The Duran Podcast - Economic Changes In The World - Jeffrey Sachs, Alexander Mercouris And Glenn Diesen

Episode Date: December 9, 2023

Economic Changes in the World - Jeffrey Sachs, Alexander Mercouris and Glenn Diesen

Welcome to today's discussion. My name is Glenn Dyson, and with me today is Alexander Mercuris from the Duran and Jeffrey Sachs, a world-renowned and very influential economists to advise many countries around the world, including the administration of Gorbachev and Yeltsin. Welcome, Professor Sachs. Great to be with you, Glenn and Alexander, both of you. So our topic today, we wanted to focus on maybe a bit too wide. topics. The first will be then, what are the main economic changes in the world? So as an economist,

perhaps you can shed some light. So we see from this election in Argentina, we see Iran deepening its economic ties with Russia now with this free trade agreement, but also linking itself to China. We see the wider Eurasian integration. We see now Russia's economic return to the Middle East, as we're also in Saudi Arabia and UAE. This is quite a quite. putting on a bit of spectacular show. And if we have time, of course, we'd like to have to look also at some of the solutions, if it's possible, some of the economic and political challenges today, such as the sustainability of U.S. debt and the stability of the dollar,

which I guess, well, many would like to see it, has a lower or more weaker status in the world. Collapse would be horrible probably for everyone. But, yeah, if you don't mind, I thought we could start with Argentina. because for me this case is very strange, I'm a hard time making sense of it. Obviously, Argentina has a lot of problem with inflation and other economic problems,

so I can understand the appetite for radical reforms. But the election of Javier-Mule is very radical, I think, even radical for Friedrich Hayek and Milton Friedman. So how do you interpret this? Why has Argentina had so many economic problems to begin with? And what do you make of his solutions? Are they accurate solution to this problem? The story of Argentina goes back two centuries.

This is a very complicated place that has added more zeros to the price level than any other country in the world. Its next-door neighbor of Brazil comes in second. So Argentina, in the course of its two centuries of independence, has done everything, you can do to money, period. It's had new currencies, old currencies, depreciated currencies, hyperinflations repeatedly, defaults repeatedly. So it's kind of a mystery at some fundamental level why such a well-resourced country, many, many educated people, a country that was one of the richest in the world a century ago has been in so much tumult. And when I was studying economics 50 years ago, as I began my freshman year at university,

the great economic historian of the day in Harvard University was a man named Simon Kuznets, who invented to a substantial extent the national income accounts, the GDP and the other parts of the national income accounts, and he won the Nobel Prize for it. But he may be apocryphly, but the story was that he opened his course each year saying there are four types of countries. There are the developed economies. There are the developing economies. There is Japan and there is Argentina. Now, what that meant was at the time Japan was the miracle economy. We would say that maybe about China now. And Argentina, already, this was 50 years ago, was the country constantly in crisis. So one of the things about crisis is that if you have had repeated financial crises, you are prone to having more of them,

because everybody is always on guard to get out of the national currency before it loses all value. So Argentina is a country of macroeconomists. The taxi drivers, a macro economist, the storekeepers of macro economists, they all have dollars and pesos. They're always ready. They're looking every moment. Will there be a political crisis? Will our currency lose value?

and you end up with a lot of self-fulfilling catastrophes. A self-fulfilling catastrophe is when something bad happens because something bad is expected to happen. And if the currency is expected to lose value, then people flee the currency and drive down its value, thereby confirming the fear. And in certain circumstances with fragile economies and Argentina is the most classic case, that fear becomes self-confirming on an ongoing basis.

And I can tell you a story. I was trying to help not the previous finance minister, but the finance minister just before him. A man named Martin Guzman, a professional, a very decent man. And he was battling an inflation rate of 40 or 50 percent per year. and Argentina had a large debt. But actually not, I shouldn't even say that. It had a relatively small debt, but since nobody trusts Argentina, no one would lend it new money. So as the old debt was coming due, a government would normally borrow new money to pay off the old money and keep the debt level pretty much the same.

But Argentina has no friends. Nobody trusts it. So as the Argentine debt was coming due, everyone wanted to be. repaid thank you, no more loans. So I was trying to help since part of my work over the last 40 years has been in economic emergencies, and I helped them negotiate arrangements with their bank creditors, and I helped them negotiate arrangements with the International Monetary Fund. And I said, oh, God, this is tough. Nobody believes in Argentina, least of all the Argentines. So after these agreements were reached, I flew to Buenos Aires and I met in a large room with

Argentina's Poubas, the powers and chakers. And I said, you know, your situation is not as bad as you think. Your debt is actually not so high. Your need for the central bank to print money is actually not so high. It's just that nobody trusts you. So if we could regain trust. trust. Believe me, you know, your balance sheet is actually better than the U.S. government. It's just that in the U.S., everybody uses the dollar so you could run big budget deficits. But Argentina's budget deficit was smaller than the U.S. And Argentina's inflation soared because everyone was always ready to run out of the peso. Okay. So I said, just rebuild trust. I felt pretty good, compelling speech, showed the

Feta showed that the U.S. is worse at a fundamental level than Argentina, flew home. And within days, the finance minister basically resigned because his own political party more or less disowned him after he had gotten these agreements. Oh, my God. Okay, he's gone. Inflation sores again. And so all that handiwork of saying, you know, there's a way to get out of this, be careful. evaporated and the inflation eventually rose to more than 100% per year, which is pretty high, although I've dealt with countries in thousands of percent per year.

But it was sufficiently high that the Argentine said in this election, we don't want to hear anything about any standard politician. We want something completely new. And the incoming president promised something completely new, specifically. to adopt the dollar. And it's probably not going to happen because quickly they backtrack. We don't even have dollars. We can't tie our future to a currency in which we have no reserves. We couldn't back the banking system and so forth. I've not spoken with the new government, although I know the incoming finance minister quite well. I plan to speak with them. The long and the short of it is

this is just chronic crisis. So I wouldn't draw too much about general facts from Argentina because basically almost any time between 1823 and 2023, you could have found the country in crisis. And I've dealt with already in my career with a number of presidents of Argentina. and they don't have the internal political capacity to overcome this yet. So all of this is to say Argentina endlessly fascinating, a little bit bizarre. Hopefully they'll get out of it this time. What's interesting now geopolitically is that the outgoing government had joined the bricks. And that is a good thing.

And an important thing for Argentina because it brings Argentina and the next door giant Brazil together, which is very good for South America, very important diplomatically, very important geopolitically. The incoming government has said, oh, we don't want to have anything to do with China because Malay is being portrayed as an ardent Americanist. So on the American side of these block politics, my message to the Argentines is. look, China is your major customer. Don't be dumb. Don't go with the U.S. in this sense. You know, trade with the U.S., trade with China. Don't get into this crazy mentality of one side or another.

And by the way, in this world today, if you have to choose one side or another, I wouldn't go with the American side. Every time a country sides with the United States these days, it ends up in disaster like Ukraine. because the U.S. is a fading empire. It can't sustain all its promises, not even close. It can't even keep its own public institutions functioning anymore. So my message to the Argentines is you don't have to choose sides.

Just be nice, but don't break relations with China for having to say, join the Bricks. It's a good thing to do. And maybe within the Bricks efforts this year, which are, very important efforts to create non-dollar payments. There'll be something in it for Argentina. That I'm going to try to explain to them. There really is some good news for Argentina in the fact that it won't just be the dollar in the world, that there will be alternative payments.

