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Former Pakistan Prime Minister Imran Khan speaks to Reuters during an interview in Lahore, Pakistan, in March 2023.
Hard Numbers: Imran Khan faces new sentence, Russia gets economic upgrade, Philippines and Vietnam join hands in South China Sea, Germany makes big Bitcoin seizure
10: Pakistan’s former Prime Minister Imran Khan and former Foreign Minister ShahMahmood Qureshi were sentenced Tuesday to 10 years in prison for leaking state secrets. While Khan is already serving a three-year term on corruption charges, this is Qureshi’s first conviction. The new ruling comes just a week before general elections on Feb. 8. Khan’s political party, Pakistan Tehreek-e-Insaf, called it “a sham case” and plans to challenge the decision in a higher court.
2.6: Is President Vladimir Putin’s military spending spree paying off? Russia’s GDP is expected to grow 2.6% in 2024, according to the International Monetary Fund, which is 1.5 percentage points higher than its October forecast. For 2025, the IMF sees GDP growth for Russia easing to just 1.1%.
2: Philippine President Ferdinand Marcos Jr. signed two memorandums of understanding with Vietnam on Tuesday to boost cooperation on maritime security in the South China Sea. Vietnam also agreed to a five-year trade deal to supply up to two million tons of white rice to Manila. China, which is less than thrilled by such agreements between its neighbors, launched military drills in the disputed waters earlier this month as the US and Philippines initiated their exercises in the region.
50,000: German authorities on Tuesday seized 50,000 Bitcoins worth nearly $2.17 billion in Saxony. While no charges have been filed yet, police suspect that two men who purchased the cryptocurrency did so with profits from a piracy website. Police are investigating unauthorized commercial exploitation of copyrighted works and money laundering.
Ian Bremmer: Why Rogue Russia was predicted as Eurasia Group's 2023's top risk
Evan Solomon: Risk number one in 2023, rogue Russia. Tell us why, Ian.
Ian Bremmer: Well, look at how unhappy Putin looks in that graphic, first of all, I mean, that drives a risk just by itself. Look, this is the biggest misjudgment made by any leader on the global stage since we've been covering this stuff in the 90s. Unfortunately for Putin, he has no way to claw back anything like his life pre-status quo ante in February 24th. I mean, at least the Cuban missile crisis you talk about there's this incredible chance of Armageddon and then both sides stepped back, and they were able to do business as usual. That can't happen, right? Putin, he's destroyed his military. He's got an economic position, a country which is being forcibly decoupled from the West, that's not coming back. NATO's expanding. Ukraine is now going to be the best trained, best armed, most effective intelligence, best army in Europe facing Russia. All of that is happening while Putin is failing at every one of his war aims.
So, what's going to happen in 2023? Well, first, Putin is going to fail on the ground in Ukraine, and it might be worse than that, Ukraine, for him, Ukraine might be able to retake a lot of the land in counter offensives that the Russians have taken, maybe even threatening to retake Crimea. Russia will increasingly not even be in a position to punish the Ukrainians the way they have in the last couple months because Ukrainian air defenses will get a lot more effective, especially when the Patriot missile system is stood up. So, what can the Russians do unless the country's going to give up? Unless they're going to simply sort of surrender, which I don't expect.
And so, the outcome is likely to be that Putin's going to escalate. An escalation means that the war is increasingly going to hit NATO, asymmetric attacks, cyber, fiber, pipeline, disinformation, espionage. In other words, rogue Russia is going to look to NATO the way rogue Iran has looked to the Middle East. Russia will become the most powerful rogue state that the world has ever experienced.
Russian President Vladimir Putin
Russia’s economy (finally) feels the burn of sanctions
It took a little while, but Russia’s economy is finally starting to unravel thanks to hard-hitting Western sanctions, according to a new Wall Street Journal report.
For much of the past year, there has been a seeming disconnect between the state of Russia’s economy and the scope of punitive measures imposed on Moscow by the US and its allies. But the slow burn of sanctions – many of which only came into force over the past few months after lengthy negotiations among allies – is now finally being felt by the Russian economy.
High global energy prices during the first half of 2022 kept Russia’s economy afloat, and its gross domestic product dropped by a lower-than-expected 1.1% when many analysts had initially anticipated a sanctions-linked contraction of up to 15%.
