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Why is Julian Assange in the news again?
Ian Bremmer shares his insights on global politics this week on World In :60.
What's left to sanction with Russia and have existing sanctions been effective?
There's very little left to sanction with Russia that the Americans and their allies want to sanction. I mean, you could try to cut off Russian oil exports to, say, India, but no one wants to do that because that would cause a global recession. Food, fertilizer, same thing. At the end of the day, the sanctions that the West can put on Russia without a massive impact to themselves and the world they've already put. But because Biden said there'd be hell to pay if anything happened to Navalny in jail and he's dead now, and it's pretty clear the Russians, the Kremlin killed him. That means they have to sound tough. But ultimately, the only thing that is changing Russian behavior is the provision of significant military support to the Ukrainians, and that is determined by US Congress going forward.
Is Israel preventing humanitarian aid from reaching Gaza?
Certainly that is the case, and they've been very reluctant to allow significant humanitarian aid to get into Gaza. Their view is that a lot of that aid would be taken by Hamas, and there's very limited capacity to stop Hamas from doing it. It's terrorist organization. Most of the rest of the world says, yeah, even if that's the case, you've got a couple of million civilians in Gaza whose homes have been destroyed, who've been displaced, that have no other way to live unless you provide them with support. And in very short order, the principal danger to civilians in Gaza will be humanitarian and will not be the war. That's how bad the humanitarian crisis is getting, even though the war fighting continues to go on.
Why is Julian Assange in the news today?
Well, because he is facing one of his last opportunities to avoid extradition to the United States. He is in the UK right now. He's wanted on almost two dozen criminal charges by the United States in regard to he and his organization putting out classified material and diplomatic cables over ten years ago. Those are serious crimes from the United States. But supporters of Assange are all about, look, this is, you know, putting truth to power and shining a light on massive human rights abuses. And if it wasn't for Assange, people wouldn't know about those abuses. It's kind of the same thing people have been saying about Snowden. There is a massive political debate that we can't finish in 180 seconds, but that's why Assange is in the news. We will see what the high court rules.
That’s it for me and I'll talk to you all real soon.
The Graphic Truth: How low will the Russian ruble go?
In an emergency meeting on Tuesday, Russia’s central bank raised interest rates to 12% (up from 8.5%) after its currency reached an almost 17-month low against the US dollar. Clearly the Kremlin is spooked that the Russian ruble has lost 25% of its worth against the greenback over the past seven months alone.
The ruble – which this week slid past 101 against the US dollar, before recovering slightly to 98 on Tuesday – has ebbed and flowed since Russian forces invaded Ukraine in Feb. 2022. For context, when oil prices were soaring last July (bolstered by the Kremlin's capital controls), the ruble touched around 61 to the dollar. But many analysts are skeptical that this move will be able to stabilize the ruble, warning that Western sanctions will make it very difficult for Moscow to attract foreign investment.
Still, last summer, things looked pretty rosy for the Russian economy due to high oil and gas prices which, many suggested, were scarcely being impacted by harsh Western sanctions.
At the time, Russia’s trade surplus was further bolstered by the fact that imports fell as Russians’ spending habits were crimped by the uncertainty of war.
But the current currency turndown shows that when compounded by a range of other fiscal and economic factors, Western sanctions are in fact having a strong impact on Moscow’s trade balance – and the value of its currency.
The decline is significant enough that the Bank of Russia last week announced that it would stop buying foreign currency for the remainder of the year in a bid to avoid further volatility.
So what are the key factors at play?
Energy revenue is down. Western sanctions, augmented by a cap on oil prices introduced by G7 countries in recent months, are hurting the Kremlin’s bottom line. Cash inflows from oil and gas, Russia’s main exports, have fallen by 47% in the first six months of this year compared to the same period in 2022. Although countries like China and India continue to buy large amounts of Russian oil and gas, much of this has been gobbled up at a steep discount.
At the same time, imports have recovered in part because the state itself relies on things from abroad to keep its war machine pumping. And its military spending is only growing. Consider that Russia has doubled its 2023 defense spending target from the previous year to more than $100 billion a year.
