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.
{{ subpage.title }}
Russian President Vladimir Putin attends a meeting with Chinese President Xi Jinping in Beijing, China February 4, 2022
What We're Watching: Putin-Xi meeting, Brussels vs. Budapest, Sweden's next government, Japanese yen in trouble,
Putin hears out Xi on Ukraine, blasts “unipolar” world
Vladimir Putin and Xi Jinping met in person on Thursday for the first time since Russia invaded Ukraine. The Russian leader said he valued the “balanced position” Beijing has taken over Ukraine, noting that he understood Xi’s “concerns” about how the war is going (not well). But since there’s no way the Russian president will reverse course in Ukraine, he took the opportunity to play his greatest hits, railing against US-led efforts to create a “unipolar” world that leaves both Russia and China out to dry. Putin might consider what a US Senate committee did Wednesday an example of that. It advanced a bill that would for the first time authorize providing $4.5 billion worth of direct US military aid to Taiwan. The proposal still needs to pass the Senate, and the White House is not fully on board. But if it becomes law, Beijing will likely see this as a de facto change in US policy toward Taiwan. Since 1979, Washington has sold Taiwan weapons to defend itself against a Chinese invasion that was considered a long shot just a decade ago. Not so much now — which explains why the US is mulling preemptive sanctions to deter Xi.
Will Brussels freeze out Budapest?
The European Union’s executive reportedly plans to recommend withholding billions of dollars in funds to Hungary due to alleged corruption by the Hungarian government. What’s more, in a symbolic vote on Thursday, the European Parliament declared Hungary a “hybrid electoral autocracy,” a scathing condemnation of PM Viktor Orbán’s leadership. Brussels and Budapest have long been on a collision course over the latter’s erosion of democratic norms since Orbán’s conservative Fidesz Party came to power in 2012. Hungary is hoping to unlock more than 40 billion euros of EU funding over the next five years, but the EU alleges that Budapest has failed to reform its public procurement process, which undermines competition and favors government allies. If Brussels follows through, it would send a worrying message to other rogue EU states – like Poland – that have been at loggerheads with Brussels over rule-of-law issues. A final decision will be released Sunday and would need to be passed by a majority of member states to take effect. Orbán, who has long relished his reputation as an anti-EU warrior, has reason to worry given that annual inflation in Hungary hit a whopping 15.6% in August and the currency continues to depreciate.
Sweden’s next government
Magdalena Andersson resigned as Sweden’s prime minister on Thursday following a narrow election defeat for her center-left bloc last weekend. Her Social Democrats – which have dominated Swedish politics for nearly a century – remain the country’s largest party, but it’s bloc politics that matter most, and the parties of the right have proven more unified than those of the left. Moderate Party leader Ulf Kristersson will now try to form a government. Controversies over immigration policy, price inflation, and rising crime have increased support for a bloc of conservative parties that also includes the anti-immigrant Sweden Democrats, which have used the promise to “make Sweden safe again” to stride from the wings to center-stage in Swedish politics. It remains unclear how large a role the Sweden Democrats might play in a Kristersson-led government. Following elections four years ago, it took four months for Andersson to form a government. But Kristersson will begin coalition talks at a moment of national urgency as the country battles an economic crisis and prepares to enter NATO in response to Russia’s invasion of Ukraine. Anti-immigration policies can limit the size of the potential workforce, pushing wages higher. So, the big question will be how conservative parties that are primarily pro-business will bargain with the anti-immigration nationalists of the Sweden Democrats, now the country’s second-most popular party.
Japanese yen drops, further weakening Kishida
Things aren’t going well for Japan’s government. The Japanese yen has continued to drop against an increasingly strong US dollar in recent months, falling to a 24-year low on Thursday. The government, meanwhile, says it has not ruled out intervening to try to prop up the ailing currency, though Tokyo also acknowledged that the effect of such a move would be minimal, in large part because of the significant interest-rate gap between the United States and Japan. While Washington has steadily been raising interest rates to curb inflation, Tokyo has kept rates ultra-low in line with its long-held view that a weak currency is good for exports. But current global inflationary pressures have revealed the vulnerabilities of this approach. This comes at a bad time for Prime Minister Fumio Kishida, whose disapproval rating recently reached 41%, the highest level since he took office a year ago. Kishida’s popularity has nosedived over the ruling Liberal Democratic Party's ties to the controversial Unification Church following the assassination of former PM Shinzo Abe. Moreover, the government’s decision to hold an expensive state funeral for the slain former PM on Sept. 27 has been broadly criticized.
China-Russia relationship status: It’s complicated
The presidents of China and Russia will meet in person this week for the first time since early February, shortly before Russia invaded Ukraine. Back then, Xi Jinping and Vladimir Putin announced in Beijing a bilateral friendship "without limits." Seven months later, the relationship has strengthened but also seen trouble — and this is likely to continue.
