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Viewpoint
Representation of the $Trump meme coin together with Bitcoin and crypto coins, seen in this photo illustration.
Though once a crypto skeptic, President Donald Trump has become an enthusiastic supporter of the industry. His media company began investing in crypto several years ago, and on the campaign trail, he pledged to reverse Joe Biden’s administration's tough regulatory approach toward this asset class. He also proposed creating a national Bitcoin stockpile, which would include the Bitcoin seized in law enforcement actions.
Trump’s recent announcement of a “strategic crypto reserve” showed his continued commitment to this idea, as well as his indifference to perceptions of conflicts of interest. Crypto-friendly investors are influential in the new administration, and Trump himself launched a crypto meme coin shortly before taking office.
We asked Eurasia Group expert Babak Minovi how a “strategic crypto reserve” would work.
What do you think the reserve’s purpose would be?
The name implies it would be similar to the Strategic Petroleum Reserve, the 400 million barrels of crude oil the US holds in reserve to supply the country in the event of a disruption. This reserve has also been occasionally used to smooth out the price of oil, most recently with sales in 2020 and 2021 to help moderate post-pandemic price increases. Yet is unclear that crypto is a similarly strategic asset for the US.
Countries also hold other types of assets – usually gold and so-called hard currencies (currencies such as the US dollar that serve as a stable store of value) – for use during times of economic or financial crisis. The US dollar’s status as a global reserve currency allows the US to hold much smaller foreign exchange reserves than the size of its economy would indicate. The US currently has about $1 trillion in reserves, including about $750 billion in gold. In comparison, China has reserves of about $3.2 trillion.
Although speculative assets such as stocks or crypto are generally not included in reserves, allocating some of the US’s reserves to crypto could also be a policy objective of the administration.
What would the reserve mean for the crypto industry?
Given that crypto trading volumes have been around $0.5 trillion a day, it is highly unlikely that any reserve buying envisioned under existing norms would be of sufficient magnitude to affect crypto prices. However, the US Treasury's stamp of approval on crypto as a reserve asset would probably affect market sentiment positively, especially in the short term, by convincing more conservative investors to allocate to the asset class.
There is also the possibility that the US's entry into the crypto reserve bloc could encourage other countries to add crypto assets to their government coffers. El Salvador is another country that has allocated some of its reserves to crypto (though the practice has prompted stern warnings from the International Monetary Fund).
Do you think this is a feasible proposal that is likely to go ahead?
It's hard to say that anything is not feasible these days, given some of the administration’s unexpected early actions, but the wisdom of such a move is questionable. The current downward trend in crypto prices is not outside of historical norms, and its value could sink much more. The relative opacity of the crypto market could also leave these assets more vulnerable to bad actor manipulation, potentially causing ripple effects in financial markets.
Why do you think Trump is advancing this idea and is so bullish on crypto generally?
Though Trump was once dismissive of crypto – he said in 2019 that Bitcoin “was based on thin air” – he later shifted his stance. His deregulatory instincts probably played a role in this shift, as did the influence of people in his orbit. Close advisers such as Elon Musk, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent – plus some family members – are crypto bulls. Trump’s media company has been dabbling in crypto investments for some time, and his recent experience with the $TRUMP meme coin probably reinforced the idea of crypto’s money-making potential in the president’s mind.
The Biden administration, conversely, took a tough regulatory stance toward crypto – why do you think that is?
In a way, regulators’ concerns with crypto mirror those about any other tradeable asset. Regulators need to be able to establish ownership and price and make sure that investors aren’t swindled by false claims and fraud. The existing regulatory systems have been put in place to ensure the strength and stability of the system for stocks, bonds, foreign exchange, and commodities. A desire to extend that umbrella to crypto – a relatively new asset class – explains most of the tough stance of the previous administration.
Edited by Jonathan House, senior editor at Eurasia Group.
Chinese national flags flutter near Tian'anmen Square ahead of China's annual sessions of its top legislature and political advisory body, known as the "Two Sessions," on March 3, 2025, in Beijing.
