We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
by ian bremmer
Clean energy sources amid a futuristic landscape.
World leaders are flooding New York this week for the 78th United Nations General Assembly and Climate Week NYC, less than two months before the landmark COP28, the UN Climate Change Conference, is set to begin in Dubai. With climate being at the top of the agenda and top of mind, I thought I’d use today’s newsletter to debunk a myth that pervades an annoying amount of climate doomerism.
Most climate change discussions frame the issue in cost-benefit terms. Would we rather save the planet or keep our living standards? Save the planet or increase profits? Save the planet or lift people out of poverty? In other words, how much are we willing to sacrifice to stop climate change?
In rich countries like the US, both sides of the aisle assume this tradeoff between climate action and economic prosperity exists. The difference between them is that most of the political right wants to prioritize growth at the expense of climate action, while the “de-growth” and anti-capitalist parts of the left want to halt growth for the sake of climate action.
Meanwhile, the consensus in developing nations – which today account for two-thirds of global carbon emissions but are only responsible for about one-fifth of historical emissions – is that poorer countries have the right (indeed, the obligation) to put economic development above climate action. This view is also premised on the assumption that economic growth can only be powered by fossil fuels, and therefore, that saving the planet requires economic sacrifice.
But that is a false dilemma. In 2023, there is no longer a systemic trade-off between decarbonization and economic growth.
A technological revolution in the making
The reason for this is that technological advances have made clean energy – especially solar power, wind power, and battery storage – cheaper than fossil fuels.
Until quite recently, high-polluting fossil fuels (especially coal) were by far the cheapest sources of energy available. Renewables didn’t come close. But in the past decade, the unsubsidized price of electricity from solar and wind declined by 89% and 69%, respectively. And the cost of lithium-ion batteries – which are needed to smooth out the intermittent supply of solar and wind energy – has declined by 90%. As a result, new solar power plants have gone from being 710% more expensive than the cheapest fossil-fueled plants in 2010 to being 29% cheaper now, and new onshore wind plants have gone from being 95% more expensive to being 52% cheaper than the cheapest fossil-fueled plants in the same period.
Today, when you compare the lifetime cost of building and operating new power plants, renewable energy sources like solar and wind are already the cheapest options for most of the world. In some places, building new solar and wind plants is even cheaper than keeping existing coal plants running!
This price advantage explains why the world’s largest carbon emitters are quickly moving away from coal and toward wind and solar power, and why renewable power has more than tripled as a share of global power generation in the last decade. In Europe, wind and solar generate more power than coal and gas. And solar, wind, and battery storage account for 82% of planned generating capacity additions in the US this year.
Interests trump politics
A common refrain is that these renewable technologies are being forced on unwilling Americans and Europeans by woke politicians and activists. But ask yourself, why would countries like China and India, states like Texas and Florida, and companies like BP and Total be building so much solar, wind, and battery storage capacity if not out of self-interest?
China and India certainly have little inclination to make national sacrifices for the planet’s benefit. Texas and Florida are Republican bastions — not exactly tree-huggers. And, like all corporations, BP and Total seek to maximize profits for shareholders. If you think Greta Thunberg is pushing developing countries as diverse as Brazil, Chile, Vietnam, India, and Morocco to deploy solar power at scale, I’ve got a coal mine to sell you…
The truth is that the world is adopting clean energy because it’s cheaper than the alternative. Even countries and companies that don’t care about climate change at all are finding it worthwhile to switch to renewables. And thanks to these technologies’ uniquely steep learning curves, the more they get deployed, the cheaper they’ll become, and the cheaper they become, the more they’ll get adopted everywhere.
At the same time that the increased adoption of renewables will reduce carbon emissions and deadly pollution, falling energy prices will lead to a rise in real incomes and standards of living. The advent of cheap, abundant, and widely available energy will free up income for people to spend on other things and allow poor countries to turbocharge their development while leapfrogging fossil fuels. If it sounds like a win-win, it’s because it is.
The invisible hand still needs a policy push
Although technological ingenuity and self-interest are making the energy transition an unstoppable reality, these forces alone aren’t enough to get the world all the way to net zero emissions in time to avoid some of the worst impacts of climate change.
For starters, there are still powerful vested interests and inertia holding back decarbonization, despite its increasingly obvious economic advantages. Many actors with political pull benefit from the carbon-intensive status quo, which generates up to $2 trillion in economic rents every year. These incumbents – ranging from petrostates and Big Oil to retail gas stations and fossil fuel workers – are fighting tooth and nail to slow down the energy transition and latch on to their power. Moreover, fossil fuels still make up 77% of the world’s energy production, and for now the cost of operating existing fossil fuel plants is lower than the cost of building new renewable plants in most (but not all) places. Absent policy action, that will remain the case for some years yet.
Then there’s the fact that electricity – the problem that solar, wind, and batteries solve – only accounts for about 40% of global carbon emissions. Cutting the remaining 60% will require addressing the other sources of emissions: transportation, commercial and residential buildings, and industrial processes. Some of this can be achieved by electrifying more of our energy use – like we are already doing by switching to electric vehicles, heat pumps, and induction stoves – while continuing to decarbonize electricity. But some – such as greening harder-to-abate, heat-intensive processes like cement and steel production – will require investment and incentives to invent, develop, and adopt new technological solutions.
Finally, while switching to renewables pays for itself in the long run, building new infrastructure while retiring fossil-fuel assets early can bring large upfront costs. This problem is especially acute for developing nations, which will generate most of the demand for new electricity in the coming decades but lack the fiscal space and access to long-term finance needed to meet the upfront costs of deploying clean energy systems. It’s in these countries’ economic interest to lock in low-carbon infrastructure now rather than get stuck with fossil-fuel assets that are already being phased out in the developed world and will be stranded in a matter of years. But they will need massive financing from rich countries to do that.
The bottom line is that although there’s a lot governments can do to help speed up the energy transition, even without government action the transition is most definitely happening. And it is happening without a reduction in our living standards. You don’t have to stop driving or ration electricity or eat bugs. Poor countries don’t have to stay poor. The opposite is true: stopping climate change will make most everyone richer.