Capital flight. Making matters worse, this dynamic has been exacerbated by the fact that many Russians have been pulling their assets from the Russian banking system amid fears about regime instability. According to the central bank, Russians withdrew a whopping 100 billion rubles (around $1 billion) from the banking system over just a few days amid Wagner chief Yevgeny Prigozhin’s short-lived mutiny back in June.
Recent events have led to increased calls to make borrowing costs higher, culminating in today's emergency measures. Indeed, Putin’s top economic advisor said earlier this week that loose monetary policy is to blame for the ruble’s downward spiral. Though the bank raised interest rates to 8.5% last month, it was the first steep hike in more than a year.
Looking ahead. While a weak ruble could actually help the Kremlin fund its war effort – more foreign currency would translate into more rubles to buy stuff – brewing chatter about current parallels to Russia’s last deep financial crisis, 25 years ago on Aug. 17, do not look good for a regime trying to project competence and strength. So how do current trends compare to Russia’s last financial catastrophe of 1998? We take a look at the ruble’s value against the US dollar since then.
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A world in need of music therapy: Renée Fleming at Davos
You never know who you're going to meet wandering around in Davos, including opera legend Renée Fleming, who was honored this week by the Forum.
The four-time Grammy-winning Soprano, who has performed on six continents, was presented in Davos with the prestigious Crystal Award—not for her singing, but for the voice she's lending to help people understand how music impacts the human brain.
"What I've seen firsthand has really convinced me of the effects of art therapies on disorders relating to aging. So, Alzheimer's and dementia, as well as Parkinson's, other movement disorders, brain trauma, or anyone who's had a horrible accident."
Fleming spoke to GZERO’s Tony Maciulis on the ground at the World Economic Forum about her passion project, Music and the Mind. She also weighed in on a sticky geopolitical issue: Russian artists who have been banned from Western concert halls over their comments (or lack therof) regarding Russia’s illegal invasion of Ukraine.
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6 months of Russia's war in Ukraine
Wednesday marks 31 years since Ukraine declared independence from the former Soviet Union. But it’s also the grim six-month anniversary of Russia bringing total war back to Europe with its invasion of Ukraine. The EU and US responded by vowing to apply maximum pressure on the Kremlin to get the Russian military to back down.
So far, the results have been mixed. What have both sides gained – and lost – since war erupted?
The view from Russia
Territory. Russia has made some significant territorial gains in eastern and southern Ukraine in recent months. In the Donbas region – Ukraine’s former industrial heartland, which Russian separatists have largely claimed since the 2014 annexation of Crimea – Russian troops now control the entire province of Luhansk and continue to make gains in neighboring Donetsk. Crucially, not only do these territories give Russia access to coal fields, but they also disrupt key transport routes for Ukraine via the Black Sea.
Meanwhile, in capturing the small southern city of Mariupol back in May, Russia has been able to create a land bridge from Crimea, which essentially gives Moscow access to Ukraine’s Black Sea coast, a crucial trade artery for agriculture, Ukraine's top export.
Economy. Reliance on Russian energy exports, particularly in Europe, has provided a windfall of oil and gas revenues for Russia over the past six months, particularly as the war sent global oil prices surging.
Still, the unprecedented scale of Western economic sanctions is hitting Russia’s economy hard. Russian imports are being pummeled because Brussels and Washington have sanctioned Russian firms, and foreign companies have fled en masse. This has driven up the cost of key commodities, further exacerbating inflation at home. Staples such as cooking oil, sugar, and medicine have become scarce, with European and American pharmaceutical companies limiting some exports to Russia.
Meanwhile, the import crunch has pummeled Russian industry, particularly car production, with manufacturers unable to get their hands on key parts. In the single month of May, for example, Russian car production slumped by 97%.
As a result, the Kremlin has taken steps to try and boost domestic manufacturing, but a surge in production takes time … and rubles that Russia is currently pumping into its war machine.
Morale. The war has taken a toll on Russian families and national morale. US officials estimate as many as 80,000 Russian casualties from the war. For now, however, President Vladimir Putin has succeeded in whipping the Russian constituency into a nationalist frenzy, and his approval rating jumped after the invasion and has remained solid. (Though polling from Russia needs to be taken with a healthy dose of skepticism.) Still, this sentiment could change if an additional 100,000 Russian troops come home in body bags by Christmas.
