We are looking at two very stark alternatives. The first represents destruction, both economic and military. And the second represents, again, development, both, in this case, economic and military, at least in the sense of providing for defence against the increasing aggression of Western powers.
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.
Radhika Desai is Professor at the Department of Political Studies, and Director, Geopolitical Economy Research Group, University of Manitoba, Winnipeg, Canada
RADHIKA DESAI: Hello and welcome to the 19th Geopolitical Economy Hour, the program where we discuss the evolving political and geopolitical economy of our time. I’m Radhika Desai.
MICHAEL HUDSON: And I’m Michael Hudson. And we bring you this program with the help of our host, Ben Norton, our videographer Paul Graham, and our transcriber Zach Weisser.
The carnage in Gaza has paused, though the possibility that this will open the door to a permanent resolution is remote. Little else seems to have changed. The U.S. remains doubled down on its one-sided support for a murderous Israel, the tail that wags the U.S. dog.
MICHAEL HUDSON: Well, it’s not only the United States that’s doubling down, it’s Europe that’s doubling down. And it’s becoming, you’re seeing, they’ve banned protests supporting the Palestinians in Germany, in France, and in Italy. And this is leading to the break between Europe, I think, and the Islamic countries. Yesterday, President Netanyahu called Hamas the Nazis. And in Europe, the Arabs are calling Germany the Nazis. So it looks like the question is, what kind of Nazism is the U.S. and NATO alliance going to have?
RADHIKA DESAI: And what is the definition of what a Nazi is anymore? I mean, it’s completely losing touch with the historical record. Indeed, as Michael, you rightly point out, the U.S. and Western governments generally are growing even further apart from their people, most of whom seem to favor a permanent ceasefire and a lasting solution to the Israel-Palestine conflict. And one might add an end to the war over Ukraine and an end to persistent saber-rattling directed at China.
The U.S. and NATO continue to mouth support for Ukraine, even as the inability to support Ukraine, whether with money, military production, or political legitimacy, becomes clear. And defeat for Ukraine is all but acknowledged. While the U.S. refuses to acknowledge it, the hunt for scapegoats has already begun in Kyiv.
The upcoming NATO foreign ministers meeting continues to invite foreign ministers of Asian non-members such as Japan, South Korea, Australia, and New Zealand, even though the possibility of the U.S. sustaining a third war front remains in question, even with allies, while the key to the entire Indo-Pacific strategy lies in tatters, because India’s Modi stands accused of organizing murders of citizens of allied countries on their territories, because, Modi claims, they are doing nothing about what he alleges is Sikh separatism in favor of a homeland called Khalistan.
So all in all, the Western powers present a picture of increasingly impotent rage. Meanwhile, the world majority continues to side raucously in demonstrations or silently for peace and development. So today we want to discuss both the international and domestic dimensions of the increasingly divergent strategies represented by these two parts of the world, the NATO- and U.S.-led West on the one hand, and the world majority, which now includes, one would imagine, the overwhelming majority of the ordinary people of the Western world, who do not wish to pursue this militaristic and war-like line. They would rather have a policy which is more in line with what China, Russia, and other world majority countries are pursuing in favor of development.
So we are looking at two very stark alternatives. The first represents destruction, both economic and military. And the second represents, again, development, both, in this case, economic and military, at least in the sense of providing for defense against the increasing aggression of Western powers. So I think you wanted to start our discussion off by discussing a couple of instances of economic self-harm that we are seeing in Western countries and those countries that seek to ally with them.
MICHAEL HUDSON: Well, while you were in China for the last few weeks, the whole post-1945 U.S.-centered order has been breaking up, most clearly in Germany and Argentina. So I want to talk a bit about the crises there, because they’re very closely related. And the BRICS countries also are just beginning to define themselves as an alternative to this.
The main strains are financial right now, and not only financial, but the particular way in which the U.S.-centered neoliberal order that was put up in 1945 has now reached its limit. And you’re seeing that in the crises. And it’s largely a balance-of-payments crisis in Germany and Argentina connected to the budget deficits, all that with a kind of neoliberal junk economics that has frozen spending in Germany to prevent Germany from essentially using public funding to get over the depression that it’s created by declaring war on Russia, and it looks like China, too. And the fact that its middle class and labor class are being squeezed, just as they’re being squeezed in Argentina.
