The Munk Debates Podcast - Friday Focus: OPEC Surprise – Xi Ascends

Episode Date: October 7, 2022

Friday Focus provides listeners with a focused, half-hour masterclass on the big issues, events and trends driving the news and current events. The show features Janice Gross Stein, the founding director of the Munk School of Global Affairs and bestselling author, in conversation with Rudyard Griffiths, Chair and moderator of the Munk Debates. The following is a sample of the Munk Debates’ weekly current affairs podcast, Friday Focus. The free portion of the program sees Janice and Rudyard discuss the machinations behind OPEC’s snub of the Biden Administration as the oil-producing cartel cuts its global output. What does this surprise move say about Saudi Arabia and its relationship with Russia and China? How is the U.S. likely to respond? The donors-only second half of the show features a discussion of China-U.S. competition and Beijing’s big leadership confab next week that will see Xi appointed to an unprecedented third term as the country’s leader.   This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue. More information at www.munkdebates.com.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

The following is a complimentary excerpt of this week's edition of the Friday Focus podcast by The Monk Debates. To access full-length editions of each and every episode, along with all kinds of great additional benefits and perks, become a donor to the Monk debates. You can do that for as little as $25 a year, and you'll receive each and every year 50 Friday Focus episodes at full length. It's all available right now on our website in just a few. few simple clicks. Triple W. The Monk Debates.com. Look for the Friday Focus option in our navigation bar, the top right of the website. Make your donation, and we will send you each and every Friday a link to listen to the full-length edition of this program. Thanks in advance for your generous contribution. Hello, Friday Focus listeners. Rudyard Griffiths here, your host and

moderator. Welcome to this, our regular Friday program, a deep dive into some of the big issues making the news this week. We do this each and every Friday with Janice Gross Stein, the founding director of the Monk School of Global Affairs, an internationally renowned scholar and author, Janice, great to be in conversation with you on a kind of chilly October day, at least here in Toronto, where we're recording from. It is a fall, Roger, that is clear. But also some bright news on this day, the really terrific response that we had from all our listeners, it is really gratifying and heartening to both of us. Absolutely.

Thank you again, everyone who's made generous donations to the Monk Debates charity to support this podcast and our efforts to bring kind of civil and substantive reflection on the big issues and ideas of our time. This is our first episode where we're going to follow our new system here, Janice. Everyone, regardless of who you are, where you are in the world, you can get the first part of this show free on our regular podcast app or feed. But if you've become a donor or you'd like to become a donor for as little as $25 a year, you get the back half of the show, often where we get into some juicy content where the Bullabay is really. really starts to bake down to the flavorful stuff that we enjoy each and every Friday.

And also we'll be adding to the program over the course of this autumn and into next year, all kinds of extra bonus content, opportunities to interact with Janice by our donors. So all of that again in the second half of the show that as of today, you can access by becoming a donor. As soon as you make a donation, you'll automatically receive an email with a link to listen to the donor-only show. If you have become a donor over the last two weeks, rest be assured,

you'll probably listening to this because you got the link to the full episode or program. If not, please just reach out to us via our website and we'll get you sorted out. Janice, first issue, well, in fact, this whole episode, Janice, I need your big brain because I've been a bit stumped this past week. There's been a couple things that have happened in international relations that I just, I don't.

get. I think somebody's playing four, fifth, sixth dimensional chess and I'm on a checkers board. So I need your help with the two topics we're going to focus on. The first is what we saw from OPEC, so the consortium of oil producing countries, most notably Saudi Arabia, but also including Russia that came out this week and made a big production cut in an already oil-constrained world that's been pushing prices high and pushing inflation high with it, Janice. And this was kind of led it seemingly by Saudi Arabia, which I thought was an ally of the United States, the famous fist bump between Joe Biden and MBS, Mohamed bin Salman, earlier this year, supposedly ushering in more cooperation on energy to lower the cost of the price at the

pumps before the midterm elections that Joe Biden's headed into in a matter of weeks. Why did Saudi Arabia do this? What's the thinking? What's the strategy? What a fascinating story this is, Roger, because we have two aggrieved people here. Joe Biden is clearly aggrieved. They expected that they had secured Saudi cooperating. when Joe Biden got on a plane, withered, withering criticism from the left, and Vince bumped the prince's hand after calling him a pariah.