That’s great news because if the fate of the planet depended on everyone agreeing to voluntarily impoverish themselves, you can bet your sweet bippy humanity would be 100% cooked.
Chinese President Xi Jinping.
After forty years of extraordinary growth, China’s economy may be entering an era of stagnation.
Youth unemployment just hit a record high of 21%. Manufacturing activity is contracting. Exports have declined on the back of sticky inflation and soaring interest rates in the US and Europe. Foreign investment has stalled. Capital outflows are accelerating. The property sector, which makes up a fifth of the economy, is crashing. Property development behemoth Evergrande Group filed for bankruptcy last month. China’s largest homebuilder, Country Garden Holdings, is on the verge of default. Headline growth has come in lower than expected, and the overall economy is flirting with deflation amid persistently weak consumer spending, faltering private investment, and mounting financial stress.
The economic and financial risks feel more urgent than ever as the limits of China’s growth model have become obvious. Gone are the days of 10% growth – the IMF now expects the Chinese economy to grow under 4% a year for the coming years, well below the government’s official target of “around 5%.” The slowdown is underpinned by structural challenges to China’s long-term economic prospects, including unfavorable demographics, high indebtedness, and intensifying geopolitical competition with the United States and its allies.
Crucially, the Chinese people seem to be losing faith in the government’s ability to fix the economy’s problems. The combination of Maximum Xi – the increasingly centralized, opaque, and capricious nature of Chinese policymaking under President Xi Jinping – and a recent slate of deeply disruptive domestic policies – like the tech crackdowns, the zero-COVID lockdown and pivot, and raids on foreign firms – has created uncertainty and undermined confidence in Beijing’s competence.
So how did we get here, and how is this going to end?
China’s original sin
China’s economic model is in trouble, and it has been for a while.
The basic story is that the tailwinds that turned China into the factory of the world and lifted a billion people out of poverty between 1980 and 2010 – including favorable demographics, large cost advantages, strong consumer demand from the US and Europe, hyper-globalization, and plenty of low-hanging-fruit technologies for China to copy or steal – ran out very early in China’s development. By the end of the 2000s, long before Chinese incomes had reached developed-country levels, exports and foreign direct investment had started to taper off, and with them so did the era of 10% growth.
Then, to keep the economy growing at a reasonable pace, Beijing turned to domestic investment, encouraging state-controlled banks to pump massive amounts of lending into real estate and infrastructure. This strategy allowed China to maintain 6-7% growth and avoid politically risky recessions in the decade that followed. But the unintended consequence was that real estate-related activities grew from about 10% of China’s GDP in 2000 to nearly 30% at its peak, becoming by far the country’s largest source of growth, investment, and jobs.
This shift from an export-led economy to a real estate-led economy was problematic, for several reasons.
For starters, real estate-related activities like construction have lower productivity growth than export-related industries like manufacturing, so allocating more and more resources to them led to a decline in China’s aggregate productivity growth – itself a key driver of long-term economic growth.
In order to keep growth going, China had to borrow and invest ever more capital into assets with ever lower returns, leading to a decline in the private sector’s return on assets. At first, infrastructure investment was profitable because China had to make up for decades of underinvestment. But eventually, China built enough apartment buildings, bridges, and airports to meet all its needs. Additional investments after that point were malinvestments – think ghost cities, bridges to nowhere, airports without planes – generating less and less growth for every yuan borrowed and invested. The more China used this playbook, the less potent and more costly it became.
But real estate wasn’t just the principal engine of growth. It was also (and still is) the main financial asset and store of wealth for regular Chinese citizens, who – lacking access to well-developed stock and bond markets and believing that prices would keep going up forever – spent their life savings on overpriced investment properties and took on loans (collateralized by the properties in question) to afford them. Real estate now accounts for nearly two-thirds of China’s household wealth and about 40% of the collateral held by banks.
To make things worse, because China doesn’t have a property tax, local governments had to rely on land sales to finance spending on public goods and services. This perverse incentive led them to shower property developers with cheap credit to invest in real estate, bidding up demand for land and property prices.
All these factors made China’s growth model predictably unsustainable – and a dual property and credit bubble all but inevitable.
What happens next?
Now that the real estate boom has gone bust, China’s economy is unraveling under the weight of its contradictions.
Property prices are crashing. Household wealth is getting wiped out. Borrowers are defaulting on their mortgages, in turn leading developers and lenders to default. Credit is flatlining. Revenues for local governments are drying up at the same time as their debt servicing costs rise. Domestic demand is plummeting as all these economic actors hunker down and go into deleveraging mode, causing a growth slowdown.
In the past, Beijing would’ve responded by injecting debt-financed stimulus into the property sector. But that strategy has reached the end of its rope. Large-scale bailouts by the central government to distressed developers, shadow banks, and local governments are also off the table for now.
The obvious thing Beijing could do to stimulate growth in the short term would be to give direct fiscal stimulus to consumers (especially the poor and unemployed, who have the highest propensity to spend). Consumer stimulus would also be a step in the right direction toward the kind of structural reform China needs to achieve more balanced and sustainable growth in the long term: shifting economic activity from investment to household consumption, which at 38% of China’s GDP is extremely low compared to the 60% global average and about 70% in the US.
But Xi is ideologically suspicious of consumption, both as a policy lever and as a driver of so-called “high-quality development.” The concern is that stimulating consumption would either exacerbate the property/debt bubble or be ineffective as households use the money to repay debts or save rather than spend. More broadly, Xi fears that the redistribution of resources required to give households a larger share of the pie could generate social unrest and undermine his and the Chinese Communist Party’s political control. And if there’s one thing you should know about Xi, it’s that he prioritizes social stability and political control above all else – including economic growth.
This is the sort of policy bind that would pose an urgent political crisis in any democracy. But China is no democracy. After his extreme consolidation of power post-20th Party Congress, Xi has the unique political ability to ignore the slowdown if he so chooses. And that is exactly what he’ll do unless his hand is unexpectedly forced by systemic financial contagion or mass protests – at which point the response could be too little, too late. Which means Chinese growth is going to be slower for longer, with the bigger structural challenges remaining unaddressed for the foreseeable future.