The view from Ukraine
Death and destruction. Formerly bustling Ukrainian cities have been reduced to rubble, and the numbers are staggering: At least 114,700 homes have been damaged or destroyed, along with hundreds of kindergartens (764) and medical facilities (123). Some 4.8 million jobs have been wiped out, while more than 8 million Ukrainians have been internally displaced and more than 5 million have fled to nearby countries.
Moreover, Ukraine’s defense ministry says that 9,000 Ukrainian soldiers have been killed, while the UN estimates that at least 5,587 civilians have died, and that’s likely an undercount.
This says nothing, of course, of non-quantifiable losses: women and kids leaving behind male family members; children missing school; loss of income; mental trauma; missed pets.
War of public opinion. Ukraine has won the battle for hearts and minds. Ukrainian flags now adorn national parliaments across the Western world, and anyone who is anyone has touched down in Kyiv over the past six months for a photo op with Ukraine’s man-of-the-people President Volodymyr Zelensky. Meanwhile, Zelensky and his wife, Olena Zelenska, have emerged as darlings of the West, landing a splashy Vogue cover shoot in recent months with the photographer to the stars, Annie Leibovitz.
Friends with some benefits. The perception that Russia is threatening not only Ukrainian security but democracy itself has pushed European leaders to welcome Ukraine as a rightful member of the broader European community.
As a result, Brussels agreed in June to give Kyiv EU member candidate status under a new accelerated process (though it could take years for Ukraine to implement the reforms needed to formally join the bloc).
What’s more, the EU and US have also given Ukraine sophisticated weaponry – including long-range precision missiles known as HIMARS – to repel Russian advances, along with specialized military training, which Ukraine could use to bolster its military capabilities going forward. So Kyiv gets some of the NATO toys before joining the alliance — and it has long wanted to be a member.
Moving forward. Ahead of winter, the Russians worry that slumping oil and gas prices may make a dent in their economic ability to wage war. For the Ukrainians, the big concern is whether the West will find high inflation and energy costs too big a price to continue supporting Kyiv, leaving the Ukrainians to fend for themselves in the bitter cold.
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From left to right, the presidents of Russia (Vladimir Putin), Iranian (Ebrahim Raisi), and Turkey (Recep Tayyip Erdogan) hold talks in Tehran.
What We're Watching: Tehran trilateral, EU food jitters, Sri Lankan presidential vote
Putin, Raisi & Erdogan in Tehran: friends with differences
Leaving the former Soviet region for the first time since he ordered the invasion of Ukraine, Russian President Vladimir Putin met in Tehran on Tuesday with his Iranian and Turkish counterparts. The conflict in Syria, where Russia and Iran are on the opposite side of Turkey, was the main item on the agenda, but little of substance was announced beyond a pledge to rid the country of terrorist groups and to meet again later this year. Importantly, Turkey’s recent threat to invade northern Syria to destroy Kurdish militant groups based there still hangs in the air — a point underscored by Recep Tayyip Erdogan’s call for Russia and Iran to be more “supportive” of Turkey’s security concerns. Still, both Moscow and Tehran have warned him against an invasion. Putin and Erdogan also failed to close the remaining gaps on a UN-backed plan to restart Ukraine’s seaborne grain exports. Lastly, while Putin and the Iranians traded shots at NATO and the West, there was no public mention of the current, fast-fading efforts to revive the long-stalled 2015 Iran nuclear deal.
EU fillets financial sanctions over food concerns
The European Union is planning on Wednesday to relax sanctions against several major Russian banks in a move to address high global food prices. Although there are no Western restrictions on Russian food or agricultural goods specifically, many global traders have avoided taking Russian cargo because the Russian banks that finance those exports are sanctioned. The news comes as Ukraine and Russia are nearing a UN-brokered deal to reopen Ukraine’s Black Sea shipping lanes for grain exports. Before Russia invaded Ukraine, the two countries were leading exporters of grain and cooking oils, and Russia was a top fertilizer exporter. The war and sanctions interrupted much of those shipments, driving up global food prices and jeopardizing the livelihoods and food security of hundreds of millions of people globally. Although global food prices have eased since hitting historic highs in May, they are still 23% higher than they were a year ago, according to the UN. For complete coverage of the global food crisis, check out our Hunger Pains project.
