Is Trump leading the West into a final battle in an attempt to save US world hegemony?
21 August 2025
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, August 21, 2025, and our friends Richard Wolff and Michael Hudson are back with us. Welcome back.
RICHARD WOLFF: Glad to be here.
NIMA ALKHORSHID: Michael, I want to start with you. You believe that the outcome of those two meetings between the United States and Russia, then Europeans coming to the United States together with Zelensky, somehow shows that Trump is pushing NATO into new proxy wars after Ukraine collapsed. What’s your logic? What’s your understanding of that?
MICHAEL HUDSON: Well, part of the logic is the fact that everybody seemed so harmonious when the meetings in Washington ended. And the mainstream media said, look how Europe has capitulated to the United States. Trump said, I want peace in Ukraine and peace with Russia. And, basically, Trump’s position is to forget Ukraine. The war in Ukraine is over. We know what’s going to happen. Russia is going to take over. There’s nothing that Zelensky or that the European countries can do by giving arms that is going to prevent Russia’s victory. So let’s forget that.
Of course, we will support Zelensky in trying to have his troops. He’s called up apparently the Azov Battalion themselves to actually go to the front and fight and be decimated. Let him fight and bother Russia and Ukraine as much as possible. But let’s talk about what we really want. We really still hate Russia. I hate Russia as much as you do, Trump said, but we’re not going to beat Russia in Ukraine. So let’s talk about where we can beat Russia.
Well, we can begin to trouble it, we’ve already shown, we can trouble it in the Baltic. We can sabotage its tankers. We can block Russia’s Baltic tanker trade. We can bother Russia in Azerbaijan and Armenia. We can build that road to not only threaten Russia, as Azerbaijan is already pretty much broken with Russia, but we can threaten Iran also, the whole Russian-Iranian mutual support. We can threaten Russia in Syria by backing Netanyahu’s takeover of and alliance with the al-Qaeda al-Nusra Wahhabi terrorists there to prepare to attack Russia and Iran, Russia from the south, so we can beat Russia in Syria. We can look all over the world where we can destabilize not only Russia, but also the BRICS.
And that’s where we have a chance to really build up and open new fronts against Russia, make it fight on a number of fronts. And I think the Europeans said, oh, are we relieved? We thought you wanted peace. And I think Trump said, look, forget it. The reason that I’m making such a big stink about wanting the peace prize and calling the former head of NATO, who’s now Norway’s finance minister, and saying, Do you think I can get the peace prize?
He wants to make it appear as if he’s a man of peace when actually he’s worked with the deep state to plan a whole war, not only against Russia and Iran, but against the BRICS as well. There’s talk now of him planning an attack on Venezuela, sending in the special forces to kidnap or kill Maduro. He said, well, you know, just in case there’s a chance of winning the peace prize, what do you have to do to win it? You have to be like Kissinger. Kissinger sent in attackers to murder Allende and put in the fascist Pinochet government.
Well, Trump’s going to send in attackers to kidnap or murder Maduro and put in a U.S. proxy right-wing government and spread that throughout Latin America. You’re already having the Bolivia elections moving to the right. I think Trump has planned to follow the neocons in the CIA and the National Security Agency and the military right down the line. But he wants to sort of prevent the rest of the world from realizing that we’ve really got to organize and this is really going to be a war. He’s trying to deaden their realization as to what he’s really trying to do.
And everything that he’s done is the opposite of anyone who wants peace. It’s trying to prepare as strong a case for what he looks at as the final battle. And by the final battle, I think he’s bought the neocon argument that, well, we are losing the empire. We are losing our influence. And given that, if our influence is going to wane, then the sooner we go to war, the less costly it will be. Because the longer we wait to go to war, the longer we have peace, the more China, Russia, Iran, the BRICS, the global majority is going to gain power.
So what Trump was able to convince the Europeans of was: okay, we’re not going to give up Ukraine. Of course, we’re going to try to stabilize our control. We’re going to insist on, well, we have to support Ukraine’s security. Well, what does security mean for the United States? It means the ability to totally control a puppet government.