To be clear, China remains a highly competitive economy, with enduring advantages in manufacturing, renewable energy, and electric vehicles as well as leading-edge innovation in frontier industries such as advanced computing, AI, biotechnology, and the like.
Yet outside these clusters and absent a more decisive rebalancing from Beijing, China’s economy could soon begin to look like Japan’s in the 1990s, which suffered a “lost decade” of prolonged deflation, stagnant growth, and high indebtedness on the back of a stock market and property crash. The difference being that this “Japanification” would hit China at a much lower level of development, long before it can close the gap in living standards with rich countries.
Could a chronically weaker economy chip away at China’s social contract, undermining popular support for Xi and the CCP and weakening their grip on power? Could it tank the global economy? Could it prompt Beijing to become more aggressive abroad, making a conflict with the US over Taiwan more likely or imminent?
I’ll tackle these questions in future newsletters.
Walmart is creating more American jobs by strengthening their commitment to local communities, investing in US manufacturing and supporting veteran-owned businesses like Bon AppéSweet. America's largest company has spent $1 billion with veteran-owned businesses, helping Navy veteran Thereasa Black and her small business gain nationwide success.
Artificial intelligence
That’s the question I set out to answer in my latest Foreign Affairs deep dive, penned with one of the top minds on artificial intelligence in the world, Inflection AI CEO and Co-Founder Mustafa Suleyman.
Just a year ago, there wasn’t a single world leader I’d meet who would bring up AI. Today, there isn’t a single world leader who doesn’t. In this short time, the explosive debut of generative AI systems like ChatGPT and Midjourney signaled the beginning of a new technological revolution that will remake politics, economies, and societies. For better and for worse.
As governments are starting to recognize, realizing AI’s astonishing upside while containing its disruptive – and destructive – potential may be the greatest governance challenge humanity has ever faced. If governments don’t get it right soon, it’s possible they never will.
Why AI needs to be governed
First, a disclaimer: I’m an AI enthusiast. I believe AI will drive nothing less than a new globalization that will give billions of people access to world-leading intelligence, facilitate impossible-to-imagine scientific advances, and unleash extraordinary innovation, opportunity, and growth. Importantly, we’re heading in this direction without policy intervention: The fundamental technologies are proven, the money is available, and the incentives are aligned for full-steam-ahead progress.
At the same time, artificial intelligence has the potential to cause unprecedented social, economic, political, and geopolitical disruption that upends our lives in lasting and irreversible ways.
In the nearest term, AI will be used to generate and spread toxic misinformation, eroding social trust and democracy; to surveil, manipulate, and subdue citizens, undermining individual and collective freedom; and to create powerful digital or physical weapons that threaten human lives. In the longer run, AI could also destroy millions of jobs, worsening existing inequalities and creating new ones; entrench discriminatory patterns and distort decision-making by amplifying bad information feedback loops; or spark unintended and uncontrollable military escalations that lead to war. Farther out on the horizon lurks the promise of artificial general intelligence (AGI), the still uncertain point where AI exceeds human performance at any given task, and the existential (albeit speculative) peril that an AGI could become self-directed, self-replicating, and self-improving beyond human control.
Experts disagree on which of these risks are more important or urgent. Some lie awake at night fearing the prospect of a superpowerful AGI turning humans into slaves. To me, the real catastrophic threat is humans using ever more powerful and available AI tools for malicious or unintended purposes. But it doesn’t really matter: Given how little we know about what AI might be able to do in the future – what kinds of threats it could pose, how severe and irreversible its damages could be – we should prepare for the worst while hoping for (and working toward) the best.
What makes AI so hard to govern
AI can’t be governed like any previous technology because it’s unlike any previous technology. It doesn’t just pose policy challenges; its unique features also make solving those challenges progressively harder. That is the AI power paradox.
For starters, the pace of AI progress is hyper-evolutionary. Take Moore’s Law, which has successfully predicted the doubling of computing power every two years. The new wave of AI makes that rate of progress seem quaint. The amount of computation used to train the most powerful AI models has increased by a factor of 10 every year for the last 10 years. Processing that once took weeks now happens in seconds. Yesterday’s cutting-edge capabilities are running on smaller, cheaper, and more accessible systems today.
As their enormous benefits become self-evident, AI systems will only grow bigger, cheaper, and more ubiquitous. And with each new order of magnitude, unexpected capabilities will emerge. Few predicted that training on raw text would enable large language models to produce coherent, novel, and even creative sentences. Fewer still expected language models to be able to compose music or solve scientific problems, as some now can. Soon, AI developers will likely succeed in creating systems capable of quasi-autonomy (i.e., able to achieve concrete goals with minimal human oversight) and self-improvement – a critical juncture that should give everyone pause.
Then there’s the ease of AI proliferation. As with any software, AI algorithms are much easier and cheaper to copy and share (or steal) than physical assets. Although the most powerful models still require sophisticated hardware to work, midrange versions can run on computers that can be rented for a few dollars an hour. Soon, such models will run on smartphones. No technology this powerful has become so accessible, so widely, so quickly. All this plays out on a global field: Once released, AI models can and will be everywhere. All it takes is one malign or “breakout” model to wreak worldwide havoc.
AI also differs from older technologies in that almost all of it can be characterized as “general purpose” and “dual use” (i.e., having both military and civilian applications). An AI application built to diagnose diseases might be able to create – and weaponize – a new one. The boundaries between the safely civilian and the militarily destructive are inherently blurred. This makes AI more than just software development as usual; it is an entirely new means of projecting power.
As such, its advancement is being propelled by irresistible incentives. Whether for its repressive capabilities, economic potential, or military advantage, AI supremacy is a strategic objective of every government and company with the resources to compete. At the end of the Cold War, powerful countries might have cooperated to arrest a potentially destabilizing technological arms race. But today’s tense geopolitical environment makes such cooperation much harder. From the vantage point of the world’s two superpowers, the United States and China, the risk that the other side will gain an edge in AI is greater than any theoretical risk the technology might pose to society or to their own domestic political authority. This zero-sum dynamic means that Beijing and Washington are focused on accelerating AI development, rather than slowing it down.