A sluggish economy and new headwinds created by Donald Trump’s return to the White House will be prominent themes when the nearly 3,000 delegates of China’s National People’s Congress, or NPC, convene in Beijing starting Wednesday. The legislative session will run for about seven days (time not fixed) in parallel with that of the National Committee of the Chinese People’s Political Consultative Conference, or CPPCC. The so-called Two Sessions represent China’s biggest annual political gathering and provide insight into the leadership’s priorities for the year ahead.
We asked Eurasia Group expert Lauren Gloudeman what to watch out for.
What are the NPC and CPPCC?
The NPC is China’s highest governmental organ and national legislature. It usually convenes just once a year to advance legislation and approve national policy plans; the smaller Standing Committee of the National People’s Congress meets more often to continue the body’s legislative work. The CPPCC unites about 2,000 representatives of different social and political groups, giving them the opportunity to make their views known to the country’s leadership. Its role is more symbolic than anything else.
How does the NPC fit into China’s broader governance framework?
On the one hand, you have organs of government such as the NPC and the State Council, which implements legislation passed by the NPC and supervises the bureaucracy. On the other hand, you have the Chinese Communist Party, with its decision-making bodies such as Politburo and the Central Committee. The relationship between the government and the party has changed over time. Xi Jinping – general secretary of the party and president of the Chinese state – has made it a priority to assert the party’s authority over the government. Li Qiang, the party’s No. 2 official is premier of the State Council; Zhao Leji, the party’s No. 3 official, heads the NPC.
Are the Two Sessions’ proceedings open to the public?
The first couple of days will be open-door sessions of public speeches, reports, and press conferences. Li will present his so-called government work report. Like the US president’s state-of-the-union speech, the work report reviews the achievements of the past year and identifies key tasks ahead for the government. It usually sets economic targets. In addition, Xi will give remarks and the Ministry of Finance will give a budget report. Then there will be several days of closed-door sessions, during which not much information will emerge. At the end, different ministries will follow up with press conferences about their plans to advance policies discussed at the NPC.
What do you expect will be the main topics of discussion?
One major topic will be what to do about weak consumer spending, which has been a challenge for years now – especially since the COVID-19 lockdowns, when some people couldn’t leave their homes for months. Nonetheless, we’re not expecting a sea change in the policy approach to stimulating spending. More likely is an expansion of existing trade-in programs that offer subsidies for consumers to trade in their old EVs, household appliances, and other consumer goods for new ones.
What else would you highlight?
On a related note, officials will discuss measures to promote private enterprises. One of the reasons consumer spending is weak is that so many businesses struggled during the pandemic and continue to struggle, which has affected hiring. Authorities aggravated these problems in the private sector with an aggressive regulatory campaign against major companies they thought were insufficiently aligned with the party’s national development strategy. Now they are trying to repair the damage. Xi met last week with the leaders of 20 or 30 companies to reassure them that the government cares about stabilizing the private sector, and the NPC is expected to discuss a so-called private economy law. This measure could, for example, codify into law that private companies have equal rights and status with state-owned companies and offer guarantees of payment for private companies doing business with local governments.
How do you expect tensions with the Trump administration – which has slapped new tariffs on China and threatened more – to play into the NPC discussions?
The NPC is not an event that reacts to or is calibrated around recent events. That said, since Trump took office, we’ve been seeing the party’s high-level talking points acknowledging “external uncertainty” – which is code for Trump-related risks. Its response has been to make it clear to the country that it is committed to increasing support for the domestic economy to boost confidence. I expect these themes to be prominent at the Two Sessions.
Edited by Jonathan House, senior editor at Eurasia Group.
Ten thousand protesters gather in front of Duesseldorf Central Station to march against the AfD's upcoming afternoon rally in Duesseldorf, Germany, on Feb. 15, 2025.
Amid a deep economic crisis and renewed migration concerns, the far-right party Alternative for Germany, or AfD, is poised to double its vote share in this weekend’s general elections. As a series of random attacks by Middle Eastern or Afghan migrants have increased the appeal of the party’s harsh anti-migration stance, its gains have caught the eye of officials in US President Donald Trump’s administration. In highly unusual interventions, presidential adviser Elon Musk has urged Germans to “move past” the guilt associated with World War II and vote for the extremist AfD, while Vice President JD Vance criticized the refusal of mainstream political leaders to work with the party.