If you don’t control a puppet government, you feel insecure. If you don’t have the power to destroy it, you feel insecure, just like Netanyahu feels insecure if he can’t exterminate the Palestinians. To America and Zelensky, Russian-speaking Ukraine is Ukraine’s Gaza. It’s exactly the same feeling of hatred that he’s tried to spur there. And you could say that he has this same antagonism; it’s almost a religious fight of supporting American values and autocracy, the ability to control the rest of the world.
This is the last time there’s any chance of doing it. And if we don’t fight now, we’re certainly going to lose a fight if we fight labor. So I think that Russia immediately understood this two days ago when it bombed Odessa’s oil export, oil refineries and export facilities. These were the export facilities owned by Azerbaijan to export Azerbaijani oil to the rest of the world. I think this accounted for maybe 25% of Azerbaijan’s foreign trade. So Russia immediately saw this and the fact that it is now focusing on fighting against Azerbaijan.
I don’t know what it’s going to do in Syria. I think that the Russians and the Americans understand what’s happening. I don’t see any discussion in the media. And even some of your guests are optimistic that maybe Putin really does want to go down in history as the Prince of Peace instead of the War Devil.
NIMA ALKHORSHID: Richard, coming to you, here is what Scott Bessent said about the case of Ukraine.
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Scott Bessent said, “Trump is very vigilant. Right now, we are selling arms to the Europeans, who are then selling them on to the Ukrainians. And President Trump’s taking a 10% markup on the arms. So maybe that 10% will cover the cost of the air cover.”
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NIMA ALKHORSHID: Yeah. I was wondering, what is your take on the two meetings? The first with Russia, then in the United States with Europeans coming, it’s somehow amazing. I don’t know if you saw the pictures that we had from Washington. Here is Donald Trump. Compare this to, I don’t know if you remember, Richard, those pictures from 2016 or 2017, where Donald Trump was sitting at a table and everybody was above him and trying to, you know, somehow attack him or talk to him.
And then this picture is totally different. It shows how European leaders are somehow so desperate in their sort of manner toward the U.S. president. What’s going on? What’s your take on what has happened, Richard?
RICHARD WOLFF: Well, it’s interesting. I come at it a little bit differently from Michael, but I suspect that if we have the time, we can figure out how the two points of view might, in fact, be consistent with each other. So let me respond. I begin with Scott Bessent. And all I can say is I’m sure his mother is very taken with him, but for the rest of us, not so much. I mean, that is embarrassing.
Almost every time he speaks, it is embarrassing. I have no idea half the time where he’s coming from. His fealty to Mr. Trump ranges from disgusting to pathetic, but beyond that, I wouldn’t know what to say. To look at the arrangement between the United States and Europe and to focus the attention on the 10% markup in the movement of the weapons, I mean, that is looking at an enormous tableau, and you’re at one infinitesimally unimportant dimension, and that’s what you’re going to talk about. It really, you have to take a step back.
And you’re right, Nima, you’re right to look at the different pictures of the Europeans relative to Mr. Trump then and now, because that’s Mr. Bessent, too. What’s important here is the subordination of Europe. This is the end of Europe’s maybe 500 years since the Renaissance, where Europe could be the center of the world through its colonial takeover of the rest of the world, through its early development of capitalism, through its early period of industrialization. When it could be said, it was in the lead in some sense. And perhaps it wasn’t the only part of the world then. I don’t know much about what was going on in China that many centuries ago, et cetera.
But for much of the world, this was the power, the center, the wealth. And now look at it. It’s like a group of children from the kindergarten being taken by their teacher to the big man’s building, the White House, where they are gathered in the chairs to orate or to listen to the blather that comes out of Mr. Trump. I mean, I know what they secretly think of him because they have said that in many interviews in their own country.