So I think underlying both countries and their balance-of-payments deficit is a kind of false view of what causes inflation. And I just want to say one thing about where the German nuttiness comes from. The Germans say that we have to freeze government spending because that’s what is causing inflation. It’s not that the United States has blown up Nord Stream. It’s not that energy prices have gone up. It’s not that food prices have gone up. It’s because we’re running a deficit, too much social spending. And the only cause that the Germans realize except for inflation is government money creation.
But that’s obviously not the case. Every hyperinflation in history, such as we’re seeing in Argentina now, whose prices have gone up 140% in the last year, every hyperinflation has come from the currency depreciation, from the balance-of-payments deficit. And Germany, now that it is deindustrializing, now that it cannot import, if affordable, gas and oil to run its industry, all of a sudden this anchor of the euro’s exchange rate has turned into a deficit, meaning the euro is looking like it’s on the downside.
The reality back in the 1920s is Germany had to pay reparations. The payment of reparations caused the currency to plunge. When a currency goes down, as Germany’s did and Argentina’s today, the price of imports go up. And the price of imports go up, increase the domestic price of food, the domestic price of doing business. And so the government then has to create more money to enable these transactions of the economy to take place at the higher price level.
In every case, the hyperinflation and even regular inflations are led by the balance-of-payments deficit, followed by a declining exchange rate, followed by increasing import prices and domestic prices, and then at the very end, money creation increases, just the opposite of what Milton Friedman and the Chicago School and the right-wingers say.
When you have a false view of what causes inflation for the last 100 years, ever since the 1920s, it’s not a mistake. It’s because there’s a social interest in having a wrong view. The social interest is essentially to squeeze government and essentially privatize everything.
What you’re seeing in Argentina now is that the incoming Mr. Milei is trying to create a new government. He’s dropped the idea of dollarization, but he says there’s a simple way to stabilize Argentina’s balance-of-payments. And it’s exactly what Argentina did in 1991, and that is you sell off the public domain. Argentina was able to stabilize its exchange rate by selling its banks, selling its natural resources, selling its public utilities. Milei says, we can raise the exchange rate once again and stop the depreciation if we just sell off everything, sell off our roads, sell off our streets, sell off our land, sell off whatever natural resources we have, and you’re going to have an influx of foreign money coming in, and that foreign money is going to buy up our government, what we sell off from the government, and that will stop the inflation, and now you middle-class and working-class people can somehow survive.
And, of course, the problem with this is once you privatize the public domain, the private owners are now going to raise the prices for public services. They’re going to turn government infrastructure into monopolies and extract monopoly rent, and all of this rent is then going to be remitted to their own countries abroad, and most foreigners in Argentina are Argentinians, the 50 families that run the economy, operating out of offshore banking centers, the Dutch West Indies, the United States, London, and so they’re pretending to be foreigners, so you’re having a huge privatization and the squeeze of the middle-class and the working-class.
RADHIKA DESAI: What you say is really interesting, Michael, but first of all, let me just make one little qualification to what you’re saying, because, you know, Germany yesterday has announced that it has actually raised the debt brake. And so what that means is, and by the way, this is not the first time they’ve done so, they have done so repeatedly, particularly over the pandemic, but even before that, because quite frankly, the position they have taken that the German public debt should be limited to some ridiculously low amount, or rather the German deficit should be limited to a ridiculously low amount, can actually not be sustained, even in the case of an economy like Germany.
And as you rightly point out, more recently, they have been indulging in deindustrialization. And what is at stake this time around is precisely the ability of the German government to give subsidies to German corporations to allegedly organize a green transition, but in reality, it’s not so much the green transition that matters, but the subsidy to the big corporations.
And that’s the point I want to make, because, you know, we all say that neoliberalism is all about essentially freeing up markets and rolling back governments and reducing government spending even, but in reality, it is about none of those things primarily. That is the rhetoric that is indeed used, but it is used in order to essentially create a government policy paradigm, whose main purpose is to focus, is to protect the interests of and advance the interests of the biggest corporations in the country.
And that’s what the German government was being prevented from doing by taking the money that it did not spend during the pandemic, which the parliament had allocated, and giving it to the Green Fund. The issue is not that it’s a Green Fund, the issue is that this would have gone in the form of subsidies and supports for Germany’s big corporations.
