How NATO has shifted from its proxy war against Russia in Ukraine to targeting China in the Pacific
Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City.
Dr. Radhika Desai is Professor at the Department of Political Studies, and Director, Geopolitical Economy Research Group, University of Manitoba, Winnipeg, Canada
Pepe Escobar is a Brazilian journalist and geopolitical analyst
RADHIKA DESAI: Hello, everyone, and welcome to the 15th Geopolitical Economy Hour, the fortnightly show on the political and geopolitical economy of our times. I’m Radhika Desai.
MICHAEL HUDSON: And I’m Michael Hudson.
RADHIKA DESAI: And today we propose to discuss NATO in the aftermath of its recently concluded Vilnius Summit, exploring a variety of questions about how its assault on Russia is faring and the prospects of extending its sphere of operations to what NATO leaders like to call the Indo-Pacific.
RADHIKA DESAI: And in order to do this, on today’s show, we are joined by none other than Pepe Escobar. Many of you will, of course, know who he is.
He’s a Brazilian journalist, geopolitical analyst and author. Pepe, welcome to our show.
PEPE ESCOBAR: It’s a huge honor and pleasure to be with you guys and with this fantastic audience, of course. And let’s rock.
RADHIKA DESAI: All right. Let’s let’s rock. So basically, NATO is a huge topic and it’s surrounded by a considerable amount of smoke and a vast number of mirrors.
So we have to try to understand we have to sort of push through all of this to try to understand what it is. It calls itself a defensive alliance, defensive.
The fact of the matter is it was created as part of the Cold War, which the U.S. launched more or less single handedly before the Second World War was even over. It launched it against its own Second World War ally.
And again, the United States did this, you know, launched the nuclear bombs on Hiroshima and Nagasaki as part of this launching of the Cold War. So there is no way in which this war is defensive.
And what’s more, it’s also was an offense against communism, of course, but it has also been an offense against the third world.
Essentially, NATO was also set up as a bit of a rival to the United Nations, which the U.S. liked less and less as it began to include more and more countries from the third world.
Alliance? What sort of an alliance is it in which one about one member seeks to essentially damage and harm other members? That’s what the United States is doing, for instance, to Germany today. That’s what it did to the United Kingdom all those decades ago at the end of the Second World War.
Much is also made of NATO’s unity. In reality, the effort, the mountains of effort required to paper over the cracks that are widening in NATO are, in fact, no longer even enough. And the cracks are showing through.
The North Atlantic? What do you mean North Atlantic? NATO has long abandoned its alleged sphere of operation and it has penetrated more and more outside that sphere, not only within Europe, but is today, of course, as I’ve already said, preparing to penetrate the Indo-Pacific.
One could lengthen this list of the lies that surround NATO. But why don’t we just launch into our conversation? We’ve decided to structure it around a series of questions. So let me just start us off by posing the first one.
The first question we have is simply, where did the Vilnius Summit leave NATO? What are the principal features within the alliance that it exposed?
Maybe we can start with you, Pepe, since you are our guest.
PEPE ESCOBAR: Oh my God. Can I throw a bomb? OK, guys, look, I have had this pleasure of following virtually every NATO summit for the past 15 years or so.
So the evolution or the involution of NATO as a global Robocop has been distinct year after year. In fact, I started calling NATO global Robocop as early as 2010, 2011, 2012, because that was already obvious.
And then when we got under a fog of war, Rasmussen as NATO General Secretary, usually they get a deranged Scandinavian as NATO General Secretary. Now the deranged Scandinavian is, of course, that piece of Norwegian wood, Jens Stoltenberg.
So it’s very, very hot.
I remember when I was in Sweden years ago and I was on a geopolitical roundtable in a university in southern Sweden, when I started talking about Rasmussen, my Swedish audience erupted in anger because they knew, they were postgrad students, they knew very well who Rasmussen was and they said, look, he’s destroying the reputation of Scandinavia as rational actors.
And they knew it very well. Stoltenberg is not as rabid as Rasmussen, but he is sold basically by the people who control NATO, as you know, better, much better than I do, straight from Washington. And obviously those guys at NATO headquarters in Belgium are just following orders coming from Washington.
Stoltenberg is sold as a sort of a relatively polite face of NATO, but the message is the same. And after the start of the special military operations, got even worse.
So anything that comes from the mouth of Stoltenberg, we know that it’s coming from the mouth of the rabid, Straussian neocon psychos in D.C. And they have their Scandinavian guy, you know, just voicing them.
The problem is he’s taken seriously all across Europe. I mean, seriously, Ursula von der Leyen now is the butt of jokes from Spain to Greece and everywhere in between. But Stoltenberg is actually taken seriously. And that’s what makes them even more dangerous.