I follow some of those in France and Germany. I know what leaders, including those sitting there, have said about him. And there they are like puppies. For me, historically, that is the most important. And I know we may not have time today to talk about it, but if you look at the trade agreement that has been reached between Mr. Trump and von der Leyen and the Europeans, the Americans have imposed basically a 15% across-the-board tariff that all Europeans will have to basically submit to. And in exchange, the Europeans took away whatever tariffs they had so that the United States has virtually carte blanche.
By the way, that’s not enough to accomplish very much. But in terms of economics, and certainly in the short run, it is enough to show that the colonial country has become the colony and the colony has become the colonizer. Britain and Europe are now minor players in a game orchestrated by Mr. Trump and the United States. And the irony of it all is that the United States is doing this, as Michael correctly says, because the empire is going down.
They don’t want to spend the money. They want to take advantage of those they control to impose the costs of a declining empire on them so that they have to commit to investing in the United States. They have to commit to buying liquid natural gas and other energy products from the United States. They have to open up their fishing and agriculture to American products, which is an important business, and so on.
And so it’s wonderful. You have to do all these things because we’re running short of money. And the irony is that Mr. Bessent knows that. He kind of gets that. And for someone like him, this is an achievement. And the way you see it is he focuses on the 10% markup…what? You know, only a person who’s doing the nickel-and-dime counting…
I find it in the history of Europe, the humiliation. And I believe, and I know my belief is partly based on hope. I understand that. But of course, let me remind everyone, that’s true of everybody else also. I’m just admitting it. My hope is that the European people will be disgusted by what they’re watching and that you will see inside the European countries on the left and on the right a desire not to be dragged into this subordination.
Let me remind everyone, including the Europeans, if the United States can do what it is now doing, why do you imagine that the next president will not do more of this? Because you’re telling the Americans, here’s a way to ease your problems. Put them on us. How are the Europeans going to sustain their social welfare program? Western Europe’s welfare for its people is way ahead of what the United States does. They were able to afford that because they had no military outlays. The United States took care of that.
It was a wonderful arrangement to give a military Keynesian boost to the United States, which needed it, since we never got out of the depression. World War II got us out, and the warfare budget has sustained us ever since. So we took care of that for Europe so they could use the money they would have had to spend on military to give their people health care, free education, and all the other benefits that they get and that Americans don’t know about because it would be very difficult to get away with not giving it to Americans if they did.
Okay, now what’s going to happen in Europe now if they’re not getting these benefits, if they have to pay all kinds of costs, if they have all kinds of adjustments to make, they’re going to cut their welfare. So they’re already busy doing it. They’re going to keep cutting their welfare.
Well, here are two things. In Germany, as Michael, I believe, pointed out last week, the polling shows that the Alternative für Deutschland now gets a bigger polling result than the Christian Democratic Party, which used to be the dominant party in Germany, sometimes in partnership with the Social Democrats. But nowadays, the Social Democrats have largely collapsed. So the Alternative, that’s the right wing saying, we don’t want to be in this position. In France, it’s the left wing. The right wing is there and has importance, but the left-wing is where the action is.
The left wing is the largest faction in the parliament, and they have just declared, and I’m following this real closely: the bloc en tout – let’s blockade everything is the slogan in english. And on September 10th, they are going into the streets of Paris, Lyon, Marseille, Nice, all the major parts of France to shut the country down. And boy, they’ve shown with their yellow jackets, they’ve shown with their history going back to the French Revolution: don’t push these people too far because they have in them a gene that seems lacking in the rest of us of mobilizing their people.
I would add, therefore, it is an empire going down and it is taking extraordinary steps. If we want to give Mr. Trump credit for recognizing that the war in Ukraine was a vast amount of money was wasted over three years, okay. But meanwhile, what the other things they’re doing, whether they’re neocons or not, these are minor. This is not going to work.
