truly control, immensely powerful global platforms that operate with some level of sovereignty outside of the power purview, even of governments.

8:12Ian Bremmer:And I think that the disruptive implications of that, for good and for bad, are also unprecedented. So there's a lot I want to come back to in that, you know, Vladimir Putin's invasion of Ukraine. I mean, it sort of reminds me of when China invaded Vietnam to teach them a lesson several decades ago. You know, they were able to realize really quickly that it was going badly, and they pulled out, you know, relatively quickly. But it reminds me of that same kind of hubris, I guess, and miscalculation. But that leads me to a question. How good are any of us at forecasting what's coming down the road?

8:46I mean, people like to talk about, well, the World Economic Forum didn't foresee Russia's invasion, didn't foresee this or that. A lot of the game-changing events we don't see. So talk about what you do. You're forecasting political risk, but then there are these sort of black swans, positive and negative. So how do you do what you do, and how do we really know what's coming down the pipe? Yeah.

9:08Ian Bremmer:Well, I mean, the obvious answer is that we don't, and people get things wrong all the time, so it's important to come clean on that. I think there are two ways that you mitigate uncertainty if you're really trying to project where the world is going. The first is less about prediction and more about the realm of what's not possible. I think it's very important to understand, given the interests and resources that are available to given actors, what are the things that they say politically that you know they can't do? So, for example, you know that political leaders in the U.S. can't move towards strong decoupling from the Chinese economy, even if that's what they're saying, because of where they get their money from.

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10:47Ian Bremmer:because of the impact that would have on so many of their direct interests, because of what it means for the ambitions and for the business models of those that are really relevant stakeholders. So I think, you know, applying the realm of the not possible constrains significantly the things that you think might happen. So many people talk about what might happen because it's what they want to happen. And they conflate ideology with analysis, especially in today's very polarized environment that always gets people into trouble. So that's the first thing I would say. But the second thing I would say is you need to have an environment around you that is culturally disposed to getting it right and being honest about when you get it wrong.

11:33Ian Bremmer:So, I mean, a very simple thing that you think everyone would do. The most important analytic piece we put out every year is what we call our top risks report. We put it out on the first Monday of every new year. And then we leave it on our, and the entire firm analytically is involved in it. It's a long process and it's very robust. Yeah, yeah, yeah. And then we put it on our homepage and we leave it up the entire year on our homepage. And then in the last week of every year, we go back and publicly say, OK, let's look at these things again with a fresh eye. What have we gotten right? What have we gotten wrong?

12:15Ian Bremmer:What lessons do we take from that? What do we learn? How do we apply those things? I don't understand why every organization that's involved in analysis doesn't do that publicly and privately. I don't understand why they don't. None of them do. None of them do it. I love that transparency. I think the answer is obvious. They don't want to be sort of exposed and want to. But I love that you do that. I don't think they don't want to be exposed. I think they're just not culturally oriented towards it. I think it's because the business model is usually not about content. The business model is actually about something else.

12:47Ian Bremmer:And that's fair. Right. Like, I mean, if I were a big bank and the reason I put out content is simply one way to differentiate, you know, from other big banks. But what I'm really about is just trying to make sure that I'm getting a bigger share of wallet from all of these clients that are out there that I don't really care about, like, how accurate the content is out as long as it makes a big splash when it comes. Well, but if you're an organization like ours that literally our entire business model is content, then, you know, that's what you have to do. All right. So if you just joined us, my guest is Ian Bremmer, who's the president of Eurasia Group and a political scientist and a political risk analyst.

13:26If you have questions for Ian, put them into the chat, and we'll try to get to some of them later. So, you know, you talked about the, you know, that it would be very difficult for the U.S. to, in fact, decouple from China, even if the rhetoric is that way. But I just want to ask, I mean, you know, Russia's invasion and the response to it is worth unpacking a little bit. Because, you know, most U.S. companies, a lot of Western companies, suddenly ended their businesses in Russia. It broke ties with partners who may have been, you know, local partners in Russia may have been as anti-Putin as the American investors were.