If you talk to an average citizen, let’s say here in France or in Italy or in Greece or in Germany, they take NATO’s pronouncement seriously. And the NATO 24-7 spin on the war against Russia, which basically says, no, we are not involved. We are not at war with Russia. We are not part of the war.
And then he announces the umpteenth package coming either from the West, from the EU or NATO countries as well against Russia. So the problem is, most people, because of the mainstream media barrage all across Europe, they don’t get into the specifics.
So they really don’t know that NATO is up to their necks and beyond in a war against Russia.
The way Vilnius was covered by European mainstream media was that, no, once again, we are all united, the 27 of us against Russian aggression, the usual.
But no specifics and much, much worse, only very, very sparse mentions of NATO extending the Robocop mandate to the Indo-Pacific and to the South China Sea.
So in fact, what we’re seeing for the past year and a half, let’s put it this way, is that the North Atlantic Organization now has taken over the Indo-Pacific and the South China Sea. So they actually moved to Asia.
So it’s not North Atlantic Organization. It’s Northern Hemisphere, Including the Far East Organization.
But this is not explained, obviously, by, for instance, The Economist, The Financial Times, major newspapers in Italy, Le Monde here in France, etc. So obviously, the average European citizen is absolutely clueless about that.
And the fact that the war, which is being lost dramatically in Ukraine, the narrative has been changing by the Americans, not yet by NATO. But on terms of NATO policy, there is a 4,400 page not-so-secret document at the end of the World News Summit, which categorizes their next steps in Russia, but also their next steps in the Indo-Pacific. And that’s the most worrying part of them all.
And once again, I would say 99% of EU citizens are completely oblivious to all of that.
MICHAEL HUDSON: Well, I think the purpose of NATO from the beginning has always been to promote a unipolar U.S.-centered order. And it began with Europe, because NATO, in effect, has taken over European foreign policy, and even domestic policy. It’s written into the EU constitution.
And certainly, you’ve seen the effect of the war in Ukraine is to make Western Europe a U.S. satellite. It’s cut off the trade with Russian gas and oil and fertilizer and other raw materials, making Europe dependent on U.S. suppliers at much, much higher prices.
So the effect of NATO so far has been to sort of break away Europe from what seemed to be an increasingly close relationship of mutual economic gain between Germany and other European countries, trading and investing with Russia for low-cost raw materials, and with China for low-cost manufacturers.
Well, the U.S. plan in just forcing a military solution in Ukraine has been to break away Russia’s ability to support China, to support Syria, to support Iran and other countries. The whole idea of NATO was to carve away any group that would seek to be independent of the U.S. world order.
And of course, the ultimate aim, as President Biden has said again and again, is China is the number one enemy.
Well, you can’t go against China right now, because it already has so much support from Russia and other countries. So NATO thought, well, how do we isolate China? We first of all have to break away its potential ally in Russia.
And if we have a war in Ukraine, the neocons actually believe that the Russian people would rise up against President Putin and have a regime change, and the regime change would bring another Boris Yeltsin-type Western-oriented character.
Well, the reality has been just the opposite. Hardly surprising, when a country is under attack, like Russian speakers are under attack in eastern Ukraine, well, the tendency of any population is to rally behind the leader.
And that’s why Putin’s approval rating has gone up to 80 percent, much higher than any American or European leader.
So what’s happened is that instead of NATO breaking up China, Russia, and other countries seeking to pursue their own policy, it’s driving them all together out of simply the need to protect their own economies from the U.S. sanctions and from the U.S. plan to break them up.
And when the United States comes right out and says China is our enemy, Russia’s our enemy, and all their allies are enemy, hardly by surprise, the enemies get together.
So the result is that NATO really, instead of isolating the members of the BRICS and the global majority of Eurasia with the global south, they’ve driven them all together.
I don’t think there’s any truth at all in the rumor that the heads of NATO are really working for China’s foreign policy department. I don’t think they’re really in the pay of China’s government to make sure that Western Europe is driving all the other countries together under Chinese and Russian domination.
And I don’t think they’re really working for the Russian State Department, either. But if you think of them as working for Russia and China, you realize suddenly you can explain all of the consequences of what the NATO policy is bringing about.
It’s driving the rest of the world together and being an integrating force for the rest of the world by making an iron curtain, isolating the United States, England, and Western Europe away from the rest of the world, leaving the west of the world, the BRICS and the global majority to make their own new world order.
RADHIKA DESAI: I mean, I think all of these are really interesting points. I mean, if I were to put, just summarize in one word what, where, you know, where Vilnius leaves NATO, I would say that word would be failure.
Because even though NATO has a lot of things going for it, including, you know, governments in places, important capitals like Berlin that are willing to do everything that NATO wants, in fact, NATO is failing to achieve its objectives.