And Argentina shouldn't close itself off from what's going to be an important new force in international monetary economics. That's all very interesting because one of the things that I noticed, which has not been mentioned, I think, widely, is that Putin, of course, has just been to the UAE and he's just been to the Saudi Arabia. And he came with a very, very big and very strong delegation of people. And I noticed that one of the people who was there was, of course, Nabulina, who was the central bank chair. And both Saudi Arabia... I didn't realize she was on the trip. But that isn't a very interesting part.

It was interesting because there was a, she was, I don't think it was announced, but there was a list of, you saw the picture of all the people in Riyadh, and they were all shaking hands. And one of the people who was there and who shook the hands was none other than Nubulin. So she was there. And of course, Saudi Arabia and the UAE are both joining the bricks in a few weeks. So is Iran, the Iranian, the Iranian, the Iranian, has just been to Moscow. He's had discussions there with Putin. There's just been this announcement

of this free trade agreement. And then at the same time, Putin gave this speech at an investment forum run by VTP. And a disproportionate amount of that discussion was about the financial architecture. He was saying that, in fact, that that seemed to be the most, you know, important thing that you know the finance you need to get the financial architecture right domestically in order to move forward but he was also talking about the new financial architecture and he said some very interesting things about how the existing financial architecture which is western based is becoming outdated and obsolescent also in a technological sense so you have nebulin are there and all the meetings and she's presumably talking about all of these matters. She seems to be very interested

in them. And she's talking with the big oil producers. And Iran is also a big oil producer. And at the same time, you have all these discussions, but from Putin about financial systems. And I wonder what this adds up. Yeah, the trip was absolutely fascinating, incredibly skillful of Putin at this moment. And it reflects actually three major, geopolitical points, all I think rather ingeniously brought together. One of them is OPEC plus, of course. OPEC plus Russia constitutes an enormous part of the hydrocarbons market of the world, and they do a lot of important business together in this in managing the oil and gas market. So that's one part of the trip. Another part of the trip is clearly regional, which is the integration of Russia with Central Asia, with the Arabian Peninsula, with the Middle East more generally.

And you look at the map between Russia, China, Central Asia, Arabia. This is building, and of course, India is a member of the bricks. this is really building most of Eurasia into an integrated geopolitical and economic, a huge part of the world. And so very, very deft in that regard also. A basic principle of economics, a fundamental principle is neighbors should get along. They trade well with each other. They share ecosystems with each other.

And that's the principle that Putin is following. because Iran is a neighbor. The Middle East is a neighbor. This is very smart. And then the third dimension, in addition to the oil and the neighborhood, is, of course, the bricks. And the bricks started out as the five Brazil, Russia, India, China, and South Africa. It had already reached an output level measured at what we call purchasing power prices or at international prices, larger than the G7. That is geopolitically and economically notable. But now the five are being

joined by six more presumably, Argentina. That's the new edition in South America, Egypt and Ethiopia in Africa and Saudi Arabia, the Emirates and Iran in the Middle East. region. Now, you add the six to the original five, you have 37% of world output, according to the IMF purchasing power data compared to 29 to 30% for the G7. This is a different world. And this is really powerful. And what the bricks are discussing, this year, in particular is exactly this financial architecture. And of course, that was greatly hastened by the absolutely awful and mistaken U.S. policies on the dollar. So the U.S. has what Charles de Gaulle, already President de Gaulle, 50 years ago, 60 years ago, called the exorbitant privilege,

which is that the dollar is used for about 60% of international transactions of all kinds. The way you denominate a contract, the way you pay to settle a contract, the way governments hold their foreign exchange reserves. So on all three major dimensions of international currency, the dollar predominates. Not exclusively, but overwhelming. And that gives the U.S. a huge advantage. you don't run out of the dollar to what, to the dollar. And so it's not like Argentina where everyone's sitting on the edge as the U.S. debt reaches

100% of GDP. If Argentine debt ever came close to 100% of GDP, they'd be out the door in a moment. But with the U.S. being the currency of the world, nobody flees the dollars. So that's the exorbitant privilege that you get to borrow. You can pump up the money supply. You get some inflation, but you don't get whatever. Argentina or just about any other emerging economy would get. But the U.S. just couldn't leave good enough alone. It had to weaponize the dollar. And this has really been, it's become an addiction.

The U.S. generally is addicted to regime change. The U.S. generally is addicted to a foreign policy that says, I don't like you. I want to replace you. Send in the CIA. or send in an army, but we get to choose who your government is. Now, this is absolutely disastrous foreign policy, in my view, completely against the UN charter, completely against international law. But that's the core. And the U.S. figured out 10 or 15 years ago that it could use the dollar as a foreign policy weapon.

And the main way that it uses it is in a very crude way, which is to say, one day, you Your dollars are now our dollars, thank you. Your dollars means, literally means you have accounts in U.S. banks or U.S. controlled banks. That's what a dollar is in effect, M2 definition of a dollar. So you're holding dollar accounts in institutions that we control. And what the U.S. has come to do increasingly frequently is freeze the money of other countries of their central banks, no less, of their state enterprises. And the United States did this with Venezuela. Absolutely absurd. But one day, Trump and his minions got the idea that they will

declare who's the real president of Venezuela, not the actual president of Venezuela, but they named someone from the Venezuelan parliament as president and said, okay, that guy's president. That actually, lasted for a few years. And you could see the power of the United States. It's like the emperor with no clothes. Oh, about 40 countries said, oh, now Mr. Guido is president, not Mr. Maduro, who's actually president. So you could see a measure of the U.S. influence that other countries would follow this nonsense. But in the process, they said, Mr. Maduro is no longer president, because we said so. And he has no longer has access to the foreign exchange reserves of the country. We give that to this other one.

Well, this is absolutely crazy. Even the IMF couldn't. I mean, I shouldn't say even the IMF. The IMF couldn't figure this out. It doesn't have the gumption to say to the United States, you know, that's ridiculous. So, no, we have a big issue. Who really controls the foreign exchange reserves? So these games went on for years.

Of course, with Russia, it's much. much more serious than that, the United States froze its estimated $300 billion of Russian financial assets. That's a lot of money, by the way. That was the trick that was going to bring Russia to its knees. It didn't do so. But that's what they thought, you know, we've got Putin cornered, we've got Russia cornered, we'll bring them to their knees by freezing their assets and locking them out of the U.S. banking. system, the so-called swift settlement system. Well, Russia quickly figured out very cleverly.

We can trade with China and Redmond B. We could trade with India and rupees, a little bit shakier on that front. We can find other ways to transact. And to make maybe a short story long as I have, this year, Russia is the leader of the bricks. The Bricks summit will be in Kazan, next October, I believe it is. And so Russia chairs the process. And it's chairing an expert group to come up with non-dollar payments. This is smart. And I kept telling my friends in the U.S. government, don't abuse the dollar. It's going to go away. Who? Because in monetary economics, the first thing you teach is the real economy is the real thing. What you preach is. What you produce what the factories are. There are many ways to make a settlement, even barter, of course,

but there are many currencies you can use. So don't think that your currency brings another country to its knees because the other country's economy is the real economy, the ability to produce steel, the ability to produce weapons or artillery, the ability to produce automobiles or chips or whatever it is or oil. And the United States misunderstood that, but really abused the privilege of the dollar. And the dollar will absolutely lose its role in centrality in the international payment system

in the coming decade. You know, in monetary economics, just to mention all my colleagues, look at history and say it's a long, slow decline of a currency and the most famous case is the British pound, which used to be the core of the international monetary and financial system in the 19th century until basically the Great Depression. But the fact is, and so they say, look, the pound hung in there even after Germany was larger, even after the United States was larger, even after Britain's share

of the world economy had declined. London remained the center of the international system. But it's not going to happen the same way with the dollar because it's just too easy technologically to do things differently. And so we will have at least an international Redmond B at a minimum playing a big role. And we could have a kind of BRICS, if not Central Bank, a BRICS monetary fund that serves the role of giving liquidity and credits among the BRICS countries in a way which will mean a non-dollar settlement system. Professor Sacks, there's a few things. As a person in Britain, I can say that the long decline of Sterling after Britain lost its hegemony position in the world economy was an absolutely disaster for Britain. You would not want to go through that process again.

