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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning again, everyone. Joining us now, as he has done every January for a whole bunch of years in a row, is Ian Bremmer, president of the Eurasia Group and GZero media. He's also the author of the book Us vs. Them: The Failure of Globalism, and the forthcoming book, The Power of Crisis: How Three Threats and Our Response Will Change the World.

As some of you know, every year, Ian and his Eurasia Group publishes a list of the top political risks for 2022 through a global lens, and he's got a list for this year. By the way, if you think this is just predicting in the wind, we looked up some of this, and there's a track record here now. From last year's report in 2021 on COVID and climate as political risks, well before COP26 or Omicron, he wrote, "Evolution of the virus could meaningfully change the goalposts on population immunity and vaccine effectiveness over time."

That was before Omicron or Delta. He wrote, "The energy transition will be dominated by competition and a lack of coordination. Of course, there will be plenty of triumphant handshakes and the appearance of climate progress." That was before that seemed to actually happen at COP26. With anticipation, we welcome Ian Bremmer back to WNYC. Hi, Ian. Happy New Year. Always great to have you in January.

Ian Bremmer: Hi. I think it's been like a decade now. I'm feeling pretty good about it.

Brian Lehrer: Yes. When did you start doing top political risks of the year?

Ian Bremmer: Oh, back in 1998. I was thinking more meaningfully about your and my partnership, which, of course, is always a highlight for any New Yorker.

Brian Lehrer: [laughs] Right. I guess we picked up on each other about 10 years ago. You're right. All right. Let's go right down from the top of the list through these first few. Your number one risk for 2022, no zero-COVID. Well, yes,

Ian Bremmer: Well, yes. The surprising thing about this, Brian, it's actually optimistic in terms of 2022 for the United States and Europe. It's pessimistic for China. The pandemic has changed a lot in the last two years. The Chinese did the best job of any large economy because they could test, they could track, they could trace, they could quarantine, they could lockdown. In 2020, that meant that they got their supply chain back up and running really fast. They were the only major economy that grew in 2020 in the whole world.

In 2022, we've got Omicron, which is less dangerous, but much more transmissible. No one in China has gotten COVID yet, so they don't have natural antibodies. Their vaccines are really ineffective in terms of preventing spread, much worse than the mRNA vaccines in the US, but they're still trying to focus on cases and zero-COVID. They get one, two cases in a city, they will close down the city. With the Olympics coming up, and Xi Jinping's third term coming up, and China still being the factory for the world, it's actually China's zero-COVID policy that's going to be the biggest global risk out there this year.

Brian Lehrer: That's so interesting. You said China hasn't gotten any COVID cases yet. I think you meant Omicron cases. Obviously, COVID started in China. I saw that stat that just got released in the last day or so, and I really can't figure it out. Maybe you can help us make sense of this, that China's economy grew in 2021 by more than 8%. It surprised people how fast that was.

They've been locking down the economy so aggressively to really try to stamp out COVID spread there more than any other country, as you were just describing. How do fast economic growth and COVID economic lockdowns go together? Because that's exactly what we're trying to balance in this country all the time, right? How to not stop the economy in its tracks, and still stop the spread of COVID.

Ian Bremmer: Well, you've probably seen a bunch of these massive, call them hotels, call them facilities, institutions, with tens and tens of thousands of people, you want to travel into China, you're quarantining in a bubble for weeks before you're getting into China. They've done an incredible job of really shutting themselves off from the rest of the world. That means that when they're not locking down, it's fully open, so you wouldn't think that there was any pandemic going on unless you see cases. When you see cases, suddenly, that place is closed. In the last two years, when they haven't had the cases, it's not been a problem.

By the way, Brian, I did mean that most of the population hasn't gotten COVID. Yes, China is where COVID started back in Wuhan. It spread like wildfire, but once they admitted to it to themselves and the rest of the world, and they started locking down, the vast majority of the Chinese population hasn't gotten COVID. We just had Omicron start in South Africa. South Africans think 90% of the South African population already had antibodies from COVID. On top of that, whatever 40% of the population, 45% of the population had been vaccinated.

The reason why they had this gaudy growth in 2021, is because most of the economy was completely open because they were able to basically stop beta variants and delta variants from spreading. They won't be able to do that with Omicron. That's the problem. Your question will leave the Chinese to suddenly start locking down, locking down more and more districts and cities, and the impact of that on ports, on moving goods, on exporting, is going to be really substantial this year. You're not going to see that growth. They won't have 8.1% growth this year, they're not going to hit 5 this year, and the risks are all on the downside.