Eurasia Group expert Jan Techau says the AfD has no path to government at present, but its increasing strength is transforming German politics. We sat down with him to learn more.
What are the main issues in these elections?
Two issues stand out. The first is the economy. With terms like “de-industrialization” being bandied around, this is no cyclical adjustment but a profound economic crisis caused by a decline in productivity, high energy prices, and high taxation. Every single party has acknowledged this, even the ones that don’t typically run on economic platforms. The second is migration, which had faded into the background a little, but has been revived in the last couple of months by a series of horrific incidents. In the last one, a rejected Afghan asylum seeker, who, for whatever reason still had a residence permit, drove a car into a crowd.
The war in Ukraine also preoccupies voters, but to a lesser extent at present. The issue is expected to gain prominence during the government formation talks after the elections, especially given US President Donald Trump’s recent outreach to Russia’s Vladimir Putin to start ceasefire talks.
What has been the impact of Vance’s and Musk’s interventions in favor of the AfD?
The AfD’s strong polling is mainly the result of the recent attacks that have stoked concerns over uncontrolled migration, not these interventions by external players. Still, their comments help the AfD by normalizing it and giving it more visibility and air time. Vance’s speech at the Munich Security Conference sent a clear signal to the foreign policy establishment assembled there: The new US government seeks friendship with far-right nationalists in Europe and considers them its real allies. This has not yet translated into better polling for the AfD but has clearly strengthened its confidence.
How do you expect the AfD to perform in the elections?
The party appears on track to win 21% or 22% of the vote, doubling its share from the last elections and finishing second behind the center-right Christian Democrats, or CDU, which is polling at about 30%. The AfD won’t be able to enter government given the aversion of mainstream parties to working with it, but it will lead the opposition, allowing it to partially set the agenda from the political fringes. The AfD’s strategy will be to adopt an obstructionist stance to make the government look bad and improve the party’s position even further ahead of the 2029 elections.
The CDU recently took a risk by accepting AdF support for a proposed bill of harsh migration measures, which was rejected by parliament. Does that mean the gambit failed?
I think it's too early to make a final judgment on whether this move was strategically successful. The aim was to create more space for centrist parties to advance stricter migration policies without being accused of pandering to the far right. What we can say is that the move has not affected the CDU’s comfortable lead in the polls despite the harsh criticism received from other mainstream parties. So, we’ll see if the next government, which the CDU is expected to lead, can advance stricter migration policies. It's interesting to note that the Christian Democrats are one of the few center-right parties that remain competitive in Europe. In most other countries they have been eclipsed by formations advocating more radical policies on migration. CDU leader Friedrich Merz is trying to avoid this fate.
So, do you expect the CDU to rule in coalition with other parties, and if so, what does that mean for governance?
Yes, we expect the CDU to form a coalition with the Social Democrats and, if necessary, another party as well. Single-party majorities or minority governments are very uncommon in the German system. Of course, coalition means compromise, which could lead to an indecisive reform agenda that is not sufficient to address the issues we see at the moment. But maybe this time will be different and the mainstream parties can rise to the occasion. They know that the AfD is waiting in the wings and eager to capitalize on any governmental dysfunction in the 2029 elections.
When will we get some indication about the cohesion and strength of the next government?
The post-election coalition talks that will start shortly after the elections will give us an idea about what the next government wants to do and what – beyond the parties’ campaign rhetoric – is really possible. The war in Ukraine will also start to have an impact at this point, as the new government will have to contemplate the policy implications of Trump’s push to broker a cease-fire and get European countries to assume more responsibility for Ukraine’s security. The German mindset is very domestically focused, and the government will very likely be faced early on with requests to shoulder a massive new military exposure.
Edited by Jonathan House, senior editor at Eurasia Group.
Viewpoint: With his reelection bid, Ecuador’s Noboa seeks more time to bring violence under control
Supporters hold cardboard cutouts of Ecuadorian President Daniel Noboa, days before the Ecuadorian presidential election, in Guayaquil, Ecuador, on Feb. 4, 2025.