14:02But the logic of sanctions is just so, it's such a blunt tool that there was no room for nuance. So suddenly these economic relationships were broken. I mean, that could happen, right? That could happen elsewhere. I mean, if you're thinking about political risk, you know, if you're a business, don't you have to diversify the supply chain and think about the worst case scenario where this happens somewhere else?

14:24Ian Bremmer:Of course you do. But let's let's first a couple of points here that are really important to nuance what you just said. So, I mean, there is a very strong level of decoupling that is going on from Russia, but it's a lot less than the headlines. I mean, you've got organizations like BP that say they're decoupling from Russia, say they're selling. They haven't sold. And when you ask them why they. This episode is brought to you by Google Chrome. You think, you know, a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

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15:43Ian Bremmer:Haven't sold yet. It's like, well, because right now, if we were to sell those assets, we'd just go to the Russians. And do you really want us to do that? You know, it just gives them the capacity to exploit them. Well, that may be true and it may be a reasonable argument, but that's not decoupled. And there are a lot of organizations out there that are publicly decoupling and privately dragging their feet. That's still very true. And not many people are talking about it. Number two, everyone out there opposes Putin in the West. I mean, Tucker Carlson and Noam Chomsky are about the only well-known Americans you can find that are willing to actually sort of publicly take and say, well, maybe actually Putin has a point.

16:20Ian Bremmer:Nobody else. And so as a consequence, it's very easy for corporations to make that call on Russia. On any other issue with significant assets at stake, you would find far more nuance, far more challenges in taking one side or the other. It'd be much more like Disney picking California or Florida. And you're going to alienate the other half of your constituents no matter what you do. So what do you do? You talk out of both sides of your mouth. You don't actually sort of implement on it. That's that's a lot more clear. But again, I want to get to ideology on this, too, because so much of this is just overblown by headlines.

17:00Ian Bremmer:I was just the opening one of the opening panels at Davos. I think it was the opening panel at Davos. I was on the stage with someone I like a lot personally, Neil Ferguson. and I've known him for a long time, the great and, you know, sort of celebrated historian at Stanford, Harvard, lots of other places, written lots of books. But he's decided ideologically that he's going to be attached to the idea that there's going to be a cold war between the U.S., China and China. First, he said there's going to be, and now he says we're in one. And we're not. And objectively, we're not. Objectively, President Biden continues to say that we're not, both publicly and privately to Xi Jinping.

17:40Ian Bremmer:He's told everyone around him that we absolutely don't want to be in one. Xi Jinping has made the same statements. And yet, Neil Ferguson continues to say that. Now, in part because it's useful to be a bit of a bomb thrower and kind of a professional oppositionist, and in part because now that he's committed to it, he kind of wants it to happen. And I told him on stage, I said, it's kind of like fetch. No matter how many times you say it, You can't make it happen. And I think that it's the problem we have, especially when it comes to punditry and professional intellectuals, is there's not much excitement in being nuanced.

18:20Ian Bremmer:There's not much excitement in having a headline that says, no, actually, that's overblown. No, actually, yes, we are doing a limited amount of decoupling in areas that are dual use on national security, semiconductors, 5G. But it's actually not impacting all of these sectors. And in fact, something really unsexy to say, the United States actually really needs a robust economic China, that the alternative would be a disaster for everyone. We all understand that. I mean, you're not going to get members of Congress to say that publicly, but they all say it privately. And so, yes, there's going to be more hedging.

18:58Ian Bremmer:And I see it. I see Apple hedging more away from China because of what they've seen through COVID and now sort of post-COVID in China. But the hedging that Apple is doing is incremental. And it's not because of the U.S. government. It's not because the Americans are heading into a Cold War or containment. It's just because they see that they're not getting paid for the level of risk that they're taking in China right now. OK, so part of the China conversation is trying to analyze what is happening at the highest echelons of political leadership, what is happening with Xi Jinping. When the party congress ended a couple of months ago, it seemed like, wow, Xi Jinping is really consolidated power.

