Israel's highly charged election; EU-China deal at risk over sanctions

Ian Bremmer discusses Israel's election, the EU-China tensions over sanctions, and Putin's jab on this edition of World In 60 Seconds.

Will Israel's fourth election in two years finally provide the country stability?

Well, I mean, to be fair, the country is actually stable. Seven million people rolling out vaccines faster than any other country around the world. I mean, you know, life is relatively normal unless you're in the occupied territories as a Palestinian. But the politics are indeed problematic. It is very close, indeed. It is conceivable that Netanyahu will be able, by the skin of his teeth, to put together a very, very right-wing coalition, that could threaten democracy. It's also conceivable that no one can put together a coalition, it depends on small parties, in which case you could have a fifth election in two years. Yes, that could easily happen. There you go.


What will come from new EU and US sanctions on China?

Well, the Europeans are saying that unless the Chinese actually pull back on the sanctions against European MEPs, which they did in response to the US, the EU, the UK, and Canada, all putting sanctions on Chinese officials in response to treatment of the Uighurs - they really didn't like that - that the EU-China investment deal wouldn't get ratified. Macron really wants this to get done. Merkel really wants this to get done. There is some uncertainty, of course, in Germany, depending on what happens after Merkel and the government. On balance, I would argue that this investment relationship still ends up happening and the US and the EU have very different perspectives on China, but still overall a hardening of positions towards each other across the board, on the western side and on the Chinese side.

Finally, Putin is finally getting vaccinated. What took so long?

It is a little surprising. And he did not get vaccinated on television. We have to take his word for it. His daughter got vaccinated with Sputnik V very early. Maybe he wanted to make sure she didn't grow a second head or anything. I don't know. Look, I'm a little surprised because, I mean, Sputnik V has been peer reviewed. It's a worthwhile vaccine. It's being exported and it's quite effective. So, I mean, I would have thought that Putin would want to show some patriotism. But, you know, maybe he's skittish about needles. I literally, I find it kind of strange. And with Russia, at the end of the day, you'll never find out, you don't want to be in a position to.

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Germany's historic moment of choice is finally here, and voters will stream to the polls on Sunday for the country's first post-World War II vote without a national leader seeking re-election. They will elect new members of the Bundestag, Germany's lower house of parliament. The leader of the party that wins the most seats will then try to secure a majority of seats by drawing other parties into a governing partnership. He or she will then replace Angela Merkel as Germany's chancellor.

If the latest opinion polls are right, the center-left Social Democrats will finish first. In coming weeks, they look likely to form a (potentially unwieldy) governing coalition with the Green Party and the pro-business Free Democrats, which would be Germany's first-ever governing alliance of more than two parties.

Change?

Though he's a man of the center-left, Olaf Scholz, current finance minister and most likely next chancellor, wouldn't represent a radical break from Merkel. He's among the more fiscally frugal of Germany's Social Democrats, and after decades in German politics, he's an experienced technocrat and a skilled manager of political alliances.

Nor would a change in government radically shift Germany's foreign and trade policies. Its new government, whoever it includes, will keep strong security ties with the United States and NATO and protect opportunities to expand economic relations with China. Germany's dependence on Russian energy will demand a continuation of Merkel's pragmatic approach to Vladimir Putin's government.

Scholz's conviction that a strong and cohesive EU is good for Germany will limit any temptation to get tougher with the governments of Poland and Hungary over their violations of EU rules and principles. And aware that COVID can widen gaps between richer and poorer EU countries, and that anti-EU economic populism remains a potent force in Italy and elsewhere, he's likely to support a generous approach to pandemic recovery in southern Europe.

But climate policy, an area where Merkel concedes she should have done more, will be an important and interesting story to watch. Given its leadership within the EU and its standing as the world's fourth largest economy, the influence of Germany's next government on climate policy will be crucial to global climate strategies. A new German government with Scholz as chancellor will likely push the pace of transition from carbon to renewable energy, at least in part because the Green Party coalition partner will push for this as hard as it can. The Greens must show progress on the climate front to maintain political credibility and popularity. If the Free Democrats are indeed part of the coalition, they'll push hard to limit tax increases to pay for tougher climate action, but they won't blow up the coalition that gives them a seat at Germany's governing table.