Ecuadorians will head to the polls on Feb. 9 to choose their next president against a backdrop of spiraling violence similar to that of the last presidential election in 2023. That was an early vote called by then-President Guillermo Lasso in an attempt to avoid impeachment. Daniel Noboa, the fresh-faced son of a banana magnate, achieved an upset victory, assumed the presidency, and launched an aggressive crackdown against the drug trafficking gangs terrorizing the country.
Less than two years later, the 38-year-old president is asking for a full term in office (four years) in this weekend’s regularly scheduled election. Noboa says he wants to finish what he started, and his clear lead in the polls suggests that voters are inclined to give him the opportunity. We sat down with Eurasia Group expert Risa Grais-Targow to learn more about the upcoming election.
What are voters’ biggest concerns?
The main issue by far is security, followed by economic concerns. There was a crisis of electricity outages toward the end of last year, but that has been abated by recent rains (the country is heavily dependent on hydropower) and fallen lower on the list of voter concerns. However, there has been a renewed deterioration of the security situation, and the start of this year has been one of the most violent ever.
What is driving this violence? Are political candidates being targeted, as in 2023?
No high-profile candidates have been targeted this time (presidential hopeful Fernando Villavicencio was shot and killed in 2023), but some local officials have been killed and there may be a political motive behind the latest wave of violence. Noboa has really made the fight against organized crime a pillar of his presidency. When he took office in January 2024, he declared a state of emergency, brought the military out onto the streets, and took control of the country’s prisons, which had been a hotbed of criminal activity. So criminal groups may be intensifying their battles for control of drug-transit routes partly in the hope that the resulting uptick in violence will lead voters to conclude the president’s approach is not working.
Is it working? Given these still high levels of violence under Noboa, why is he leading in the polls?
Noboa’s policies initially brought a dramatic decline in homicide rates and other violence. Since then, it’s possible that criminal groups found ways to work around them. Still, levels of violence are lower than at their late 2023 peak. More broadly, voters support Noboa’s policies and believe that he is doing the right thing or trying to do the right thing. They think he needs more time. He's only been in office for just over a year, so I think voters are still, at this juncture, willing to give him the benefit of the doubt.
Are there other reasons for this high level of support for Noboa?
I think that he is still viewed by voters as a bit of an outsider, someone who is shaking up Ecuadorian politics. He came out of nowhere in 2023 to win the election. He's very young and still kind of feels like a fresh face. The other thing he has going for him is that his main opponent, Luisa Gonzalez, is not a strong candidate with a clear message on the issues voters care about. She represents the correismo movement launched by former president Rafael Correa, which has a very loyal base but also is strongly disliked by some parts of the electorate.
What has happened to correismo? It used to be a dominant force in Ecuadorian politics, but its fortunes seem to have declined in the last couple of elections.
The movement has struggled to come up with a compelling forward-looking campaign message, focusing more on attacking Noboa and peddling nostalgia about conditions during Correa’s time in office (2007-2017). Moreover, the country’s security crisis has focused attention on decisions Correa made such as expelling the US military from the base in Manta. Similarly, the country’s current reliance on hydropower and shaky electricity grid stems from decisions made under Correa, including his flagship Chinese-built Coca Codo Sinclair hydroelectric dam, which has major structural problems.
At the same time, Noboa’s young National Democratic Action party seems to be consolidating its position. What is the significance of this?
Ecuadorian politics seems to be consolidating around two main parties, National Democratic Action and Correismo, which marks a departure from its typical fragmentation. This can be a stabilizing force for a country with a long history of political instability and volatility.
What are some things Ecuador’s next president could do to address the country’s problems?
Noboa wants to amend the constitution to allow foreign military bases in Ecuador, reversing the policy instituted by Correa. The country is doing battle with multinational criminal organizations – the groups in Ecuador report, for example, to Mexico’s Sinaloa cartel – so having foreign military and intelligence assistance is potentially a big deal. This is a popular idea locally but will need to be put to a public referendum. In terms of electricity supply, Noboa has been changing regulations to stimulate investment in new generation capacity, and I think if he is elected to a new four-year term, that could help get some of these projects moving. Finally, under the terms of the country’s financial support package from the IMF, the next president will have to raise tax revenue and cut back on fuel subsidies. The latter is a particularly challenging issue that has prompted mass public protests in the past.