But even if the world’s powers were inclined to contain AI, there’s no guarantee they’d be able to, because, like most of the digital world, every aspect of AI is presently controlled by the private sector. I call this arrangement “technopolar,” with technology companies effectively exerting sovereignty over the rules that apply to their digital fiefdoms at the expense of governments. The handful of large tech firms that currently control AI may retain their advantage for the foreseeable future – or they may be eclipsed by a raft of smaller players as low barriers to entry, open-source development, and near-zero marginal costs lead to uncontrolled proliferation of AI. Either way, AI’s trajectory will be largely determined not by governments but by private businesses and individual technologists who have little incentive to self-regulate.
Any one of these features would strain traditional governance models; all of them together render these models inadequate and make the challenge of governing AI unlike anything governments have faced before.
The “technoprudential" imperative
For AI governance to work, it must be tailored to the specific nature of the technology and the unique challenges it poses. But because the evolution, uses, and risks of AI are inherently unpredictable, AI governance can’t be fully specified at the outset. Instead, it must be as innovative, adaptive, and evolutionary as the technology it seeks to govern.
Our proposal? “Technoprudentialism.” That’s a big word, but essentially it’s about governing AI much in the same way that we govern global finance. The idea is that we need a system to identify and mitigate risks to global stability posed by AI before they occur, without choking off innovation and the opportunities that flow from it, and without getting bogged down by everyday politics and geopolitics. In practice, technoprudentialism requires the creation of multiple complementary governance regimes – each with different mandates, levers, and participants – to address the various aspects of AI that could threaten geopolitical stability, guided by common principles that reflect AI’s unique features.
Mustafa and I argue that AI governance needs to be precautionary, agile, inclusive, impermeable, and targeted. Built atop these principles should be a minimum of three AI governance regimes: an Intergovernmental Panel on Artificial Intelligence for establishing facts and advising governments on the risks posed by AI, an arms control-style mechanism for preventing an all-out arms race between them, and a Geotechnology Stability Board for managing the disruptive forces of a technology unlike anything the world has seen.
The 21st century will throw up few challenges as daunting or opportunities as promising as those presented by AI. Whether our future is defined by the former or the latter depends on what policymakers do next.
Trump, robot, tank, ect. on top of colorful flags
Best guess on what the war in Ukraine will look like 12 months from now? (Michael Riley)
A frozen conflict with both sides exhausted, US and Western support starting to erode, Russia fully isolated from the G7 and behaving like a rogue state with asymmetric attacks against NATO, and the risk of dangerous accidents higher than ever.
What will be the impact of the suspension of the Black Sea grain deal? (Nia Bello)
A lot of new antagonism toward Russia from the Global South, in particular sub-Saharan countries like Kenya (which accused Moscow of “stabbing it in the back”), because global food and fertilizer prices are going to go up and, this time around, Russia will find it harder to deflect responsibility for it. Initially, it seemed possible that some grain ships would still be able to get out of the region (with Turkish escorts and/or NATO/UN guarantees), but recent Russian strikes on Ukrainian port infrastructure and grain storage as well as stepped-up threats against commercial shipping signal that the supply disruption will be extensive. On the other hand, in the past year Ukraine has meaningfully reduced its dependence on Black Sea routes for its agricultural exports, half of which now reach global markets either overland or by river through Europe (compared to just 10% before the invasion). That, combined with a record wheat crop from Russia and export increases by major producers elsewhere in the world, should keep the impact on global food prices from reaching extreme levels.
Would a Donald Trump reelection in 2024 undermine Ukraine’s efforts to push Russian forces out of Ukraine? (Paul Cianfarano)
Yes. Trump has repeatedly said he’d “end the war in 24 hours” (why so long?), reduce aid for Ukraine, and strongly push for negotiations. But the extent to which that view gets executed on would depend in part on the composition of his cabinet. Remember that during his presidency, Trump was warmly disposed toward Putin, but actual US policy toward Russia took a harder line than under Obama (tougher sanctions, Javelin missiles to Ukraine, etc.) because of the influence of Russia hawks like Mike Pompeo, John Bolton, and other senior advisors.
What are the chances a third-party candidate will join the 2024 race, and who is it more likely to hurt? (Hakeem Janah)
Well, the fact that both nominees are historically unpopular – and, accordingly, that a large number of voters will be up for grabs or otherwise won’t turn out at all – increases the incentive for third-party candidates to come in (I’m looking at you, Joe Manchin). However, the chance of any independent candidate winning is far lower than the chance they hand the election to Trump, who has a much more committed base than Biden. Knowing that, I think it’s ultimately unlikely someone serious like Manchin decides to run unless Biden has to pull out for health-related issues and Kamala Harris becomes the Democratic nominee.
Is Guatemala's democracy at risk? What would be the implications for the US of a failed state there? (Laura Gomez)
It is. President Alejandro Giammattei and his allies are using extralegal means to try to prevent anti-corruption opposition candidate Bernardo Arevalo, the strong favorite to win the August 20 election, from reaching the presidency and threatening their business interests. If they succeed, the country would not become a failed state, but it would slide toward further authoritarianism and kleptocracy. The US would be inclined to cut back economic aid significantly in that scenario, but it probably would stop short of imposing sanctions given the domestic political costs of the surge in migration that would ensue if Guatemala stopped cooperating on border security.
Is democracy dead in Israel? (Gal Rivkin)
Not at all. It's very much alive, as evidenced by the extraordinary (and completely peaceful) outcry among so many Israeli citizens over six months of protesting the government’s attempts to undermine Israel's independent judiciary. The first piece of that, the “reasonableness bill” that passed on Monday, is by itself not a death knell for democracy, though it will probably allow Netanyahu to appoint officials and judges who will make the corruption cases against him go away. If the ruling coalition persists with the next couple of pieces of legislation, which would allow the Knesset (Israel’s parliament) to overturn judicial decisions with a simple majority, that would be a more significant threat to Israeli democracy.
