I'm not gonna put words in the mouth of the strongest president in the world.

He's the one who decides.

We are trying to find solutions which will work both for the United States, the alliance, and of course for Greenland and Denmark themselves.

Hello and welcome to GZERO World.

I'm Ian Bremmer coming to you from Davos, Switzerland, where political leaders, diplomats and CEOs alike gathered for the 56th Annual World Economic Forum.

The theme of the forum this year, the spirit of dialogue.

But even before we arrived, very clear that spirit would be served on the rocks.

On the eve of Davos, President Donald Trump doubled down on his desire to own Greenland, threatening steep tariffs on a bloc of European nations who stand with Denmark in opposing his plan.

It brought a mood of crisis to what was already a fraught forum.

And then on Wednesday, Trump made his first in-person appearance here since 2020.

I love Europe and I want to see Europe go good, but it's not heading in the right direction.

We want strong allies, not seriously weakened ones.

We want Europe to be strong.

Ultimately, these are matters of national security and perhaps no current issue makes the situation more clear than what's currently going on with Greenland.

With year one of Trump's second presidency behind them, European leaders are learning how to handle the uncertainty of relations with their once staunchest ally.

And today, I'm bringing you two of my conversations from here in Davos that help illustrate the political and economic impact of this deeply fractured moment.

First, you'll hear from Finland's President Alexander Stubb about rapidly shifting transatlantic relations and why his nation, which shares an 800-mile border with Russia, won't walk away from Ukraine.

And Kristalina Georgieva, managing director of the International Monetary Fund, joining me to break down what impact tariff battles and the rise of AI will have for global growth.

Don't worry, I've also got your puppet regime.

Hello?

Hey, big guy.

Is this new president of Venezuela?

Ha ha, si, senor.

Did you see I finally also got the Nobel Peace Prize?

After bombing seven countries, you really deserve it.

Very strongly.

Look, Donald, President Xi and I were not thrilled to lose our friend, Nicolas Maduro, but we admire how quickly you've taken on a role yourself.

But first, a word from the folks helping us keep the lights on.

Funding for GZERO World is provided by our lead sponsor, Prologis.

Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains.

With a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

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Cox is investing in the future, working to create an impact in advanced recycling and in emerging technology companies that will help shape tomorrow.

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Additional funding provided by Carnegie Corporation of New York, Koo and Patricia Yuen, committed to bridging cultural differences in our communities, and... President Alexander Stubb, so nice to see you.

Nice to see you.

So, last year, we did not talk about Greenland.

No.

This year, I think, I fear we can't avoid it.

I think you're right.

But I want to start with a quote I heard this morning from Treasury Secretary Scott Bessent.

He says that US-Europe relations have never been closer.

Would you agree with that statement?

Well, I'm an avid pro-European, avid pro-American, an avid transatlanticist.

And if closeness means that we can talk frankly to each other, yes.

Then there are, of course, right now a few disagreements, which I think we can shovel under the carpet.

But all of us who cherish the relationship want to bring it as close as possible.

One thing I can tell is that the bilateral relationship between Finland and the US has never been close.

Well, that's good to know, but it doesn't describe the transatlantic relationship as a whole.

And Greenland is an odd thing to be fighting about.

In the sense that, right, everything that the US wants in principle can be provided through the alliance.

Am I right about that?

Yeah, I mean, and I think in diplomacy what you always have to look at is short term and long term.

So in the short term, I think what we now need to do is to de-escalate the language.

We need to find an off-ramp and then a process.

And then in the long term, we need to think about what can we do together about Arctic security.

I come from an Arctic country.

We have probably the most confident Arctic Army in the world, certainly the largest for Arctic conditions.

I think if we can find a process which leads to the NATO summit in Ankara with a big package on how NATO reinforces Arctic security together, of course with the United States, then I think we will come off quite well.

Davos is for discussion.

I think dialogue is the theme of this year.

Trump was excluded, though.

There was an asterisk.

So I think the good thing is that the US administration is coming here really as the most impactful administration ever.

I've never seen so many ministers, secretaries of state and other US players, including, of course, the president himself.

So you think we will come out of Davos and actually we won't be talking about the United States needing to own, take sovereignty of Greenland?

Well, I'm not, you know, I'm not going to put words in the mouth of the strongest president in the world.

He's the one who decides.

But, you know, all of us working in the back office who are avid transatlanticists are trying to find solutions which will work both for the United States, the alliance, and of course for Greenland and Denmark themselves.

Talk about the European response.

Certainly there is a level of, I would say, consistent private concern over this crisis needing to be responded to.

How aligned would you say the Europeans are on a common position, publicly, what needs to be done?

Well, I mean, the first thing to say is that as an EU nerd, I don't think I've ever seen the European Union more united than what we have been actually pretty much ever since COVID.

