President of the Eurasia Group Ian Bremmer told Yahoo Finance Editor-in-Chief Andy Serwer that the North Korea crisis is not the biggest geopolitical problem in the world right now.
“That’s not the worst [problem]. It’s much more stable,” Bremmer said at the 2017 Concordia Summit. “This is a problem we’ve been dealing with for decades. We’re going to keep dealing with it. The idea that we won’t tolerate a North Korea that can have the same capabilities that the US, that it’s had in Japan and South Korea for a long time I think is a good talking point, but it’s not real.”
Bremmer noted that the Trump administration has actually made progress on the North Korea issue by attempting “work with allies and antagonists.” The clearest example of international cooperation came earlier this month when the UN Security Council unanimously passed a resolution (albeit watered-down) that placed new sanctions on the rogue regime.
“It’s hard for [the current US administration] to fix it, but that doesn’t mean that it’s going to be a disaster,” Bremmer said.
“The Chinese are writing big checks”
As for China, by far North Korea’s biggest trading partner, Bremmer argued that “it’s getting more challenging for Trump to get what he wants” as China’s economy becomes more influential globally.
“China’s getting more powerful by the day, particularly economically,” Bremmer said. “And the environment for Western multinationals to invest and have a long perspective in China, for some of the most important American companies that we have, is actually getting much more challenging.”
The U.S. dollar has logged its worst year since 1986, and one factor is the Chinese yuan subverting the dollar’s primacy as the currency used to facilitate international trade. For example, this summer Russia began accepting yuan (as opposed to dollars) when selling oil to China.
“The prospect of the world’s largest importers and exporters of oil pricing and trading crude in yuan is a big dollar-negative,” Carl Weinberg, chief economist at High Frequency Economics, explained to clients. “If oil trade moves to yuan, it will mean a potential loss of $800 billion per year in U.S. dollar transactions, and a similar reduction of $800 billion in re-cycling of petro-surpluses into U.S. dollar assets. That is not a pretty picture for either the dollar or U.S. securities in the longer term.”
Bremmer echoed this view on a geopolitical level, arguing that “Chinese money is increasingly trumping US muscle” on the world stage.
“If you go and you talk to heads of state or foreign ministers in countries all over the world, and you ask: ‘From your perspective, who’s the more important power, the US or China?’ A lot of countries you wouldn’t expect are now saying China,” Bremmer said. “And it’s because the Chinese are writing big checks and because their economy is integrated from the top down by the state, where if ExxonMobil or Facebook comes to invest, it’s not your relationship with Washington, DC that’s doing that. And it’s hard for the Americans to deal with that.”
The economic trend — along with the Trump factor — does not seem to be lost on Beijing.
“I don’t understand Trump,” Shen Zhihua, a prominent Chinese historian, told Evan Osnos of the New Yorker. “One day he is saying something good about Xi Jinping and the next he is criticizing him. Trump is becoming more and more of a problem. China is becoming more and more stable.”
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