And the key way in which it is failing is, of course, that all the help that has gone to the Ukrainian membership, they have essentially not been, they’re essentially going to fail in the battlefield.
Sanctions, Michael, as you mentioned, have already failed to bring Russia down. Now there’s going to be failure in the battlefield.
And if there is failure in the battlefield, then I think that the divisions within NATO, which are already quite apparent, I mean, the fact of the matter is that the various Eastern European countries wanted to give Ukraine membership or at least some sort of map to membership.
And this was not permitted by Germany for its own reasons, but also by the United States. And President Biden cannot afford to be seen as essentially, you know, increasing the U.S.’s or NATO’s involvement in this war in any way.
So the fact of the matter is that in this it has not succeeded either.
Moreover, the military aid, you know, just think about this, the size of the actual military industrial complex possessed by the NATO countries collectively is enormous.
But the fact of the matter is that still they have been unwilling to a considerable extent, but also unable to supply Ukraine with the quantity and quality of the arms that it needs so that it cannot succeed, could not succeed. And so the so-called counteroffensive is failing.
And that’s the background against which the Vilnius Summit took place. With that background, even though it added Finland and hopes to add Sweden, having overcome President Erdogan’s limitations by offering him vast quantities of money, et cetera.
The fact of the matter is that this alliance, the cracks within it are already showing.
And I also feel that success against Russia is very critical to extending the alliance and its sphere of operations to China, because the fact of the matter is that if they can’t succeed against Russia, there’s definitely, they’re not going to succeed against China.
And what’s more, there was already dissension over Russia. The fact of the matter is that the various NATO members are so deeply involved economically with China that they are not going to, they’re going to be even greater dissensions with essentially targeting China, even though all Washington’s puppets in various European capitals are huffing and puffing to try to achieve this by talking about de-risking and what have you.
People like Ursula von der Leyen are in the forefront of this effort, but I don’t think they’re going to succeed for reasons, I think, Michael, that you also mentioned.
The cost that these countries are going to have to pay for these wars costs not just militarily, but also economically. The consequences of the economic disruptions that it’s going to bring is going to create dissension within these people, is going to create popular discontent. It’s going to destabilize governments.
And what’s more, it’s also going to create dissensions within the elites, because many of them have reasons to continue doing business not only with Russia, but also with China, in particular with China.
So in that sense, I would say that the Vilnius Summit has simply shown the dysfunction of NATO to an even greater extent.
Maybe we can go on to the next question, which is how is the proxy war on Ukraine faring? What does it mean for Biden and his larger strategy of uniting so-called democracies against the so-called autocracies and targeting China?
I’ve kind of already segued into that topic.
PEPE ESCOBAR: Well, I’ve been writing about this stuff for a year and a half, so I hate to repeat myself. But OK, let’s go straight to the point.
NATO’s humiliation, full humiliation, is just around the corner. And compared to it, Afghanistan does not even qualify as a mini Disneyland. Just wait. Because in terms of the counteroffensive, it’s already dead. It lasted three weeks and it’s already dead. And there won’t be a counteroffensive 2.0.
First of all, they have no personnel, qualified personnel. Second, they have no weapons. Third, they are being demilitarized on a daily basis, non-stop.
Because if you follow any good writing in English, of course, if you don’t follow the ones writing Russian or Chinese, it’s understandable in the West.
But if you follow the very good ones writing in English, starting with Andrei Martianov. Andrei Martianov is very funny because technically he’s an Azerbaijani. He was born in Baku, but in the old Soviet Union. But Andrei lives in Western USA.
He writes in English. His blog is excellent. His podcasts are also excellent. And I would say, without a shadow of a doubt, in English, he’s the number one military analyst of what’s really going on in the war.
And we have excellent American analysts like Colonel Douglas McGregor, Scott Ritter, etc. They all, in military terms, they all say the same thing. This thing is dead. This thing is practically over. The thing is how long […] NATO can get away with selling a fiction to a global audience.
People in Germany, France, and Italy, the top three economies here in Europe, are already asking questions. I mean, industrialists, academics, they are not, of course, stigmatized in mainstream media, underground channels, parallel discussions, roundtables of very well-informed people, including intelligence people, French, Italians, etc.
They say, look, there’s got. We need to find a way out of this, but it’s impossible because everything is controlled in Washington by those Straussian neocon psychos.
Even them, not them, even the so-called Biden administration, which the way I’ve been writing for years, it doesn’t exist. What exists is the Biden combo.
Biden is, as we all know, he cannot find his way to the next room. Everybody knows that. So the decisions are taken by the combo.
And among the combo, the visible faces, which makes them even more toxic, are the toxic trio. Sullivan, Blinken and Nuland. But the guys who actually make these decisions, they are in the back. They never show up. So that makes it even more dangerous.