So from Joe Biden's perspective, he really moved. But that's not quite how Prince Mohammed bin Salman sees at MBS. He was outraged. to be called a pariah. In his circle, the storyline was with allies like this. You don't need enemies, frankly. And this is a hostile and personal act.

In Saudi culture, everything is personal. So for Joe Biden to name MBS and you call him out as a pariah, was a direct personal insult. And the ground changes. Let's just remind listeners the reason that all happened, no small part was because MBS, more than alleged, there seemed to be good CIA intelligence, directed a Saudi kill team to an embassy in Istanbul,

where journalist Washington Post columnist, Jamal Khashoggi, was lured on the basis of supposedly renewing his passports or some documents. And then was cut to pieces using bone saws and taken back to Saudi Arabia or dumped into the bosphorus in a suitcase. So some pretty pariah-like behavior in my books. Well, you know, as I said, that's not how MBS sees it. And he walked away after that whole exchange figuring there is no real friendship here. This is just transactional.

That's all this is. and along comes a change in the global energy picture, and that's what drove Joe Biden to go to Saudi Arabia. He did it with the greatest reluctance possible. If he'd had a choice, he wouldn't have done it. And the Saudis look at this, and they say, well, okay, this is business. And OPEC right now, the price of oil, as you know, Rudyard has actually dropped over the last few weeks. Just last week it began to creep up again.

but the price of oil has dropped. The Saudi diversification plan depends on a floor price of $80 a barrel. And they were looking at the combination of what Joe Biden has put forward a cap on Russian oil in order to prevent Russia from the windfall profits. It's getting from this tight energy market. that plus reduced demand as a result of higher than expected inflation. And it looks like a movement toward a recession and several big economies. And they said, we're not doing that. We're not doing that.

And oh, by the way, Russia is a partner in OPEC 2. Now, why all these details? This story says to me, it's a measure of how. changed the U.S. position is in the world, really. It's inconceivable. Changed or weaker? Weaker. Weaker. It is so much weaker than the administration realizes. There's been a rough road in the Middle East, really beginning with Obama, who stood up for human rights in Egypt and did not defend Mubarak. and all of the United States long-time partners in the Gulf just stared at the abyss and said the world has changed. And so what we're seeing now is Biden's expectation that a fist bump was going to do it. And that was going to bring Saudi Arabia back into the traditional relationship.

But it's not. But it's not. This is my confusion. It's not just a fist bump. It's a U.S. security guarantee. that Saudi Arabia has enjoyed for a generation. Significant U.S. ornaments and weapon sales to the kingdom, tacit support for its disastrous war counterinsurgency in Yemen, propping up Saudi Arabia as a regional competitor to Iran.

So I wonder why the Saudis, as you're now seeing, U.S. Congress members saying maybe it's time to put a bill in front of the House withdrawing the U.S. troops and security guarantees for the kingdom on the basis that we no longer have an ally. Instead, we have somebody who is giving Putin billions of more dollars to fight his horrific war and occupation of eastern Ukraine and is fueling inflation. that will cause the likelihood, the chances of the more severe economic correction to result as central banks have to keep rates higher for longer to push back against the trickle-down effects. And that's even before you get to the fact that they time this just before the midterm election.

So the prices at the pump are, the United States are heading back up to near $4 a gallon. and you know Janice better than anyone. There's almost a direct correlation between support for the incumbent party and the incumbent president and what Americans are paying at the pump for gas. So all of this, I don't know, it just bewilders me on the security front. It seems politically ham-fisted. It once again looks like a kind of arrogant prince who I guess is used to having his cake and eating it too. I wonder this time if maybe he's. bit off too large a piece.

Well, let's talk about the security guarantees, right? That certainly the United States and many allies just think extends to the Saudis. That's not how the Saudis see it. Beginning again with Obama, Obama signed JCPOA, the agreement with Iran to limit its nuclear weapons program. Shock. In Riyadh, is the against the strenuous objections of, Saudi Arabian, not to mention Israel, but Obama pursued what he thought, and there's a strong

case to be made for a chance to keep that program in the box for 10 more years. Horrified. Obama doesn't stand behind Mubarak. Well, what kind of security guarantee? There's no formal security alliance. So beginning about a decade ago, and this is not something that Americans nor Canadians recognize, the Saudis began to. think, well, this isn't that much of a security guarantee. We're on our own. And that led to the warming of the relationship with Russia, which long precedes the invasion of this comment that came

