‘Worst geopolitical environment of our lifetime’ – Ian Bremmer outlines risks investors can’t ignore

It’s going to be a “Voldemort of years, politically” according to Eurasia Group president and founder Ian Bremmer. In a sit-down with TheStreet’s editor in chief Sara Silverstein, Bremmer outlines the biggest risks on the table in 2024 from uncertainty around the U.S. election to the ongoing conflicts across the globe. 

“I mean, it’s one thing if you’re flying a plane at 40,000 feet and it’s sunny out and you hand the controls to somebody you’re not really sure about, probably going to be OK. You’re trying to land that plane when it’s a hurricane and you can’t see the landing strip, might crash the plane.” – Ian Bremmer 

Related: Fed’s plan to cut rates will be shaped by geopolitics, and investors should take note

FULL VIDEO TRANSCRIPT BELOW 

SARA SILVERSTEIN: Your risk lists are never sunny, but your call for 2024, you call it the Voldemort of years politically. Why is this the year that must not be named?

IAN BREMMER: Well, I mean, first of all, because we are here in the United States and facing an incredibly dysfunctional, polarizing election period. And it’s happening at a time that the rest of the world is not stable.

I mean, it’s one thing if you’re flying a plane at 40,000 feet and it’s sunny out and you hand the controls to somebody you’re not really sure about, probably going to be OK. You’re trying to land that plane when it’s a hurricane and you can’t see the landing strip, might crash the plane.

So that is a very, very serious political issue that I think is causing a level of distress, anxiety, all the way to panic depending on who you’re talking to. But beyond that, of course, we have a couple of other big wars happening in the world, one in the Middle East between Israel and Hamas that you’re not going to be able to contain, and one in Europe between Russia and Ukraine that is not heading well, certainly not from the perspective of the US and its allies.

So you put those three things together, even if everything else was perfectly sunny, that by far is the worst geopolitical environment of our lifetimes. We’ve never seen that. I mean, you’d have to go back to World War II before you had that level of geopolitical risk from that many different corners of the planet. There are good things that are happening, that’s not what you just asked me about. But from a risk perspective, those are the things we’re most worried about.

SARA SILVERSTEIN: And what kind of president does the US need given the current global instability?

IAN BREMMER: Well, I mean, not one that’s running, so not one that we’re going to get. And you see the level of general dissatisfaction with both candidates in the United States right now. But the problem is deeper than just a matter of candidates.

I mean, the fact is that there’s really no one that could be running that would get a strong majority of the country. And the kind of leader you need is someone that actually would bring the country together.

Now, Biden has wanted to bring the country together for the last three years. He’s not particularly polarizing as a person, as a politician. And so why is it that we are in the fix we presently are? And that says more about the nature of the country and the nature of the challenge than it does about the two people that are running.

In other words, I think that the problem here, Trump clearly is a clear and present danger in terms of his ability to blow things up if he becomes president in 2025, and his focus on vindictiveness, and the rest.

But the real challenge is that the world’s most powerful country cannot have a free and fair election seen as legitimate by all of its population, you can’t actually host something that’s completely foundational to the functioning of a proper democracy. That is a very serious problem.

There are a lot of countries having elections in the world this year, you’ve got India, you’ve got the European Union, you’ve got Mexico, you’ve got Indonesia. None of those countries have that problem, the most powerful one does. That’s what’s driving the risk.

SARA SILVERSTEIN: When was the last time the US was in danger of not being able to have a free and fair election?

IAN BREMMER: 1870s. I mean, really would have been in the reconstruction period, when you were essentially close to a constitutional crisis. That, I would argue, would be the last time we’ve seen that. Nothing remotely like that in our lifetimes, and certainly not 2020.

I mean, in 2020 the sitting president did everything he could to subvert the outcome, but it was not a coup, it could not be a coup, because the judiciary opposed it, the military opposed it, the police opposed it. There was no way to make it happen.

