Ian Bremmer's Quick Take: A Quick Take to close out our week in Davos, Switzerland.
Want to talk about now President Trump's address; virtual, direct to everybody, collected yesterday, assembled yesterday, to hear his speech, and then to ask a few pre-planned questions. The speech itself, at the beginning, not all that surprising, "America's back open for business. Everything was horrible before. Everything's going to be great, now." Not a surprise, kind of exaggerated. You'd never think that the US was by far the strongest-performing economy in the advanced industrial world, coming out of the pandemic. But people roll their eyes a bit, they get on getting on. There was still a fair amount of news that was actually made, and some interesting thoughts about where the initial Trump administration is going to go.
First point, on OPEC, talks a lot about Saudi Arabia directly, Mohammed bin Salman. They're very close, they've worked together closely. Not only when he was president the first time, it was his first trip as president back in 2017, but since then. A lot of business with the family as well. And has been promised $600 billion to invest in the United States directly. That beats the $500 billion announcement that the AI giants have just made in what they're going to do, this Stargate project. He likes that. He said, "Why don't you up it to a trillion?" That's a round number. Good thing we're base-10 in this country. Anyway, the fact that Trump is interested in engaging very closely with the Saudis, not a surprise at all, there is going to be a very big push to try to ensure that Saudi Arabia moves on normalization of relations with Israel. Given the fact that there's no two-state solution on the table for the Palestinians, that's challenging, but I wouldn't count it out, frankly.
Secondly, a lot of talk about oil and the fact that Trump really doesn't like where oil prices are right now. Now, the Americans are going to try to pump more, but he knows that there's only so much that can be done in the near term, maybe another 500,000 barrels a day. OPEC, on the other hand, has over four million barrels that are off the market. Why? Because they're willing to ensure that prices are comparatively high. And if that means they lose a little bit of market share, they're happy to do that. Well, Trump doesn't like that one bit, and especially because he wants to hit Iran hard, and take more of their oil off the market. He doesn't want prices to go up, so he wants the Saudis to lean in. How are they going to react? We'll see. Something at least nominal in the near-term, that brings prices maybe down towards, let's say, $70, as opposed to roughly $80, where they've been, that would be interesting to see. I wouldn't put it past the Saudis at all to lean in on that.
Secondly, China. We are going to now see tariffs early on China, 10% across the board, February 1. Markets seem to like the fact that, on the first day, Trump didn't do anything, but a few days later, is that really much better? What was interesting about the conversation, Trump is trying to make it very clear, he doesn't have an ideological beef with China. He continues to speak broadly, more warmly about Xi Jinping, and specifically about China, than generally President Biden has. That's not all that different from the first term, but it's different from expectations over the past few months. And I do expect we're going to see a summit meeting relatively soon, even though there's been no announcements around it. Having said all of that, the fact that the US has a really tough take on China, not only bilaterally but also versus all these other countries, Trump wants to punish the Europeans to ensure that they coordinate with the US on China, wants to ensure the Mexicans, the Indians, the Vietnamese, and others don't allow Chinese goods into the US through their countries.
It's very hard for the US and China to maintain a stable relationship when Trump's going to respond to China, "Well, that's our business. Those are relations with other countries. You have nothing to say about it." They're really stuck on this, and I expect that, despite maybe a bit of a honeymoon, which I wasn't thinking we'd have a few weeks ago, the US-China relations are still going to get a lot more challenging over the coming months.
And then we have Russia. And I thought it was very interesting that when Trump was asked, "So, next year at Davos, if you were here, is the war going to be over between Russia and Ukraine?" Because, of course, he's been saying, "I can end the war in a day." Then he's saying, "100 days." Now, he's saying, "Actually, the Ukrainians are ready for a deal." And by the way, that's true. But you're going to have to ask the Russians. Well, that's very different from, "I can get the deal done very easily."
He also continues to lean into the fact that the Chinese can be useful here, and that's true. That's something that the Biden administration and Trump administration actually agree pretty strongly on, that China has a lot more direct leverage over Russia than the United States does. And there's only so much the US can do with additional sanctions to convince the Russians to stop. Now, Trump can say that Russia needs to end the war, and that this is hurting them, but Putin doesn't actually feel that way. Certainly isn't prepared to accept less than the territory that he's presently occupying. So that, to me, is very interesting.
I would say the place that Trump has moved the most in the last three months, moved specifically towards the position that the Europeans have, and they're a lot less panicked about it now than they were even a week ago, is on the Russia-Ukraine issue. No one here in Europe, not one European leader I spoke with, now believes that Trump is going to basically throw Zelenskyy under the bus. And that's absolutely not where they were even, let's say, in December. So, that's a big deal.
That doesn't mean that the Europeans are feeling comfortable about Trump because, of course, Trump does not like Europe. Does not like a consolidated Europe, doesn't think a strong Europe is good for the United States. He wants to deal with individual European countries, and he wants to deal, of course, preferably with more Europe-first types in those individual countries. So, it's not the British Prime Minister, it's not the German Chancellor. It's organizations like the Reform Party and AFD. And, of course, Giorgia Meloni from Italy. He also bitterly complains about all the regulations, all the taxes, how hard it is to do business in Europe, how hard it is to do business with Europe. And that is a big challenge for Europe, that understands they need to be more competitive, but isn't prepared to spend the money, isn't capable of coordinating to get the kind of industrial policy done that the Americans are now doing.
So, on defense, on Ukraine, existential threat from Russia, Europe's doing a lot more coordination with the United States. On the economy, which concerns the Europeans equally much, and technology, where the Americans are a clear leader and leaning in very heavily, and the regulations are only going to get more comfortable and aligned with the technology companies, those that remain, the regulations, that is, not the tech companies, the Europeans are in very serious trouble.
So, that's it from me. I hope you all guys are well, and I'll talk to you all from New York next week.