We have an idea of who they are, but they never show up. They don’t need to. The messengers spread the message. And they are trying to change the narrative badly because they know that there’s going to be a massive humiliation just around the corner.
The elections are getting closer and closer. You cannot go to the American public next year and present a NATO humiliation, which is obvious for 88% of the world, as a victory and try to get away with it. It’s absolutely impossible.
People who bother to look at what’s really happening on the ground in the battlefield in Ukraine can see for themselves. So now they’re trying to change the narrative.
And the best example these past few weeks, in fact, these past few days, was Edward Luttwak, which you all know as, let’s say, number one or number two Pentagon advisor for the past 50 years or so.
He gave an interview that is absolutely incandescent, where he’s basically changing the subject to war on China.
So this was, I would say, the official entry of the real war is against China, not in Ukraine, into mainstream media. It’s on YouTube. Everybody can watch it. Soon, if people start watching, soon we’ll have millions of views.
And Edward, as you know, is a very, very clever operator. Even when he doesn’t say it, he’s spelling the whole game, in fact.
Look, William Burns called Naryshkin. William Burns, head of CIA, Naryshkin, head of Russian foreign intelligence. This is true. Burns did call Naryshkin. They have a very important phone conversation, but not exactly what Edward is spinning.
Basically, Naryshkin was trying to explain to Burns, look, if you, CIA, start mounting operations inside the Russian Federation, there are going to be repercussions for you guys. So, you know, go slow.
Edward’s, basically, Edward’s spin was, no, Burns told Naryshkin that Putin and Biden should close a deal.
Putin is not going to close a deal with the Biden administration. Forget it. The Biden administration knows exactly what Russia wants, which is exactly what Russia wanted in December 2021. Indivisibility of security. You guys know this very, very well. In our audience, I’m sure it’s familiar with that.
Those letters that were sent to the Pentagon and the White House and got a non-answer. Also sent to NATO. It’s all about indivisibility of security for Europe and for the post-Soviet space. And at the time, the Americans ignored it.
So now they want to go back to the table and discuss with the Russians. The Russians know very well when they receive a yes, no, or a no, yes, which was the case. So there’s nothing to discuss.
And the Russian foreign ministry, the minister of defense, in putting himself over and over again has said, look, our set of conditions to end the war are there. The Americans know it very well.
We can finish the whole thing with a phone call. They don’t make the phone call that really matters. It’s not Bernstein or Rischke. It’s the White House to Putin. This one is not going to happen anytime soon. But he’s still trying to find a way out.
So if you think that this came straight out of a Kafka novel, yes, it did. And it keeps going.
RADHIKA DESAI: How and when do you think the war might end?
PEPE ESCOBAR: There are two short answers, Radhika. One, with the phone call, the war stops tomorrow. And they all go to a negotiating table somewhere in Finland, in Kazakhstan, in Geneva.
And obviously there will be no agreement because the Americans will refuse to accept indivisibility of security. Everybody knows that. So there is no peaceful solution to this war.
The only solution for this war is a complete humiliation of either side. As we look at the battlefield, we see that the humiliation of NATO is just around the corner, literally.
And it doesn’t matter if you send F-16s in six months or in one year. It doesn’t matter if you have more Storm Shadows from Britain. It doesn’t matter if you send 1,000 Leopards from Germany. It doesn’t matter.
And it’s very, very funny because even Putin himself is saying, look, whatever they send here, it will be incinerated. And he says that casually now. Before that, the Russian Minister of Defense was even trying to be relatively diplomatic.
And now the Russians are even laughing about it because they are annihilating so-called top-of-the-line Western weapons with old Soviet weapons, modified Soviet weapons as well. So is this going on for another three months? It’s very possible.
And there is going to be some sort of Russian, let’s say, crypto-offensive trying to take the whole of the east of Dnieper. They can take over everything.
Another possibility, in the next few months or until early next year, go all the way to Odessa, which is something that every military analyst in Russia was saying since February last year. We have to go all the way to Odessa now, soon, immediately.
So maybe this is going to happen. But the Russian Minister of Defense has different scenarios for what happens after what happened in Bakhmut, which was this World War I thing, absolutely devastating, lasting six or seven months.
But it was a rehearsal to what the Russians might do when they really decide to get into war. So what Putin said a few months ago still applies. We haven’t even started yet. And they haven’t.
Because their best weapons are still in the rear guard. Their top battalions are not part of the fighting yet. They are using their hypersonic missiles sparingly when they have a very specific target like that bunker near Lviv in western Ukraine that they destroyed a few months ago with one Kinzhal penetrating underground.
And then nobody talked about it. The Pentagon didn’t talk about it. The Russian Minister of Defense didn’t talk about it because this was too sensitive. A lot of NATO people were killed in that Kinzhal strike.