Sri Lankan MPs pick unpopular president
Following last week's dramatic resignation of disgraced former President Gotabaya Rajapaksa, Sri Lankan's parliament on Wednesday endorsed his unpopular chosen successor amid mass social unrest sparked by a months-long economic collapse and political crisis. Ranil Wickremesinghe, the former prime minister appointed acting president after Rajapaksa's departure, was confirmed in the top job by a majority of MPs over the little-known opposition hopeful Dullas Alahapperuma. On the one hand, Wickremesinghe has the experience to lead the country through tough times and crucial negotiations for an IMF bailout after serving — checks notes — sixstints as PM. On the other, most protesters want him out because he's considered a Rajapaksa loyalist (they even torching his private residence at the height of the popular uprising). The opposition now says they’re willing to give Wickremesinghe a chance, but the political turmoil will likely continue.
This comes to you from the Signal newsletter team of GZERO Media, a subsidiary of Eurasia Group that offers balanced, nonpartisan reporting, and analysis of foreign affairs. Subscribe to Signal today.
A natural gas pipe in front of EU and Russian flags.
What We're Watching: Russia-EU pipeline repairs, AMLO in the (White) House, Sri Lanka's new leader
Will Russia turn the taps back on?
“Trust us,” Russia is saying, “we’re just doing routine maintenance.” Moscow has just shut off its Nord Stream 1 pipeline, a major source of natural gas for Germany, for 10 days of summer repairs. Annual checkups to these pipelines are normal, but this is no normal year. Berlin worries the Kremlin might leave the pipes closed as a way to retaliate against the EU for the bloc’s Ukraine-related sanctions. Nord Stream 1 carries about 55 billion cubic meters of gas annually to Germany, equaling about half of the country’s yearly consumption. If Moscow keeps the line shut, Europe would struggle to store up enough gas supplies ahead of next winter. Natural gas prices in Europe are already soaring, and although the EU is moving to wean itself off of Russian energy, any further shortfalls would further stoke already-high inflation, with unpredictable political consequences across the continent. Putin, of course, knows this. Keep an eye on that “closed for repairs” sign hanging on Nord Stream 1.
Biden meets AMLO
Mexico’s President Andrés Manuel López Obrador, popularly known as AMLO, visits the White House on Tuesday for a sit-down with US President Joe Biden at a time when ties are tense. López Obrador has recently irked the Biden administration by calling US support for Ukraine a “crass error” and by skipping the US-hosted Summit of the Americas because the White House didn’t invite the authoritarian leaders of Cuba, Venezuela, and Nicaragua. Washington, meanwhile, has irritated AMLO with criticisms that he’s undermined the independence of some of Mexico’s governing institutions and hasn’t done enough to protect journalists’ lives. Still, the two men will try to make progress on two key issues. On immigration, Mexico still allows the US to deport non-Mexican migrants back into Mexico under the controversial Title 42 policy, but in exchange AMLO wants Biden to authorize more work visas for Mexicans and Central Americans – perhaps a tough sell for a Democrat in an election year. Trade too will figure in the meeting: Washington is concerned about Mexico’s loose adherence to environmental and labor standards in the US-Mexico-Canada free trade deal (the NAFTA 2.0 pact that Trump negotiated in 2020.)
Date set for new Sri Lankan president
Sri Lanka’s parliament will select a new caretaker president from among its own ranks on July 20, in hopes of calming the worst political, economic, and social crisis in the island nation’s history. To clear the way for that, the current president and prime minister will both resign on Wednesday. The moves come after protesters furious about a nosediving economy and high prices for food, fuel, and medicine stormed the leaders’ residences over the weekend. Whoever is tapped to lead the country now will face daunting challenges: the most immediate is to secure an IMF rescue package, but beyond that to re-establish trust in the government and place the country’s tourism-dependent economy back on firmer footing as the pandemic recedes. In May, the country allowed the first sovereign debt default in its history, the result of government mismanagement of foreign currency reserves, which now hardly exist at all.Putin attends a meeting with Senegal's President and African Union chair Macky Sall in Sochi.