So in that sense, neoliberalism is less about markets, all the junk economics is indeed junk economics, but its primary purpose is to serve the interests of big corporations.
MICHAEL HUDSON: That’s quite correct. Under the claim that there’s a budget squeeze, what is cut back is the social spending on the population at large, the consumers. In Germany, what was cut back has been the subsidies of families that have to pay much higher prices now for their heating and for their oil and gas. And that’s cut back precisely for what you say, in order to help the large corporations.
But the large corporations in Germany were very large, primarily industrial corporations. And there’s no way that a government subsidy can really protect these corporations, given the sixfold, somewhere threefold, sixfold increase in energy prices. So it’s very difficult.
So what Germany has done is saying, OK, we are going to need more money, we’ll cut back social spending, but we’ll spend it on the war. And that’s what EU Commissioner President Ursula von Leyen said. And back in February, the Minister Habeck, the economics minister, went to Washington and he said, the more Germany serves, the greater its role. That was his quote. In other words, he’s trying to increase, his role in Germany is to serve the U.S. interests in Ukraine. And you’re having Germany more for a war economy right now, even than how, I don’t know if it can save its industrial sector and its economy.
But what it can do, at least, is act as America’s puppet, going for the war economy. And essentially, that’s really the problem. The inflation is going to increase there. There’s going to be a wage squeeze. And that’s what’s leading to the right wing shift all throughout Europe. The Social Democrats and the center parties are really the pro-war parties and the anti-labor parties now. And ironically enough, it’s the right wing in Germany with a little bit of the old links party with Sarah Wagenknecht. And it’s the right wing parties in Holland and in Hungary that are doing what used to be the left wing parties.
All this is posing the question, will the European Union break up? And you can say the same thing for what’s happening for the global south countries now that Argentina is saying that it wants to leave the BRICS.
RADHIKA DESAI: So this is really, again, very important and interesting, Michael. Because what we are looking at is really the world is splitting. And it’s splitting at two levels. On the one hand, there is a split, of course, among the countries of the world. And that split is a little more messy than we thought it would be. So countries like Argentina and India may not really remain part of this non-Western alliance or the world majority alliance. Although, of course, we’ve seen this before. It’s not necessarily anything new. When Bolsonaro was in power, then Brazil was not exactly pulling its weight in the BRICS, et cetera. So that was so but nevertheless, there is a polarization at the international level.
But increasingly, there is also a polarization that is taking place within the Western countries. You don’t see the same polarization elsewhere. Within the Western countries, you are seeing a polarization between ordinary people upon whom governments are imposing austerity, low wages, ever-disappearing social services, increased taxes, et cetera, in order to finance, in Germany’s case, the war and subsidization of big corporations. And in the case of Argentina, as you said, essentially to service the interests of a small number of really rich families there.
So at both levels, we are seeing polarization. And I would say that the real issue is that the neoliberal strategy does not work, which is why you get the election of people like Geert Wilders, because the so-called centrist governments basically create the mess and then people get alienated with it.
They have nobody else to vote for, but these populists like Milei or Geert Wilders or what have you. And this is the whole sort of spectrum of Western politics has moved to the right in such a way as to leave people with no alternative. So essentially what we are also at the root of what we are looking at is the exhaustion of Western capitalism and the inability of political forces in most of the world to see that their salvation lies in a political strategy which is fundamentally different, which is not aimed at protecting the interests of a small number of big corporations. It is not articulated in the form of junk economics, but it is fundamentally a developmentalist strategy which involves pursuing the interests of the vast majority of the people, much like what we see in China. It’s not perfect, but it is broadly correct.
MICHAEL HUDSON: Well, we’ve been talking about this for the last few months and well, we’ve been talking about this in China, Russia and the global majority have been talking about this. The amazing thing is there is no talk about this in any major NATO party, nowhere in Europe, nowhere in the United States, nowhere in Canada are people coming and saying there has to be an alternative. The only alternative that is being discussed is in Eurasia, which is very interesting.
And for the first time now, because of the split of the Israeli war against the Arab countries to create a greater Israel, you have the Arab countries now, I think, beginning to turn away from the European Union and from NATO. Now that they see Europe is backing the U.S. and they’re now working, I think, opening their eyes, at least, to the possibility of the kind of alternative there’s going to be. And that’s really what all of these shows that we’re doing are all about.