And by the way, it's quite interesting just to say the way it manifested, of course, World War I was awful. The return to gold in 1926 overvalued to Britain in the world economy. And Keynes wrote one of his most famous essays in 1926 called the Economic Consequences of Mr. Churchill, who happened to be the chancellor of the ex-checker in 1926 that put this mistake into place. the 1930s were the Great Depression, World War II, of course, devastating. And the point is by the end of World War II, Britain had basically gone deeply into debt, even with its own colonies, which became independent countries. And so Britain never quite got out of debtor status again.

And it was a very, very heavy, long, painful period. Britain, the center of the world, going to the new international monetary fund for an emergency loan. I mean, unthinkable. But, you know, the United States, can you imagine going to the IMF for a loan? It's not impossible. This is exactly what you're referring to. Absolutely. I remember it.

I was in London, of course, when it happened. I can remember the chancellor turning back at the airport. He had to rush off to Washington to raise funds. And, of course, the fact that we had this currency, which was still an international currency, was doing immense damage to the British domestic economy, which I think people don't understand. So in some ways, it might actually be better for the United States. I would have thought to go through it quickly than have it, you know, drawn out in the way that it was with Britain. I'm not, by the way, saying that's going to happen, and I'm not making those points. But anyway, that's what I wanted to say.

But it's a long process. It's a long agony. It's based on the British experience. So, you know, we will have non-dollar payments in the BRICS. That's clearly high on the mind, not only of President Putin, obviously, but also President Lula, who every day asks, and he's the chair of the G20 this year as well as being a BRICS member. why are we dealing with Russia in dollars for heaven's sake? And he's very sensible, very logical. And we will move to new payments arrangements, and they will do just fine, thank you.

That will be the real lesson. What are you describing, though, is usually a hegemon in decline. And one of the key issues, then, of course, will be once, when you have a hegemon, which is secure in itself, usually can facilitate a liberal economic system. problem often a hegeman in decline will often push towards a resumption to more or less mercantilism or more of this using its administrative power of the international economy as a weapon, which you pointed out quite nicely. But I was curious about what would be the main challenges and opportunities with this new construct, because often, I guess, bricks and all is

almost presented as a block with this very Cold War mentality. But obviously, the members of of bricks, you know, bring from China, India, or, you know, now with Saudi Arabia Iran, they don't, you know, their main objective would be to solve cooperation between each other, not target an external adversary. Of course, if they can make it work together, that would diminish the reliance on the US. But again, this is, it seems to be, well, what they have to negotiate now is everything from, you know, technologies and industries and banking and the payment. systems across the board. I'm just wondering because because these countries do have a lot of

divisions between them, well, what do you see as the main challenges? Because many people assume that Bricks, for example, would have their own pursued a common currency. But I was recently speaking to the Indian ambassador and he was pointing, no, no, no, no, that's not going to happen with us. But we will look for other, for example, payment systems in order for, you know, diversify our, the currencies we use. But I guess my point is that what Bricks is forming is something different than what the US facilitated. Because under the US system, everything was very centralized. Everything, you know, the key technologies, the industries, the currency, the banks, everything is US-centric. But Bricks is something much more decentralized. I was just wondering, how do you see this thing

moving forward? And what would be the challenges? The U.S. did aim to build a global world, a globally interconnected world, but on the presumption that the U.S. would always be at the center of it and the dominant power of it. But it meant that the U.S. was ready at a lot of times to take some responsibility and to pay some costs. and to take some what was true leadership, open the markets for other countries before those other countries would open the markets to U.S. goods or actively share technologies or inventing foreign aid, which was an anti-S.-move, but it was real money given to other countries, which is not a usual behavior in the world. And the U.S. had the concept of so-called trade rounds to reduce trade barriers and then eventually to create WTO,

which was a U.S. initiative and so on. Now, the presumption of all of this was that an interconnected world would be good and the U.S. would sit on top of it. The miscalculation, I won't say it's a miscalculation. I would say the naivete of that view was, yeah, other countries are going to come along and the U.S. being 4.1% of the world population has no right to presume that it is the hegemon that gets to determine everything else. And lo and behold, comes China with a population four times larger, more than four times larger, and extraordinarily skillful governance and really, really,

remarkable quality of planning and governance and good judgment with the reforms ushered in by Deng Xiaoping starting in 1978. The U.S. didn't see it coming, but China grew at around 10% per year. That means you double every seven years in aggregate size of the economy. That's fast. You do that for 35 years. That's five doublings.

that's two times two times two times two, that's 32 time increase of the size of the economy. That's what China achieved. Suddenly China's bigger than the United States, again, measured in international prices. Now, this is an incredible affront to the Americans. Not to me. I think it's great. You know, China is catching up. That's wonderful.

That's what economics is supposed to be all about. Is it a loss for the United States? Not in any real way at all. None of China's gains is a loss for the United States. None of it. It just expands world markets. We have more productivity. We have new technology.

We're able to buy a lot of goods and my iPhone made in China and so forth at low cost. It's good. But it's an affront to a mindset that's, says, we run the show. And so starting 10 years ago, the United States got it in its head that we got to stop this. It's crazy. How can you stop another country from achieving development? And how can you stop a country, 1.4 billion people? But the United States does genius things. Like I said, the genius thing of saying, President Maduro is not president. It's the one we chose. It's nuts. Okay. So what did President Obama decide to do?

do. He said, we're going to have a traded agreement with Asia that will not include China. Well, duh. China's the largest trade partner of half the world, and it's the largest trading economy in Asia by far. And the United States, in its absolute foolishness, even explicitly says, we need to make arrangements where we set the rules. the so-called rule-based order. Well, two things wrong with this. One, you can't have a trade arrangement in Asia without China. Are you kidding? And second, we were supposed to make international rules at the World Trade Organization.

That was the idea of it. But that means actually that China has a voice. And so this is where we are right now. We are a declining hegemonic power in the United States, which has lost its nerve. which is fighting, it thought it was kind of a walk, at least into Ukraine, with NATO and, you know, a destroyed Russia, that was their idea, turned out to be a little bit naive, to say the least. An ascendant China, a BRICS group larger than the U.S.-backed G7 group. And there is no hegemon anymore, but the U.S. fights a rear guard on this.

And the mentality is unbelievably weird and out of date. Okay, Biden lives in the past literally, maybe even more than we've realized. But in any event, all his tropes, which you guys talk about and I talk about of the indispensable nation. And U.S. leadership, well, those are so outdated that they were even funny in the 1990s, but kind of believable because the Soviet Union had disappeared suddenly in December 1991. But weird to hear now. The U.S. is the indispensable country? Sorry, not quite.