19:35He's removed the reformers. He's removed any kind of clique that isn't the Xi Jinping clique. You know, and this episode is brought to you by Google Chrome. You think, you know, a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense. There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus. hey Chicago class it up with Crocs you know back to school is coming in fast so why wait to find your new fave footwear step into a local Crocs store and step into your new look try it style it make it yours because the right pair doesn't just show up it shows off first day fits handled Walk out ready for whatever's next.

20:36Visit your nearest Crock store today. Identify with policies like zero COVID and identify with policies like a kind of relatively harsh rhetoric toward the West, toward the U.S. OK, now it's flipped. I mean, now the COVID policy changed. There is this thought. You talked about Liu He, you know, speaking at World Economic Forum, saying we're open, foreign investors, come on in. And so, and I've seen, you know, very informed analysts who think Xi Jinping has, that he must have lost some degree of power. Others who think that's ridiculous, he had no choice but to do this. I'm interested how you read.

21:12I know you can't know, but how do you read what's happening?

21:14Ian Bremmer:Yeah, I don't know. But, I mean, I don't see it. I mean, it looks like a lot of people say Putin's lost the level of power, given, I mean, his economy has contracted by three and a half percent. It was growing strongly because of the Russian invasion of Ukraine. I mean, NATO's expanding. Ukraine is stronger. I mean, on every front, I mean, you'd think that Putin is losing control. And yet inside Russia, you don't see it. You don't see significant demonstrations. There were some briefly after they called up the 300 ,000 in the special mobilization. That's it. I mean, you've seen, I guess, about 18 or 20 mid-level oligarchs commit suicide by jumping out of windows.

21:51Ian Bremmer:And that makes it very clear that there are going to be consequences if you're even thought to be. disloyal to the regime. But there's not a significant challenge that I see to Putin domestically. And I don't see it in China either. I see an enormous concentration of power. I see loyalists all the way from the top to the mid-levels of the Chinese Communist Party elite hierarchy and leadership aligned thoroughly and loyal thoroughly to Xi and those that he has groomed over the years. I think it's unprecedented. And I think the fact that he had no intention of pivoting away from zero COVID after the party Congress or after the G20 in Bali, when he was meeting with Western leaders, and it was only after he saw demonstrations on the ground, relatively small demonstrations, that kind of shows you how much control he actually has, because he's able to make that decision, that he's able to change that decision.

22:47Ian Bremmer:Now, the problem here, Adi, is that the one thing that we've known from China over the past decades is they're authoritarian, they're state capitalists, but they execute reasonably well and strategically. So when they decide to put a policy in place, they focus on how they're going to implement the policy. Well, I mean, here you saw them suddenly decide that they're going to rip the Band-Aid off of zero COVID. They're not ready at all. They don't do a couple cities first so they make sure the hospitals don't get overwhelmed or they can move people into other hospitals. No, it's just it's free for all.

23:18Ian Bremmer:We're just we're not going to test anymore. They approve for for Pfizer to finally have a distributor after waiting for months and months, finally having a distributor for Pax Levit, the most important therapeutic that you have out there for COVID. They only do it after Xi Jinping has made his decision. So there's not enough in place. So people are selling it on the black market. Five thousand dollars a dose in some place. Then the Chinese public gets annoyed about it and they're saying we don't want to take it. It's only for the elites. And then the Chinese government pippets again and says, well, OK, you can instead will support Chinese therapeutics that aren't as good and Eastern medicine that doesn't work.

23:54Ian Bremmer:My God, I mean, this I'm we're all delighted that China is moving away from zero covid. We're going to have much higher growth from China in the second, third, fourth quarters this year. It'll be supply chain is going to be moving fast again. People aren't going to be stuck in their homes. All that is to the good. My God, they've executed so poorly on this pivot. And this is precisely the thing that business leaders over the past years, whether they liked doing business in China or they were definitely scared of it, they knew they could count on reasonably competent execution. So that's, by the way, I think Eurasia Group called it right in terms of what would happen in China.