Brian Lehrer: You're predicting that China's zero-COVID policy will ultimately fail, and that that will have an impact, not only on China, but also on the already disrupted global supply chains, where so much of that comes from China?

Ian Bremmer: Yes. It also means that because they want to be able to ensure sustainable growth for the population, and so the knock-on effects is they're probably going to miss a lot of their climate goals, they'll take the foot off the gas of the transition to renewables. They'll also be less heavy-handed on things like deleveraging, and the bubble in their real estate sector. That, of course, creates bigger debt problems for the Chinese long term. This is not the best time for them to have this problem.

Brian Lehrer: There's also always concern about how much of a collision course the United States and China are on economically or militarily. To take one of those, how do you expect firms around the world to navigate what you call a two-way political risk of working with both China and the United States?

Ian Bremmer: Well, look, clearly, if you're a capitalist, you just want to invest everywhere. You don't want politics to get involved with your ability to get goods out to consumers that have the money to buy them. Of course, you see this with the Beijing Olympics. You see it almost every day, that there's some American capitalist that wants to invest in China. Then you've got a whole bunch of political backlash saying they commit genocide against their own population, against the Uyghurs. How can you possibly say that?

This is a tension, it's getting harder to navigate. Do you want to alienate the Chinese, in which case they will shut you down, or do you want to alienate the Americans in which case you're going to get whacked on social media, and you might see people calling to not buy your products? NBA is in the middle of this right now, for example. The good news is that the United States and China, you'll remember how bad that initial meeting that Biden's team had with the Chinese in Anchorage a year ago, they've stabilized that relationship somewhat.

The Biden White House is convinced that with all the problems that the Chinese have this year, they really don't want a crisis with the Americans in the near term. Biden doesn't want one either. Xi Jinping's third term is coming just about the same time as midterms, so I think that they don't want to be seen as weak on nationalism. Biden knows he lost votes back in 2020 for being perceived as weak on China, so he can't suddenly say, "Okay, let's have a new trade deal," but he's not going to try to really flex his muscles. That means issues like Taiwan, the South China Sea, that have the potential to blow up and they make these headlines, 2022 is not actually a big year for that to be a problem.

Brian Lehrer: No cold war 2.0, as you put it, between the US and China, and you're predicting no hot war in terms of China invading Taiwan and things like that, because it's not in Xi Jinping's interest, even as it's not in the United States interest. Listeners, what political risks for 2022 do you want to ask Ian Bremmer about, or what would top your list? 212-433 WNYC. 212-433-9692. We've spent a lot of time already just taking off from his top political risk of 2022, which is no zero-COVID, and segueing that into a number of other things that are on the list that have to do with China, because that's so big from a global perspective that affects everybody. Listeners, we'll take your calls. We're going to go onto some of the others from the list. One that's interesting to me is risk number nine, corporates losing the culture wars. Another one is on climate, two steps greener, one step back. We'll do those and more with Ian Bremmer and your calls after this.

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Brian Lehrer on WNYC with Ian Bremmer, president and CEO of the Eurasia Group, which comes out every January with its top risks predictions for the year and for 2022. Let's go on to your risk number seven. To me, it's a big one, two steps greener one step back, elaborate.

Ian Bremmer: Well, back in 2021, there was a lot of talk about moving forward net-zero targets. There was movement and commitments in less methane going into the atmosphere, reducing deforestation, moving forward on a carbon trading mechanism, even though there wasn't a lot of leadership from the two largest carbon emitters on the planet, China and the United States.

This year, you're going to see that all of that progress, which is important, is going to be mitigated by the fact that there's a robust rebound in the global economy, leaving aside the China discussion we just had. The supply and demand of global energy is not where the politics want it to be. There's still a lot of need and demand for natural gas as a transition fuel, and even for oil and coal. That reality means prices are going to be higher than people want them to be, inflation is a bigger risk, also that governments are going to backslide on a lot of their promises, and that's the danger of 2022.

Brian Lehrer: Let's take a phone call. Let's take a China call before that gets too far in the rearview mirror. Joseph in Suffern, you're on WNYC. Hi, Joseph.