Fooling around with Azerbaijan, you got to be kidding. What are you going to accomplish by murdering Mr. Maduro? I mean, really, these are the desperate acts of a declining empire, and they will be seen that way. Look, I suspect, just my own vision from it, that much of the Azerbaijan noise, and Michael’s right about looking at it, or in Syria or in Venezuela, or if they renew the Taiwan noise once the Ukraine thing is put to sleep, these are indeed typical Washingtonian punches. But to me, they look like a desperate effort to maintain the theater of American imperialism once the reality is no longer available.
Their problem, which they know, is China and the BRICS. And those places are growing way faster than the United States is. They grew faster throughout the Ukraine war. I want to remind people: China’s economic growth per year is in the 5% range, American growth per year: half that, if that. And India’s is even faster. Russia grew faster during the war than it had been growing before, and grew faster than any European country, including the United States. You’re losing. You’re losing left, right, and center.
And much of these efforts, indeed, I would argue the Ukraine war itself is a demonstration they can’t do it. And I think that’s a crisis for Europe that we’re not appreciating. All those people sitting around the desk that you just showed us of Mr. Trump in the Oval Office. These are the leaders who were born into – grew their entire careers as the American ally, as the allies of the United States, the subordinate allies, the ones who had been defeated in World War II, emerged from it ruined if they were on the winning side, ruined if they were on the losing side. The United States is dominant, and they’re going to rebuild Europe, as it’s all over for them.
They are desperate people, desperate in terms of their own careers, desperate in terms of their own worldview. They picked the wrong horse and it’s too late to get off. So they’re going to ride him as long as he’s still standing. They will continue the war in Ukraine forever if they have to look at them. That’s how they talk. They see no defeat. They see Russia keeps moving X kilometers to the West. They don’t see it. It is an extraordinary display of weakness. And the theater around it shouldn’t obscure that.
NIMA ALKHORSHID: Go ahead, Michael.
MICHAEL HUDSON: Richard, we always end up in agreement. I think that the European response has gone beyond disgust. They are now afraid. There is a wonderful editorial in today’s Financial Times, an op-ed by Professor Schock, saying that the new arena, the most important arena between the United States and Europe is, and really the rest of the world, has to do with artificial intelligence.
She says that America’s policy, especially under Trump, has been to weaponize any form of trade into a form of threatening to make your trading partner dependent on you. And in the past, America has been doing precisely this with oil and with grain exports, willing to turn off the taps and turn off the food and to start to isolate, to put sanctions on and isolate other nations and starve them out or cut off their energy if they don’t obey. Schock says that the new weaponization of American foreign trade, specifically against Europe, because that’s what she’s writing for the Financial Times, is artificial intelligence.
She says that one of the focal points of this agreement that America has been pressuring Europe to sign is that they do not follow through on their plans to regulate artificial intelligence, the computerized internet, the cloud, and all of these things. They leave, they remain dependent on the United States for the algorithms, the way that the whole artificial intelligence system is programmed in such a way as to lock in users. And it locks in users by the fact that as the system spreads and becomes more widely used, the cost of creating an alternative system is larger and larger and larger.
And that if Europe does not prevent the American domination of AI now and tries to assert its own ability in AI, in chip making, and basically in the way in which the artificial intelligence system is structured, the logic system of it – I’m not a computer specialist, so I can’t get into the details – but she gets into the details and says that essentially the U.S. can impose a garbage in, garbage out system on the rest of the world.
She doesn’t call it that. She calls it just building in the algorithm in a way that reflects American values and policy. And in the process, she says, Trump is turning America into an autocracy, not a democracy. And its mode of control of Europe is in the new growth industry, replacing oil, replacing food. Now that other countries have alternative sources of oil and are producing their own food, the one thing that is up for grabs is artificial intelligence. And I think it’s the magic seven AI stocks that have been accounting for 80% of the value of the increase in stock exchange prices in the United States. This economic arena is very important.