Edited by Jonathan House, Senior Editor, Eurasia Group
Viewpoint: With Putin’s protection, is Lukashenko’s reelection in Belarus a foregone conclusion?
Russia's President Vladimir Putin and Belarus' President Alexander Lukashenko take part in a signing ceremony following a meeting of the Supreme State Council of the Union State of Russia and Belarus in Minsk, Belarus, on Dec. 6, 2024.
Ahead of Sunday’s election in Belarus, there is little doubt that Alexander Lukashenko, Europe’s longest-serving leader, will win a new term in office. After the protests that erupted following the 2020 elections, threatening his grip on power for the first time, a government crackdown supported by Russia has eliminated any opposition to the president.
Yet a new term for the 70-year-old leader, who has complained about health problems, will likely raise questions about potential succession planning in his next term. Regardless of what comes next, Russian President Vladimir Putin, who considers neighboring Belarus a critical part of his country’s sphere of influence, will make sure its interests are protected.
We sat down with Eurasia Group expert Alex Brideau to learn more about the upcoming election.
What do we know about Lukashenko’s true level of support?
Lukashenko has been in power for more than 30 years, ever since he won Belarus’ first and only genuine democratic presidential election, held in 1994 a few years after the collapse of the Soviet Union. Since then, it has been hard to tell just how genuine Lukashenko’s public support is. He has routinely won reelection in votes that were neither free nor fair. Many of his challengers have been arrested for standing against him.
Lukashenko’s reelection in 2020, though, demonstrated that whatever popularity he previously enjoyed had eroded and that his hold on power looked shaky. Public outcry over manipulated results that showed another landslide victory against a credible opposition candidate, Svetlana Tikhanovskaya, prompted major demonstrations that threatened Lukashenko’s hold on power for months. Major repression by the security forces and support from Russia allowed him to regain control of the situation.
Is there any chance of a repeat of the 2020 results or unrest?
This election is going to look very different from the anger of five years ago. Belarus’ security services continue to repress the formal opposition. Parties have been banned and their leaders have been arrested or forced to flee the country. Attempts to protest the results will be met with arrests and force, most likely. The regime may hope that holding the election in January instead of August, as happened in 2020, might limit the appetite for demonstrations. As for the election itself, there is little mystery as to who will win. Lukashenko won’t have a serious challenger, instead facing candidates who are considered to be loyal opposition.
What matters with this vote?
Given his age and past statements suggesting he is concerned about his health, there will be at least some question as to whether Lukashenko might consider a succession plan during his new term. Lukashenko has talked about stepping aside before, only to stay firmly in charge. And it’s doubtful that a succession plan would truly lead to him giving up his control. Lukashenko’s control of the All-Belarusian People’s Assembly gives him a way to exert power if he decided he wanted to transfer the presidency to a loyalist.
How do outside powers view the election?
Russia will recognize the election results, allowing it to maintain its influence over Belarus. Lukashenko isn’t exactly liked in Moscow. His leadership has been considered erratic, and he has thumbed his nose at Moscow’s interests at times when it either helped him at home or when he tried (and failed) to cozy up to the West. But he has become even more dependent on Russian economic and military support since 2020, as Western governments imposed heavier sanctions and even restricted air travel from Belarus. Putin’s policies have treated Belarus much the same way he has approached Ukraine, seeing it as an integral part of Russia’s sphere of influence. Russia has used a bilateral “Union State” treaty from 1999 to boost its role in the country. If there were a crisis stemming from the election, Moscow could very well intervene to ensure that its control was intact.
How about the West?
The US and EU members, meanwhile, will not consider the election legitimate. But so far they aren’t saying all that much. Having already imposed a large number of sanctions against the economy and Belarusian leaders both before and after the 2020 crackdown, there is only so much they are able to do to affect Lukashenko’s control.
Edited by Jonathan House, Senior Editor of Eurasia Group.
Following the end of the "traffic light" coalition, Federal Chancellor Olaf Scholz has submitted a request to the president of the Bundestag for a vote of confidence in the Bundestag.
Faced with a political impasse preventing action on acute economic and geopolitical challenges, the German parliament will hold a vote of confidence in Chancellor Olaf Scholz’s government on Dec. 16. Based on an agreement among the main parties in the Bundestag, lawmakers will deliver a vote of “no confidence,” paving the way for snap elections on Feb. 23.