I mean, that's when people started to understand that it's good to have European integration.

Then came Russia's war of aggression in Ukraine.

Then came the energy crisis.

Now we're working on defense.

We're together in NATO.

So I think there's a lot of unity, of course.

Then you have, you know, countries like Hungary and Slovakia who sometimes take a different line, but that's a little bit beside the point.

In this particular case, I think we are very united.

And I think you have two schools of thought.

One school of thought is, okay, let's deescalate, let's find an off-ramp and do what we have done previously.

And the other school of thought says, no, we need to go immediately for retaliatory measures.

Well, the first thing we need to find, and I think the end result will be somewhere in between.

So, when you do the de-escalation, you at the same time prepare just for a rainy day if something happens.

Of course, the EU has the measures, I hope, and I don't believe that we have to go that far.

So, long answer, the short version is, yes, I feel that Europe is very united on this.

And to explain to our viewers all over the world, when you say the EU has the measures, what you mean is the competency to respond on trade, the anti-coercion instruments, these reside at the EU level, they're not individual countries.

Yeah, so just to put it in very simple terms, the European Union has 27 member states and there are a few areas where it has exclusive competence.

And the key areas in this particular case is monetary policy, trade policy, customs.

So you know, you have a number of instruments that can be used if needed.

I hope we don't have to use them and I hope we'll be able to de-escalate, but of course the next few days will tell.

As I said, I'm carefully optimistic.

I mean, you know, look, so today is the one-year anniversary of the Trump presidency.

And you know, I've been in foreign policy for 30 years.

I've never seen so much activity.

And I don't say this out of a lack of institutional memory, but I, you know, it starts with Venezuela.

Then we have a big meeting in Paris on Ukraine.

Then we move on to Iran.

We have issues with the peace plan in Gaza and working on that.

We have the Greenland issue.

So, you know, there's so many things that are sort of flooded at the same time, and we're trying to deal with them together.

And Trump has a different type of way of doing foreign policy.

And a lot of it's actually quite effective, I have to say.

So you represent one of the strongest allies in the NATO alliance on Ukraine policy.

No surprise given your long border with the Russians.

It feels over the past months that the Ukrainians have given a lot in service of trying to keep NATO supporting them and also to get to a ceasefire.

The Russians have not.

How do you assess where we are in trying to bring this world to a close?

Well, I think we're in a good place.

And by a good place, I mean that there was sort of a process and a sequence that started with the national security advisors in Geneva right after the G20 meeting, then moved on to a leaders meeting in Berlin and then finally in Paris on the 5th of December.

And I feel that the US, Ukraine and Europe and the coalition of the willing, we're now on the same page.

We have a set of documents, depends on how you count, six or five plus two, I know they're a different figure, but nevertheless, where, you know, we have security guarantees, we have a 20 point plan, we have a prosperity package, we have sequencing plan, et cetera, et cetera.

And I feel those are in a good place.

And from what I hear in the negotiations in Miami over the weekend, we've made some progress.

So I think we're in a good place there.

But I don't know what the Russians are going to do.

My big fear is that the Russians are going to say "nyet."

Why are the Russians saying "nyet"?

And this is very important.

I think we need to reverse the narrative that Putin is winning this war.

He is not winning this war.

He tried to take over Ukraine.

He failed.

He tried to stop NATO from expanding.

He failed.

He tried to keep NATO's defence expenditure down.

It's to 5%.

On the battlefield, he's failing.

And the sanctions have only gotten tougher.

And they should continue.

So in the battlefield, he's failing.

The progress is very slow.

One percentage point of Ukrainian territory in the past 1,000 days.

On the economic side, the inflation figures for the two first weeks, if you multiply them for the last, for the year to come, it's about 30 percent.

Interest rate 16 percent.

No growth in the economy.

If the war ends, the soldiers will go home and they'll probably get no bonuses.

So we're in a place where there seems to be very little incentive for Putin to end this war, but actually for the wrong reasons that we think.

It's not because he will win.

It's because he knows that he will lose.

So this is kind of a catch-22 situation that we have to deal with.

So you ultimately don't have a lot of faith that we're going to get to a ceasefire this year.

Oh, we work towards it.

I think we work on three scenarios.

One is that this war of attrition will continue.

Second one is that we get a ceasefire of 90 days and then a peace agreement.

And then the third one, of course, is, you know, catastrophe of one form or another.

We're working towards this second phase.

It's taking a lot of time, but remember that Trump has been president only for one year, and we've been working on this more or less for one year.

And really in terms of textualizing and putting things down in documents only for three months.

I want to also just bring up the NATO countries directly, because of course Russia is not just fighting Ukraine.

Russia is sending weather balloons over Lithuania, they're sending drones into Poland and Romania.