As the power in our world becomes more fragmented, are there any agendas or areas that will see joint global action? (Ali Al Suhail)
Climate change, definitely. Nuclear non-proliferation, I hope – before another one goes off. And if we don't see it in AI … we are in big trouble.
How long do you think it’ll take for Congress to regulate generative AI models? (Clara Jones)
I don’t think it’s going to happen. They’ll try, but AI will move much faster than Congress can. Which means we need a new, more agile, and hybrid model of governance. More from me soon on this, so stay tuned.
Do you agree with Peter Zeihan that China only has 10 years left? (Renni Deacon)
No. I’m not convinced that China’s serious demographic challenges are either near-term or inexorable. For example, China’s pension age is low by international standards (60 for men, 55 for women) and hasn’t changed in decades despite big jumps in life expectancy. China can halve its demographic tax by 2035 by introducing 40 million more people into the workforce. China’s educational system has only recently seen dramatic increases in funding, with related improvements coming in quality, especially in rural areas, which will also help boost higher-quality labor participation in the economy. China can further increase productivity by increasing urbanization rates (now 65%, compared to developed countries at 80%) and, in particular, moving workers out of low-productivity agriculture (25%, compared to 3% in most industrialized countries). Don’t get me wrong, demographics are a huge challenge (and I quite like Peter, even though we disagree on some things) … but China has at least 10-15 years of space, and several tools, to address it.
Will China try to take Taiwan by force? And if so, what is the likely timeline? (Berton Woodward)
Not in the near term, given the current balance of power and economic interdependence between the US and China. Having just witnessed the Western response to Russia’s invasion of Ukraine, Xi Jinping knows that an attack on Taiwan would risk devastating economic damage, sweeping diplomatic isolation, and a humiliating military defeat against a still-superior US – all of which would threaten Xi’s and the Communist Party’s standing. There’s no reason for him to take that risk in the near term when he can wait for the balance of power to swing more in his favor (or for a major political crisis in the US that distracts Americans, or for a US president who's unwilling to fight for Taiwan), allowing him to change the political map without firing a shot. Longer term, as China’s economic and military influence grows and as it works to close the semiconductor gap with the West, the potential for a fight goes up.
Do you think the US will split into two or more countries in the next 10 years? (@zk_rollup_chad)
No. In large part because the military and judiciary remain politically independent and committed to upholding the rule of law. But people shouldn’t believe “this can’t happen here.” The United States is by far the most politically divided and dysfunctional of advanced industrial democracies, and it’s hard to be optimistic about the trajectory over the coming years. The 2020 election and its aftermath – Jan. 6, a delegitimized national election, a historically divided country – was not a big enough crisis to bring about structural change to address the dysfunction in the country. Americans are more polarized than ever, and a recent SPLC study found domestic support for "participating in a political revolution even if it is violent in its ends" is historically high among young people – roughly 40% across the political spectrum. I’ve grown increasingly concerned that the 2024 election will bring more political violence on both sides of the aisle and risk a greater political crisis, irrespective of who wins.
What are the four levers we could pull to reduce political division in the US? (@Eric17727617)
Ranked choice voting. Mandatory verification of all social media accounts (while still allowing anonymity). Bipartisan districting for House seats. And exclusively public campaign financing (aka no more dark/corporate/super PAC funding).
What is an issue that isn’t receiving enough attention? (Paul Vant)
One billion more Africans joining the planet with the full potential to participate in global development and thrive as human beings, but neither the infrastructure nor the investment to realize it.
What advice do you have for someone who wants to work in the geopolitics/political risk field? What is a good way to break into it? (Craig Long)
Develop great content. Learn how to best communicate it (across various fora). And build a relevant network of principals in some area of the field (corporates, global markets, policymakers, educators, influencers, etc.). In that order.
Despite unpopularity, Biden remains the overwhelming favorite for the Democratic nomination
Joe Biden is a historically unpopular president.
Two and a half years into his term, Biden’s average job-approval rating is a dismal 39.1%. His net approval – the difference between his approval and disapproval ratings – is -16.3%, the second lowest of any modern US president at this point in their term (the top spot goes to Jimmy Carter). Even former president and current Republican frontrunner Donald Trump was more popular than Biden.
Biden is struggling not just with Republicans (duh) and independents (whom he won by double digits in 2020), but he’s also unusually weak among Democrats and Democratic-leaning constituencies. More than two-thirds of Americans – including a majority of Democrats – say they don’t want the president to seek a second term. About half of these cite Biden’s age and mental fitness as major reasons why. Already the oldest president in history at 80 years old, Biden would be 82 on Election Day and 86 at the end of a second presidential term.
Biden’s unpopularity threatens to hurt his reelection bid. While he’s still the narrow favorite against Trump and Florida Gov. Ron DeSantis – the top GOP contenders –Biden’s lead seems to be shrinking, and Democratic elites are increasingly worried that the president’s age, deteriorating health, and weak public standing will lose them the White House.
It follows that Democrats will nominate someone else to replace Biden at the head of the Democratic ticket and maximize their chances of winning in 2024. Right?
Wrong.
There are three possible pathways for Democrats to get a non-Biden nominee (well, technically four if you count a sudden serious health incident): Either he exits the race willingly, he’s forced to drop out, or he’s defeated in a contested primary. None of these scenarios is remotely likely to happen.
As long as he remains (broadly) healthy, Biden will lead his party next November. Here’s why.
Biden won’t exit the race willingly
While a growing number of Democratic leaders privately tell me they wish Biden would voluntarily step aside, their hopes will almost certainly be dashed.
The president officially launched his reelection campaign on April 25; his ongoing push to sell Americans on “Bidenomics” and the strength of the US economy signals that he has not changed his mind. Indeed, First Lady Jill Biden spoke of his motivation to run earlier this year, telling an interviewer: “He’s not finished what he’s started, and that’s what’s important.”