Also, you make the important point: what about where the opposition is in Europe? Well, let’s imagine, going back to Monday’s meeting, if Trump really had wanted to show up Europe, imagine if he had said, well, I know that many of you leaders now are carryovers from past elections, but you got to realize in the next election, we’re going to have the Alternative für Deutschland replace Merz. We’re going to have the French left replace Macron. And in England, one would expect Starmer and the collapsing Labour Party will be replaced either by Corbyn on the left or an alliance between Corbyn and the nationalist party, the Brexit leader over there.
He would have had them and say, let’s all get in the same room and see what they have. And you’d have these other groups all saying, well, we’re against the war with Russia. We’re against the war in Ukraine. But Trump didn’t do that. And that’s because they would also have been against his requirement to say, yes, I’ll go along with you. We’ll expand the Cold War. We’ll fight Russia. But you have to follow our leadership in this economic growth industry, the artificial intelligence.
And it’s a wonderful editorial on all of this saying that by weaponizing technology, by weaponizing any area of foreign trade in which the United States can establish dependency on other countries, that indicates a policy of preventing other countries from creating an alternative. And that’s what America’s definition of security is. Security is preventing other countries from having an alternative. Then they can feel secure.
So that’s what they mean by security for Ukraine. There’s no alternative to American control of a puppet government. So you have to have a puppet government. But that military idea of security is exactly the same economically. You can’t have any independent technology capable of becoming a rival.
Well, what doesn’t this include? This may or may not work for Europe, but it certainly isn’t going to work for China, which is already forging ahead in artificial intelligence and computerization and chipmaking and the whole sphere of technological breakthroughs, including rare-earth magnets and all of the high technology, including hypersonic missile development. America is behind in all of this. And its question is: what part of the world do we have the power to prevent that part of the world from having an alternative? It’s trying to lock in Europe. Europe today, tomorrow, BRICS. And that means the world.
So through all of this, I think America has told Europe, don’t worry, we’ll do it together, but together under American hegemony. And that ‘together’ will be turned against somehow through trying to establish a critical mass of artificial intelligence. Through a way of programming that will try to pry away other countries, global south countries, other BRICS countries, from China. And by having their own independent AI system that presumably Europe would ultimately have to adopt. If China and its neighboring Asian countries can create their own artificial intelligence system and prevent backdoors from being imposed, then the United States will end up completely isolated. And isolated means without its export markets to create its balance of payments and to posit its trade balance by the technology services.
And you can already see this in the fight over Intel and the fight to prevent blocking out NVIDIA from exporting more to China. America says you can export all you want. We want a backdoor location controller so at a certain flick of the switch, we can disable every NVIDIA switch in China, paralyze their machines, and turn off all of their computers if they use your chips. So China has just moved to block NVIDIA’s export of chips until it can secure itself to make sure that there’s no back door.
But how do you do this? It takes so long to go through the millions of commands that are built into the chip that how do you know they haven’t put in this geolocator and the on-off switch that can enable them to paralyze China very much like Germany sabotaged the Iranian refiners, the centrifuges, and blew them all up by putting in a secret control there. That’s what America wants to do with AI for the rest of the world.
And it’s become so apparent that it’s insisted on this. It has insisted on doing this for Britain and for continental Europe as well. This is the most immediate arena of the parallel fight to the military rivalry and fight that’s going on.
RICHARD WOLFF: Yeah, you could see that already earlier. Remember, arresting the daughter of the Chinese gentleman, CEO of Huawei Corporation, when she was in Canada, and forcing the Canadians to arrest her. And I mean, hysterical anxiety about what you just said: that the Chinese had the capacity already then, and that’s many years ago now, already then to do this kind of warfare. I don’t want to beat the dead horse but I want to make it clear: the scariest part of what Michael has outlined for us is the part that says that this is the strategy of the United States. But then the really crucial part is: that strategy is being frustrated by an equivalent opposite strategy in China and the BRICS.
Okay, that means that the United States confronts a situation where it either has to act militarily now or risk losing this contest. And if it loses it, well, then the game is over and the military won’t solve your problem. But they might try it. And you know, the irony there is that then gives the American left its opening.