Xi — on his first trip outside China since early 2020 — and Putin will hang out in the Uzbek city of Samarkand for the annual summit of the Shanghai Cooperation Organization, a China-led regional bloc initially set up to fight Islamic terrorism across Central Asia. But the agenda will mainly focus on Ukraine, common grievances with the West, and further deepening bilateral ties on things like a mammoth pipeline that’ll pump Russian natural gas to China via Mongolia.
When the famously stone-faced Xi and always-smirking Putin "smile" for their photo-op, they'll put on a brave face. The two want to appear as BFFs standing strong and tall against America and its allies — a bulwark of resistance to the US-led liberal international order that won't give them a fair shake. Their handshake will dominate state media in Beijing and Moscow, and it will raise the usual alarm bells in Washington.
In private, though, Xi is anything but pleased. We'll never know whether Putin told Xi in February he'd already decided to invade Ukraine, but China’s leader likely expected a swift campaign that wouldn't give the US or its NATO allies time to respond.
"Obviously, the war hasn't gone the way that Russia intended or the way that China expected," says Eurasia Group senior analyst Ali Wyne. The longer it drags on, and China stays non-committal about Russian aggression, the further it'll strain Beijing's already-fraught relationships with its top trading partners in the West.
What’s more, both Xi and Putin have a lot going on these days. Xi is freaking out about China's economy, which is in the doldrums thanks in no small part to his stubborn refusal to relax the zero-COVID policy. Hardly the rosy outlook he was hoping for just one month before the 20th Communist Party Congress, where Xi will get a norm-defying third term as CCP secretary-general.
Putin, for his part, is losing Russian-held territory to the Ukrainian counteroffensive, bracing for a G7 cap on the price of Russian oil, and facing rare internal pushback. The "special military operation" is not going according to plan — to the point that Putin might soon need to admit it's actually a "war".
Personality matters, too. Like classic Bond villains, the two autocrats would rather jump out a window than admit to being wrong and reverse course for fear of appearing weak or losing face with their people. This rigidity extends to foreign policy, where Wyne says that Xi has boxed himself in with Taiwan much as Putin has with Ukraine.
Xi might not be happy with the current state of the relationship, but he knows that China and Russia now need each other more than they have in decades. And while Putin is a lot needier — especially to sell Russian oil and gas in roubles and yuan — Xi has invested so much politically in their bromance that China is stuck in a toxic relationship it can’t escape.
So, how might the China-Russia friendship evolve in the near future? Expect it to get stronger but even more complicated, since Beijing and Moscow are as nervous about Western opposition as they are suspicious of each other.
For instance, Russia frets about China's growing security clout among the Central Asian republics, part of the former Soviet sphere of influence. Interestingly, the Xi-Putin meeting is taking place in Uzbekistan, one of the ‘Stans that Wyne says is getting cold feet about dealing with Moscow after witnessing Russia's brutality in Ukraine. Putin has responded to Beijing's charm offensive by reaching out to India, China's strategic rival and eager to play a bigger role in Central Asia.
Still, Xi and Putin will continue going steady because neither can afford to part ways with the other.
"China is wary of throwing Russia under the bus," says Wyne. If Beijing abandons Moscow, it really has no on other major powers to turn to. "That scares China," which is doubling down on the Russian friendship out of anxiety, not confidence.
All eyes on Russia ahead of Putin-Xi meeting
Ian Bremmer's Quick Take: Hi, everybody. Ian Bremmer here. Happy week. We are still in the thick of it when it comes to all things Russia. So let me jump right in.
Latest on the Russia front. Well, really, over the last six weeks, if you weren't paying attention to what people were saying and just what activities were going on on the ground, what you'd be seeing was steady escalation, more and more Russian troops with offensive capabilities to the front, both at the direct border with Ukraine, as well as now into Belarus as well, ostensibly for exercises, but we don't tend to see coincidences in this line of work.
And if the Russians wanted to engage in a full-scale invasion, they're not quite there yet, but they certainly will be by the time the Olympics are over. That's relevant, by the way, because there is this Olympics moratorium on fighting, which is at the United Nations, but which the Chinese actually not only co-sponsored, but actually drafted along with the United Nations leadership. And to the extent that President Putin cares at all about his relationship with China, and Beijing hosting the Olympics and Putin, traveling right over there, it is very, very, very hard to imagine that the Russians would engage in any direct military activities in Ukraine before the Olympics are over. And certainly not while Putin is over there in Beijing for the opening ceremony.
I feel fairly confident about that, which means there's still a few weeks for diplomacy to play out. There are still a few weeks for climb down, but to be clear, from the Russian side, everything points to escalation so far. From the Western side, there certainly lots of willingness to engage in diplomacy, but there also has been a strengthening of the expected deterrence if there is any form of an attack. That's come from the United States, come from the US allies. And most recently it's come also from the United Kingdom, the foreign secretary saying that there would be full sanctions readiness taken against not just people directly involved in making the calls, the orders on what would transpire in Ukraine, but anyone directly linked to the Kremlin. That means lots of oligarchs who park all sorts of cash and massive amounts of real estate holdings in the United Kingdom. Something that I'm very skeptical that the Brits would actually do.