So the Russians are fighting with one hand behind their backs. No question. And with velvet gloves. But now, after all these attacks inside the Russian Federation including the second attack against the Kerch Bridge and attacks against civilians in Russia, they are starting to lose their patience.
They have the possibility to increase lethality to any degree you can imagine. They don’t want it for the moment. They always leave a window open in case the Americans decide to start talking.
And that brings us to an extremely complex matter which unfortunately we don’t have time at least today to talk about it, which is divisions at the top in Russia.
There are oligarchs who are pro-ending the war. There are oligarchs who want to extend the war indefinitely because they are making a lot of money out of it. There are pro-EU people very, very close to the Kremlin. And there are the Silovikis and the ultra-nationalists who say no, we should cut off the head of the snake tomorrow in 20 minutes, which they can if they want to.
So there are divisions inside Russia and at the highest levels. There is no division in terms of accomplishing the goals as fuzzy as they are of the special military operation.
Demilitarization of Ukraine is on the way. They did it at least 50% if not more. Demilitarization of NATO is also working because they did it.
Germany, they don’t have shells for one week if they decide to go into a war. Their Leopards are gone, not to mention the other ones.
Which leads us to the most dangerous element in all that, which brings us back to our NATO discussion: the Poles, the rabbit hyenas of Europe. The Poles and the Baltics are cultivated by the Americans as their new strike force considering that the Ukrainian strike force is practically gone
And that would assure the war entering another even more complicated stage and with no end in sight. The possibilities of this thing getting worse of course are endless but this one I would say is the number one.
Subcontracting the next offensive to the Poles with help from other NATO mercenaries. Forget about Ukraine, now it’s going to be Poland independently, not part of NATO because they’re doing this on their own, NATO is not involved.
And then we have a different actor on the Ukrainian battlefield because the Poles, their agenda as all of us know, is to annex Western Ukraine and they think they have a golden opportunity that they never had before in the past few decades to do it.
So I’m sorry if I’m being so nihilistic but.
MICHAEL HUDSON: Well you may sound nihilistic but I think what you said Pepe is exactly what was being discussed at Vilnius and NATO. I think all the NATO people are in agreement with you.
What we’re saying is no longer on the outside as a minority view. What you said is the majority view of NATO.
They got together, they realized it, and it’s as if at the Vilnius meeting they said, okay we’re going to bury Ukraine, this is a funeral for Ukraine, we know that we can’t win, the only thing we want to do is.
If there are any tanks and weapons left, let’s use them all up so that Europe will buy a huge bonanza for the American military industrial complex, Raytheon is very happy.
But I think the message at Vilnius the associated meetings at the EU was, we’re finished with Ukraine, we’ve done everything that we set out to do, we’ve bled Russia, great success as you pointed out elsewhere our real enemy now is China.
Now our center is really in the Pacific. Our center is in the China Sea. Specifically, let’s make Taiwan the new Ukraine. Let’s be willing to die for the last Taiwanese. Let’s do to China what we’ve just so wonderfully done to NATO.
We’ve expended everything there, but while we’ve used our tanks and ammunition and armaments in the West now let’s use up our navy, there’s a huge market in building all the ships that a war with a provocation with China will do.
Let’s send some of our ships that China will say well that’s our own territory we’re one country, let’s shift to a naval war in the Pacific now, and that seems to be what they all decided on.
They don’t want to talk about Ukraine anymore, it makes them unhappy. I mean for us it’s saying, ha ha we told you all about it all along.
For them they say, well we did what we could.
And I think you’re right about Poland. In Poland they’re obsessed with the 15th century and the 16th century. When Poland had Lithuania, had many of the Baltic States, had Prussia. All of that. Had part of Ukraine.
They want to recover their lost glory and the leaders of Poland are exactly as you said, and I think NATO isn’t really going to be a part of it, if Poland tries to attack Belarus or even isolate Königsberg.
Somehow NATO’s not going to get involved if Russia retaliates with a slam. You can just remember what happened in World War II to remember that.
I think what you’ve outlined, I think it’s what NATO agrees with
RADHIKA DESAI: Well I mean let me complicate that a little bit, because the thing is that if there were to be any kind of Polish military action of the sort that you’re discussing, it’s going to actually divide NATO quite radically.
There’ll be some powers who’ll be saying, we have to back Poland. This is a fight. And all the rhetoric about freedom and democracy and so on will come out.
But the fact of the matter is beginning with the Germans and a whole lot of others, they’re not going to support, as Michael you were just saying, they’re not going to go along with that. So I think it’s more complicated.
I think also that in terms of extending this to China I really think that military failure of the sort that we all agree the West is facing that NATO is facing is going to give people pause, first of all.
