Ian Bremmer – We Face a Profound Geopolitical Recession

This article is part of our Schwab IMPACT 2016 Special Coverage this week. More articles are listed below.

The world will enter a geo-political “recession,” according to Ian Bremmer, resulting in a large list of failed states. The U.S. will be relatively insulated from that crisis, but faces its own challenges driven by globalization and wealth inequality.

Bremmer is the president and founder of Eurasia Group, a leading global political risk research and consulting firm. He delivered a keynote address yesterday at the Schwab IMPACT conference in San Diego. It is the industry’s largest conference, with approximately 2,000 advisor attendees.

“We are used to boom-and-bust cycles,” he said, “like recessions every seven to eight years. But we don’t talk about geopolitical recessions, because the cycles are much longer.” Bremmer said the last time the world fell apart was after World War II. When it did, we rebuilt the world with U.S.-based values and standards – indeed, he said, globalization became Americanization.

A profound geopolitical recession

Now we are entering a period of profound geo-political recession, according to Bremmer.

The U.S. will not be badly affected, nor will be Japan or China. To understand why, consider the U.S. approach to the risk of terrorism, which is part of what is driving the geopolitical recession. Terrorism is a problem in the U.S., Bremmer said, but nowhere close to the concern it is in Europe, which is nowhere close to the level of concern in the Middle East. Angela Merkel, who Bremmer said is the strongest leader in Europe, took the lead in the refugee crisis. That was “massively courageous,” he said, but can’t be called leadership, since nobody followed her. Merkel offered to pay Turkey to keep refugees, he said, after German citizens pushed back when she tried to increase immigration.

The Middle East could count on oil money and stable populations, according to Bremmer. Now, OPEC has been “fundamentally destroyed,” he said, and the U.S. is no longer willing to provide military support to those countries. As a result, popular unrest will turn Syria, Libya, Yemen, Iraq and Afghanistan into failed states, among others.

“The biggest refugee crisis and the worst terrorist organization in history are not a problem for the U.S., China and Japan,” he said.