Barring a major health setback that forces him out of the race, Biden will remain fully committed to being the Democratic nominee.
Forcing Biden to drop out would be challenging and could backfire
Getting Biden to exit the race would require a coordinated pressure campaign among Democratic elites that leans on the president to make room for a candidate more likely to beat Trump. This campaign couldn’t be kept under wraps; to succeed, prominent Democrats would have to make their worries about Biden’s reelection prospects known in public and pledge considerable money to the effort, threatening Biden’s primary campaign by forcing him to compete for a limited pool of donor dollars.
There’s zero upside and big downside for any individual Democrat to go out on a limb like this.
If too few others join and the “coup” fails, the “plotters” would not only get frozen out of positions in a second Biden administration but also risk losing their jobs as party officials. Quoting Omar Little, “You come at the king, you best not miss.” At the same time, the attempt itself would risk causing a deep schism in the party that hurts the Democrats’ performance in the general election (like Sen. Ted Kennedy’s challenge hurt Carter in 1980 and Pat Buchanan’s challenge hurt George H.W. Bush in 1992).
Even if the “coup” against Biden were to succeed, the natural choice to replace him would be Vice President Kamala Harris, who is even less popular among the voting public and would be more likely to lose to the Republican nominee. Yet as the first woman, Asian American, and African American to serve as vice president, she would be a difficult candidate for prospective primary challengers to dislodge.
Replacing both Biden and Harris would require unprecedented behind-the-scenes coordination from a two-person ticket sometime in the next six months to provide sufficient time to qualify for the ballot in early primary states. But this strategy would risk alienating Black voters and progressives, both key elements of the Democratic base, which would put Harris’s challengers on the back foot from the outset.
The difficulty of replacing both Biden and Harris at the top of the ticket disincentivizes Democratic elites from trying to force Biden out in the first place.
Defeating Biden in a contested primary would be an uphill battle
The two current challengers to Biden – wackos Robert F. Kennedy Jr. and Marianne Williamson – have little chance of winning even a single primary. And while Democrats don’t lack for other good options to nominate, including California Gov. Gavin Newsom, Michigan Gov. Gretchen Whitmer, Illinois Gov. J.B. Pritzker, and Colorado Gov. Jared Polis, none of them can boast the national profile or broad appeal across the Democratic Party that Biden does.
The fact is that though Biden is unpopular, he has already defeated Trump once and is the only Democrat with the national profile to match the former president. Always strong with Black voters – he won 61% of Black voters in the crucial South Carolina primary in 2020 – and moderate Democrats, Biden has also done enough on the policy front to get progressives to endorse him (including $2 trillion in pandemic relief and billions’ worth of generational investments in manufacturing, infrastructure, climate, clean energy, and health care), as Squad talisman Rep. Alexandria Ocasio-Cortez (D-NY) did earlier this month.
A new Democratic candidate would need to develop a national profile, gain nationwide name recognition, and win the trust of key constituencies like Black and moderate voters – all in a relatively short period of time. With state-by-state ballot-filing deadlines starting in the early fall, challengers would have to enter the race in the next two months. Even if they were ready to do that, Biden has rigged the primary calendar in his favor by moving key states that swung heavily for him in the 2020 primaries – including South Carolina and Michigan – to earlier in the season. This built-in advantage deters would-be challengers from entering at all.
NATO summit, the future of US-China, Elon vs. Zuck, and more: Your questions, answered
It's summer in the Northern Hemisphere, which means: you get to ask me anything.
That's right — it's the time of the year when I take your best questions on anything politics, geopolitics, and personal. Want to know what I think about the 2024 US elections? The war in Ukraine? The meaning of life? Follow me on Facebook, Twitter, and LinkedIn and look out for future AMAs if you want a chance at getting your question answered.
I picked 10 questions this time. Some of them have been slightly edited for clarity.
What do you make of the NATO Summit outcomes? (Sophia Müller)
The big news was Turkey's President Recept Tayyip Erdogan finally agreeing to let Sweden into the alliance. It was going to happen eventually, but it’s a nice surprise for the US and NATO members that it happened now. Much less surprising (aka not at all) is that Ukraine’s NATO accession keeps getting pushed off into the indeterminate future. While military support for Ukraine will keep expanding week in and week out, core NATO members (especially the US and Germany) have no intention of getting automatically dragged into a direct fight with Russia. They’re perfectly happy fighting a proxy war, but they don’t want to risk a World War III that puts their own troops in harm’s way. That’s the same reason why the Americans refuse to impose a no-fly zone over Ukraine. Not everyone agrees, of course: the Poles, the Balts, the Finns, and even the French (of late) want immediate membership. That said, the other thing the summit showed is that NATO only keeps getting stronger. Members are overall very well aligned, and the alliance has become critical to their national security — not just in the North Atlantic but everywhere (watch your step, Beijing). I guess Russia starting a land war in Europe will do that...
Was it the right call for the US to approve cluster munitions for Ukraine? (Chloe Li)
On balance, I say no. There’s a reason why these weapons are banned (though neither the US, Russia, nor Ukraine are signatories to the ban): they are brutally dangerous to civilians for many years after they’ve been used. Yes, the Russians have been using them throughout the war, but that doesn’t mean we should want more of them in the fight. Now, I understand why Biden is doing this. The US and its allies are running very low on artillery ammunition, which the Ukrainians need much more of to take back and defend their territory. But the US has plenty of cluster munitions, which would actually be pretty useful on the battleground for Ukraine. And Biden wants to do everything he can to help ensure the Ukrainian counteroffensive is successful. Be that as it may, the US dragging itself down to the level the Russians have been fighting on is ultimately detrimental to core American interests and our moral standing.
