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Modi (not Xi) leads G-20 summit
Ian Bremmer's Quick Take: Hi, everybody. Ian Bremmer here and I. Happy post Labor Day to all of you. I'm in London for a very, very brief trip, but I wanted to talk a little bit about the G-20 summit coming up this weekend.
Big news to start, Xi Jinping is not coming. Why not? Lots of speculation, lots of news, lots of ink being spilled except for the fact that people should have known about this a while back. One, the Indian government had been informed at least a month ago that Xi Jinping wasn't planning on attending. And secondly, the Americans have been working on a meeting with Xi Jinping and Biden for months now at APEC in San Francisco in November, and that was widely expected to be the next time the two men would be in the same place at the same time.
Biden is going to the G-20, in other words, Xi Jinping was not. Now, that certainly means it's not a sudden health issue, not a sudden domestic economic crisis or political crisis that stopping him from going. It's a question of how much of this is Chinese irritation at their relationship with India. India's export controls, investment review and screens against China now are frankly stronger than those from the United States against China, not to mention border disputes. And the Chinese trying to limit some of India's influence and roles in multilateral organizations. It's been fairly chippy. I wouldn't say it's overtly hostile, but it's certainly not friendly. And, you know, Xi Jinping might see that he has little interest in turning up at a G-20 that is going to be in India. And is know sort of Modi's great party. Risks antagonizing Modi more, of course, by doing that.
But again, not a decision that was taken recently. Secondly, the fact that Russia is not attending and really can't attend, given Putin and the ICC ruling against him, the fact that the G-20, the one place that you have not been able to get any coordination at this meeting in any of the ministerial is around Ukraine statement. The Chinese have been aligned this time around more with the Russians on this and really don't want to be front and center with Xi Jinping being the holdout facing pressure from the G-20, from all the other countries to get an agreement done. And Modi would certainly be on the other side of that. So would the Americans, frankly, so would all the other attendees. China doesn't want to be seen in that regard as the only country supporting the Russian position. So then you have the issue of China having the BRICS, and that is a group that they've just had some success with a significant expansion to Middle East and North African states. That will happen at the beginning of 2024. It's a meeting that China has a lot more sway over. It is China as by far the largest economy and then the Global South as opposed to the G-20, which is everybody that matters and China certainly not feeling in charge of anything. So in that regard, Xi Jinping has a structural reason to make the G20 less important and make the BRICS summit more important going forward.
I'm particularly interested in how they play that with Russia chairing the BRICS next year and how many of the other BRICS invitees show up at the head of state level. It's going to be, I mean, quite something when you've got, say, the Saudis and the Emiratis and the Brazilians all showing up in Russia for a BRICS summit. I think a lot of them are going to be looking for cover and maybe hoping that one or two say no so that they can say no to. But that's kind of where we are. The G-20 itself should be quite successful. I don't think that it's going to be meaningfully different in terms of Modi's ability to show that he's doing well on the back of Xi not showing up, in part because, of course China's having so many economic challenges at home. While this is really India's year, Modi with very strong popularity inside India, strongest economic growth of any major economy in the world, and moving, driving a more assertive climate policy, a more assertive technology reform policy, and, you know, looking pretty strong in the run up to 2024 India elections.
So at this point, especially with Modi having talked with over 100 leaders in preparation to the G-20 summit and seeing a lot of irritation with the United States on the back of unilateralism, America firstism and questions of where the US is going post 2024. A lot of Belt and Road countries feeling like they're not getting the kind of support they have historically from the Chinese. This is a big opportunity and India with some role to fill and they've historically not wanting to be a big geopolitical player, especially outside of the region, that is changing a lot under Modi.
So we're watching that all weekend and I hope everyone's doing well. Talk to you soon. Bye.
Biden speaks to Scholz during an EU leaders summit in Brussels.
What We're Watching: US-EU gas deal, Putin's ruble ruse, China-India meeting
EU signs US gas deal amid Biden's European trip
US President Joe Biden kicked off his meetings in Europe on Thursday with a few big salvos. Ship more weapons and humanitarian aid to the Ukrainians? Check. Welcome 100,000 Ukrainian refugees to the US? Check. Zoom with Ukrainian President Volodymyr Zelensky? Of course. Biden also said Russia should be booted from the G20, a grouping of the world's largest economies, ahead of a summit later this year in Indonesia.
The G-7 countries and the EU leveled new sanctions on Thursday against more than 400 Russians, including members of the Russian legislature. But the allies still aren't giving Zelensky what he really wants: a NATO-enforced no-fly zone to let civilians escape Russian attacks.