That is to say, can the United States really do, can it really hold up the military end, so to speak? And it can’t. It spends more money on its military than the next however many states combined but still cannot produce weapons of the quantity and quality that even Ukraine needs, let alone the West as a whole will need if it goes to war with China.
So in a sense it’s got an overpaid, pampered military industrial complex that cannot actually produce the weapons, so in that sense.
And earlier I said Biden didn’t want to include Ukraine in NATO or not even give it a road map for electoral reasons, but I think there’s also another reason.
They do not want a failed state in their ranks, because that’s what Ukraine will become soon. So in that sense I would say that the possibility of extending the war to China is much less secure I think.
Also because, even the countries around China who the United States has been trying to divide from China for a long time, they continue to deepen their economic connections, trade relations, investment relations, etc with China.They’re not going to go to war with China in any easy way.
They’re going to be deeply divided just as the European leadership is divided.
In fact all of this kind of nicely segues into our next question, which is how much longer do you think Europe and other US allies sustain the appearance of unity?
Because we know that Europe is paying a big economic cost. The unity that is much doubted has also been a very selective sort of, convenient sort of, unity where every country has sent whatever is convenient for it rather than what is needed in Ukraine.
So how long do you think that even Europe can stay united, with the British pulling in one direction, the eastern states in another direction, Germany and France and Italy in yet another direction? How long can this unity be sustained?
MICHAEL HUDSON: I don’t think it’s a question of countries fighting each other. It’s a question of the business interests fighting the political interests who basically are employees of the United States.
The question is, are international relations going to be determined by economic factors and mutual gains as we all believe with the materialist approach to history, or is it going to be completely non-economic factors, or, as Janet Yellen and her European counterpart said, all trade is risk.
Any trade with China or Russia or the Near East runs a risk of losing national security. Because if you trade with a country, you’re dependent on them, and therefore you should break off the trade with China. You should break off the trade.
Well obviously, breaking off the trade with China and Russia has already led to the collapse of the German steel industry and the industries that use steel and the fertilizer industry and the glass making industry that uses gas.
So the real question is, are European politics going to be based on economic long-term self-interest as we all assumed was the guiding shape of geopolitical arrangements, or is it going to be rejecting your self-interest in terms of national security, meaning, trade with the United States establishes absolute dependence on the United States.
When Janet Yellen the US Secretary of the Treasury and [Von Leyen] you have to base all your trade on national security, that means all trade must be locking in your dependence on US exporters, US oil and gas exporters, now that we are your only suppliers of gas and oil. US farm exports. US computer information technology exports. US communications technology. Rejecting Huawei.
How is it that the European politics is not dominated by the business interests, but by American fantasy that even American interests are not based on the benefits of American computer chip exporters.
You’ve just had President Biden say we’re going to have to give 30 billion dollars to support US chip modernization, but the chip companies are going to have to lose one third of their total market which is China.
And the chip companies have said, wait a minute you’re saying that we’re going to lose our markets and you’re going to try to make us grow again but without a market for our goods because our market is China.
Even the United States is turning away from its economic self-interest to this obsession with we must dominate other countries. This obsession of the neocon to control other countries.
I don’t think something like this has really come across before and those of us who believe in the economic determination of history can’t believe it’s going to go on very long but here we are.
PEPE ESCOBAR: Just complementing what Michael said, it has to do with the astounding mediocrity of the current political elites in Europe.
This is something that, of course, we have these conversations here in Europe, but of course, totally off the record. And you never see a debate like that on the opinion pages of Le Monde or in any nightly newscast.
But German businesses, they are absolutely furious. And they said, look, there are already some sort of revolt that we need to get rid of this government as soon as possible. French interests, more or less the same thing.
When Macron went to visit China recently, the businessman with Macron said, we don’t care what you discuss in terms of politics. We are here to do business with the Chinese, whatever you say.
And in fact, they clinched a lot of very juicy contracts while they were in Beijing.
The Italians, the same thing. The Italians are saying, are you nuts? You want to cut off the Italian partnership in the Belt and Road Initiative in Brie, which is a decision that they’ll have to take until the end of the year, beginning of next year. This is absurd. They’re going to invest in our ports. They’re creating jobs here.
So, you know, there is a revolt in business circles. These are the three economists that really matter in Europe, Germany, France. Everybody else is an extra, you know.
So we can see maybe, I would say, medium to long term, a change in the horizon. Short term, I would say it’s an absolute massive tactical victory by the Americans to cut off the EU, especially Germany, from Russia.
The problem is the people who actually know how business is done, businessmen and industrialists, now they’re starting to get the full picture, not only for the next winter, but for the years ahead.
So the best we should all expect is a change in governments in these three countries that really matter.
In France, it’s not going to happen because, as we know, Macron was recently reelected, even though his popularity is probably less than zero at the moment. There’s no chance there’s going to be a coup d’etat to get rid of le petit roi, the little king.