Where in 2024, you have a situation where the stakes are actually much higher for both of the people that are running. If Trump loses, he’s going to jail. He knows this, and so he has to do absolutely everything possible to ensure that does not pass.

And if that means efforts to undermine and subvert the actual election itself, certainly those are efforts that he and his supporters would take. Secondly, if Biden loses, there’s a significant expectation that he and his closest advisors would face serious legal challenges, maybe jail themselves, investigations.

I mean, Trump will have to undo the indictments, and probably by election time, the convictions that he’s already faced. And he is going to weaponize, politicize the Department of Justice, the IRS, and the FBI to go after his political adversaries.

Now, in 2016 when Trump won, that was not a priority, in 2024, it absolutely will be. So it’s not that Trump is particularly different than he was the first time he was elected president, but the geopolitical environment is radically worse and the domestic prioritization for the president is very different than it’s more challenging.

SARA SILVERSTEIN: Moving on to looking at investors. What do you think the biggest risk for investors in 2024 is?

IAN BREMMER: Well, the biggest risk for investors is precisely that level of uncertainty for the United States. Now, the US economy is doing very well, the dollar is very strong, US technology, artificial intelligence dominates the world, but your ability to rely on political certainty and transparency in the United States domestically between red and blue states is becoming a hell of a lot harder in the political and electoral environment that I just mentioned.

So you are potentially questioning whether or not you can invest in the United States in a non-political way. We’ve already seen some of that with red states versus blue states on ESG and DEI, but that is likely to become significantly more challenging and costly.

But the biggest problems aren’t in the United States, they’re what happens as a consequence of that. You’ve already seen that it looks increasingly unlikely that the US is going to be able to get its $61 billion for Ukraine this year. Big reason for that, Trump putting his finger on the scale and saying, I don’t want it done.

The reason that he has an impact is because he’s going to get the nomination. And as he gets the nomination, all of the Republicans will line up behind him, it’ll also be true in the way he talks about thinks about the border, that’s also true in terms of his position on the Middle East, going after the Iranians.

In other words, Trump’s policies, even if he doesn’t become president, will become the policies of the entire Republican Party. As you see people like Tim Scott, and Ron DeSantis, and very soon Nikki Haley full throatedly endorsing the former president, and therefore, all of the things that he supports and all of the legal jeopardy that he’s presently in, they’re buying all of it.

And that means that’s going to be the position of the entire Republican Party, and the media that supports it, and the money that’s behind that election. That is an incredibly dysfunctional and destabilizing political year in the US.

SARA SILVERSTEIN: Another one of your top risks are high rates driven by inflation, which not everybody is expecting, which might make it more dangerous. Can you talk a little bit about that? And what can investors do?

IAN BREMMER: It’s a relatively low-risk because we’re not talking about a recessionary environment, we’re talking about inflation being higher for longer than the markets are presently pricing in.

There’s an enormous expectation on the part of the markets, that interest rates are coming down dramatically. The Fed’s going to do a lot of lowering over the course of 2024. We think that that’s too much. We think it’s going to be less than the markets expect.

And a big part of the reason for that is the level of geopolitical uncertainty and the implications for the markets, the supply chain challenges when the Middle East war expands, the challenges on the markets for energy, for example, when Ukraine increasingly starts hitting critical energy infrastructure in Russia because there’s no way for them to take land back, but they’re getting more desperate and they’ve got the drones and the missiles. Those sorts of things.

Not to mention, El Niño, and yet again, the warmest year on record with economic implications and insurance implications as all of that climate change and high-impact weather-stress events plays through in countries around the world. Those things are not priced in when you look at how much the markets expect interest rates to come down. That is as a consequence, a risk for the marketplace.

SARA SILVERSTEIN: And when the market expects interest rates to come down, there’s what the Fed should do and what the Fed is going to do. Do you think the Fed shouldn’t cut rates and also that they are not going to as much as the market thinks?