There's been all sorts of attacks on critical infrastructure.

We've seen the ships that have taken out the fiber optic lines.

And this is your country, this is your neighborhood.

What does NATO need to do to respond?

Are they adequately responding to that asymmetric warfare for Russia?

I think so.

I mean, you know, warfare nowadays, I guess, has three different components to it.

One is kinetic, what we're basically seeing in Ukraine right now.

One is cyber, which all of us are hit with every day, all the time.

And then one is hybrid.

And the Russians, of course, they try to intimidate through the hybrid.

And just to give you, I guess, three examples of how we've dealt with it.

The first hybrid attack has been sending over asylum seekers across the Finnish border.

Well, we legislate, we close the border.

They don't do it anymore.

Second, they start cutting cables.

We have a Baltic Sentry operation on NATO.

They don't cut cables anymore, or if they do, they do it because of incompetence.

And then thirdly, there are drones flying and violations of airspace.

And we put an Eastern Sentry.

So, you know, we're doing what we can on this.

And on Russian foreign policy, look, Syria, how did that go for Russia?

Not too well.

- Venezuela?

- Iran, how did that go for Russia?

Not very well.

Venezuela, how did that go for Russia?

Not very well.

So, the U.S.

is able to project power, but Russia is not.

If you really want to simplify things, what the U.S.

did in Venezuela in 24 hours and less was what President Putin wanted to do in Kiev four years ago.

- Completely.

- One million died in casualties later.

Here we are.

Yeah, here we are.

So I guess that leads to perhaps the biggest concern that I have.

And I suspect you have it too, which is, when Russia is a country that is run by a dictator, aging, don't know his health, I mean, the reality is that Russia's becoming, at best, a junior partner to China.

That's a dangerous position for a man who has complete control of his country, not to mention a lot of nuclear weapons.

Mm.

No, it's true.

And that's why we, you know, have to be balanced and tactful and try to navigate through this quite dangerous era of changing world orders.

I firmly believe we are in this.

You know, we've had this conversation many times.

I just wrote a book on the changing world order.

And we can make a mistake as they did after World War I, the system wasn't strong enough.

Or we can get it more or less right as they did after World War II, or we can be lazy as we were after the Cold War.

And I think it'll take about five years for things to settle.

And the big debate is, do you go for multipolarity, transactionalism and deals, which we're seeing a lot of right now, or do you go for multilateralism, cooperation and international institutions?

If you go for the latter, which I would prefer, of course, coming from a small state, then you need to rejig the balance of power in these institutions.

You need to give agency to guys that are not in the Security Council from Africa, from India and elsewhere.

Alexander Stubb, so good to see you, man.

That was my conversation with Finland's president, Alexander Stubb.

Now for the Economic View, here's the head of the International Monetary Fund, Kristalina Georgieva.

Kristalina Georgieva, so nice to see you as always.

Thank you for inviting me.

So, I mean, it's been challenging, an uncertain backdrop, but not from the IMF.

You actually just increased the economic outlook for a lot of countries around the world, for China, for the US, for India, for even a couple of... For the Eurozone.

For even the Eurozone, which is kind of shocking to me.

How can we get excited about... Why did you upgrade the Eurozone right now?

There are four things that are acting in favor of more resilient economy, and they're holding it despite all the turbulence and uncertainty.

The first one is over the last decades, governments smartly moved out of economic activity almost everywhere.

There are very few countries where governments are still running companies.

They let the private sector do it.

The US is moving a little bit more in that direction, of course.

There is a little bit of this here, a little bit of this there.

But you'd say that that's at the margins.

It's not fundamental.

The core is let the private sector do it.

And at the time of uncertainty, private sector, much more agile, they act swiftly and they bring dynamism.

Second source of resilience, the fact that the tariffs have proven to be much lesser a risk for the world than we feared.

Even though they were, when they were announced, the highest levels we've seen in almost a century.

Absolutely the highest.

Massive tax on American consumers, everyone's saying the supply chain's gonna break.

Why not?

We were saying at that time, don't rush, let's see the data.

Majority of the world decided that tariffs, thank you, but no thank you.

Midsize countries, smaller countries, regional blocs, they all decided that they want to protect a world of fair free trade.

So we had then the United States as an outlier.

But the United States, one, is 13, 14% of global imports, exports.

Two, the announcements then were corrected through exceptions, negotiations, and the result is a much lesser impact, very mute impact of tariffs.

Third reason.

It is there.

It is there, but it is very minor.

Now, mark my word, we should not take this for granted.

We have to always remind countries of the benefits and costs of how they choose to participate in trade.

Third reason, AI.

Not only enthusiasm and massive investment, 1.5 trillion, but actually we see the impact in terms of productivity already.

And the expectation for increasing productivity is getting people hugely excited.