The fight in Ukraine is really the last battle of the expanding empire. I call it the Tutubert Forest battle. That was when the Roman Empire faced its limit finally on the Rhine, because Augustus in 9 AD wanted to keep expanding, and the Germans beat them on the Rhine. So Rome never conquered Germania. By the way, Rome remained an empire for centuries, so it wasn't the end of the world not to have Roman legions in Germania.

It will not be the end of the United States, not to have NATO forces in Ukraine, but they think it is right now. So what we're seeing is a psyche that's wounded, that is still believing we run things that still so much wants to run things. We get, I assume you get your monthly copy of Foreign Affairs magazine. all it is every issue is to try to cheer up the Americans that you're still number one. Every article is China in decline. Are we still the strongest?

It's not even a scorecard that makes sense in a world of cooperation and economics, but to these strategists that rank everything, this is their world. So we've gone to protectionism. We ignore the World Trade Organization. We break every international agreement. We're on the veto side of every U.N. Security Council resolution. We're on the defeated side of almost every U.N. General Assembly resolution. What kind of hegemon is that?

It is a country that was in the lead that doesn't offer to other countries anymore, only threatens them. And you can't sustain your power only by threat. anyway, the power doesn't even, it's evanescent in that sense when other countries have the same technologies you do. When we see that the NATO weaponry is no wonder weapons that defeats Putin from one day to the next, that Russia is very clever. They've got very sophisticated technologies. So this is why the whole idea of the hegemonic power is passe. But if you don't know it, it's really dangerous.

And the US doesn't recognize it yet. It hasn't changed its foreign policy appropriately. Professor Sachs, I was wondering if we could go back to the Middle East because the Middle East is such an enigmatic region. I mean, we've had so many wars there. There's also, I think, a widespread view that it has never fulfilled its economic promise since the Second World War.

And yet one senses that things are starting to change now. We see Saudi Arabia and Iran making friends, and you've pointed out how neighbours being friends is economically beneficial. We see very ambitious economic development plans in Saudi Arabia itself. We see Saudi Arabia and the Emirates joining bricks. we see Egypt joining bricks and Egypt is now also taking steps to seek industrialisation. It's opening an industry park with Russia.

It's got many contacts with China, all of these things. And one also gets the sense lots of young people in the Middle East, increasingly well-educated. They've got tremendous, entrepreneurial flair. You see that in London, where we have a lot of people from the Middle East here.

So do you sense that it's all finally coming together, that things aren't changing, that the Arab states are starting to think for themselves at last, rather than take their queue from Washington and London, Paris, and those sorts of places? I mean, you're in the Middle East now. Yeah. So I'm in Dubai in the Emirates. It is, I think it's fair to say, an extraordinarily complex region. It is fair to say it really has been an extraordinarily complex region for as long as we have history,

because it really, and it's the place where history was invented. After all, I think Herodotus is the histories, which tells the war of the Persians versus the Greeks, gives us a flavor of things that went on for a very long time afterwards. So the Middle East is in the middle. It's in the middle of lots of different cultures, the Turkish world, the Arab world, the African world, the Western world, which became the imperial powers centuries ago, the Russian world. So it's an extremely complex region.

It's, of course, in the world of the three great monotheistic religions, Judaism, Christianity, and Islam. It is divided between the oil halves and the oil have-nots. It is the region probably that was, in a way, it's a little strange to say, but I'm going to say it kind of the epicenter of European imperialism. Of course, Europe imperialized Africa, it imperialized India, Southeast Asia. But the Middle East was viewed so strategically the Suez Canal, Britain's transport link to the jewel of the British Empire to India. And then in the 20th century, when Churchill converted the British Navy from coal to oil, suddenly the oil of the Middle East was strategically absolutely central. And it has basically remained almost that way until very, very recently.

So you add it all up. It's been what said about the Versailles Treaty, that it was the peace to end all peace. It created so many more wars. But one thing it did was put Britain and France after 1919 into the center of imperialism for another grand war, after which the United States became the great Western imperial power. It created Israel, which has been the source of repeated war and endless turmoil, starting it as a British project in the British mandate after World War I. So to say that they've turned the corner on conflict would be premature.

because this is a region not only with internal divisions, but with so much mischief coming from the outside. And we have the American fleet, you know, in the Persian Gulf again, in the eastern Mediterranean, again, this is a playground of great powers that have created such a mess over the past century, but really centuries that you can't declare that this is solved. But I think the key always in these circumstances is to understand it could be solved. There's nothing fundamental that prevents solutions. And exhibit, I'll give you three exhibits to that. One is the Saudi-Iranian rapprochement, the Sunni,

Shia rapprochma. Oh, you, you listen to any lecture at Harvard, they would have told you completely impossible. Any think tank in London or the United States completely impossible. China pulled it off because what was impossible? To my mind, I recently went from Tehran to Riyadh. The problems are so shared. I wanted them to work together. At the time, it was impossible. it's possible. So that's, this is one point of showing how this resolution can occur. Today, or I think it was yesterday, but the news today, who shows up in Greece? Erdogan. Erdogan goes to meet his Greek counterpart. Wonderful. You know, the Greeks and the Turks and Ben and each other's next, basically since the Greek War of Independence that you know very well of the 1820s.

And Erdogan shows up phenomenal. I love Greece. I love Turkey. I love going to both. And I think the reproshma, if it is that, would be phenomenally smart for both countries and both centers of civilization after all. It's such an amazing fit. And I was going to give a third, yes, a third point.

Now, this is actually absolutely crucial because we have an ongoing genocide taking place in Gaza right now. Israel is mass killing Gazans with the most vulgar, disgusting statements of intent coming from the Israeli political leaders. It's absolutely criminal in the literal international law sense what's going on. But what do the Arab leaders say and what do the Arab Islamic leaders say when they meet, when they met recently in Riyadh? They said, we could have peace with Israel, actually straightforwardly establish a state of Palestine according to all the UN Security Council resolutions. and Palestine and Israel live side by side in peace, and then we normalize our relations with Israel. Is that crazy to believe?

No, it's absolutely possible. What stops it? Zellets. On the Israeli side, the zealots who are well represented in this terrible right-wing government of Netanyahu that believe in what they call greater Israel, which means no Palestinian state nearby, in Palestinian land, by the way, despite resolutions of the UN Security Council that go back to Resolution 242 in 1967. So you could have, you really could have Israel in peace. you could have the region in peace between the Sunnis and the Shias, between Turkey and Greece,

the West could actually behave itself for the first time in a century and not be so mischievous in the region. And you could actually see this region as a region with, of course, as you say, tremendous talent, young people, gobs of money because they have the largest sovereign wealth funds. And the Saudis are trying to build cutting-edge technologies, the largest solar fields in the world. They want to shift out of hydrocarbons if there's a way to do it peacefully, cooperatively. And so we have all the reason to help make this work. But remember, you know, the United States absolutely did so much damage to this by taking Arab nationalism and considering it the great threat and aiming to break it. Nasser could have been a partner with the world and with the West in modernization going back to the 1950s.

the United States had the idea in its hegemonic worldview that any legitimate popular government that is not under our thumb is a potential partner of the Soviet Union. So we can only abide by puppet regimes. This was the real mentality. So Nasser becomes an enemy. They made them an enemy. And this broke Arab nationalism. And it was a goal of the United States, divide and empire, divide and conquer, learn from the British very well. And it prevented this region from getting together.