IAN BREMMER: It’s less about what I think they should do because I’m not an economist, I’m a political scientist. What I’m saying is that the geopolitical and related risk environment to 2024 is a lot higher than the economists and the markets are pricing in.

SARA SILVERSTEIN: Another one of your big top risks for 2024 is ungoverned AI. And you also have this as one of your big three risks in your book about the coming crises. What’s the biggest short-term risk for ungoverned AI?

IAN BREMMER: I’m a huge enthusiast when it comes for AI. I believe that the level of productivity is extraordinary and the technology is moving very fast. You’re going to see it used in every sector in every company.

And therefore, you’re not going to have really powerful companies and powerful individuals trying to stop it, which is what usually happens with a technological revolution. You get post-carbon energy, and then all the coal and the oil people try to stop it, try to lobby against it. That’s not happening in AI, so it’s going to actually lead to a much bigger upside than people expect much faster.

But technology is moving much faster than the ability to govern it. And that means that the negative externalities, which one would expect from such a transformative technology, are going to happen very quickly and they aren’t going to be contained, or constrained.

What kind of negative externalities? Well, one obvious one is deepfakes and artificial intelligence used for disinformation. So in an election like the United State’s, where so much is at stake, where people are so angry with it, so much chaos that could come, we’re moving from disinformation to AI-driven disinformation. That’s a very significant disruptive risk.

Then there’s also the question of what bad actors can do to just blow things up. So you use AI to code, it’s very impressive. Use AI to create malware, that’s very dangerous and costly. Use AI to create vaccines, we love that, that actually got us out of COVID a lot faster than we otherwise would have been. Use AI to create new viruses and new diseases, we don’t like that so much.

And as you have these new incredible AI tools that are rolling out that everyone has access to, some of which are open source and they will be used not just for productive purposes, but also by tinkerers and by bad actors, this is the first year we’re going to start to see the negative impact of that more broadly.

SARA SILVERSTEIN: You talk in your arrest about America’s confidence in political and social institutions. And it feels like this ungoverned AI could also lead into that. Can you talk a little bit about why it matters that our confidence is so low and what we can do about that?

IAN BREMMER: Our confidence is not just low in our government institutions, it’s low in the school system, in the media, in the church, whatever church you’re talking about. I mean, the fact is that institutions which are how we become educated, how we develop from children into adults that act in a civic way to create a community, to create a nation, those institutions have been eroding, they’re getting weaker, we don’t believe in them as much as American citizens. And that’s a problem.

That means we don’t know what our country stands for and we’re more willing to believe things that aren’t true, we’re more willing to become tribal and polarized in our views, we’re more willing to turn on our fellow American citizens as enemies, as others, behaving in ways that really are deeply un-American in the kind of values that I think a lot of us want to be able to share.

And well, what do we need to do about it? We need to invest in civic infrastructure. We’ve invested so much in hard infrastructure, finally we know our bridges are falling down, so we finally do an Infrastructure Act and we try to make sure that maybe we can make a Acela actually work the way it was supposed to and stop bridges in Minnesota from suddenly falling down.

We know that we ignored our semiconductor industry for 20 years, it all went to Taiwan. We’re now building that again. We know that we weren’t focusing on transition energy, we’re now creating all these jobs in red states and in blue states to move us not just from being the world’s biggest oil and gas producer, but also the world’s biggest renewable energy producer.

We know that we need to invest in infrastructure. We’re investing nothing in civic infrastructure. We’re not investing in the institutions that create a strong community, that allow us to engage with our fellow citizens and not feel like nobody cares about us.

That has been the ugly stepchild that nobody wants to talk about, or spend money on, in the United States. And as a consequence, a lot of Americans feel left behind, angry, and wanting to break things. And that’s how you end up electing people that are destroyers as opposed to builders.

SARA SILVERSTEIN: Number 10 on your top risk list is the corporate culture wars. And this is something we see in the news every day. We are all talking about it in our own companies. How should companies navigate this? Is there any way to win?