Here’s what happens: the American left becomes a movement. It’s, of course, not there yet, to say the least, but it becomes a movement that says the best thing for the United States is not a confrontation with China, which costs us too much in the way of lost quality of life in this country, given the risk that we’re going to lose, that China is just too much bigger. And with the BRICS, it’s ridiculous how much bigger they are. And that bigness is in the end going to overwhelm us. Therefore, stop it now.
Change the policy, work out a live and let live deal with China as the alternative to the confrontation. It’s a little bit like saying, and if we go in that direction, we will be saying: you had a chance in April of the year 2022 when you sat down in, if I remember correctly, Istanbul, and you worked out most of a deal that would have ended the Ukraine war weeks after it began, you would have had a better deal for Ukraine, much better than what you’re going to get now. You lost it. You’re now embarking.
This becomes the mantra. You’re embarking on the same losing proposition in your struggle with China. Only it’ll be longer and more costly and with greater risk than was involved. Learn from Ukraine. Don’t do it again. Right now in the United States, that position would get an enormous number of people supporting it, left, right, and center.
MICHAEL HUDSON: That’s why they’re trying to make sure that elections can still be financed. I want to add one thing. What really gives Asia and China the advantage, a total winning advantage over the West in AI? It’s open source. Everything China is doing and AI is open source. That makes it impossible to put back doors in. It makes it impossible to sabotage chips. America cannot win in a fair competition.
It can only win by sabotage, bribery, assassination, and by playing dirty. But in a fair play with everything’s open, sort of the equivalent of free trade, it cannot win. That’s the dilemma that Trump and the neocons have in common. And I think you should look at Trump, really as the neocon leader for all of this, because he’s willing to do explicitly what other neocons never thought they could possibly get away with.
And Trump is able to play the Christian card, saying God is telling him to do all of this, and he’s found religion, and he talks about what he has to do to go to heaven. I don’t think any of the neocons who were not that kind of Christian ever would have conceived that being a winning ploy to produce MAGA behind them. But the purpose of all of this flimflam is to prevent open source, prevent free trade, and prevent other countries from making a choice.
That’s what national security is: preventing other countries from making a choice other than to subordinate themselves to the United States and to sacrifice their own growth to pay their foreign debts to the United States, to rely on the United States for its military support for locking in their military arms systems, their Air Force, their ships, American airplanes, ships, and guns requiring replacement parts and continual fix-ups by the United States. Without replacement parts, it’s as if the United States militarily has the ability to flip a switch and just turn off the ability for foreign supersonic airplanes, fighters, ships, and submarines to operate. You could apply this system of “how do we turn off and disable other countries” right across the board.
So while the global majority thinks, how can we provide means of technology raising living standards for the rest of the world? America says, how can we sabotage this effect? That’s all that they can do to delay the decline of the American demand for control. They can’t prevent it in the end. They can delay it, and that’s all they’re playing for. It’s a short-run game, but it’s the short-run game that is the center of politics and financial markets.
NIMA ALKHORSHID: Richard, before coming to you, here is what Scott Bessent said in terms of what the nature of the economic ties between Russia and China and India is – how dependent they have become during the war in Ukraine.
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Scott Bessent said, “China importing it is suboptimal. But if you go back and look pre-22, pre-invasion, 13% of China’s oil was already coming from Russia. Now it’s 16%. So China has a diversified input of their oil. If you go back and look now, I believe India had less than 1% of their oil, 1%, and now I believe it’s up to 42%. So India is just profiteering. They are just profiteering. They are reselling. They made 16 billion in excess profits, some of the richest families in India.”
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NIMA ALKHORSHID: So yeah, they’re reselling to whom? To Europeans. Two days ago, Richard, there was a meeting in which the foreign minister of China went to India to talk with Modi, and Modi posted on his X account. He said that the situation between the ties between India and China are improving like never before. I think Donald Trump is doing everything to unify. He’s just achieving something that nobody could have ever achieved in terms of what’s going on in BRICS.