But French businessmen, they are as furious as their German counterparts. They say, so what do we got left? Are we going to transfer to the US? No. Are we going to transfer to Asia? Maybe.
And obviously, if that happens, the social situation inside France, which is already mega explosive, then it’s going to be total combustion.
And in Germany, the deindustrialization of Germany now is a fact, and the numbers are absolutely horrifying. They basically deindustrialized this year over 30% compared to last year. This is beyond enormous and unimaginable until a few months ago, right?
And obviously, Eastern Europe doesn’t count. In Eastern Europe, they have other ideas. Apart from the Poles, the Romanians soon are going to start saying, ah, we want to recover our lands that now are part of Ukraine.
And the Hungarians are going to say exactly the same thing.
So basically, there will be a giant partition of Western Ukraine with everybody jumping in. So the ramifications of all that are, in terms of political economy and in geopolitical terms, are absolutely horrifying.
And from the point of view of the average EU citizen, which is already being buried by taxes, the average French or Italian taxpayer basically pays 50% of what they earn in taxes. It’s completely absurd.
They don’t get much in return because the social security system in both countries and the other ones is also collapsing. So ends barely meet for most people.
They are starting to make the direct connection of throwing zillions of euros into Ukraine while the social situation inside the EU, as much as inside the US, as you know very well, is deteriorating very fast.
RADHIKA DESAI: And this is so true. And just to go back to something that Michael was saying, you know, Michael, you were talking about how those of us who think that economic interests should determine political and geopolitical actions and so on, that we are somehow being pushed to reassess the basis of the way we think.
But there’s a way of thinking about it. If you think about this in terms of the longer history of imperialism, and I’ve always said that it’s important to recognize that imperialism has been in decline since about 1914.
It’s been a long one. It’s been a slow one. Some of us can’t wait for it to accelerate, but it has been in decline.
And it’s come to the point where the very actions that are necessary to preserve the imperial system are in fact harming the very system on which it is based.
So when you have that sort of, the snake eating its own tail situation, that’s when you begin to see that the contradictions of the system are mounting. And that’s the position, that’s the situation where we are at.
That what the United States needs to do in order to preserve and extend the imperial system and therefore the capitalist system itself is proving harmful to capitalism.
Now, what that means for the future is anybody’s guess. Supposing, you know, we got the kind of government that, the regime change.
So if you got the kind of regime change that Pepe was mentioning and important European capitals, they will then have to go back to something like the approach that they were taking when Merkel made Germany dependent on Russia for its, you know, energy needs and so on and so forth.
You could have something like that.
But then what that has to do is we will see that the capitalist world is going to have to make terms with a world that is, you know, on the one hand socialist in the sense that China is socialist and other socialist powers.
And on the other hand, if not socialist, like Russia, at least not willing to be subordinated to capitalism and therefore to be, to follow neoliberal principles, because neoliberal principles are nothing but subordination to capitalism.
So in that sense, I think that we are looking at part of the reason why this situation looks as complex as it does is because of this very complicated situation of capitalism and imperialism today.
So maybe we have time to at least go into one further question. And that is really, again, this is about the very economic question.
But why do you think the Grain Deal broke down? What is the significance of the breakdown of the Grain Deal?
Because remember, of course, remembering that originally the Grain Deal, you know, the West made a lot of noise about how Ukraine feeds the world and blah blah and so on.
But in reality, the Grain Deal was arrived at in order that the big agribusinesses that are located in Ukraine will be able to export their grain and make a profit. That was the real reason for the Grain Deal.
Now, of course, President Putin has given his own reasons and he’s actually given two sets of reasons. One is, you know, he’s pointed out that the West did not keep its side of the deal.
But he also pointed out that the grain that was coming out of Ukraine was, in fact, not reaching the third world anyway.
PEPE ESCOBAR: Three percent of the grain was reaching poor countries in Africa. You know what? They were discussing this this morning at a Valdai Club session this morning, previous to the Russia-Africa Summit that starts on Thursday.
They were discussing that and they got into detail and they said the Russians were the only ones who actually exposed to the rest of the world a fiction.
Over 40 percent was going to rich EU nations, not the poor EU nations. That’s number one.
Number two, they were using the fact that Odessa port was the center to stockpile weapons in Odessa. Why the Russians are bombing Odessa since the beginning of this week? Because they are bombing exactly this as a stockpiling of weapons.
And number three, they were organizing ways of using the corridors of the Grain Deal to attack the Black Sea fleet and especially Crimea. There you go. Michael, it’s all yours.
MICHAEL HUDSON: Now that you said the whole point, what you said is exactly right.
The grain that Russia had said, we’re producing the grain. We want to use this grain to give to the African countries to consolidate our linkage between Russia, China and the BRICS and the global south, specifically of Africa.