IAN BREMMER: Companies do not want to have to deal with politics. The more people like me are talking to companies, the more unhappy they are. They want globalization, they want capital that can move everywhere, they don’t want to have to be different politically in different constituencies.

They’re getting used to having to do that all over the world, but they didn’t think they had to do that all over the United States. And yet, increasingly they do. It’s the battle against woke capitalism, it’s the battle against DEI, it’s some of your clients and some of your customers in certain states want you to say one thing, it’s black or it’s white.

And then people in other states want you to say exactly the opposite. And they’ll punish you. It’s Disney in red Florida and blue California feeling like there’s no win for them to be both, to be able to serve both.

I mean, shouldn’t Mickey be equally red and blue? Does it really matter? And the answer is, yeah. It really does. It’s almost impossible to serve those constituents. And that’s making it harder for people to invest successfully in the world’s most attractive and powerful market.

SARA SILVERSTEIN: And I know we talk all about the risks, but what do you see as the biggest opportunity in 2024?

IAN BREMMER: Well, I mentioned AI. That’s clearly the biggest opportunity writ large, but geopolitically there are a surprising number of big opportunities that people usually think of as risks. I’ll mention two.

The biggest one is that for the last 20 years the most important geopolitical relationship in the world has been US-China and it’s also been increasingly confrontational. This year, that relationship is being managed comparatively well.

In part because the Biden administration, facing election and two big wars in the Middle East and Europe, doesn’t want a big fight with China so they’re trying to manage the relationship more effectively.

But even more importantly, China is facing big economic trouble and they are trying to find a way to not make it worse, which means reaching out to the American private sector, the Europeans, the Japanese, and others and saying, hey, we want to make life more normal for you, we want to engage more, we don’t want more crises.

Also geopolitically, the Chinese have lost a lot by biting off more than they can chew in their own backyard. And their relations now are worse with South Korea and Japan, who are working now together and closer with the United States, with the Quad, India, Australia, Japan, the United States, building out new architecture.

Indonesia, building stronger relations with the US and Japan. Philippines, offering the US eight military bases. For all of those reasons, China wants a more stable, managed relationship with the United States.

That’s a very big deal for 2024, even after the Taiwanese elections, which so many people thought were going to lead to a crisis. So far, pretty easy, pretty stable response by all actors involved, Beijing, Taipei, Washington.

Finally, this is the year of all these elections all over the world. We talked about how much risk the US election is driving. People worried about all the instability. Most of the elections will be just fine.

Mexico, very smooth. The next president, very likely to be the one that AMLO wants, Claudia Sheinbaum, a technocrat, pro-business, former environmental scientist, great. In the largest democracy in the world, India, $1.5 billion people, Modi has 80% approval.

He’s going to win easily four of his last five-year term. More economic reform, good relations with the west, good relations with the global south, great place to be. European Union, plenty of populism, plenty of anti-establishment sentiment, but the overall election’s likely to have the same party coalition as what we have right now. Most of the elections around the world are a lot of stability.

SARA SILVERSTEIN: And I want to ask you before I lose you, an old question that you and I have talked about before. Who is the most powerful person in the world right now?

IAN BREMMER: It ain’t the US president because the president is so constrained. You’d probably say it’s Xi Jinping because he has the second largest economy and he’s consolidated so much power and can leverage it, particularly economically and commercially, through a state capitalist system to get outcomes that he wants with countries that need that largesse around the world, mostly in the global South.

But I would say, increasingly the most powerful people in the world are the small handful of individuals that are driving AI. It’s Sam Altman, and it’s Satya Nadella. And there’s 7 to 10 of them.

And these people are going to create the AI in a very short period of time that is being trained on our individual data. We will use those tools continuously, we won’t shut it off, and it will change who we are. It will make us different from homo sapiens. It will make us hybrid human beings who act and think differently.

I’m a little scared by that, I’m a little concerned by that, it’s obviously also very exciting, but it’s an enormous amount of power in the hands of a very small number of people. And it’s something we need to spend a lot more time on.

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