RICHARD WOLFF: Well, for me, what I see is the relentless march of the decline of the American Empire. It is in the interest of India to get discounted oil because the Russians give them a very good price. They’re just doing business. The Russians can’t sell oil and gas in Europe. That was a European decision and an American decision. Close the market, bring Russia to its knees by depriving it of its export markets.
The Russians turned to the Indians, with whom they had long trading relations and military relations anyway, and gave them a price they couldn’t believe. And of course, the Indians… What is it you want? India isn’t in Europe. India is not interested in the fight between East and West over Ukraine. India is interested in developing its economy, which is the number one demand upon the government by its people. And getting cheap energy from Russia is a way to do it.
I remember listening to the very able foreign minister from India now, who’s very, very good, looking incredulous at the newsmen asking him: why is India buying oil from Russia? He said, you know the answer. Why did Germany buy oil from Russia? Why did Europe buy oil? What are you asking us? You want us to take sides in a war we had nothing to do with? Well, we’re not required to take sides in a war we had nothing to do with. You don’t take sides in your country in wars, you have nothing to do with. So, what is there? There are no answers to these questions.
And there are no answers because of what’s going on. And I think that’s why China and India are discovering that they have lots of interests in common. They always did, right? India was a colonial property. China never was, but was almost. And so, they have a great deal in common. Britain has been a problem for both of them. They all know that, et cetera, et cetera, et cetera. And they all know that they would be better off if they were less dependent on the West and more dependent on others, like one another. I mean, of course, they should expand exports and imports between them.
They are the two biggest countries on this planet. They are desirable markets for each other. They ought to be developing their countries in a coordinated way because it will be a faster growth for both of them rather than being oriented to the West, which intrudes its interests on their exchanges. By the way, they know that. They talk about it, they’re aware of it. Economists I know at the university in New Delhi, they have debates about this.
By the way, they have radical economists in a way that American universities don’t tolerate. So, they actually could get a diversity of points of view. Americans celebrate it, but don’t have it. They don’t make such a big deal of it because they have it. And so, they are able to build on diverse perspectives, many of which agree, left, right, and center, that, of course, their relationship to China has to develop. And the cheap energy from Russia makes that easier, makes it quicker, gives them a boost because they become an important manufacturing country.
I mean, India is not where China is and won’t be for a while, but it is becoming important, so it needs energy. It’s a developing country. It needs a lot of energy. Russia is in a position to provide. The idea that India, to satisfy Britain and the West, would sacrifice its own growth development is preposterous. That it should even occur to a journalist just shows you how lost those journalists are in their country of origin and the mentality of the colonial mind. It is pathetic.
Of course, Mr. Bessent, you know, he can’t spell colony, so he won’t bring that to bear in his thinking. He will look at numbers like, gee, India is making a lot of money. Notice him again. He was fascinated with the 10% markup on weapons. Now he’s fascinated by the fact that discounted oil from Russia is making families in India rich. Of course it is. But again, that is the least important dimension. But for Mr. Bessent, it’s what he wants to talk about in the 30 seconds he has on national television. You’re talking here about a true mental midget.
MICHAEL HUDSON: I want to add the balance of payments dimension to this Indian-Russian trade. You pointed out that the families are getting rich because Russian oil is less expensive to India than foreign oil. But the most important feature of this is that the payments are denominated in their own currencies. Well, the result is that Russia’s accumulated a very large volume of Indian currencies and probably more than it needs, but it’s still willing to do this to establish the principle of trading in their own currencies instead of in the dollars.
Well, that’s spread throughout the whole world. You’ve had China especially leading all of this, and one result is that as a result of China’s holding foreign currencies that it receives in payment for its exports, its dollar holdings have fallen to the lowest level in 20 years to about $750 billion. So it’s lowering dollars. Now, just imagine what would happen if America really does attack Venezuela. That is a sign that this is the first step: today Venezuela, tomorrow the BRICS. You can imagine the BRICS countries accelerating their flight out of the dollar.