With some level of Putin opposition building in Russia, what are the chances of Putin being unseated? (Jeff Muchow)
The odds of Putin being unseated are zero … until right after it happens. In other words, if it happens, it’s likely to be sudden and with no external signaling or foreknowledge. The downside of taking Putin on for any Russian citizen and their family/loved ones remains absolute if they fail. And we haven’t seen any grassroots demonstrations or major defections. The Wagner “coup” was unprecedented, but it had no immediate impact on Russia’s status quo. Clearly, though, there’s lots more pressure now that Prigozhin openly challenged him and lived to see another day (for now). Deeper, systemic, and potentially existential fault lines in the system have been exposed – and they can’t be un-exposed. The war in Ukraine has gone terribly for Russia’s military, and a successful Ukrainian counteroffensive could make this even more evident. Elite fracture, especially within the national security complex, is much more likely in an environment where Russia’s strongman no longer looks so … strong. A successful challenge to Putin’s rule is still a tail risk, but whereas a month ago it seemed unthinkable, today it’s considerably more plausible.
Why is Gavin Newsom not running for president? (Ade of Nigeria)
Nobody serious is prepared to challenge Biden if the incumbent president decides he wants to run (as he has), even though most Democratic leaders I know privately tell me they would rather he didn’t run again. While Biden’s age is a massive liability, he is the incumbent president and has the full support of his party’s establishment, so he’d have the overwhelming advantage in a contested primary (not to mention that he has reformed the primary calendar in his favor). Most Democratic voters and elites correctly recognize that Biden, a known quantity with proven electability and a 1-0 record against Republican frontrunner Donald Trump, is their best chance of keeping the White House. No one else in the field can boast about that.
Do you still believe that the US is the best country to live in the world? (Mahadi Hasan)
For me personally, absolutely. I’m never going to move. But that answer is dependent on so many factors. There are lots of countries that the US could (and should) learn from to improve our quality of life and well-being: most every advanced democracy on keeping money out of politics, Canada on reasonable gun control, the Nordics on health care and primary education, and the list goes on and on. But all these countries can also learn things from the United States — especially on how to integrate immigrants, entrepreneurship, and fostering a culture of risk-taking, invention, and innovation. There’s a reason why people from all over the world want to move to America despite its many flaws ...
Where’s the US-China relationship heading? (Brian Li)
Right now, in a negative direction. Despite ongoing (and moderately successful) efforts by both sides to improve high-level diplomacy, the relationship itself isn’t improving … and it’s unlikely to in the near future. There’s a floor under it, but it’s being tested by challenging domestic politics and an increasing misalignment between economics and national security. The strong economic interdependence between the two countries will remain for the foreseeable future, even as it’s progressively eroded by “derisking” on both sides. But in an environment of zero trust and no high-level military-to-military dialogue, the potential for “accidents” will continue to grow. And the more the two economies decouple, the higher the odds of direct conflict – most likely over Taiwan, as the hotspot where the underlying status quo is most quickly changing.
Do you still believe we’re in a G-Zero world? (@KaroshiProspect)
Yes, sadly. Global institutions are still not aligned with the underlying balance of power. But as I explained in my recent TED Talk, I also think we are quickly moving away from this leaderless G-Zero world and toward a world with three different global orders: a multipolar economic order, a unipolar security order, and a digital order whose balance of power is still to be determined.
When people talk about geopolitical risks, it's always implicitly downside risks. But what are some of your top *upside* risk scenarios over the next 1, 5, and 20 years? (Alex Holmes)
My answer’s the same for all time horizons: AI being used to massively improve education, health, climate, and, heck, every field of science. I’ve never been more excited about the upside potential of humanity than I am by the promise of AI. (Simultaneously, I’ve never been more concerned about the tail risks that we’re not going to be around for long). Yay, us!
Is your money on Elon or Zuck if they throw down in the octagon together? (Joshua Morganstern)
This fight is one of the stupidest ideas I’ve heard in a long time – and the bar is high. Having said that, if there’s anyone who should be in a cage match, it’s probably two men who think Ayn Rand is high literature ... I expect that if they go through it (big if), they’ll probably play-fight for two or three rounds before they announce a tie or some such BS.
What’s your beef with cats? (@freeulysses_tj)
It’s unclear whether they have any use for people.
What was Prigozhin thinking?
Anyone who watched Wagner chief Yevgeny Prigozhin over the past few months knows that he had grown progressively unhinged in the run-up to his mutiny, just as his political position had become increasingly untenable.
Prigozhin was furious at the leaders of Russia’s Ministry of Defense, whom he repeatedly accused of sending tens of thousands of Russian soldiers to certain death through their corruption, incompetence, and cowardice. Over 20,000 of his own fighters were killed in the bloody battle for Bakhmut – a town of only 70,000 inhabitants before the war. He publicly blamed Defense Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov for Russia’s casualties and battlefield struggles.
Notably, Russian President Vladimir Putin had largely allowed him to voice his criticism – a remarkable show of tolerance in a country that punishes “discrediting” the army with 5-15 years of jail time. Prigozhin got this dispensation in no small part because it was Wagner’s seasoned troops that had achieved Russia’s most notable battlefield victories in an otherwise sputtering invasion. In part, it was because Prigozhin had always been extremely careful not to criticize Putin directly.
This started to change a couple of weeks ago when the Defense Ministry announced that all paramilitary forces fighting in Ukraine would have to sign contracts directly with the ministry by July 1, ending their autonomy and absorbing them into the regular armed forces. Chechen warlord Ramzan Kadyrov said he and his troops would comply; Prigozhin said Wagner would not, claiming his men didn’t want to fight alongside poorly trained conscripts or under the command of Shoigu and Gerasimov.
Then, at a rare public meeting with military bloggers, Putin reiterated the order, backing the ministry over Prigozhin. You’d think that would’ve been the end of it, but instead of taking the loss, Prigozhin doubled down on his refusal to give up control of Wagner – an unprecedented act of direct insubordination against Putin.
At that point, Prigozhin knew the clock was ticking for him. Knowing he was a dead man walking from the moment he disobeyed Putin’s order, he opted to roll the dice in a last-ditch attempt to force the president to reconsider and salvage his position (and possibly his life) – a decision that smacked more of desperation than of rational calculation.
Why did Prigozhin stop before getting to Moscow?