RADHIKA DESAI: Absolutely. And I just want to go back to what we started with, you know, you pointed out that a lot of this is financial and I completely agree with you that it is indeed financial, but it is also military and economic and political. So in the military sense, of course, what we are looking at in the Western world generally, which is backing Ukraine and now Israel, what’s really going on is that these countries which spend so much of their money, particularly the United States, but also these other countries, you know, a small proportion of their very big GDPs is still a very large amount. So they spend a lot of money on their militaries.
But in fact, the last 18, 20 months of war against Ukraine has already depleted the arsenals of these countries. And even though the military industrial complex is making money hand over fist producing new weapons, the fact of the matter is this military industrial complex is turning out to be a toy weapons complex. It is not actually able to produce at the rate at which, say, Russia is able to produce or China is able to produce.
So once again, on the productive front, even though it involves military production, which is usually regarded as a national priority, even though in the United States, the military industrial complex eats up about a trillion dollars, and probably that’s an underestimate every year. The fact is they cannot produce the weapons.
The second associated fact is that they cannot produce technologically sophisticated weapons. I was just recently reading in the news that Iran has now produced a hypersonic missile. So Russia produces hypersonic missiles, China produces hypersonic missiles, now Iran produces hypersonic missiles. Meanwhile, the coddled military industrial complex of the West is not able to produce anything of the sort. So it is also a military confrontation which the West is losing.
MICHAEL HUDSON: Well, this is why there are calls for a ceasefire right now, both in Ukraine saying, well, there’s a stalemate in Ukraine, let’s just stop. And they want to stop because the West has run out of the weapons, even though the weapons don’t work. What they have, they’ve run out of. They’ve run out of tanks, they’ve run out of bullets, they’ve run out of missiles. They’re trying to buy some more bullets from South Korea, I think, the Ukraine is.
But the fact is, obviously, it’s not a stalemate. The Ukrainians have been essentially losing their entire population and turning Ukraine into a land without the people, as they used to say of Palestine in 1947. It’s depopulated. And so what you’re having is a military that doesn’t work there.
And regarding what you commented on quite correctly on Iran, it looks like both Israel and the United States want to end the ceasefire and then resume the fighting. It’s now primarily on the West Bank. There’s been no ceasefire at all on the West Bank. The murder squads have been going out. They call them “settlers”, to shoot the existing homeowners, take over their homes, and essentially make the West Bank and Palestine only for the Israeli population.
If this continues, you’re going to have not only Lebanon and Hezbollah come up, you’re going to have Iran actually use these missiles. And you may see in the Near East fighting to the last Israeli to support the United States’ attempt to fight Iran. And they will not succeed, I don’t think, in the Near East any more than they’ll succeed in Ukraine.
RADHIKA DESAI: Absolutely, Michael. This is exactly what I was saying the other time when we were chatting with Pepe, you know. And in fact, let me say another thing, which is, you know, this is how the international and the domestic interact, you know, what we call the political and the geopolitical economy of the world interact.
Part of the reason why we are going in this direction is that the West in general, and Biden in particular, cannot afford to admit defeat in Ukraine. And nor can he, in fact, what he seems to have decided to do, particularly given that he is essentially, you know, I never thought there would be such a thing, but you know, there are lame duck presidents. Well, I think he is a lame duck candidate.
That is to say that there are essentially people in his own party who are saying that he should basically step aside. He’s not capable of running, but he is insisting on running. And I think one of the ways in which he’s going to try, he may not succeed, but he’s going to try to force the hand of the rest of his party and make them keep him as the candidate for president, is essentially he wants to run the campaign as a war president and a war president and then some.
So he wants to go into the campaign with certainly one war, certainly two wars now, the war against Russia and as I pointed out last time, the war. So the war against Russia with using Ukraine as a proxy and now a war against Iran using Israel as a proxy. And here the position of Hamas and the Palestinians is actually to be likened not to Ukraine, not to Russia, as President Zelensky tried to do. But in fact, it is to be likened to Donbass, which Ukraine was pummeling before it became the proxy for a war against Ukraine. So now Israel will be a proxy for a war against Iran.