And so you ask, could it? Of course it could. Should it? My God, no question. We're not far from it. But instead, we're in a horrific war. and the United States are playing, as always, not just the spoiler, by the way, but the complete enabler. Every bomb, maybe not every bomb, but just about every bomb falling on Gaza is an American-made bomb.

And this is shocking, disgusting, and a part of the reason why the region doesn't get out of this mess. John Kirby actually gave a speech yesterday when he argued that no other country has done more to alleviate the suffering from Gassens than the United States. So it was quite a remarkable statement. But I want to suggest that perhaps that the problem is alliance systems, because classical realists in Smorgantau always argued that peacetime alliances is really a source of huge instability. Because we see if you have a military power like the United States trying to organize. a region, it would always have the incentives, again, an imperial logic of divide and conquer. So you see in all continents of the world, if you have a conflict with China, for example,

whenever there's division between China and India, this is a benefit because you can weaken the Chinese, and the Indians will become more reliant on the Americans. You've seen that now in Europe as well. As soon as we have this war now with the Russians, Europe is completely now subordinated to the United States. Meanwhile, the Russians, at least the objective was to weaken Russia. But we also see the same logic in the Middle East, of course. The more conflict you have between the Arabs and the Iranians, the more loyal the Arabs will beat America and the more, you know, you can weaken the Iranians.

But with the Chinese, given that they're not really a military power in the same sense, and they don't have any peacetime alliances, formal alliances. There seems to be more of a different systemic incentives from pursuing economic connectivity. because when the Chinese enter the Arab states, they're very careful also to reach out to the Iranian. So doing the exact opposite, make sure you don't pick them against each other because then China would have to choose. And I thought the same now with Putin going down to Middle East, you know, it goes to Saudi Arabia, UAE,

and at the same time, you know, he books an appointment with the Iranian president to come to Moscow just to make sure, you know, we're not forming alliances here. Like we don't want to choose one and the cost will be to alienate the other. So is this the – would you kind of – contrast is economic connectivity of organizing a region versus the military, militarized line system? Or how would you, like, why is China so different in this region, for example, from the United States? So, you know, there are maybe four theories of international relations that are debated, or we in the West debate three, but I'm going to add a fourth.

So our dear friend John Meersheimer, who's really a wonderful person and a great political scientist, has the theory that he calls offensive realism, which is that states compete. It's a dangerous world out there. Everybody senses danger. It's a fight for survival. And therefore, you're constantly pushing against the others and you're constantly yearning. for hegemony because being the hegemon is the only safe place in the world after all. So you're always greatly endangered. And that's a world of conflict. And John Meersheimer's most famous book is called The Tragedy of Great Power Politics. And he says, it's a tragedy. And I say,

John, you can't write a book that just ends in tragedy. You have to give a solution. And he says, Jeff, it's a tragedy. And I say, no, you can't accept a tragedy because, especially in a nuclear age, we can't accept that. We're going to blow ourselves to smithereens on your theory. Jeff, it's a tragedy. Okay, that's my ongoing debate with my dear friend John Meersheimer. Then there's a theory that I would ascribe to the recently deceased Henry Kissinger, which is a balance of power that you don't need endless. struggle, you need to create and structure a balance. The balance can be alliances, but it's better if it's a kind of concert of Europe where the major powers agree. Don't push too hard against each other. And this is why Kissinger was rightly, wisely, among the big poobaz of foreign policy against NATO enlargement to Ukraine. Actually, I would say all experienced diplomats were was a bunch of foolish politicians like Biden and others that push for it. But Kissinger says, don't rock the boat,

make a concert of big powers. And of course, his model was the concert of Europe after the defeat of Napoleon in 1815 and the structuring together of a system. in Europe in which the major powers preserved the peace under Metternich and then later under Bismarck. There were some skirmishes in Europe, more than skirmishes, German reunification, Italian reunification, the Crimean War, which was an imperialist war by Britain and France against Russia. But by and large, the 19th century didn't have a world war between the Napoleonic Wars and World War I. So that was the balance of power theory that Kissinger tried to put into play. The interesting thing about balance of power, though, is that it becomes imbalanced.

Because if you had a static substrate of relative economic size and technology, you probably could fashion a predictable geopolitical and military equilibrium. but power changes. And it was, of course, the rise of Germany that changed the balance of power in Europe at the end of the 19th century. And this is absolutely important to understand. To keep the balance of power in Europe required tremendous prudence and wisdom. And Bismarck had that. Bismarck was a geopolitical genius.

And he was thrown out when, the old Kaiser died and the young kid came in and the young kid got it into his head that he was going to compete with Britain for naval supremacy. And Bismarck said, why will we do that? Bismarck was dismissed. And there was the end of the balance of power because it required genius to hold it together. And the Kaiser, Kaiser Wilhelm I famously said to Bismarck, what are we going to do? do if the British show up on our shores? And Bismarck famously said, well, Kaiser, we'll have them arrested.

In other words, we don't need to build a world-class navy. We just need to, you know, bind our own time. Things will be fine. But Wilhelm II didn't believe it. Got into an arms race with Britain, alliances, and all the rest. And eventually World War I broke out. So that's the second. theory. My theory is, why don't we all get along? You know, that's my theory. I'm an economist. I learned from Adam Smith that a world market is better than protected national markets, that global trade is better than mercantilism, and kind of from Emmanuel Kant in his famous essay and perpetual peace in 1795 that actually a set of republics that trade with each other and act peacefully with each other is the kind of world that we want.

Now, I devote my life to that. I work with the UN on countless matters and donate my time to the UN because I believe we could fashion an international framework of law in which countries could grow, in which China's success would not be viewed or acted upon as a threat by the United States because it's no such thing at all in which the United States could not unilaterally sanctioned Russia or grab foreign exchange reserves because it's against international law, which, by the way it is, against international law, which the U.S. happens to completely ignore. So my theory is that cooperation is so important that we could actually

find our way to achieve it. It's a long story, but it's not impossible to cooperate. Of course, there are cheaters that try to take advantage of softies and so forth and abuse of privileges, but we really could have an international system of law. The United States is the least multilateral country among all major economies. I've just done a study looking at the number of times the U.S. violates international law, basically, and it's the most of any country because it's all unilateralism. That's being, you know, the would-be hegemonic power, not abiding by the views of the rest of the international system. But that's what I would aim for. And I don't think it's naive. I think it's vital for survival, especially because we have to

grapple with mass environmental crises and horrible depletion of our oceans and pollution and many other things that we need to deal with together through a cooperative approach. Now, I said there's a fourth approach. This is arguable, but I think Chinese statecraft really is different. And it's fascinating to me. And I've just been reading some Chinese philosophers who say, you know, we really think about the world order in a different way, in a truly Confucian way. Confucius's greatest virtue for Confucius was orderliness, was harmony. You hear that word repeatedly. It's really a Chinese very deep idea. And China is very different from Europe, which created our international system, because in Europe, the Roman Empire fell in 476 AD, and it never came together

again, Europe remained fragmented after the fall of the Western Roman Empire until today. And you could say the European Union is the attempt to put something unified together. China has a completely different history. China unified in 21 BC. And by and large, with episodes of breakdown that lasted decades, not centuries, China has remained a unified state. So China went through the Han dynasty and Tang and Song and Yuan and Ming and Qing, but as a unified state. So China doesn't have that sense of fragmentation the same way. Of course, it always faced invaders from the north, the nomadic invaders. But this is quite different.

and internal rebellions. But China has the idea we're unified. Our western border is the Himalayas. Okay. Our southern border is the tropical rainforest border. Our eastern border is the great ocean. Our northern border is the steppe region, the dryland region. Yes, we keep getting some invasions across that way.