It's interesting. I mean, Navalny, the opposition leader at Russia presently in jail, and others have been calling after the UK government to go after oligarch money forever. It's never happened. I think that the UK is concerned about strengthening, what it would mean, they want to strengthen anti money laundering rules, but that seizing oligarch assets would send very strong messages to all sorts of strong men and crooks and cronies across the Middle East, North Africa and beyond. And London makes an enormous amount of money off of that. I mean, first you do Brexit, and then you go after all of your oligarchs from sort of everywhere internationally? There are sort of all sorts of willingness to punch yourself in the face if you're UK leadership in recent years, but this I think is a step too far.
I do think the UK though wants to signal that they are a hundred percent aligned with the United States, especially in a post Brexit environment. That they are more reliable. And so I think a harder line UK posture fits in with that. That's not as much as the headlines are telling you, but generally speaking, yeah, I think there's been a lot more NATO alignment, more US-Europe alignment on policies vis-à-vis the Russians in the last couple of weeks.
That's interesting in so far as it should make it a little bit less likely that Putin engages even in relatively limited military incursions into Ukraine, but it also means the implications of such strikes if they were to occur, and there's still a really good chance they happen, would be much more dangerous. Escalation from the West, and then further cycles, further spiral that gets us into major power conflict, not World War III, but nonetheless, real knock-on implications for countries all over the world, which is why we're spending so much time on this.
The other thing I would pay attention to is the President Putin, President Xi summit coming at the end of this week. It's probably the most important geopolitical summit we've had in years in terms of the implications of what happens if it goes really well, or if it doesn't go so well. It's pretty clear that this relationship is moving from tactical to strategic. It's moving towards a real alliance. And I say that in part, because both sides feel for different reasons like they're being backed into a corner. President Xi is looking for more friends. He's of course lost the Indian government in a dramatic way through his own escalation over the last couple of years. There's been more isolation, more domestic focus in China with COVID. And there's more of a feeling that the United States is playing a more hard-line policy that is unfixable to a degree. And so, if that's the case, a closer relationship with Russia makes more sense.
Putin, of course, it's more obvious. He sees NATO as more strongly arrayed against them. He's deeply unhappy with the geopolitical status quo in Europe. He sees no way of opening up, unless there's a surprising diplomatic breakthrough. He sees that democratic force is increasingly arrayed against him and a threat towards him. He's seen it in Belarus. He saw it even in Kazakhstan. He's seen it in Moldova. He's seen in Armenia. He's seen in Georgia. And now potentially he has to be worried about that in Russia longer term too. So, who you're going to work with? You're going to work with the Chinese.
In that regard, I think it's a very, very important meeting. I would say that while the relationship feels more strategic, it's not that the Chinese are going to offer that much, at least in the near term to the Russians economically. I mean, for example, they don't have the gas pipeline infrastructure. So if the Russians are cutting off a gas to Europe, it's not like the Chinese can make that up. Furthermore, they haven't invested all that much in Russia economically over the past years. They don't have an awful lot of exposure to help sink or float the Russian economy. But diplomatically, I think it's very important.
In this regard, I do think that the announcement that the United States is bringing this issue to the United Nation Security Council, on balance I think is a mistake. The Biden administration has done a really solid job in engaging in an enormous amount of proactive diplomacy with all of the NATO allies and have gotten them to a more unified position on Russia and Ukraine, both in terms of military support for the Ukrainians, as well as direct consequences, which they would all put towards the Russians if there was either a broad invasion or a more limited incursion.
That's all in favor of American national security interest and policy, but the Chinese have stayed out of this, mostly, so far. The Russians want to bring them in. We'll see how far that goes but having a big conversation at the security council that tries to focus in international spotlight on Russia-Ukraine, makes it more likely that the Chinese will veto. That the Chinese publicly will be more aligned with the Russians. And as the Americans, why would you want to make the Chinese take that kind of a decision? I would say you don't. You don't want to use your capital on getting them to abstain, which is something that frankly isn't all that important or useful to the United States. And you certainly don't want to risk the likelihood that they are publicly on board with the Russians. The same Chinese that have opposed intervention into sovereign countries policies. And of course, they said very little after the Russians did very differently with Crimea and the Donbas. Why would you push them in that direction?
So I see that as a mistake. We'll see where that goes today, tomorrow, but that's it for me. Hope everyone's well, and I'll talk to y'all real soon.
- Russia cares more about Ukraine than the US does - GZERO Media ›
- Podcast: Ukraine crisis: the signals pointing to Russian invasion ›
- Russia & China vs “the West” - GZERO Media ›
- What We're Watching: Putin-Xi heart each other, Boris survives Tory ... ›
- US & NATO will draw a hard line on Russian aggression in Ukraine – Ian Bremmer - GZERO Media ›
- China’s place in the war in Ukraine - GZERO Media ›
- China is wary of supporting Russia: Finland’s former PM Alexander Stubb - GZERO Media ›