The Peter Zeihan Podcast Series - Trump 2.0 - NATO || Peter Zeihan

Episode Date: January 17, 2025

Next on our list of things Trump 2.0 will have to deal with is NATO. Trump's second term could reshape NATO dynamics, with a significant focus on defense spending, China, and European alliances.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/trump-20-nato

Everybody, Peter Zine here coming to you from New Zealand, specifically the Queen Charlotte Walkway and Marlboro Sounds. Today we're going to do the next step of our open-ended series on Trump 2.0, the things that are waiting for him are that he's going to choose to tackle in the early days of his administration. Today we're going to talk about the NATO alliance. Now, with the Europeans, there's any number of things going on with trade, with demographics, with energy, with Russia, with Ukraine, with China. It's a long list. But Trump only cares about two things on it. Number one, will they assist the United States in cracking down on Chinese trade on a global basis? And number two, will they up their defense spending to whatever target the Donald Trump administration establishes?

Now, if this sounds kind of reminiscent of Trump one, it is. And the difference this time around is that there's been a change of mindset in Europe itself. the Ukraine War has really sharpened a lot of minds and made people think differently about security. And so most of the European countries that were dragging their feet when it came to meeting defense expenditures in the Trump one term have done so voluntarily during the Biden administration because of the Ukraine war. That's going to make hitting 2.0 percent very, very simple. That's supposedly what everyone's supposed to be doing anyway. But this world has changed.

The situation is different. And Donald Trump is almost certainly going to insist on a 3%, maybe even a 4%, maybe even a 4%. with some countries even openly talking about 5%. When I'm going to say some countries, some countries in NATO. The bottom line is if Ukraine falls, then this war comes to Europe's doorstep, and there is no way that the Europeans can launch a meaningful defense without a significant build-out of their defense capacity. So say what you will about Donald Trump.

He got the ball rolling on this conversation even before the Ukraine war started. The second thing to keep in mind, of course, is the China angle. The Europeans have always been more circumspect when it comes to putting tech restrictions or trade restrictions on the Chinese than the Americans have. But again, the situation has changed. Now that the Chinese are basically bankrolling and equipping the Russian military in Ukraine, most of the Central Europeans have flipped completely. And now that the Chinese have come to a level of technological acumen that they don't need

nearly as much German equipment, the Germans are starting to look at this from a different angle as well. The French for their part were always for it. In fact, the biggest free trader in Europe, Britain, left with Breggen, it. So that quiet voice in the back that was whispering in America's ears to dial it back, that's gone. So we actually have a situation where the Europeans might, might, might, might, might, be a little bit more willing to consider things. There's also been a change of diplomatic positions. The Europeans always had this view that they were friends and allies and family of the United States, and you don't lie to your friends and your family and your allies. Well, Donald Trump really doesn't

care what you say as long as it makes him look good. The Russians figure that, out. The Chinese figured that out. But the Europeans tried to be good actors. Not this time around. It's going to be a very different situation with the Europeans blowing a lot of smoke to cover their asses and whatever the topic happens to be. But at the end of the day, cooperation is going to be a lot more doable because the situation has changed. Now, of course, you look at this country by country, you get a very different view. So let's break this into three groups. At the top of the list, the countries they're going to be doing really well. Either the they get along with Trump or they're not going to have a problem meeting those thresholds,

or they're nervous about the Chinese already. Poland at the very top of that list. Poland actually takes over the European Union's executive arm, or all chairs the meetings. I overstated that this January, and we'll hold it for the first six months of the year. So coinciding with the honeymoon period for Donald Trump. The polls are on the front line with the Russians. They are already well over the 2% threshold. They have plans to reach.

4% within a few years. And on everything from trade to illegal immigration, the polls are actually on a similar page with most of the things that Trump believes in. Also, we have this weird thing going on where Polish politics are starting to mirror U.S. politics as they used to be. So the two main forces in Poland are the civic platform, which is a centrist group. It kind of leans right on economic issues, which currently runs the government, and a group called Law and Justice, which is far more populist right,

more populist and conservative than Donald Trump. And the two of them disagree on everything, American style. But on the big stuff, most notably Russia and relations with the United States, they're almost in lockstep. So you get this scream fest in Polish politics that when it comes to the big stuff, means very, very little sound familiar? Anyway, good time to be Polish. Scandinavia is going to do pretty well, too.