Are the West’s efforts to isolate Russia doomed?
In response to Russia’s invasion of Ukraine, the US and Europe have launched a concerted campaign to punish Russia economically and isolate it politically. The West wants to send a strong message to other powers that might be tempted to violate the so-called rules-based international order. But many developing countries across Asia, Africa, and Latin America are reluctant to go along, blunting the effectiveness of this campaign. We spoke to Eurasia Group expert Christopher Garman to better understand the reasons for their skepticism, and what the consequences are likely to be.
Who is opposing the campaign against Russia?
China, of course, is the biggest opponent. Locked in a rivalry of its own with the US, China is not likely to abandon its strategic partnership with Russia. At the same time, China worries about the consequences of the West’s pressure campaign on the global economy. It has been active in rallying opposition to Western sanctions and overtures to isolate Russia in the Global South, where many countries see no reason why they should follow US and European efforts to isolate Russia — especially if doing so will come at a steep economic cost.
The first signs of tension emerged at the United Nations. When the UN General Assembly voted on March 2 to condemn Russia’s invasion, 141 member states voted in favor and only 5 against, with 35 abstentions. But when a second vote on April 7 sought to suspend Russia from the UN Human Rights Council, support dwindled to just 93 countries; 24 countries opposed the measure, and 58 abstained.
So, this is mostly about economics?
Mostly, yes. The war and the sanctions have supercharged already high inflation, and the developing world is suffering most acutely from spiraling food and energy prices. Ukraine is a major food supplier, and Russia is a big producer of both food and energy — as well as the fertilizer used to grow food elsewhere. Rising costs for this input are making basic foodstuffs like meat or dairy more expensive, in addition to the soaring prices for commodities produced in Russia and Ukraine such as wheat, barley, and sunflower oil. The war will therefore have a longer-term effect on global food prices, putting millions of people at risk of going hungry.
How are these trends shaping perceptions of Russia outside of the West?
Russia has been adroitly pushing the narrative that Western sanctions on its exports have triggered the global food crisis, rhetoric that has been echoed by leaders in the developing world, including Macky Sall, Senegal’s president and current chair of the African Union. This allows Moscow to continue to strangle Kyiv economically while exporting wheat — including stolen Ukrainian grain — to friendly emerging markets at high prices (a win-win for the Kremlin).
Are there other reasons for the developing world’s opposition to the campaign against Russia?
Most leaders in the Global South instinctively favor a multipolar international order. They don’t believe that multilateral institutions adequately reflect their weight in the global economy and resent that they're dominated by the US and Europe. As a result, many developing countries see Russia as a useful counterweight to US and/or Chinese influence in their regions. They think Russia can help them advance their own military, economic, and diplomatic objectives.
India, for example, relies heavily on Russian arms and has cultivated its relationship with Moscow even as it deepens cooperation with Washington against Beijing in the Indo-Pacific.
And from the perspective of much of the world, the war in Ukraine, though a humanitarian tragedy, is a regional crisis for Europe — neither a threat to the wider international order, nor something worth alienating an important military and economic actor over.
So, what is likely to happen?
The sanctions imposed by the West will likely succeed in materially degrading Russia’s economy, and the decoupling between the two sides appears irreversible as long as President Vladimir Putin remains in power. Yet, the prospect of a unified global effort to isolate Moscow seems remote, and any attempts to toughen the current sanctions framework could prompt China and developing countries to develop alternative payment and transport mechanisms to access Russian exports.
Meanwhile, the rift over the campaign against Russia may have broader implications. It bodes poorly for US attempts to build partnerships with developing countries to push back against Chinese influence. It could also undermine cooperation in multilateral fora such as the G20, where US-led efforts to expel Russia have been opposed by developing countries, and even encourage the expansion of alternative organizations. Last month, the BRICS grouping — comprised of Brazil, Russia, India, China, and South Africa and seen by some as a possible future alternative to the G20 — invited more than half a dozen other developing countries to participate in a virtual meeting of foreign ministers.