Eurasia Group Founder & President Ian Bremmer joins Yahoo Finance Live to talk about the support Ukraine has received amid Russian escalations, Russia's future economic and financial system weaknesses, the European energy market, President Putin's strategic options, and cyberattack and misinformation campaigns.
EMILY MCCORMICK: The world continues to monitor the latest on the war in Ukraine as Russia's attacks escalate in some of Ukraine's largest cities. Joining us now to break down the latest on the geopolitical situation is Ian Bremmer, Eurasia Group Founder and President. Ian, thank you so much for your time this afternoon.
We're hearing now that Russia's attacks in Kyiv and Kharkiv have grown more brutal while Russian forces have been met with increased resistance. Are you surprised? And do you think Russia is surprised with the scale of the response both within Ukraine and from the rest of the world in response to this invasion?
IAN BREMMER: I think they're very surprised by the response internationally. It is clear that the history of Russian escalation has been met mostly with very limited and fragmented response. Think about when they took a piece of Georgia in 2008, when they took two pieces of Ukraine in 2014, when they intervened in the US elections in 2016.
This time, they've got Biden focused on Asia after Afghanistan, and then Merkel's gone and Macron's thinking strategic autonomy. They had every reason to believe that the response this time around was going to be a lot weaker, and it wasn't. I mean, this feels like a huge red line that they crossed and suddenly everyone is piling on-- literally everyone.
I mean, you've got-- in Monaco and Switzerland you have them cutting off and freezing assets. You've got Luxembourg sending Jeeps over and anti-tank missiles to the Ukrainians. I mean, it's astonishing just how angry the advanced industrial economies are at Russia right now. And I think that Putin clearly did not expect that his economy would be devastated as a consequence of his decision to invade Ukraine.
EMILY MCCORMICK: And given these sanctions and the level of Russian isolation that the rest of the world has really put Russia under at this point, how much economic strain can Putin afford to withstand among the average Russian people before he's forced to change course?
IAN BREMMER: Well, forced to change course is a pretty high bar. This is probably going to cost the Russians some 5% to 10% of GDP all in, on top of the under-performance from the sanctions that existed from 2014, which were pretty marginal but did matter. That's roughly equivalent to the sanctions that the Americans and the Europeans put on Iran.
Now, it matters a lot more because Russia is a much bigger economy, it's interconnected with the world economy, it has the potential to have a Lehman Brothers type moment spillover effect. But in terms of the ability of the Russians to survive this, to live with a so-called resistance economy, to say, screw you, to the United States and Europe, I do believe the Russians will have significant capacity to withstand it if they want to.
But the point is that if you combine the decoupling long-term of Europe from Russia-- I mean, they're literally going to move their energy dependence away from Russia, that will never come back-- combine that with the forward deployments of NATO into the Baltic states, probably permanent basing agreements coming, and Poland, and Romania, and Bulgaria-- combine it with the Fins now talking about wanting to join NATO-- and once they go, the Swedes probably will as well. Combine it with the Germans that are now announcing that they're going to send weapons to Ukraine and they're going to spend 2% of their GDP on defense-- I mean, you put those things together, this is obviously and dramatically worse for Russia's strategic position in Europe, which you'll remember is a big part of why Putin started this to begin with than anything that he gains in the best possible scenario for Putin. And we're not there on the ground in Ukraine.
- And as you're mentioning, so many of these countries now getting in on the action in their support of Ukraine. You've said that European governments now realize that their post-Cold War decisions to increase the dependence on the Russian economy was a strategic mistake and should be undone. But when you are this closely connected in this highly of a globalized world, what does that look like in real terms? And what sort of economic fallout could there be then for these countries that do try and cut off Russia or ease off their dependence on Russia's economy?
IAN BREMMER: Well, this is less of an America problem. It's less of a France problem, which gets most of their energy from nuclear plants. And of course, the Germans should be doing that and they're not. High level German officials have told me very clearly that Nord Stream 2 is a strategic mistake.
The dependence they have on Russian energy's a strategic mistake and they're going to undo it. Now, there's a reason why the decisions to hit Russia so hard with sanctions do include cutouts for the ability to pay for gas and oil coming to Europe, because it's still necessary for the European economies.
They want to, even with their anger, they'd like to still be able to keep their people warm, right? And the Russians want to make that money. But a lot of that pipeline system runs through Ukraine. So clearly, ther'es a big war going on. It's vulnerable to getting destroyed by either side, frankly. And it's also vulnerable to the Russians cutting it off in a fit of pique, even if it means that they're going to take economic cost because they want the Europeans to feel that pain.
Now, if that happens, there's no way the Europeans can make up that gap with gas from the US, or Japan, or Qatar, or Azerbaijan-- there just isn't enough that's unspoken for. So prices would then go way up, and you'd have to see rationing across many European countries. And you're still in winter, it's still fairly cold, and people would be really angry. You'd see demonstrations, I have no doubt.
But I will tell you-- you've got 80% German approval right now for spending 2% of GDP on defense. That's astonishing. I mean, the anger of the German people at what the Russians have done is so far beyond the imagination of where you could have been a couple of weeks ago, five months ago, two years ago.
And I do think there's a greater willingness to take hardship. What's basically happened, and it's a very simple way of thinking about this-- when the Soviet Union collapsed, we had a peace dividend. The world benefited from not having to think so much about national security, not have to pay so much about national security-- instead, leaning into globalization.