Of course, there is a worry, what if that increase in productivity doesn't come?

The fourth reason is one that I want to stress because we absolutely take it for granted.

And it is that since the global financial crisis, central banks, fiscal councils, finance ministries, they have learned to act responsibly and to have policy, fiscal and monetary policy, that is positive for business and for households.

And it's also long term.

It is long term.

It is defined in a way.

It is evidence-based.

So all these four reasons together, they are protecting the world economy from the uncertainty that of course is dominant.

But even the Eurozone?

So Eurozone.

Because they don't seem to have the competitiveness, the productivity, the investment in technology.

What is it?

So here it is.

The Eurozone is consistent of countries where you have big businesses, you have SMEs, you have the Nordics that are very much innovation-driven economies.

So it is not one block that is all the same everywhere.

You have the new member states a little bit more hungry for performance.

So that leads to the better outcome in Eurozone.

Plus, in the Eurozone, what we see today is finally an awakening that they cannot anymore drag their feet on completing the single market.

Now, from accepting they have to do it to actually doing it, there is a lot of work, but there is a much more sober attitude.

I know that people may think of developments, tensions within the Western Alliance only as a problem.

I actually think it's an opportunity.

Because it forces more action.

Yeah, forces more determination to act.

So the Eurozone got a little bump, 0.2%.

For fairness, US 2.4%, Eurozone 1.3%.

So the Eurozone has to aspire for more and better.

But all in all, not a bad place.

However, not a great place.

- So if I go back to the beginning, just to close out, you are, one of the things you are structurally more comfortable with is private sector, more efficient, more agile, actually doing much more to drive an economy, governments doing less.

You understand what state-planned economies are like, haven't worked that well historically.

You've also said really critical that we have central bank independence, that we have technocrats there.

Now, the United States is, even though they're talking a lot about the state doing more in the economy, isn't doing that much more.

They're talking a lot about taking away independence from the Fed.

And I know this is something that worries you a lot.

This has not gone away as an issue.

There's been consistent political pressure from President Trump to say, "I want lower interest rates, and I'm going to appoint somebody that's going to do what I want."

How do you deal with that?

Evidence-based monetary policy is good for businesses and good for households.

What does that translate into?

It translates into actually quite broad understanding that, of course, well-managed, accountable, independent central banks need to remain so.

When I say private sector is great, I also add governments that do a good job in policies and institutions.

These two things go together.

We cannot go in wild, wild west just because private sector is great.

It does need a framework to operate, otherwise we may end up in a very bad place.

So what I rely on is that this long-term evidence that is valid for everybody, it's valid for big companies, it's valid for you, that it would provide the buffer.

And of course, we see the Fed very important for the American businesses, for the American people, but also because of the role of the dollar as a reserve currency, very important for the rest of the world.

IMF Managing Director Kristalina Georgieva, it's always great to see you.

My pleasure.

Thank you.

Are you ready to thaw out after some of the icy political battles in Davos?

Warm up with a brand new installment of Puppet Regime.

Roll that tape.

- Hello?

- Hey, big guy.

Is this new president of Venezuela?

Ha ha, si, senor.

Did you see I finally also got the Nobel Peace Prize?

After bombing seven countries, you really deserve it.

Very strongly.

Look, Donald, President Xi and I were not thrilled to lose our friend, Nicolas Maduro, but we admire how quickly you've taken on a role yourself.

Cracking down on protestors like a real Chavista.

Muy fuertemente.

But enough about what you're doing inside of US right now.

We're interested in something else.

- I'm listening.

Greenland.

- I knew it.

The fake news media said I was making it up, but you guys just want... No, no, no, no.

Not for us, but for you.

For me?

For you.

We actually aren't mad at the idea of you having a Greenland.

Everybody should have a Greenland.

If you see something you like, just take it, da?

When you're a star, they just let you do it.

Well, then we are all on same page.

Everybody gets to invade at least one weaker neighbor.

For its own protection.

Oh, just one, huh?

You just stay away from my neighbors.

What was that?

That's our show this week.

Come back next week.

And if you like what you've seen, or even if you don't, but maybe you want to draw your own red line in the snow of Davos.

If so, why don't you come check us out at gzeromedia.com.

(upbeat music) - Funding for GZERO World is provided by our lead sponsor, Prologis.

- Every day, all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains with a portfolio of logistics and real estate and an end-to-end solutions platform addressing the critical initiatives of global logistics today.

Learn more at prologis.com.

And by Cox Enterprises is proud to support GZERO.

Cox is investing in the future, working to create an impact in advanced recycling and in emerging technology companies that will help shape tomorrow.

Cox, a family of businesses.

Additional funding provided by Carnegie Corporation of New York, Koo and Patricia Yuen, committed to bridging cultural differences in our communities.

And... [music]