Bremmer: Europe Vulnerable; India Ready To Rise

July 29, 2014 Switching to Gaza, how is Operation Protective Edge different from previous conflicts in Gaza?
Bremmer: It's different in the sense that Israel is in a better position in the short term, partially because the world is maximally distracted by a bunch of other crises. Regional actors are much more concerned about what is happening in Iraq and Syria than what's happening in Gaza—not only the war in Syria, but also the fragmentation of Iraq and the rise of the Islamic state. The Americans are more concerned about that—as well as an Iranian deal and Ukraine-Russia.

Furthermore, you now have a government in Egypt which is much more aligned with Israel than Mr. Morsi's Muslim Brotherhood government was. El-Sisi has basically destroyed the Muslim Brotherhood in Egypt. He considers Hamas a terrorist organization, so Hamas is not getting the kind of support they were before. Qatar has backed off a little bit because they have seen how ineffectual their support has been recently. They've also gotten some pushback from the Saudis.

So the ability of the Israelis, both to truly degrade Hamas's military capacity and not have it rebuilt anytime soon, as well as to push them in the context of very little economic leverage for the Hamas leadership, is actually pretty good timing. On the other hand, there's been a fair number of Israeli soldiers getting killed, obviously nothing close to the number of Palestinian civilians and children. But from the Israeli perspective, this is a more costly invasion than many Israelis would have expected. That has the potential to hurt Netanyahu's popularity.

The winner here, interestingly, is probably Mahmoud Abbas, who has been active as a statesman. Hamas is not going away, but Abbas' position in the Palestinian government will likely strengthen. That means his ability to go to the United Nations to join other international organizations in a unilateral way as a Palestinian state against the express wishes of the United States and Israel is likely to be greater.

Longer term, even though this defangs Hamas—and let's face it, the direct military threat of Hamas to Israel was pretty limited—it's certainly radically asymmetrical, compared to the direct military threat of Israel to Hamas. Longer term, the ability of the Palestinian state to be more effectual internationally, and also to gain sympathy and support, is probably going to thrive. The Israeli stock market looks to be brushing off this current conflict. Do you have a view on Israel's economy?
Bremmer: I don't think there's going to be a significant issue here. Certainly, if the Americans were to maintain a flight restriction on Israel, that would have an effect on the markets. I was a little surprised by that. That's a more aggressive move from the FAA backed by Obama than we would have expected. But it looks like it's a short-term move. There has been some outcry in the U.S. among pro-Israel circles, most visually Mike Bloomberg getting on his personal plane and flying over to Tel Aviv in solidarity with the Israelis, much to Obama and Kerry's personal pique.

I don't expect that there is going to be much impact here, especially because the likelihood is that the actual links of any military incursions by the Israelis directly on the ground in Gaza will be short—a matter of weeks, not months. Jokowi was just elected president of Indonesia. Is this positive for Indonesia's growth prospects? Does it change your view on the country's economy?
Bremmer: Not much. First of all, there are still legal challenges that are coming from Prabowo, who's sort of said that it was stolen, and massive voter manipulation, and phantom voters and that Jokowi was complicit, or his party was. We don't think that's going to move anywhere. But that'll still cause a little bit of market uncertainty in the near term.

My issue is not that Jokowi is a bad guy. He's actually quite popular, he's well spoken, he's not very flamboyant, and I think that's a good thing. He's considered a can-do guy, certainly during his Jakarta governorship. Indonesia has been on a pretty good trajectory under Susilo Bambang Yudhoyono (SBY). They've got great demographics. They've got a lot of natural resources.

They're benefiting from massive amounts of Chinese trade and investment that will continue. They can also pivot very easily between other economies as well, working well with the Japanese, well with the Americans, and all the rest. They're in a good position in that regard. That doesn't change.

Jokowi is less pro-market than a lot of people believe. When he was governor, he was more than willing to play populist on local subsidies. I suspect he'll do that nationally. Indonesia is a very decentralized government—hard for one person to win. Jokowi is not a dramatic change from his predecessor SBY, in the way that Modi in India, another decentralized state, is a dramatic change from his predecessors in the Congress party.

I would say India was really bad. Now it looks really good. Indonesia was pretty good, and now it's still pretty good. That's the way I would look at it.

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