We asked Eurasia Group expert Jan Techau to explain what set off this chain of events and where it is likely to lead.
What has prompted this vote of confidence?
The chancellor called the vote after long-simmering tensions finally brought down the ruling coalition of Scholz’s Social Democrats, the pro-business Free Democrats, and the Greens. There are big ideological divides among these three parties, and it was never an easy marriage. Initially, they could paper over these divides with money for each party’s pet projects. But a little over a year ago, the Constitutional Court struck down large parts of the 2024 budget, saying they were financed with an illegal repurposing of unused pandemic-relief funds. That set up endless negotiations and finally a showdown over the 2025 budget, which ended with Scholz firing the finance minister, the Free Democrats’ Christian Lindner, and the subsequent collapse of the coalition agreement.
So, it sounds like fights over spending priorities are the main issue shaping German politics?
They are a symptom of a broader economic crisis that has undermined competitiveness, growth, and tax revenue. The country has high labor and energy costs and a high reliance on exports, especially to China. For a long time, China bought nearly everything that Germany produced, from machinery to cars and chemicals. But China has developed its own industries and is no longer just a customer but increasingly an aggressive competitor making many of the same goods. To put it simply: Germany is a high-cost country reliant on exports whose main customer no longer wants to buy all its stuff.
How are geopolitical issues shaping the domestic debate?
All these economic problems come at a time of mounting geopolitical challenges. Donald Trump’s election victory in the US is expected to bring increased pressure on Germany and other European countries to harden their stances against China. Trump could force Germany to choose between its economic reliance on China and its security reliance on the US. At the same time, you have the war in Ukraine and Russia’s hostility to Germany and the rest of the West that has prompted significant – and very costly – efforts to rebuild Europe’s defense capabilities.
What seems like the most likely outcome of the February elections?
The conservative Christian Democrats, led by Friedrich Merz, have a substantial lead in the polls. It seems unlikely that any other party will be able to close the gap by Feb. 23. They will need to form a coalition government (one-party parliamentary majorities and minority governments are very uncommon in the German system), probably with the Social Democrats and maybe a third party as well. One key watchpoint will be the performance of the two extremist parties, the far-right Alternative for Germany and the far-left Sahra Wagenknecht Alliance. They have no prospect of entering government this time around, but if they obtain a combined one-third of the seats in the Bundestag, they could block legislation requiring changes to the constitution, which needs a two-thirds majority. Such a blocking minority could hamper the next government’s ability to implement a forceful reform agenda.
What is the reason for the conservatives’ strength?
There are two factors. The first is that voters’ number one concern at the moment is the state of the economy. This issue has traditionally favored conservatives, who are seen as more competent in this realm. The second is the collapse in the popularity of the three parties of the ruling coalition amid a widespread sense of crisis and malaise. They have recovered a bit recently, but at one point the approval ratings of the three parties combined were at about the same level as those of the conservatives.
Assuming a conservative-led government emerges, what does that mean for domestic policy?
If the Christian Democrats form a coalition with the Social Democrats, they will have to jettison many conservative ideas. The German system is geared toward stability and continuity, an approach that has worked extremely well, though the downside is that it’s hard to make big changes when needed. The question is whether the current crisis is big enough to force change. I expect an overhaul of the so-called debt brake, a strict limitation on government borrowing that has restrained policymaking. But beyond that, a raft of politically difficult measures are needed to deregulate industries and lower labor costs to restore German competitiveness. We’ll see if the next government can deliver.
How about foreign policy?
There would certainly be more engagement with the EU. The Christian Democrats pride themselves on being the pro-EU party of Germany in the tradition of Konrad Adenauer and Helmut Kohl. My guess is that the next government will remain reluctant to embrace the proposals for common borrowing backed by some other EU countries. Still, it could be more supportive of other joint initiatives. Merz had been more hawkish in his rhetoric toward Russia but has recently toned it down because he knows there are a limited number of votes he can win with this approach. Regardless, foreign policy will be a somewhat lower priority for the next government than getting the economy going again.
Edited by Jonathan House, Senior Editor at Eurasia Group.