I think both starting and stopping the mutiny can be understood as desperate acts of self-preservation. This will be one for historians to debate, but I’m inclined to believe Prigozhin probably didn’t set out to overthrow Putin in the first place, as he had neither a plan nor the allies to do so. All he wanted was to prevent Wagner from being disbanded and himself from losing his power.
The biggest reason why I believe this is that Prigozhin couldn’t possibly have thought that an outsider like himself could topple the regime with fewer than 5,000 men. Let’s keep in mind that Prigozhin was a creature of Putin: He was built up by, loyal to, and entirely dependent on the Russian president. He was not a security council insider. He did not have a power base in Moscow. He had no one in or near the Kremlin who was prepared to side with him against Putin.
That’s surely one reason why as his Wagner column drew close to Moscow, we saw no defections in the military, the government, or among the elites. And it’s why when he got thrown a lifeline just as he and his men were about to face certain death at the hands of troops reporting to Putin himself (rather than the Ministry of Defense), he grabbed it with both hands.
Prigozhin likely never had a shot of taking the Kremlin – and he and everyone else knew it all along. What he did have was a modest amount of leverage, which explains why he didn’t get killed and why he thought he could pull the stunt off in the first place. The “march for justice” was an ill-advised bargaining tactic to force Putin to cave on the issue of Wagner’s autonomy.
Why did Putin negotiate a surrender instead of just killing Prigozhin?
I think this is mostly a matter of timing.
The war in Ukraine is at a critical juncture for Russia. The Ukrainian counteroffensive is only just getting started, with fewer than three of Ukraine’s 11 battle-ready divisions positioned to attack currently involved in the fighting. Ukraine has yet to attempt to breach any of Russia’s three defensive lines, instead biding its time while conducting shaping operations and probing attacks on the first line of defense. By contrast, the Russian military is already heavily committed to trying to hold back Ukraine’s counteroffensive, and Putin is highly reluctant to order another mobilization.
A battle against Wagner on Russian soil would have distracted – potentially fatally – from Russia’s defense of its front lines, handing Ukraine a unique window of opportunity to strike while Wagner troops, the Russian army, and Kadyrov’s forces were occupied elsewhere.
Plus, by backing down and refraining from killing Prigozhin immediately, Putin lost little that he hadn’t already lost when Prigozhin initially defied him and marched toward Moscow. At the end of the day, Putin got everything he could’ve wished for: Shoigu and Gerasimov are still in their positions, Wagner is coming under Defense Ministry control, and Prigozhin is defanged and in exile. All without televised bloodshed, and without sacrificing much in terms of warfighting effectiveness given that Wagner had already been rotated out of the front.
The only concession Putin made was allowing Prigozhin, whom he called a “traitor” and “terrorist,” to live – for now. But Prigozhin is (reportedly) in Belarus, essentially a non-sovereign vassal of Russia chock-full of Russian spies, soldiers, and assassins. Putin is free to renege on the deal and kill or arrest him at a time of his choosing. I’d be very surprised if Prigozhin is still a free man by the end of the year.
What are the implications for Putin and Russia going forward?
This was by far the most serious threat to Putin’s 23-year rule.
On the one hand, you’re not supposed to be able to defy Putin in Russia this way and get away with it. Yet the men who shot down and killed an estimated 13 Russian pilots on their way to Moscow were pardoned. And the man who openly defied Putin’s orders, discredited his rationale for the war in Ukraine, and whom Putin declared a traitor on public television, is still alive (even if not for long). Putin has jailed and killed people for a lot less, so this makes him look weak before the Russian public and the elites.
On the other hand, Putin’s regime was tested over the weekend, and the regime ultimately held together. Yes, there were a lot of people who didn’t fire to stop Wagner troops from advancing, but there were virtually no defections inside the Russian government, the military, or among elites. The government is still functioning normally, and the war in Ukraine is going the way it did before the mutiny. Putin is more vulnerable on the back of it, but that’s more a long-term than an immediate issue.
In a way, this feels a bit like an extreme version of Jan. 6 in the United States (pardon the comparison): an event that was previously unthinkable, that shook people’s faith in the system, that exposed a structural weakness in domestic institutions, but that changed little in the country the day after.
The likelihood of regime change in Russia remains near zero … until it happens. But these events show that the tail risks are fatter than we thought.
What does this mean for the war in Ukraine?
The Ukrainians will try to take advantage of Russia’s domestic turmoil to make gains in their counteroffensive. Indeed, just in the last two days, they’ve reportedly seen progress in the Zaporizhzhia and Kherson regions (although the significance of these gains so far is marginal).
However, I don’t see the events of the weekend dramatically improving Ukraine’s odds on the battlefield in the near future. With the Wagner threat dissolved, Russia won’t need to shift troops from Ukraine to Russia to deal with them. Likewise, Wagner was not operating in the south where the Ukrainian counteroffensive is focused. So in terms of the actual fighting, beyond the effect that the mutiny might have on Russian morale, the overall military impact at this point is limited.
That said, the incident is a problem for Putin’s credibility with elites and the Russian public, and this political vulnerability could make him more sensitive to major battlefield losses in the coming months. If we get to a point later in the summer or fall where Ukraine starts to threaten Crimea or the land bridge, the risk of a major Russian escalation (such as blowing up the Zaporizhzhia nuclear plant or using a tactical nuclear weapon) in response would go up. The only thing more dangerous than a strongman is a weak strongman.
The one lesson from this episode is that when push comes to shove, Putin is singularly focused on his own survival, and he is willing and able to accept any outcome to ensure it. This is an important revealed preference because it speaks to the credibility of his stated goals and so-called “red lines” in Ukraine, which in turn matters for how Ukraine and NATO countries think about escalation.
It means that Putin may be willing to tolerate more aggressive behavior from NATO and Ukraine than we imagined if he thinks retaliation would lower his chances of survival. It also means that Putin could consider any outcome for the war, including negotiations, as long as he thinks he can survive it.
Latest
The false trade-off between climate action and economic growth
China’s economic woes, explained
Can we govern AI before it’s too late?
Russia’s aborted coup, explained