What’s more, it took a while for Europe to kick its Russian natural gas habit. For the first six months of 2022, major European economies continued to pump money into Russia’s war machine.
Similarly, the G7 and EU price cap on Russian gas – a bloc-wide ceiling on the price of Russian gas bought by EU energy companies – only came into effect in Dec. 2022 along with the EU ban on seaborne Russian crude oil.
The US has now surpassed Moscow as the main supplier of crude oil to the EU. Consider that before the war, Russia accounted for around one third of the bloc’s imports, while the US trailed at 13%.
Consequently, the Kremlin’s energy revenue dropped by nearly half in the first two months of this year compared to the same period in 2022. The country’s budget deficit is also ballooning as the Kremlin continues to pump money into its military-industrial complex – and into that of its ally, Iran.
Meanwhile, brain drain as a result of talented Russian professionals gradually fleeing the Kremlin’s autocracy is also hurting economic output.
Even Russia’s political elite now say things are looking bleak, with oligarch Oleg Deripaska warning that the country could run out of cash by next year unless friendly countries step in to help.
China and India, meanwhile, continue to buy large quantities of Russian oil, though at a significant discount.
A view shows graves of killed Ukrainian defenders, amid Russia's attack on Ukraine, at a cemetery in Kharkiv, Ukraine January 31, 2023.
Hard Numbers … after a year of war in Ukraine
300,000: Human losses on both sides of the conflict are mounting (and disputed), but there have been a whopping 300,000 military and civilian deaths on both sides, according to high-end estimates.
2.1 & 0.3: Russia’s economy contracted by just 2.1% last year, far less than predicted, due to continued sales of its discounted crude oil and adaptability. The IMF predicts a 0.3% growth rate for Russia this year thanks to high export prices.
51,000 vs. 40,600: Having seized roughly 51,000 square miles of Ukrainian land by late March last year, Russia has since lost roughly one-fifth of that. The Kremlin now controls about 40,600 square miles (17% of Ukraine), entirely in the south and east.
18 & 60: Russia’s invasion of Ukraine has decimated the country economically, with roughly 60% of Ukrainians now living below the poverty line, compared to 18% before the war.
35 & 139 billion: Ukraine’s GDP has diminished by 35%, and Russian targeted attacks are slamming the country’s infrastructure, having caused US$139 billion worth of damage (so far). Well over a third of the country is now dependent on humanitarian aid to live.
Up to 1 million: A reported 8,087,952 Ukrainian refugees are now spread across Europe, with close to 5 million seeking temporary asylum. Millions more are displaced within Ukraine. An estimated 500,000 to 1 million Russians have fled their homeland, driven by economic unrest, politics, and military mobilization.
Russia's resilient economy won't fall apart anytime soon
Ian Bremmer shares his insights on global politics this week on World In :60.
How badly has the Russian economy been affected from the war in Ukraine?
Well, I mean, badly in the sense that half of Russian military capabilities, uh, in terms of things like ammunition and ballistic missiles and, you know, even standing army that's capable has been chewed up by a year of war. So Russia is gonna have to now rebuild that, and that does mean that their exports to other countries, they were the second largest defense export in the world, is gonna seriously take a hit. But near-term, less than 4% GDP contraction in 2022, which means that Russia's position of having all of these critical resources that everyone else in the world still really needs gives them a lot of resilience in terms of their economy. They're not gonna fall apart any time soon.
Why is a US four-star general warning about a potential war with China in 2025?
Probably because that particular military official does not have direct accountability over China. This was a classified report that people have been talking about, and as a consequence it made it to the public. And if it bleeds it leads, especially if it's about war with China, because there are so many people that wanna talk about headlines that we could be in war with China. And so, you find thousands of people that say, "No, we don't think it's gonna happen." One that says, "I think it will by 2025." That's what everybody asks about. Deeply misleading in terms of your following and consumption of the media. And if you wanna not panic, GZERO is a better place to go than that random military official.
Given widespread opposition, how does Macron expect to pass pension reform in France?