But we are a unified state. And we, our statecraft is that we want unity across the Indian Ocean, across the South China Sea. China never invaded Japan once, not even once in 2,000 years, except when China was ruled briefly by the Mongols. And the Mongols tried two failed invasions, defeated. each time by a typhoon, which became called the kamikaze winds. But the point I'm making is that in the West, it's fighting all the time. How many years were France and Britain at war across the English Channel? Well, most of a millennium.

And compare that with China and Japan. No wars. No wars. And two invasions. I think it's 1274 and 1281, if I remember correctly, but I may have the decade off by one decade. And then at the end of the 16th century, a kind of crazy shogun of Japan decided that he would invade China. He ended up getting defeated in the Korean Peninsula. But other than that, the two didn't fight.

And here's what's fascinating. at the end of the 19th century, Japan industrialized first. And then Japan, starting after it had its so-called Meiji restoration in 1868, it went into hypercharged industrialization, absolutely remarkable. And all subsequent East Asian miracles really follow the Meiji restoration model. But without digressing, at the end, of the 19th century, Japan was the single industrial power of Asia, and Japan literally self-consciously said, okay, we have joined the European club. Now we can be an imperial power. So Japan launches the Sino-Japanese War or the Japanese Sino War of 1895. That's when it gains control of Taiwan,

colony and its first control over the Korean Peninsula, which would come a little bit later as a full colony. And the Chinese are dumbfounded by this. You know, the top diplomats of the Japanese and the Chinese were friends. And the Chinese actually plaintively look at the Japanese saying, what are you doing? You know, the Europeans are coming to attack us and you're, you're behaving like them. And the Japanese say, oh, so sorry, yes, we are Japanese, but now we're part of their club. And so the Japanese become European imperialist, European style imperialists, I should say, just to be clear.

And the Chinese never became that in their history. China never made overseas trans-oceanic empires. You could argue, okay, it experienced. expanded its land mass up to the step region, up to the Himalayas, down to the tropical rainforest to the east coast. But basically, beyond that, it never tried to conquer overseas colonies and never had them. So the argument of this fourth approach is that China really thinks differently about geopolitics. John Mearsheimer, our doing, your friend would say, no, no, no, no, no. This is structural. China will become like the United States.

It will compete for a hegemonic status. But look at what China says every day. If you go to the Chinese Foreign Ministry website, almost every week, there's some brilliant, ingenious report, including about American hegemony, including about China's development initiative, its global strategic initiative, its global civilizations initiative and so forth. China says no hegemony. We don't want hegemony. We want harmony. We want to live under the UN charter.

And the United States says, oh, that's, you know, they want to take us over. And China says, no, no, we don't want that. We just want harmony. We can't imagine another country behaving in a non-European imperial way. But I think it's actually true. unless we so damn provoke China into terrible behavior, China absolutely, in my opinion, wants cooperation. And we should meet it there and cooperate in that way.

I mean, I'm not an China expert at all, but I used to read a lot of Chinese philosophy and some literature. And I agree. One of the interesting things about Chinese literature, and Chinese painting, in which, by the way, I am, I mean, I have a great fondness of Chinese painting, is that depictions of war are absent from it. It's all about harmony, and it is all about peace. It's one of the things that attracts me to it. Yeah, this is so true. What a great observation. I've never made it or heard it, but it's absolutely true.

You don't see war pictures and conquest pictures. I just was in Chinese museums recently, and it's absolutely correct what you say. And I never thought about it, but it's absolutely true. If I can just go back to the Middle East, because of course this is a part of the, I'm glad you brought in Greece, by the way, because of course Greece is not just close to the Middle East,

but for much of our history in a kind of a sense, we were part of the Middle East. So it's a region which we have a certain, And what we have, we feel about it differently than I think Europeans, other Europeans do. And one of the things I would say about the Middle East is there's never been any developed system of international relations in the Middle East. And there's been many wars and fights and battles going back, you know, centuries well into the Middle Ages. The reality is underlying all of that, all of these various communities in the Middle East, Greeks, Arabs, Turks, Turks,

Iraqs, Iranians, Druce, Shia, Sunni. We all nonetheless somehow managed, and to a great extent still manage, despite everything, to get along with each other. We always somehow manage to coexist. At least that was the case until the Europeans came. And that's why, in the Middle East, everybody, everybody is still there, or at least was there. So, of course, you have the Assyrians.

Most people don't know that the Assyrians still exist, but they did and do. You have the Druze. You have all of these little communities. It's true. Right. And one of the things that never stopped, and you know, I know this again from Greek medieval literature, because, of course, we were the Christian Empire, we were against the Caliphate. We had tremendous respect.

for each other. It's there in our folk poetry from that period. The soldiers used to meet and they used to fight and they used to have friendships and all kinds of things of this guy. One of the things that never stopped was

trade. Trade was continuous. It was never interrupted. You went to the bazaars in Cairo, for example, which was the economic centre. And I believe the bazaar, I've never seen it, but I believe the bazaar in Cairo It's still a really violent.

I know it very well, actually. It all sort of threaded together. And there was never any question of ending all of that. And somehow that helps us all to get along with each other. What happened? No, it's absolutely right. And remember, Odessa was a Greek city to a very large extent. And the trading was, you know, Greek traders, of course, Armenian traders,

Jewish traders, these networks of trade were extensive, and you're absolutely correct, that everybody knows each other extremely well. The Turks and the Greeks, of course, they know each other. Everybody knows each other, and I was actually just had the pleasure of having a long discussion with the Orthodox patriarch of Antioch. which goes back to, I don't remember whether it's the first century AD or the second century AD. But he's a Christian patriarch in Damascus in an Arab-Mahman speaking community, for heaven's sake. This is 2,000 years. And, of course, we were discussing exactly this wonderful mix of local cultures in Syria. and Barack Obama sends in the CIA in 2012 to overthrow Assad,

lights the match, blows up the place, not knowing anything, anything about Syria, about its history, about its culture, about its diversity, just lighting the match. And so I think it's, you know, it's a fascinating thing. And it's really worth contemplating. I can think of three, let's consider three great empires of this region. First, the Persian Empire, going back, the Ashemannid Empire of Cyrus the Great, who, by the way, saved the Jewish people.

He allowed the exiles from Babylonia to return to Jerusalem. and the idea that Iran and the United and Israel, our natural enemies is fatuous given that the actual history of the two goes back to the sixth century BC, close relations. But what I was going to say about the Persians, they were very clever. They allowed local rule, local religions, and huge diversity. And so actually the Jewish second temple period in today's Israel, but back in the fourth and third century, was under the suzerainty of Persia, because it was a very tolerant system. Then came Alexander the Great conquests between 331 and 3233 BC. and of course he reached India, created the Hellenistic empires. But his genius, even, you know, as this kid, although he had the greatest teacher in history, in my view, Aristotle.

But Alexander knew. Take local traditions. Don't try to impose things. Let things be. And so the Hellenistic kingdoms, of course, brought wonderful Greek culture, Greek language, Greek knowledge, Greek wisdom, but also with a lot of local tolerance and incredible diversity. And the Ottomans, you know, I don't know, as a Greek, you may have a bit more jaundice view of the Ottomans than I do. I rather like the Ottomans in a lot of ways.