Joseph: Hi. My fear actually is that the Chinese people have regarded real estate as their savings account, and China recently put into place limits on how much real estate companies could borrow, and the price of real estate in China has begun to fall. If this turns into a collapse, I fear that they may sell their rather large stash of US bonds and treasury notes that they hold, which could affect us dramatically.

Brian Lehrer: This is a perennial that I haven't heard anybody mention in a few years, so I'm actually glad that Joseph brought it up. Ian, this fear that comes up from time to the time that if we alienate China too much, and he's got some other reasons, internal China reasons for it, but also that if we alienate China too much, they hold so much of the US debt in the world, they would decide to call in that debt, and the US government would go bankrupt or enter a debt crisis.

Ian Bremmer: Well, the Chinese invest in the United States, not because they're doing us a favor, but because they think it's the safest place for their money, and to get a known return. I think that the real question is not, will the Chinese dump it all to alienate us? They don't tend to cut their nose off to spite their face. If they dumped a lot of it, the remainder would be worth a lot less, which isn't good for them.

I think one thing you can pretty consistently count on the Chinese to do is to take action that they believe is in their long-term interest, but if the United States continues to run debt that is perceived as unsustainable, and suddenly inflationary rates means that holding US cash and bonds isn't as attractive going forward, then not just the Chinese, but a lot of countries around the world are going to be diversifying more away from the dollar as a store of value.

The RMB, the Chinese currency, is only a limited solution to that because it's not convertible, so their ability to suddenly change the rules on what your money's worth is a really big downside risk. There's no question that the reason why a lot of people have gone to crypto, a lot of people go to gold is because they're worried that the store of value that is the US dollar is not what it was historically.

Brian Lehrer: Stewart in Cliffside Park has a Russia question, and Russia certainly appears on your list. There's all the news about Russia and Ukraine right now. The US and Putin are always jockeying for power with, I think, unclear to Americans what's really at stake for us, but Russia is the number five political risk for 2022 on your list. I'm going to let Stewart in Cliffside Park get into this topic with his call. Hi, Stewart, you're on WNYC.

Stewart: Hey, hello to the two of you. Fan of both of you separately, and now you're together. It's great. Russia. Always couldn't stand Russia, bad actor. Never liked them. Then I saw Fareed Zakaria's interview with Vladimir Putin's number one advisor about the Russians' point of view of the whole thing. I'd be interested in Mr. Bremmer's opinion on the Russian point of view that yes, the further east NATO goes, the closer missiles are to Russia's borders, et cetera, et cetera. I think you would know most of the Russian arguments, and he had some credibility for me, and I can't stand Russia, so I'd like to ask Mr. Bremmer to help me sort that out.

Ian Bremmer: Yes. I actually was with Fareed on Friday, and he had just finished that interview, and we talked about it. I adore him. Fareed and I have known each other for about 30 years now. There's no question that the Russians feel like we don't care, that we don't listen to their perspective. Putin frequently talks about how we could take him out with hypersonic missiles in five minutes' time.

His deputy foreign minister, Ryabkov, came out up last week and said, "How would you like it if the Russians had troops in Venezuela or had troops in Cuba? How would that make you feel about your security? They really view Ukraine, even though we haven't brought them into NATO, they see the further equipment that we send to Ukraine, the cyber coordination we engage, the training, the exercises, they think that basically we are making Ukraine into a gateway NATO state, and that makes Russia itself feel much more vulnerable.

There's no question. I don't believe Putin is bluffing. I think that if there is not some diplomatic breakthrough between the Americans and the Russians, and I see that our secretary of state is now meeting with Lavrov, the foreign minister on Friday in Geneva. That was just announced about an hour ago, so they're still talking and that's good, but if there isn't a breakthrough, there will be Russian escalation. I don't believe Putin is bluffing. I think he will definitely take military action.

The question is, what action will he take? Is he going to invade Ukraine, and literally overthrow the Ukrainian president, which would bring severe economic, retaliation, and NATO response in the region that would be escalatory, or is he going to send troops in and basically just defend Russian citizens in the occupied territory, Donbass, and maybe send troops to Belarus after they change their constitution next month? That would be a much smaller issue. Let's be very clear, if the Americans really cared about Ukraine, this risk wouldn't be number five on our list. It would be number one or number two, there is a real foreign policy crisis here.