On Friday, the US and EU announced a major new gas deal that will see the US provide the EU with at least 15 billion additional cubic meters of liquified natural gas — last year it provided 22 billion cubic meters — by the end of 2022. The move is the latest bid to help reduce Europe's reliance on Russian gas. European leaders have shown little appetite for following the American example of banning Russian oil and gas outright, which German Chancellor Olaf Scholz warned would trigger a recession on a continent heavily dependent on Russian fossil fuels. Vladimir Putin, who knows this, recently hatched a cunning plan to cash in on his immense energy leverage over the EU ...
Putin's ruble ruse
With the ruble at historic lows and energy prices soaring over Western sanctions against Russia, Putin has found his own way to weaponize the financial system: he wants countries that backed anti-Russia sanctions to pay for Russian commodities in rubles. Why? First, he’s throwing the sanctions weapon right back at the West and artificially increasing demand for Russia's currency to prop up the ruble. Second, the Russian central bank desperately needs to exchange more rubles for hard currency to avoid defaulting on its sovereign debt. Third, a stronger ruble will help mitigate the impact of sanctions on ordinary Russians, whose cost of living has jumped 14% in recent weeks. Putin hopes Europeans are hungry enough for Russian oil and natural gas that they will ultimately cough up rubles. But to do so, Moscow's European customers would have to open accounts in the few Russian banks that haven't been sanctioned. And that's risky business ... because those banks could next.
Will China and India make up?
China’s foreign minister is visiting India on Friday for the highest-level bilateral talks between the two Asian powers since dozens of their soldiers were killed in clashes in contested territory in the western Himalayas two years ago. Wang Yi, Beijing’s top diplomat, is meeting his Indian counterpart to discuss the war in Ukraine and related energy and food shortages. Beijing and Delhi — both chummy with Moscow, but for different reasons — have so far refused to condemn Russia’s offensive in Ukraine. The topic of Nepal will also likely be on the agenda. India and China have long vied for influence in the landlocked Himalayan country and are likely unhappy that Kathmandu is trying to reduce its reliance on them in favor of a tilt toward Washington. China has been trying to improve relations with longtime rival India for some time. Less clear, however, is how India — part of the Quad alliance aimed at limiting Beijing’s influence in the Indo-Pacific — feels about getting cozier with Beijing. Things got off to a shaky start with India rebuking China over its remarks about the contested Kashmir region.What We're Watching: Few Iraqis vote, Czech Republic in crisis, China-India talks crash again
Iraq's dud of an election: Just 41 percent of eligible Iraqi voters showed up at the polls this weekend, the lowest turnout in the post-Saddam Hussein era. Lack of enthusiasm for the vote – the first since mass protests in 2019 over political corruption and economic stagnation prompted a fierce crackdown – shows the depths of popular dissatisfaction with the political elite. The election came as Iraq grapples with crumbling infrastructure, a moribund economy, and ongoing sectarian strife among Shia, Sunni, and Kurdish players, with Iran meddling on behalf of the Shia groups. Preliminary results show that no candidate is on a path to win a clear majority, meaning that negotiations to choose a PM tasked with forming a government could take weeks or even months. Gulf countries and the US are hoping for a moderate who can ensure the stability of Iraq and challenge Iran's clout in the region. Iraq's current prime minister, Mustafa al-Kadhimi, in some ways fits the bill, having played a key role in mediating negotiations between longtime rivals Saudi Arabia and Iran.
Is the Czech Republic headed for a constitutional crisis? The country's billionaire populist prime minister Andrej Babiš suffered a shock defeat in elections over the weekend, edged out by a center-right "Together" coalition that agrees on little beyond the need to defeat him. But the plot thickens! The Together bloc has announced it will seek to form a government with a center-left opposition group led by the Czech Pirate party, but they can't do so officially unless they are asked to by Czech President Miloš Zeman, a staunch Babiš ally who was taken to a hospital over the weekend and remains in intensive care. Zeman said before the vote that he'd ask the party that won the most votes to form a government. That's Babiš' party, which was beaten only by a coalition of parties. It's not clear what happens next. If Zeman is out of the picture, the post-election responsibilities would fall to the speaker of parliament, but he's a member of Babiš' party too. With the current legislature's mandate set to expire in just ten days, the Czech Republic's relatively young democracy is now at risk of a serious constitutional crisis.
China-India high-altitude talks crash again: For more than a year now, China and India have been locked in a tense border standoff high in the Himalayas. The two sides even came to blows last summer; hand-to-hand combat between border guards left 20 Indians and four Chinese dead. Now each side maintains thousands of heavily armed troops, backed by artillery and air power, along the boundary. Over the weekend, commanders from each side met – for the 13th time – to hash out an agreement on who controls what. But each side accused the other of being intransigent and, for the second winter in a row, Asia's two giants will keep their forces in areas where the temperature regularly drops to -30 degrees Celsius. A new "cold war" in Asia?