But they had, of course, multiple minority communities who lived peacefully. that is why his all holiness, the Greek Orthodox patriarch Bartholomew, lives in Istanbul, Constantinople, and keeps his throne as the patriarch of Greek orthodoxy, or the all-eciminical patriarch, I should say, because the Ottomans kept all sorts of communities within the Ottoman Empire. And you can see these minority communities till today, local religion, local language, local cultures. It's quite wonderful. And that, I would say, is your point, that lots of wars, but actually the fact that the diversity has remained for, for two millennia plus means that this wasn't mass extinctions, genocides, attempts to impose one faith or one religion.

And the Jewish community in today's modern Iran was not forced out by the Iranians. It was pulled out by the Zionist movement of Israel, which tried to. bring everyone to Israel and depleted all of these ancient, long-standing, traditional Jewish communities. And I find that very, very sad, actually, because that diversity is an incredible cultural strength, but also an economic strength because of the trading systems. And that brings me to the point about Israel, because, of course, Israel can become a part of this system. as a system where everybody learns to live with everybody else. Tensions exist.

And of course, the point is that in the modern worlds, the kind of tensions that used to exist in the Middle East, the wars, which are usually wars between local dynasties, they're not exactly the same as European wars, if you know your medieval history of this part of the world well. that period of war anyway is obsolete but the trade is not and I myself and I you know I I was very very impressed by that meeting in Riyadh actually I was too I mean everybody came together Erdogan was there Assad was there the Saudis were there the everybody was there

and they were all talking, the Iranians were there, and they were all talking together, and they were all talking together as a region, as a place where, and they were coming up with sophisticated political points. And I have to say, I felt that this does provide a real opening and a future, both for a political settlement of this crisis,

which in my opinion is the ultimate or crisis behind all the others in the Middle East and also for the potential economic and social development of this region. If they can all come together and work together and they're almost just about there doing it, then all of these synergies that do exist in the Middle East can finally start coming together

and then we can start to think of the Middle East in a completely different way. It is absolutely, case and the utter tragedy of what's happening right now beyond the human disaster that Israel is causing is that there is a clear path to peace. No question about it. The Israeli line, which I've heard for more than 50 years, there's no one to talk to on the other side, is such BS. There's no other way to put it because the other side keeps saying. We want peace.

We want normal relations, but you have to respect the fact that there are the Palestinian people who have political rights that need to be observed. It's really as simple as that. And when you look at this and it's, it is the terrible frustration, what's stopping that in Israel? What's stopping that is two different groups, one that happens to be in power right now, but there really is a group of zealots who believe as a matter of theology that all the land is promised to the Jews, and it's in the book of Joshua, and this is ours, no matter who happens to be there. And, you know, it's a completely unacceptable view, an extraordinarily dangerous one. It is not the majority view in Israel, but it is a powerful view.

And the way Israeli politics works, which is to give added weight to small groups that tip the balance to majorities in multi-party coalitions, they have a loud voice. And some of these people like Smotrich in the cabinet, who's the finance minister, are vulgar and destroying Israel because of their, well, a kind of genocidal intent, actually. So that's one group. The other group says, no, for security, we dare not risk making peace. and the stupid thing that they did, of course, but it was very premeditated and it played games with the first group and got won their support politically was the settlements process after the 1967 war. When the secularists said, you know, we don't trust Palestinians to have a state. So we're going to put Israeli settlements in Palestinian territory. And this was the famous expression back in 1970 was to put facts on the ground.

And now there are more than 400,000 Israeli settlers in the West Bank. And there are another 200, 250,000 in East Jerusalem. And it's facts that have made peace so much harder to achieve. But the main point from my point of view is these settlements are illegal. They have been declared illegal repeatedly by the Security Council. And so I want the Security Council to vote a two-state solution along the 4th of June, 1967 borders, like it is declared for more than 50 years, and get on with peace. And Israel would find that it has plenty of neighbors to do business with, to have peaceful relations with, to have tourism with and every other thing.

But they need to stop the zealots who don't see this this way. And they need to have some self-understanding that the other side has been talking about peace for decades. Israelis haven't wanted to hear it. And the United States has basically, you know, unconditionally backed Israel until today, let's be clear, you know, whatever Blinken and others are saying about protecting civilians is, is a total sham because it's American bombs dropping on Gaza every day right now. So this is not Americans protecting anything. They know perfectly well what they're doing. And that brings us back to the U.S. side and also to Britain and the European.

and imperial side, there is something about the evangelical religious view that has said, we can control these things. And it's a little less tolerant. The fundamentalist evangelical Christian view in the United States, which is probably the most pro-Zionist part of American politics, okay, at least alongside the Jewish community. But that view is, a kind of God-given, we have the right to rule view. And that is not what peaceful coexistence is about. Peaceful coexistence is about mutual respect, not the belief that one is the chosen one to rule in a particular place or to rule every place.

I wanted to shift a bit out of the Middle East. It's okay. But still, it's an economic question, I guess, because a big thing happening. now this week, of course, was the Chinese meeting with the EU. I think this was the first time they really met since the pandemic. And it kind of had the same issues where we, because we spoke previously about the mindset in the United States, but it's a similar challenge now in Europe, I feel,

because globalization is turning out very differently than many of the EU leaders suggested. It was supposed to be one which was Western-centric, And of course, now the key challenge or concern, I guess, from Brussels would be that the Europeans are becoming very dependent on China. But China not so much dependent on Europe. So this asymmetry is something that's spooking, I think, the Europeans. So the key language you now hear from the EU would be derisking, decoupling. But again, this is a dilemma for the Europeans, because if the Europeans would sever themselves from China, sever themselves from Chinese.

technologies and resources, like they cut themselves off Russian resources, it would make the European less economic, competitive, less prosperous, and also their dependence then would increase on the United States, which would effectively make them more politically obedient. So this is not a good option. But on the other side, if they accept more economic connectivity with China, the concern is the dependence would grow. So they have been looking for ways out. One of them would be, hey, how about we put some sanctions on China where it fits us? But then, of course, the Europeans are very offended when the Chinese retaliate,

because this is supposed to be a one-way tool. So, you know, they try to frame it in human rights because this is a good way of legitimizing one-sided sanctions. But again, the Chinese doesn't appear to want to have anything to do with it. Europeans, for example, cite the treatment of Uyghurs. But at the same time, you know, Wunderland doesn't want to even call for a ceasefire when the Israelis are, you know, carpet bombing Gaza. So this doesn't really work. They're also trying to blame China for supporting Russia, even though, of course,

the Europeans had a lot to do with provoking this war and now also sending all this weapon. So China pretty much took the same position as the majority of, of the world population, which was, you know, not supporting Russia's invasion, but also not supporting NATO's proxy war. Anyways, my point is, or questions, I guess, would be how do you see this, how would Europe overcome this dilemma of, you know, not wanting to become too dependent on China because, well, for example, to look at the electric car market that, you know, the Europeans simply can't compete with the Chinese.

If the Chinese cars are coming here, electric cars especially, then there's no room for the European market because on a high-quality, low-cost Chinese cars versus the lower-quality, higher-priced European ones, the Europe would de-industrialize. It simply because Europe's no longer competitive. But again, going against the Chinese is also not a great solution. So what would your advice be to the Europeans? Ideally, yeah, that would have become before this meeting. Yeah, first, I don't think Europe or the United States can ever again talk about human rights the way they do.