And of course, meanwhile, the possibility that there may be a third front has not been closed. President Biden has said repeatedly that the United States will defend Taiwan in the case of, in the case of China trying to take Taiwan by force, etc. The fact is China has no intention of taking Taiwan by force. China has been engaged in an economic and charm offensive vis-a-vis Taiwan for decades now. And what, however, we have to look out for, is some provocation in the case of which the Biden administration will try to use Taiwan in the same way as a proxy against China, as it is using Ukraine against Russia and in the coming weeks and months may use Israel against Iran. Thankfully, there are elections in Taiwan and it is very likely that a sensible government will be elected in Taiwan, which may kibosh this possibility.
But nevertheless, President Biden so far can be assured of at least trying to run as president, as a war president with a war on two fronts going on well into next November. That is why he can’t afford to admit defeat.
MICHAEL HUDSON: Well, in order for a sensitive government to take place, there has to be, I think the awareness is spreading now that the Western policy is a U.S. policy. It’s to try to control other countries by war. That’s the only way that the United States can exert control. It can’t have trade control anymore because it’s de-industrialized. It can’t even have financial control because of the problems that it has here. The only way that it has is to force other countries in a zero-sum game. As Donald Trump, who will be running against Biden, has said, America has to win on every trade deal.
Well, the difference is that if China, Taiwan, Russia, Eurasia says there is an alternative to try to fight other people, and that’s to offer mutual gain. If you have the global majority following a policy of mutual gain, the Belt and Road Initiative to develop mutual trade among them and to have it Eurasian-centered instead of all centered on the United States and its satellite in London and Frankfurt, then that is really going to be the whole difference in Western from Eurasian policy. If you can have this at least at the center of Eurasian politics, I think you’ll have a recognition of just how great an alternative there is, even if it’s not appearing in the American and European political scene.
RADHIKA DESAI: Again, I want to add to your point and to strengthen the excellent points you’re making, Michael. Let me take a minute to reflect on, just as we said, what is the domestic basis of U.S.’s militarism. It is an increasingly senile, financialized capitalism, which needs to be able to suck value out of the rest of the world in order to survive, which explains its militarism, its international aggression, etc.
Meanwhile, we can very well ask, what are the contrasting domestic bases of the completely different foreign policy that China is pursuing? What we see here is that, essentially, sometime early in this century, in the first decade of the 21st century, the government in China realized that decades of reform and opening up had been important, it had been very good, it had created employment, it had dealt with the series of multiple crises that China had to deal with in the late 1960s with the Great Proletarian Cultural Revolution and then the 1970s, but what it had not been able to do was to help China climb up the value ladder.
So to modernize China’s industry, to make China’s industry develop technologically, and in order to address that problem, since that time, the Chinese government has been taking numerous industrial policy initiatives designed to upgrade the technology of China, and within less than a decade, by about the middle of the 2010s, it already became clear that China was becoming a technological leader in many fields, whether it is information and communication technology with Huawei, or with artificial intelligence, with green technology, and so on, with high-speed rail.
By the way, we were in China, and we experienced a most amazing high-speed rail ride from Beijing to Xi’an, and I have to say, if they had high-speed rails like that, I’d never take another airplane ever in my life, unless it was for, you know, crossing oceans and so on, but anyway.
So these are just amazing levels of technological development, and as we know, the US-led West has been reacting to this by increasingly making the international environment hostile to the extent they can for China, so all of the initiatives China has taken over the last decade and more, whether it is the Asian Infrastructure Investment Bank, the Belt and Road Initiative, which celebrated its 10th anniversary this year, or more recently, all the various BRICS initiatives, its increasingly close alliance with Russia, its attempt to try to win over its own neighborhood, all of these things are essentially a way to try to resist this attempt of the United States to create a hostile international environment, and instead have a competing international order, which will be based not on aggression, on sucking out capital and value from the rest of the world, but rather on facilitating the development of the rest of the world, and that’s what we are looking at, and this is where, again, the world is standing before a set of alternatives, a very clear fork in the road.
On the one side lies China, and still the world majority, even though countries like Argentina and India may be stepping back temporarily, we hope, from that, and on the other hand, the Western-led alliance, the U.S.-led alliance, which basically stands for financial exploitation, the sucking out of value through financial means from the rest of the world, while giving nothing in return, and militarism and aggression to compel the world to cooperate with this.
MICHAEL HUDSON: Well, there’s also a parallel fork in the road that we haven’t mentioned, but is very important, and that’s the global warming and the extreme weather that we have. Certainly, that’s one problem that’s facing China.