Viewpoint: G20 leaders grapple with global inequality in Trump's shadow
A member of the cleaning crew walks past a G20 Summit sign outside the Museum of Modern Art, the venue of the G20 summit, in Rio de Janeiro, Brazil, on Nov. 14, 2024.
Amid geopolitical tensions fanned by wars in Europe and the Middle East and Donald Trump’s reelection in the US, world heads of state will gather in Rio de Janeiro for the G20 Leaders’ Summit from Nov. 18-19. They will discuss proposals to combat global inequality and climate change and try to agree on a common position toward the conflicts in Ukraine and Gaza in a carefully worded closing statement. Following the summit, Brazil’s Luiz Inacio Lula da Silva will host China’s Xi Jinping on a state visit in Brasilia, where the two will announce a series of partnerships in trade and investment.
We sat down with Eurasia Group expert Julia Thomson to learn more about this year’s G20 Summit.
What items would you highlight on the agenda?
Brazil, which holds the G20’s rotating presidency this year, tried to keep divisive geopolitical issues out of the subject matter meetings held in preparation for the summit, allowing for the approval of communiques with policy recommendations on a wide range of issues. I think those related to global inequality, a priority issue for the Brazilian presidency, are likely to get the most attention when the heads of state meet. There are two main proposals: the creation of a new tax on the super-wealthy and the new launch of a Global Alliance Against Hunger and Poverty.
There is not much consensus yet about the tax – what the rate would be, how it would be levied – but the Brazilian presidency considers it a victory to have gotten the issue on the agenda and thinks the proposal can be fleshed out in the coming years. With the Global Alliance Against Hunger and Poverty, Brazil aims to export ideas such as the Bolsa Familia program of cash transfers that have been successful at reducing hunger in Brazil. Thirty-one countries have already signed on to the initiative and another 27 have asked to join.
What impact will Trump’s election have on the summit?
The impact will be greatest on the discussion of climate and sustainability policies, another one of Brazil’s priority areas. Brazil and other emerging market countries have been pressing for assistance in financing climate change mitigation efforts from the wealthy industrialized countries that bear more responsibility for the carbon emissions causing global warming. That already fraught conversation will become much more difficult with Trump, a noted climate skeptic, poised to assume the presidency of the world’s largest economy and second-largest carbon emitter next year. I understand that Lula has been updating his planned speech at the summit to reflect this reality. A silver lining for Brazil is that South Africa, another leading global south country, will assume the G20 presidency next year, so the work done this year on this issue will likely continue.
What do you expect G20 leaders to say about the conflicts in Ukraine and Gaza?
Drafting the final communique, which will have to mention these issues, will obviously present some challenges. There are stark divisions among G20 members about the wars in Ukraine and Gaza. So, the most likely outcome is some vague language about the desirability of peace, as in previous years.
Outside of the G20 agenda, what else do you expect from this gathering of world leaders?
Lula will meet with US President Joe Biden on the sidelines, though Biden’s lame-duck status limits the potential for important outcomes from their conversation. European Commission President Ursula von der Leyen will be at the summit, which creates the opportunity to advance the discussions on a trade pact between the EU and the Mercosur bloc of Latin American countries, which is expected to be finalized in the coming months. But there will be much more focus on Xi Jinping’s follow-up state visit to Brasilia. Chinese officials are expected to announce a slew of investments in sectors of the Brazilian economy ranging from satellites to logistics and infrastructure. Xi will be arriving in Brazil after a stop in Peru to attend the APEC Leaders’ Summit and the inauguration of the Chancay port, which is majority-owned by a Chinese company. There are plans to link this Pacific Ocean-facing port to Brazil to open up a lower-cost trade route to China.
So, it sounds like Lula is expecting some good outcomes. Will that help him politically?
There was more optimism at the beginning of the year, when Lula and his team did not foresee a Trump victory and there was this idea that geopolitical conflicts could have eased by now. Still, Brazil sees hosting the G20 as good for its foreign policy agenda, offering the opportunity to dialogue with the world’s main economies. Brazil sees itself as a non-aligned country striving to maintain good relations with the US, China, and Europe.
Edited by Jonathan House, Senior Editor at Eurasia Group.