You know, this claim Xinjiang is a genocide, which was absurd, completely fatuous to begin with just a debating point or talking point. And then when a real genocide's taking place, they don't do anything. It's right before our eyes. mass slaughter, mass killings, mass ethnic cleansing, and they suck their thumbs. They don't do anything. So all of these arguments that have been used are phony geopolitical narrative arguments. They're games. They're not real.

And some people may think they're making real arguments, but they should understand that the governments are making phony arguments. And I took this on with the U.S. State Department when it talked about a genocide in Xinjiang without providing even one paragraph of backup, by the way, is just games. So they should attend to the genocide that they're a party to, which is the one taking place in Gaza right now and get this war stopped immediately. Now, when it comes to China, basically what's happening is that Vanderlayan is just, following U.S. instructions. I don't even think that this is a European view. This is the American view falling behind your leader. And I blame Europe for constantly falling behind the United States because it's falling further and further behind by doing so. It's just absolutely,

look at the trap that the U.S. got Europe into vis-a-vis Ukraine. Complete trap. Of course, the Europeans are not completely innocent of this. They watched the overthrow of Yanukovych. They went along with it. Why doesn't it? And the European leaders privately said things to me. Oh, yes, you're right. It's NATO.

And then they say the opposite the next day. So I've heard the hypocrisy directly to me. I mean, to me, they tell me one thing. They say something publicly the next day. They're just following the U.S. Look, one day the United States decided Huawei is an enemy. Now, why? To my mind, because if it's a U.S. system, they can spy on me.

But if it's a Chinese system, they can't spy on me so easily. So I trust Huawei equipment for my privacy more than I trust American equipment for sure. because I know what Ed Snowden explained to me, by the way, in an eight-hour face-to-face discussion once about what my own government's doing to me. So, but as soon as the U.S. said it, oh, the Europeans have to cut out Bowie everywhere. You know, they just follow the U.S. lead. And Vanderlain's not the most clever person I've ever seen. It's not like there really are some original ideas there. And European foreign policy is shambolic right now.

And Germany, sad to say, has really, nobody has done more damage in peacetime to the German economy than the Greens and Schultz letting them do it. And this is all very sad. So my advice to the Europeans, trade with China. good relations with China. Improve your vehicles, of course. Don't be late. But Europe's pretty clever. Europeans like a good quality of life, and they have it. Europe has the highest quality of life on the planet, the shortest working hours, the highest living standards, the longest vacation time, the longest life expectancy. The Chinese work a lot longer hours, a lot harder and so on. that's part of the trade-off.

But I think Europe gets its high living standards by being clever, well-educated, technologically sophisticated, and, yes, Europe should have a more strategic view. It fell behind, you know, look, Europe makes the leading advanced chips in the world, but it's all under U.S. control. Why doesn't Europe have its own? control over ASML chip-making capacity. No, the U.S. dictates everything. This is Europe's mistake right now. Europe's interest is not U.S. hegemony. Europe's interest is a peaceful, sustainable world and meeting China literally halfway on the Eurasian continent. If Europe had a good

investment program, it would be investing fast rail out to somewhere, in central Russia or out to Samarkand. And China would be investing in fast rail westward. And we would meet in the middle and celebrate the 21st century Silk Road, which after all is the whole idea of, and that would bring prosperity to everybody. China is not going to invade Europe. China is not a threat to Europe, period. I completely agree.

I mean, the idea that trade is a geopolitical threat because that's what it amounts to, that trading with China is somehow conjuring up some kind of geopolitical threat. The trading, Russia, was a geopolitical threat. It is so completely misconceived. It is so profoundly wrong. And you could see that what's happening is that some people, it just gave back to what you were saying about the dollar

at the start of the program. Some people want to use these trade instruments as geopolitical instruments themselves. This is exactly Jake Sullivan's sophomoric idea. And it's sophomoric idea. And it's sophomoric in the sense that you would expect to read it in a sophomore essay. But they're actually putting it into policy in the U.S. that we need to weaponize trade. We need to weaponize the dollar. He wrote about this in the campaign in 2020. I thought it was a lousy article. I couldn't imagine it would become actual American policy.

But the thing that I could never imagine is that the Europeans would stop thinking like they have and just follow along with the U.S. And this is really the big mistake. Professor Sachs, we've had you for, It's been absolutely phenomenal program. We've talked about China and the Middle East and Europe. But I think because we've come back, we've pivoted back to Eurasia.

Perhaps I'm going to suggest that we finish. Perhaps Glenn, you've got something to say about Eurasia because this is something that you've been studying and following very closely. You just met Professor Sachs talked about the Chinese and the Europeans building their railway lines and meeting. Well, why could we not do that? Isn't that exactly what was offered? And wouldn't it have been a great thing if it had happened? And wasn't that what Putin was advising and saying we should do?

And isn't that essentially what Xi Jinping is telling us the Europeans to do? So over to you, Glenn. No, well, I don't really have any much more to add. thinking the same, but it seems a lot of our policies in this greater Eurasian space from the Atlantic to the Pacific is very contradictory because we always

very worried that China's going to be this central power which everyone will be dependent on, but at the same time, we're sanctioning the Russians, so the Russians become more reliant on China. We're going after the Iranians. Iranians are going more to China. It seems like

the solution are concerned that the world all roads will go to China could be sold by ending a lot of these sanctions war because in this way, you know, Iranians have the same interest. They want to diversify their economic connectivity. They don't want to put all their eggs in a long basket where they could be taken advantage of. They want to connect with Europe. They want to connect with Russia.

They want to connect with China. And this is, I think, a lot of what you see across this Eurasian space. It's about decentralizing and diversifying to prevent everything from being decided from one center which allows it to be used as a political weapon, which allows economic connectivity, which should be a source of peace to, again, become an economic weapon. So I think... And maybe we could end with just one more terrible example of this that shows all that's wrong and all that could be right.

And that is Italy just renounced participation in the business. Belt and Road initiative. And this is quite fascinating because Italy back in 2019 knew that trade with China is a good thing for Italy because the Chinese love Italian brands and the Italians have stylish brands and the and the Chinese love it. And it brings a lot of income, a lot of wealth to Italy. And so Italy signed up as it should to be part of the Belt and Road Initiative. Well, just a couple of months ago, Prime Minister Maloney was called to Washington and was told by Biden, you've got to get out of this. And dutifully, Italy has told the Chinese, we are leaving the Belt and Road Initiative. And then we still want trade with China. We don't

want to be misunderstood and so forth. But they left. Why did they leave? not because even intrinsic fear of China, not because it was hurting the Italian economy, not because Italy lacked things to sell to China. No, they left for one simple reason. The United States told them to do so. Professor Sachs, on that bleak note, but we said a lot of things that give rise to hope

in this program. So let's, and those are the big things, actually. So let's not, let's not forget that. But on that rather sour note, maybe, but always remembering the positive and good things, I suggest that maybe this is a good place to stop our program. It's been a wonderful one. And I think you're a very interesting place at the moment. Dubai, where all sorts of exciting things are happening. And the Arabian Peninsula looks like it's becoming a very interesting place. very exciting place altogether with lots of things going on in Saudi Arabia, which sound very exciting and dynamic indeed. Great to be with you. Thanks as well for being so generous with your time. Of course. Always great to be with you guys. Thanks.