They said, well, how did America start this whole war with Venezuela? It confiscated Venezuela’s whole investments in the United States held by the government, by the oil company, in the oil distribution that it had here. And it told its puppet Britain, the Bank of England, to confiscate China’s gold and give it to Mr. Guiadó, whom America designated as the president. Well, for the rest of the BRICS, this is in the forefront of their memory. They say, okay, we know the buildup of the escalation procedure. And if they’ve already gone military in Venezuela, we can expect them to begin financially eating away at us.
You’re going to have an acceleration away from the dollar. Well, Trump is happy with that because he thinks the lower dollar value is going to help American industrialization, but it’s not going to. But I think that that is basically the key to all this. And along with that, I want to point out that, since we’re talking about the balance of payments, which I always end up talking about, you’re having the effect of capital movements, hot money, and financial flows in determining the price of the dollar. The headlines every day in the United States financial press have been that Trump wants to fire the Federal Reserve Chairman to force the Fed to lower the interest rates.
Well, CNBC announced on Tuesday something very interesting. Trump has invested $100 million of his own money in buying municipal bonds and corporate bonds. Well, he’s bought these bonds yielding fairly high interest rates. And if he succeeds in replacing the head of the Fed or arm-twisting him into lower interest rates, this is going to create an enormous capital gain for Trump. It can double from 100 million to 200 million. So you have Trump putting his personal fortune behind this manipulation of U.S. foreign policy. And you can believe that for him, with his foreshortened view, his personal fortune comes first, American strategy the second.
And in Trump’s case, they tend to converge in all of this. So you’re having an American financial war against the rest of the world, saying we’re going to lower the dollar’s value. That means if you hold U.S. dollars in your foreign reserves, as we lower the interest rates here, these dollars are going to be worth less and less and less in your own currency. So your private banks, your central banks, and your corporations that hold dollar balances are all going to show a loss in their profit and loss statements and their net worth statements. And this financial maneuvering is trying to impair the financial resilience of other countries. And that’s a dimension that is left out of discussion because the balance of payments analysis is not a topic taught in American universities, much less discussed in the public press.
RICHARD WOLFF: Yeah, and just a footnote: if Russia is accumulating rupees, you know, Indian currency out of the oil exports to India, well, here’s one thing you can be sure the Russian central bank is figuring out: it would be interesting to use those rupees to stimulate the production in India of goods that Russia would otherwise have to produce itself, or even worse, might have to import from Western Europe or the United States. They won’t have to. They can build on India. In other words, it allows the BRICS to help each other by opening up the channels for currency movements among them.
So rupees go to Russia for oil and then from Russia back to India for exports, or maybe not. Maybe the rupees will be accepted by the Chinese to pay for things they export to Russia because the Chinese know they can use them to buy who knows what from India, thereby recreating what made all the other currencies, including the dollar, become bigger than wherever they started. And this is part of the BRICS replacing America in the empire story.
And it’s relentless, and it is much more powerful than anything they can do in Azerbaijan or Venezuela or Syria. That may look good and may make a good headline here. Michael’s right about that, but it is not stopping in the same way that the Ukraine war did not stop all the things that led up to that war. They’re right, continuing. The war started, the war developed, and now the war is ending. And the other processes we’ve been talking about, they march on.
MICHAEL HUDSON: Wonderful, Richard. So now they can call us Modi’s puppets.
RICHARD WOLFF: Yes. It would work, except in America, given our level of reporting. Nobody knows who Modi is.
MICHAEL HUDSON: That’s our advantage.
NIMA ALKHORSHID: Yes. Yeah, we’re going to be pro-India. They’re going to call us pro-India. Thank you so much, Richard and Michael, for being with us today. Great pleasure, as always.
MICHAEL HUDSON: And a good discussion.
NIMA ALKHORSHID: Thank you.
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