Brian Lehrer: Why should the US care, to amplify the caller's question, what happens in Ukraine? It's one thing if you look back at the Cold War period, where Russia was expanding further and further into Europe, they had World War II after the Germans expanded all over Europe, fresh on their minds. At this point, how does it affect the United States what Russia does in Ukraine?

Ian Bremmer: One, the United States is so incredibly divided that if the Biden administration were to allow Russia to take more territory in Ukraine and not respond in a serious way, it would be a constant drumbeat from Biden's opponents on the right that he lost Ukraine, he's weak versus Putin. Of course, this is an issue that President Trump, ironically, was the person who wanted to be the closest to Putin.

I think Biden and Ron Klain, the chief of staff, would be very reluctant to take on that domestic political risk. More broadly, I would say, historically, the United States has cared to support countries that have democratic rule, that they should be able to maintain their sovereignty. Russia is not a democracy. It's an authoritarian state, and they don't like the idea that Ukraine is independent. The Russians believe they should get a veto over Ukraine's policies. The United States, as a democracy says, "No." Now we're not the policeman for the world, we're not letting them into NATO, we're not even giving them a membership action plan. We don't really like the Ukrainian president that much.

Frankly, he has his own problems in terms of thuggish behavior versus his own democratic opposition, so it's not like he's a buddy that we play nice with, but it would be a hit to democracy, especially for the Europeans if we suddenly decide that this doesn't matter. We have NATO allies like Poland and the Baltic states that would feel that their national security would be directly compromised if democratic Ukraine suddenly gets fundamentally overthrown by Russia.

Brian Lehrer: Number two on your list is the techno-polar world, and that includes you write, "The tech giants can't yet, and don't want to effectively govern the digital space or the tools they're creating. Disinformation will further undermine public faith in democracy, particularly in the US." We talk about that a lot on this show, so we're not going to go into it too much with you here. I want to touch two last ones before we run out of time, your number nine risk for 2022 is corporates losing the culture wars. Wait, don't we want corporations to lose the culture wars?

Ian Bremmer: [chuckles] Yes. The question is do the corporations lose because everyone can't stand up? For example, just in the same way before you and I, Brian, talked about the US versus China, and corporations want to do business in the US, they want to do business in China. We want them to do business in China because we like buying cheap goods, and also the interdependence between our two countries is one of the things that stops us from going to war, but what happens if we're going to war with ourselves?

In other words, what happens if, increasingly, for corporations in the US, no matter what they do, they get pushed into being red state or blue state. If major league baseball says they're going to pull their all-star game out of Georgia, suddenly they're losing their Republican fan base. They keep it there, they're losing their Democratic fan base. Are we going to be in a world where the left-wingers buy Starbucks, and the right-wingers buy Black Rifle Coffee? That's a very problematic world to be in terms of productivity and efficiency. That's a danger, broadly speaking, for the corporates and on the one hand, they're making record levels of profits so they can afford it right now, but they certainly see the writing on the wall that this is going to be a lot harder for them to navigate.

Brian Lehrer: Finally, your risk number three, the US midterm elections this year. How related to what you were just talking about?

Ian Bremmer: Oh, so related, Brian. I knew you were going there as soon as the way you framed number nine. It's so unfortunate when you and I started talking about this a decade ago, we never talked about the US politically at home, we never did, and now, of course, we talk about it all the time and it's because global democracy is not in crisis. We just had a whole bunch of countries like Germany and Japan and Canada that had democratic national elections, no problem, transfer of power. The United States, the most powerful country in the world, and we no longer have free, fair, and legitimate national elections. Whoever loses increasingly thinks it's illegitimate.

That's been through a couple cycles now, it's been getting worse, former President Trump has been driving that "big lie" himself through disinformation, and increasingly controls the Republican party. We know that coming up in November, it's very likely that a Trump-led Republican party is going to have a majority of the house, and maybe the Senate too, plus key state legislatures and gubernatorial elections. This sets 2024 up to being a constitutional crisis for our country and it's impossible to ignore.

Brian Lehrer: Ian Bremmer with his top risks of 2022, he is president of the Eurasia Group and GZero media, maybe you have seen him on Channel 13. He's also the author of Us versus Them, The Failure of Globalism, and he's got a forthcoming book, The Power of Crisis: How Three Threats And Our Response Will Change The World. Please come back when the book comes out and thanks for joining us every January with your predictions for the year. Thanks for today, Ian.

Ian Bremmer: Great to be with you, Brian.

Brian Lehrer: Sure.

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