What is making this a fork in the road is, why is the United States fighting so much to support Israel? It’s fighting not for Israel, but because Israel is a landed aircraft carrier to control the Near Eastern oil, and the American foreign policy is based, the one way in which it can control trade is by monopolizing the oil trade that American companies have been monopolizing ever since World War I, along with England and Holland for that.
Well, if America is not going to leave the Near East easily, it’s still pumping oil out of Iraq, even though it’s been told to leave. The American forces in Iraq and in Syria are being attacked.
Over the coming six months, I think you’re going to see the war being settled, one way or another, in the Near East. If there’s a defeat of the American oil in the Near East, this will entail a defeat of Israel, too. This fight is parallel to the Ukrainian fight, which ended up all to split Europe away from reliance on Russian oil.
Well, obviously, Eurasia and the other countries that are threatened by global warming, despite the fact that Europe and the United States says that it’s in favor of the green ecology and cutting back pollution, the United States is the leading lobbyist for pollution, for accelerating global warming because the global warming is caused by its oil and gas. And that’s what the United States is using, hoping to use as a lever to control the energy and hence the GDP of other countries. That’s a related fight to what you’ve been saying.
RADHIKA DESAI: Absolutely, Michael. And let me bring this back to a monetary and financial question. You know, that is to say, climate change is also a monetary and financial question. Why do I say that? Because you see, recently, of course, we’ve had a lot of inflation. And while it is undoubtedly true that on the one hand, some of it has been caused by the war in Ukraine and the rise of food and energy prices. And while it is also true that big corporations in the United States in particular, but also elsewhere, are taking every opportunity to try to jack up prices and keep them there.
Interestingly, they can only do this because, we’ve had big corporations for a very long time. So if that was the case, why didn’t we have inflation for the last two decades? We’ve had a highly monopolized economy in the US and many, most Western countries since then. The opportunity to jack up prices is only provided by supply chain bottlenecks, where those companies that do not suffer to the same extent from supply chain bottlenecks then use the opportunity to jack up prices. Fine. All of this is true. But there is an underlying cause of this. Why are supply chain bottlenecks being disrupted?
I think they are being disrupted for two reasons, both of which have to do with the destructive strategy that the United States-led West is trying to impose on the rest of the world. On the one hand, you have an increase in supply chain bottlenecks to the extent that countries like China, but also a few other countries increasingly refuse to provide the United States with cheap goods, whether they are cheap primary products such as, you know, food products or coffee or whatever, and of course, oil, or whether it is cheap manufactured products.
In both of these cases, the ability, the willingness of these countries to provide cheap goods has been declining because their own domestic markets are expanding and their own wage costs are rising, particularly in the case of China, which is a good thing. This is not a complaint. Wage costs should rise in developing countries. That’s what development is about. So that’s the first thing.
And then the second thing is that neoliberal policy has so, has laid agriculture to waste in so many countries. And today, with climate change and the United States essentially ensuring through its wars that the world will remain too divided to do anything about climate change, we are looking at an increasingly desperate situation.
Take, for example, the recent ban that India had to place on the export of oil. With the squeezing of consumption of ordinary poor people in India, India had become a major exporter of oil, sorry, of rice, on which countries like Nigeria, for example, had come to depend. Nigeria imports a lot of Indian rice. Now, if India bans the export of rice, Nigeria cannot import rice, which means prices of food in Nigeria are going to go up. And they are also going up in India because of climate change, because the rice harvest has not been sufficiently robust.
So you can see that in general, you know, just as people have lost, have left the labor force in Western countries after the pandemic and so on, the labor market has shrunk. So similarly, more and more farmers have been either leaving or have been pushed out of agriculture, which means that agricultural production is in decline. And if we in the West think that this is an easy thing, just go to the supermarket and look at the number of things we import from the rest of the world, particularly the third world, in our daily diet, and you will see where the inflation is coming from.
MICHAEL HUDSON: Well, you mentioned India and I think that’s going to be a topic of some of our future broadcasts because there’s a whole crisis. It’s occurring right now. India has been exporting oil largely that it’s gotten from Russia and it’s paid for the oil In blocked rupees in other words, Russia can only use these rupees to buy Indian goods But there are only so many Indian goods that it can buy And at the current point in time. it doesn’t want to get more Indian rupees. So it’s the question that’s going on in Russia is, are they going to continue to sell oil to India for rupees that they can’t spend?