Merkel's legacy

Even in a country that values stability and continuity, Angela Merkel's 16-year run is remarkable. More than once she's proved the maxim that it's not the smartest or strongest who survives, but the one most adaptable to change. Merkel is smart and strong, to be sure, but she'll be remembered longest – by both devoted admirers and bitter critics – as the leader who insisted Germany could and should do more to help indebted countries survive Europe's sovereign debt crisis (2010-12) and to manage the surge of migrants that followed unrest in the Middle East (2015-16). Her improvisational talents also led her to change tack on nuclear power (after the 2011 Fukushima disaster in Japan) and on common European debt.

But the main reason Merkel leaves power with an 80 percent approval rating is that, whether she receives more credit than she deserves, she has presided over a period of economic expansion and prosperity in Germany that few other world leaders can match. It's all the more remarkable then that her party looks set to find itself in opposition once a new government is formed. It's Merkel that German voters like, not her political family.

Bottom-line: Whatever he accomplishes as Germany's next chancellor, Olaf Scholz will find Angela Merkel a tough act to follow.

Listen: The pandemic hit the global economy hard, and many economies are still hurting. But it could have been even worse. In May 2020 as a guest on the GZERO World podcast, economic historian Adam Tooze told Ian Bremmer that the world was facing a second Great Depression. In a new interview, Tooze is back to take stock and explains why the US economy rebounded so surprisingly fast, while much of the rest of the world lags behind.

Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform to receive new episodes as soon as they're published.

Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective from Europe:

Who's going to be the leading voice politician in Europe after Angela Merkel leaves?

Well, that remains to be seen. First, we need to wait for the outcome of the German election, and then it's going to take quite some time to form a government in Germany to see who's going to be chancellor. And then of course we have elections coming up in France in the spring. Macron is likely to win, but you never know. So by next summer, we'll know more about that. And then there are other personalities there. There's Mario Draghi, prime minister of Italy, who has a strong personality. Mark Rutte of the Netherlands, as long as he's there. So it's going to take quite some time for this to be sorted out.

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Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, shares insights on US politics:

Is a US government shutdown coming?

Hard to say. Republicans and Democrats generally are in agreement about the need to fund the government. And they generally agree at what level the government should be funded. And they generally agree about the need for supplemental money for Afghanistan and some natural disasters, coming out of hurricanes this season and wildfires. What they're not in agreement about is the federal debt limit, which is the cap on US borrowing that the US hit in early August and needs to be extended by some time in October. Otherwise, the US will have a first-ever default. This would be a very bad outcome with cataclysmic results for the entire world economy.

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Germany's Chancellor Angela Merkel has seen a lot during her 16 years in power. She's navigated a global economic recession, multiple wars in the Middle East which sparked an EU refugee crisis, and now a once-in-a-generation pandemic. Often the only woman in the room, Merkel has had to learn to tactfully deal with dozens of idiosyncratic world leaders. Many have come and gone since 2005, but Merkel has won elections again and again. We take a look at who she's dealt with from the top democracies (by economic size) throughout her tenure.

In May 2020, economic historian Adam Tooze told GZERO World he feared 1 in 5 American workers could still be out of job now due to COVID. It didn't happen. Why? Tooze says he failed to anticipate how quickly we'd get highly effective vaccines, and the scale of the economic stimulus the government was willing to put up. During the 2008 financial crisis, he explains, "we were still beginning to flex our muscles with regards to economic policy, and the scale of fiscal and monetary stimulus that we've seen is as unprecedented as the shock of the spring of last year."

Watch Tooze's interview with Ian Bremmer on the latest episode of GZERO World, airing on US public television starting Friday 9/23/21. Check local listings.

Will Evergrande be China's Lehman Bros? Chinese authorities are bracing for the increasingly likely default of Evergrande, the country's most indebted property developer. If Evergrande — a gargantuan corporation with properties in 200 cities across China — stiffs its creditors, that'll send shockwaves throughout the country's financial system, and the wider Chinese economy and society. The possible ripple effects on home buyers and countless companies and individuals that do business with or are owed money by Evergrande have invited comparisons with Lehman Brothers, the US investment bank whose 2008 collapse triggered an American financial crisis that quickly spread to the entire world. Although in principle authoritarian China has ways of containing the fallout, the potential for social unrest is real — and opacity could make it worse. More broadly, the demise of such a big player in the country's once-booming real estate market, which accounts for over 7 percent of GDP, would expose the shaky foundations of China's debt-driven economic growth model, eroding confidence in China both at home and abroad.

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After Merkel, who leads Europe?

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