out of Washington that really struck me yesterday was, what is he thinking? He can't replace us with Russia. Well, that's very nice to hear an American say that, but that's not how the Gulf states feel any longer. They regard the United States as an unreliable and distracted ally. And so they're prepared to do stuff like this now, that they would never have done. Well, I wish MBS well in the loving embrace of Putin's Russia and Xi Jinping's China. I think it's great company for him to keep as a similar autocratic, sclerotic leader who enjoys executing people in large numbers who commit minor crimes,

who imprisons women for trying to claim some of their basic rights who persecutes his LGBT community. I gather you're not a fan, Roger. Ruth, no, I'm not. I frankly have very little patience for the House of Saturn. And yes, they have this energy card that they like to play. And they understandably have used that to, be a bad actor in a whole bunch of different ways.

This is just the latest example of it. To me, this week and this event kind of, you know, I was always a bit of a skeptic of the ethical oil argument that was used in Canada to justify the oil sands on the basis that, you know, if we didn't exploit this resource and we didn't do it in a way that was, if we could do it in a way that was responsible, that was far better than shipping money to the likes of MBS and Maduro. in Venezuela. I don't know. This week, I'm starting to think maybe there's something there in the

ethical oil argument. And there's something there about we have to realize the tradeoffs that we're making in terms of this relentless and sometimes quixotic pursuit to green our economy to, you know, hit these unrealistic targets of net zero by, you know, 2030, 2050, depending on your G7 economy. And we're doing all this at the same time. We're empowering these states who are kind of crappy actors at home who really do use their autocratic powers and privilege to brutally suppress and torture and kill with impunity within their own borders and outside their borders. And now cozy up to what are strategic global competitors. for us, China. All I can say,

Rudid, is this sounds like a blast from the past when the United States really was the dominant power in the world. There is nobody outside of NATO allies that is now not looking at the world and saying, oh, boy, there are three actors to play around with here. You know, the United States, China, Russia, we're going to balance, We're going to play one off against the other, and we're going to make the best deal for ourselves with whoever comes to the table. So I read this story, and I say to the folks in Washington, you might have to think about the language you use if you can foresee a situation where you might need these countries. because it is a luxury to call somebody a pariah merited as it is,

but it's a luxury if six months later you turn up on their doorstep, and you need their oil. Those days are gone. Well, maybe we should be pursuing our own energy independence or at least energy security with a little more clear-sightedness about the implications of not doing so or being unrealistic about the cost and the time frame for a transition to a so-called green economy. You know, for Canada, I think this is a moment where we are almost better endowed with everything

the world needs, many of the really crucial commodities that the rest of the world needs, as well as some very interesting leads in technologies that matter to the rest of the world. So is this a time to actively pursue a North. American energy solution, frankly. It was one of the first acts of Biden's presidency was to cancel what would have been, you know, crude, untouched by the bloodied hands of MS and his ilk. There's an incoherence. That's really my point. There's an incoherence in U.S. policy, which you can afford when you're the biggest, the strongest, and the richest who can therefore act with their own kind of impunity. But you can't do that anymore.

And this is a sober moment. It was really interesting because in Washington right now, that four-letter word guy who did this after the president went to Saudi Arabia, followed by, yeah, but we don't really have great options to deal with this right now. So there's some bluster coming out of the State Department now, but I wouldn't hold my breath, Roger. The United States is now at the premise interparage, but there are other big powers in the world.

Time to wake up and smell the coffee. My last comment on this is there may be a kind of karmic victory here for the forces of good, which is that these actions by Saudi Arabia are only probably going to hasten the global recession. they're only actually probably going to make it more severe on the basis that central banks have to lean in harder, raising rates, you know, faster, higher for longer. And that may end up, at least for a while, causing a really significant correction in the price of oil well below Saudi Arabia's $80 a barrel that it needs to keep its sclerotic murderous regime in power. and destabilizing the rest of the region.

Well, let's take a quick break when we come back on the other side. We'll dig into another kind of mystery this week that flummoxed me. News out this Friday as we tape the 7th of October about a big ban on part of the United States on a lot of technology that's pretty essential to China's ability to compete on AI, on a whole bunch of things related to the tech. technological revolution shaping our world. We'll have a deep dive on that topic right after this break. Thanks for listening to this excerpt of the Friday Focus podcast to get full-length editions of each and every episode of this program. Simply go to our website,

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