Well in the past they were doing it because they hoped to have an alliance with India. And that’s why India and Russia, India was part of the BRICS. But now that it looks like India has decided to change its policy radically and to throw its backing behind the United States and to be sort of America’s landed aircraft carrier in Eurasia.
You have Pakistan now saying, well, we want to apply to be a member of BRICS Plus at the upcoming January meeting. So if you have Pakistan replacing India in the BRICS that is going to obviously make the Belt and Road Initiative much easier for China, but it’s going to leave India out of this whole reconstruction of Eurasia that’s taking place. That’s a really radical change and India may end up just like Ukraine and Israel left out of the whole process.
RADHIKA DESAI: Let me add a couple of complicating factors there. So what you say is absolutely right, but let me add a couple of further complicating layers. So the complicating layer number one is of course that the United States has been pursuing a strategy of essentially bringing India into its strategy in the Asian region in a very big way and this is represented by the shift from using the term Asia-pacific, which was the term that was favored until recently from the 1990s onwards until recently, the US foreign policy towards the Pacific region towards the what’s called the Western Pacific has been articulated by using the term Asia-Pacific.
Now over the last three or four years, they have been using the term Indo-pacific. And the purpose of using the term Indo-Pacific and many people have dwelt on how you know, there was this German Geographer who first coined the term etc, etc But that has nothing to do with it. It has everything to do with bringing India into the picture as a counterbalance to China, something that India has offered the United States for a very long time, especially when we have had this BJP, you know governments of this party that is in power today. So this happened early in the late 90s and is again happening now. And of course the same party has also pursued closer alliances with Israel
However, and now the West loves them for the same reason as they love Zelensky these are fucking fascists I’m sorry, pardon my Greek, but these people are fascists in India. And so they thought they were going to get a strongman in Asia to support them, but the fact is that this strongman has turned out to be a bit of a rogue as far as they are concerned because now both Canada and the United States are saying that this government, the Modi government, has tried to assassinate Canadian and US nationals on Canadian and US territory.
And it’s also the case I don’t know the truth of this but I can certainly report that the Whatsapp world and and the social media world in India is absolutely abuzz with supporters of the current government not saying how dare US and China accuse us of this but rather, we got them, we did it, we gave it to them.
So really this is you know, there is an old saying, Who rides the tiger dare not dismount. So this is the situation in which Canada and the US now find themselves. So that’s the first complicating factor.
The second is that Mr. Modi faces an election. It must take place before May of next year. Now, of course, there is every possibility particularly if it looks as though he’s going to lose. And this is a real possibility this time because all the opposition parties created a big coalition and they are going to fight as a big coalition, and if that coalition remains together Modi cannot win. So either he will try to disrupt this coalition, and if he cannot do that, then he will try to perhaps create a national emergency to postpone the election. This is also a possibility. But nevertheless, I would say we may very well see a new government in New Delhi coming up. So both of those things are complications.
And we should probably wind down Michael, but can I just introduce a new thing? Maybe ask you to lead with it But you know you pointed out you pointed me to this book which was recently reviewed on Moon of Alabama By somebody called Fernandez about how there is a split between the US strategy of security versus hegemony. Maybe we can have a closing exchange about that and then bring our discussion to a close and of course any other remarks you want to add.
MICHAEL HUDSON: That’s a good idea obviously the idea that national security is going to increase security is just the opposite in practice. The national security has not made Europe more safe. Europe is now threatened. It’s not made America more safe. The whole world now is threatened by Insecurity as a result of America’s national security saying if we can’t control every other country we don’t feel secure. That’s why America has to go to war all over the world. And it’s the national security that is making the whole world insecure.
RADHIKA DESAI: Well, you know, let me just remind you of this particular paragraph. So basically we’re discussing the review of a discussion of a book by someone called Clinton Fernandes, who is an Australian and he has written a book called Subimperial Power which describes what Australia is doing and of course along with Australia other powers like the European powers as we know who are behaving like vassals of the United States.
So this is the key paragraph in the review.
In other words Fernandes’s point is that the key characteristic of the rules-based international order relates to the actual structure of the American or British or French or Australian social and economic system which seeks to enforce an order where the whole world is open to the penetration and control of their respective national monied classes which is why the order is about hegemony and not about security, Which is why the former so often come at the expense of the latter.