Very noisily. He's only trying to add a couple of years to the age. Previous presidents have failed in their efforts. He is taking on massive popular opposition, labor forces that are very well organized, unlike in the US, unlike in a lot of other European states, but ultimately, they need this. The demographic's life expectancy continues to increase in France, unlike the United States in recent years, and as a consequence that means people have to work longer before they get fully paid for pensions. And the French government is trying to make good on that as a fiscal reform. On balance, very likely that Macron gets it done with support from the center and center right. He should have enough in parliament to get it past. If not, he's in serious trouble, basically becomes a lame-duck presidency with a few years left. But we suspect he's likely to make that happen.
That's it for me. I'll talk to y'all real soon.
Ian Bremmer: Risk of nuclear crisis in 2022 is too high
The White House believes that there is a 20% chance of another Cuban Missile Crisis "in the next eight weeks" with Russia, Ian Bremmer said at an event at the Asia Society in New York on Monday. While Bremmer doesn't see as high a chance that Putin would risk using nuclear weapons, he added, "Either way, those numbers are way too freaking high." The even bigger risk, he points out, is that not enough is being done to manage the unprecedented danger from Russia in the medium term.
The Russian economy is being cut off from the West the same way as Iran has been, with a 40% or 50% contraction expected over the next five years. A G20 economy has never been decoupled from the West before. If Russia becomes a rogue state like Iran with ballistic missile attacks, drone strikes, espionage, proxy wars, radicalism, and terrorist violence - but with 6,000 nuclear warheads in their arsenal - "that really does not bode well for the next five, 10 years or for our kids. It really doesn't," Bremmer told former Australian PM and Asia Society President and CEO Kevin Rudd at the Asia Society's headquarters in New York.
The Graphic Truth: Tracking the ruble rebound
The ruble is back on top. Why?
What a wild ride the ruble has had so far this year.
Russia's currency nosedived in late February, losing as much as 30% of its value against the US dollar when Western nations slapped tough sanctions on the Kremlin for invading Ukraine. But then Vladimir Putin pulled out all the stops to save the ruble.
Spoiler: it worked.
First, the central bank immediately doubled interest rates and imposed strict capital controls to stop cash from leaving the country. The Kremlin also forced corporations to exchange most of their foreign currency receipts for rubles, creating artificial demand for the Russian currency.
Next, Putin demanded that all “unfriendly” countries — those that imposed sanctions on Russia — pay for Russian oil and natural gas in rubles. Although most European governments refused, many private companies in the EU decided to comply rather than risk disruptions to their energy supplies.
What’s more, imports have plummeted due to sanctions, meaning that fewer rubles are chasing foreign goods, which props up the value of each ruble. And energy prices are at multiyear highs. In the first four months of the year, Russia had its highest current account surplus — the difference between exports and imports — since 1994.
As a result, the ruble is now up 25% against the dollar this year, making it the world’s best-performing major currency in 2022.
So, is this good or bad for Russia? It depends. On the one hand, a strong ruble is surely a source of national pride for many Russians. On the other, it's hardly convenient if sanctions make it hard to buy foreign goods with it.
Also, a strong local currency could hurt the budget: since expenditures are in rubles, a weak ruble is actually the best way to top up the state's coffers when energy prices are high because sales in dollars or euros get converted into more rubles.
This comes to you from the Signal newsletter team of GZERO Media. Subscribe for your free daily Signal today.
Putin has "mummified" Russia: Ivan Krastev on the Putin effect
Vladimir Putin has a much bigger long-term problem beyond Ukraine: Russia's population is shrinking, which for political scientist Ivan Krastev will impact how post-Putin Russia looks like because Putin won't let Russians even talk about it.
That's a big deal, he tells Ian Bremmer on GZERO World, because the West seems to be primarily focused on isolating Russia while dreaming of a post-Putin world ... without Russia.
Meanwhile, Krastev says the Russians are prepping for a future in which they deal with China instead of the West — which is equally far off for them.
The result of all this will be a Russia that's so isolated that it's like under forever COVID quarantine.
Why? It's the Putin effect, which has killed our capacity to imagine a Russia without him.
Krastev says that Putin, a big fan of the USSR, has leveled up from old Soviet leaders by mummifying Russia itself.
Watch the GZERO World episode: How Putin created Ukraine’s determination to resist