Obviously for them, just as when they built the Aswan Dam in Egypt, for them trade and support was a means of creating national alliances and Europe prevented that.
And as you pointed out, the big agricultural agribusiness companies wanted to make money for the same reason that Willie Sutton said, why do you rob banks? Because that’s where the money is.
So of course they wanted to get paid by Europe instead of giving their product away for free. There’s no percentage of zero that you can really get out of this.
And as you pointed out, Ukraine was trying to use this ostensibly humanitarian grain trade to stockpile weapons and use that sea transport as a means of, how do you attack Crimea? By the sea. That’s how they used a sea torpedo to blow up the bridge to Crimea.
So you’re having exactly this. Russia has decided to demilitarize the Black Sea. Putin has said that if there’s any foreign ship that is not with Russian permission in the Black Sea, that would be treated as an enemy because who else would possibly go to the Black Sea?
There are not going to be insurance companies that are going to guarantee the safety of shipping in a military war zone. So without getting insurance for your sea transport, how are you going to transport grain? That in itself has stopped it.
And Putin had just listed a whole series of criteria that would be necessary for the grain deal to resume.
And that included stopping the EU sanctions against the Russian banks that have to finance the grain deal, stopping all sorts of attacks on Russia, sort of using the grain transport path as a means of actually putting a warship in there to attack Russia.
Essentially, Russia said, you’ll have to demilitarize the Black Sea if you want peaceful grain commerce across the Black Sea.
The US is completely unwilling to do that. Congress will never go along with that. So essentially, the United States has blocked the grain deal.
And it’s using its propaganda in Africa to say, oh, look, Russia is blocking it. That’s why you’re not being fed with the grain.
Who are you going to believe, the Russian reality or the American cover story? That’s what’s being fought out in Africa right now.
And Africa is becoming actually one of the great battlefields in this split between the unipolar US order and the emerging global majority order. And grain is the basis of this.
The foundation of American trade policy since 1945 has been to prevent other countries from growing their own food.
All of the World Bank loans to third world countries in the 50s, 60s and 70s have been for exporting plantation crops and for the US State Department opposing family-based farming to promote plantation crops, especially on lands owned by American exporting interests.
The issue is the whole structure of African and Southern Hemisphere land tenure and whether they’re going to aim at feeding themselves just as the Europeans have fed themselves.
And the issue that you didn’t mention with the grain deal was Ukraine says, all right, let’s try to export our grain by rail to Europe.
Well, the center of European foreign policy, the most important economic aim of creating the common market in the first place was the common agricultural policy to protect French and German and other agriculture.
And the last thing they want is for their farmers to be undersold with cheap Ukrainian grain that will hurt their economic interests. And so they’re European farmers and they have the agricultural policy that is blocking the shipment of Ukrainian grain through Europe.
But apart from the fact that all of the storage facilities, the silos for grain are already being used for European farm grain, there’s nowhere to put that Ukrainian grain. The problem is insolvable from that point of view.
RADHIKA DESAI: Yeah, that’s so true and important, Michael, that you sort of have broadened the picture to put the issue of the grain deal in the larger picture of imperialism and the way it has always operated.
Because all the first world countries, the imperialist countries themselves actually pursue a very strict food security policy.
Meanwhile, they tell third world countries, oh, you shouldn’t worry about food security. You should, as Michael rightly points out, produce the export crops. What are export crops? They are crops that the first world wants.
Why should third world countries produce export crops? Because they exist as far as the third world, as far as first world countries are concerned, to supply cheap things that the West, which is largely non-tropical, cannot produce.
So the third world is supposed to supply us with all those tropical fruits, vegetables, tobacco, cocoa, coffee, tea, whatever it is.
And what’s really also interesting is, you know, people always think of the third world as being unable to feed itself. In reality, there are actually relatively few third world countries that have fallen for the definitely the very real inducements of the United States to not worry about food security.
And besides, they are not rich enough to import a lot of food. So the extent of food dependence of first world countries is actually much greater.
We import a lot more of our food than the average third world country and certainly big third world countries.
And what that food export also does is it keeps inflation low. We are able to, in first world countries, buy things for next to nothing. And this is a big factor in keeping inflation low.
So, yeah, I think this is very important to put the grain deal in the larger picture of imperialism.
Now, I should say we are near to an hour in this show and we still have several questions to discuss. So what I propose is that next week we will come back and discuss the same issue and complete the number of various questions that we were discussing.
So until next week, then we will have when we’ll have the second part of this program on NATO. Thanks, everyone, for watching. Thanks to Pepe for being our guest.
He will be back next week. And, of course, thanks also to Paul Graham, who’s a videographer and all the others who support our show. Thank you very much. And till next time.
MICHAEL HUDSON: If there is a next week.