That peace dividend is gone. And it's not just gone for a month, it's gone for the foreseeable future. And the Europeans are the ones that are going to pay the most.
- So then when you look at some of these strategic alliances, whether it's China showing some support for Russia, and then you also see the Western sanctions-- it's a question that you don't really want to know the answer to, but militarily, how far do you think Putin is willing to go if he's cornered enough?
IAN BREMMER: Well, there's always the possibility that he climbs down. I mean, you'll remember when the Iranians had been engaged in all sorts of malfeasance in their backyard, including attacks against the largest refinery in the world in Saudi Arabia, the Americans suddenly decided to assassinate the head of all of their defense capabilities. And the Iranians thought about retaliating and then said, maybe we shouldn't do that.
So if Putin is rational in the way that Western leaders are rational, you can see him climbing down when he sees he has no good alternatives. But so far, that's not the way he behaves. I mean, a lot of people would have said, there's no way he's going to do a full invasion into Ukraine. And he did that.
And a lot of those same people are saying there's no way he'd ever consider using nuclear weapons when he rattles them. I wouldn't say never. So I mean, I think we have to be clear just how costly this is going to be for Russia and just how much danger that could pose to Putin himself where losing power isn't getting voted out, it's your debt.
We're playing with some fairly high stakes. And that might well mean that Putin is willing to directly threaten NATO countries. I saw this from former President Medvedev-- the French government said that they're going to war economically against Putin, and Medvedev, who was a relatively soft spoken guy, said, don't use those terms because an economic war can become something very different very easily.
And Lavrov has talked about the possibility of direct military sort of impact if the responsibility of all of those NATO countries that are providing weapons, that are being used against Russian soldiers in Ukraine right now. The foreign ministry warned the Fins and the Swedes there would be military consequences if they tried to join NATO. Putin himself has said that he's upping the readiness of their nuclear forces-- their so-called deterrence forces. So it's not just one-off.
The Russians are saber rattling directly with NATO on a number of occasions. They want NATO to see that they're prepared to go all-in. Do I believe that? Not completely. Why would I believe anything that Putin says at this point? He lied directly to the face of every NATO leader about the fact that he wasn't going to invade. So I don't put stock in what Putin says. But their capacity to escalate is real and they are getting cornered.
BRAD SMITH: And so, Ian, as you've mentioned here, much of the endgame hinges around the mental state of Russian President Vladimir Putin. How large of a question mark does that remain to, as the economic detriment has already started to be incurred, and for whatever the economic detriment is that he is willing to take on for Russia or on the other side of this, embark on given the threat of cyber attacks that he's already kind of thrown out there on the table?
IAN BREMMER: Oh, we're clearly going to see cyber attacks more broadly against NATO, not just against Ukraine. I would be stunned-- I mean, he stopped supporting the cyber attacks against critical infrastructure after Biden asked him to when they met in Geneva back in June. That's coming back, there's no question.
But might there be other sorts of attacks that would be made? Might they cut off all the energy that goes into Europe? Might there be incidents where they're harassing NATO vessels in the Black Sea or aircraft, for example, around the Baltics? Absolutely.
And this is a very dangerous environment. So I mean, again, we have to think about what it means to have this level of confrontation with a country that has 5,000 nuclear weapons and a leader that feels increasingly cornered. Now, President Putin, I mean, he doesn't look like the same president that was giving these three-hour, without notes, State of the Union speeches and taking questions from on every topic from all of these different journalists and citizens.
He doesn't have that level of coherence. And the speeches that I've seen Putin give in the last few weeks do imply that he's lost a step or two. I mean, if he were the American president, we'd already be saying his brain was oatmeal, right? I mean, we know what that's like. But a lot of that is taken out of context too.
And the fact remains that the Ukrainian government is winning the war on information. They're the ones with the millions and millions of Twitter followers right now. They're the ones with the leader who is considered a folk hero globally. And they're the ones that are doing better in getting misinformation out to try to get people to be more sympathetic.
You saw the Snake Island 13. They said they told a Russian warship to f off and they all got killed, except they didn't get killed. They all got captured. But everybody believed that and they were sympathetic to Ukraine. Now, there's reasons to be sympathetic to Ukraine, don't get me wrong.
I'm simply saying that there's lots of misinformation out there that probably paints Putin as an insane person. And I would be careful before I took that at face value.
BRAD SMITH: And so even if there was a puppet government installed in Ukraine, then what after that? Would there be any legitimacy to that--
IAN BREMMER: There's no legitimacy. There's no legitimacy. There's no legitimacy. Of course there's no legitimacy. At this point, there's no legitimacy of the Russian government. There's no legitimacy of the Belarusian government.
So I mean, a puppet government of Ukraine-- it's like double jeopardy no legitimacy, what do you want me to say? But the fact is there will be a Ukrainian government in exile, maybe in the Western Ukraine if the Russians are incapable of taking it-- maybe in Poland, maybe in France.
Every Western government will recognize that Ukrainian government. They will provide them with aid. They will provide them with weapons. Those weapons will be sent to partisans who are fighting against Russians on the ground in Ukraine. I was talking to my friend Dave Petraeus the other day, he said that Putin has swallowed a porcupine in Ukraine.
I think that's right. I think that's right. I think that there is no scenario where the Russians occupy Ukraine and this goes well for them. I mean, frankly, the Russians should hope that their army loses in Ukraine, because that would be much better off for the Russians economically and strategically in the long-term.