So essentially what it seems that Mr Fernandes is arguing is that countries like Australia or Britain or France are not being vassals of the United States. They are in fact pursuing a strategy of what he calls hegemony, which is opposed to what he calls security. And so what he’s saying is that the pursuit of hegemony is antithetical to the pursuit of security. In other parts of this review it seems that Mr. Fernandes discusses the position taken by John Mearsheimer that you know the US which is essentially that US security is not advanced by these behaviors of the United States.
But what we are really looking at in my humble opinion is a situation, or rather, let me rephrase that. What this argument completely forgets is the fact that all these countries the United States, Britain, Australia etc. They have never been pursuing national security if by that we mean the security of ordinary Americans, British, Australians, French, etc, etc. The fact is that they have always used the rhetoric of national security to justify what has always been what what would be called by Mr. Fernandes as hegemony and what ordinary people would call imperialism.
Today imperialism is not like Roman imperialism or even the imperialism of the czarist Empire or the Ottoman Empire or the Austro-Hungarian Empire. It is a specific capitalist imperialism in which, as I’ve argued under my geopolitical economy rubric, the contradictions of capitalism. On the one hand its tendency to overproduce commodities and capital and on the other hand its reliance on a constant supply of cheap inputs and labor. These two things come together to essentially create an impulsion or an imperative on the part of capitalist countries like the US, France, Britain, Australia, to essentially try to create a domination over peripheral nations so that they can require these peripheral nations in the past to absorb their excess commodities and capital.
But today, when quite frankly excess commodities and capital are not the problem they once used to be because these capitalisms have become productively quite debilitated, but rather they are now sources for financial profits and sources of cheap labor and sources of cheap goods. But in all of these ways that this world is escaping from them.
But anyway, this has always been the case. Imperialism has never been about the security of ordinary Americans. Ordinary Americans can be sent to die in the killing fields of Vietnam or Korea or wherever else as British people did and so on and so forth. So this is the real issue. And so to me I would say that while I don’t disagree with Mr. Fernandes in a certain sense what he’s saying is not necessarily very new because we’ve been saying the same thing but using different expressions.
MICHAEL HUDSON: So imperialism goes hand-in-hand with the class war and also with warfare financially by the United States and the core against the global majority. So what you’re having right now to put it all in the context of what we’ve been saying is that the whole Arab-Israel split is a catalyst. Somehow it’s shocked the whole world into forcing the global majority to Isolate itself from this NATO-US center or be sucked into it. And the only way it can isolate itself is to end not only end what has turned out to be a post-1945 financial colonialism. But you’ll have to reverse the effects of financial colonialism: the privatization of the government sector. You have to restore the government to the position that it was in throughout all of the rest of world history before privatization, this financial takeover in the name of national security.
And that’s going to involve debt cancellation. It’ll involve de-privatization It’ll involve all the things that we’ve been talking about for what will be a Eurasian alternative to the US Cold War economic order.
RADHIKA DESAI: That’s really a great note to end on Michael and I’ll just maybe add to that a very personal point and then we can wrap up. And that is that you know, as you said, I was recently in China. I attended the Tongzhou global development forum there, which was a really exciting event with a lot of absolutely stellar speakers. And one of the things that I came away with is particularly after listening to the speeches of the major office holders in China and so on is that basically Chinese are really exceedingly angry at the way in which they are being treated by the United States and so on.
But it is remarkable how they are restraining this anger in order to very quietly and methodically putting forward essentially a development agenda to counter the security agenda. So I think that, and maybe just one thing and maybe I’ll flag this for a future discussion, what really also came through in these discussions is the Chinese use the word globalization in a radically different sense in the way in which we use it, and perhaps we can weave this into our next discussion.
And so I should say that we’ve been absent for a while over the last month or so, but we will now get back on a regular basis. We just had a very hectic month. I was traveling a lot and as you know, I was the target as well of a certain kind of campaign by my own government for pointing out that the government had been rather silly and bad by applauding a Nazi in Parliament.
But anyway, we should be back. So you will hear from us in another couple of weeks Thank you very much for joining us. Thanks once again to our host Ben Norton, our videographer Paul Graham, and our transcriber Zach Weiser and until next time. Bye. Bye.