Here you've got countries that are more demographically stable, have very capable expedition-based militaries. They work together extraordinarily well, and they share the poll's general view of all things Russian and all things American. So Trump will, of course, try to lever the fact that he's got Swedish descent, and the Swedes will nod and smile and try to push their agenda through. For all of these countries, the key issue is that we are cooperating. We're doing everything that you say we should do on defense and on China. Let's talk Russia and make sure we're on the same page on Ukraine.

That will be their goal. And, of course, they have to make it look like it was Trump's idea. Second group of countries, France and Germany, the old core, both of them are utterly screwed at the moment. The German problem is not simply political. It's also demographic and economic. The economic system is in the early stages of demographic collapse as they simply run out of workforce. It'll basically be a non-functional economic system within a decade. And so increasing defense spending at a time when they have to rapidly adapt their entire society, heavy carry.

Second, their industrial base is linked in with a lot of countries in central Europe who are a little bit behind them in terms of the demographic decay, but it is very real. I've got a friend here. I'm going to try to keep up with. And the energy situation is a disaster because they used to get a lot of cheap energy from the Russians, and now that's gone, and the Chinese are now starting to outcompete them in some of the sectors that they consider themselves good at it. Increasing defense spending in that environment is really, really tough. But if they don't do it, and the American... do lose interest in Europe, then they're going to have to increase defense spending by a lot more just to keep the country coherent. So there's a lot of ways that that can go wrong. But as bad it is for the Germans, it's a known problem. The new problem, the worst problem, is actually going to be

by a non-European country that is in NATO. Keep in mind that the United States is not the only North American country in the NATO alliance. The other one is Canada. And under Justin Trudeau, the Canadian government has basically slim defense bending to almost a rounding error to zero. Let me give you the Canadian point of view than everybody else's. So the Canadian point of view is, eh,

they've got an Atlantic coast, a Pacific coast, and Arctic coast, one-ninth the population of the United States, but actually more frontage. So if Canada was to try to build a military, there's a right size so it can project power, it would break the country. And so they don't try. They've basically focused on a couple

things like special forces and everything else is kind of wasted. That doesn't fly for the rest of the alliance. The Canadians have been freeloading on the global order ever since the wall came down. And the joke in diplomatic services is after the Cold War ended, Canada basically came an NGO and was more part of the problem than part of the solution. It might be a little bit cruel, but not by a whole lot. Because if Canada were to expand its defense spending and try to excel, and three or four things and then plug those into the NATO alliance,

it would basically be under the command of the United States in all meaningful ways. And it would lose its sovereignty, even as meeting what Donald Trump says he wants them to do. That is a really ugly political carry in Canada. And so they've just kind of loafed forward. And while we are all likely to have elections this year, we will have elections this year, we will probably have a changing government. That doesn't change the underlying structure.

If the Canadian just spend money to spend money, that really doesn't do anything for anyone, including Canada. And so Donald Trump is going to be angry no matter what. And unlike Germany or France, there's a lot that the Trump administration can do to Canada if it wants to because of the trade relationship. Canada is utterly dependent on the United States for its trade well-being. And Trump loves to use trade as a cudgel. So it's difficult for me to see. a way that this can be managed. Under the current government of Justin Trudeau,

Trump broadly likes Justin Trudeau because Justin Trudeau is the only world leader that global media has ever considered to be dumber than Donald Trump, and that rings a little couple of bells here and there. The new guy, if it is one, is unexperienced and doing with the United States on this scale. We just don't know.

So one way or another, we're looking at Scandinavian-Polish relations with the Americans, probably improving significantly, Germany in a pickle where there's no easy fix and maybe not even a fix at all. And Canada basically desperate to change the topic whenever the Americans are in the room. What the Canadians are going to discover real soon is that during the Cold War, when they were like the 45th most important country on America's list, it was a comfortable place to be.

And now, because trade is becoming more regionalized and because defense is a little bit higher up the agenda for this incoming administration. Canada is like third or fourth on the list. And whenever the Americans are paying attention to you, it gets uncomfortable real fast.