US-China relations and the decline of US dominance: Interview with Jeffrey D. Sachs

Sachs talks about Ukraine, de-dollarisation, Taiwan, the Middle East and more in this transcript from an interview with ‘The Creative Process – One Planet podcast / Pearls and Irritations’.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network. He has served as Special Adviser to three UN Secretaries-General. His books include The End of Poverty, Common Wealth, The Age of Sustainable Development, Building the New American Economy, and most recently, A New Foreign Policy: Beyond American Exceptionalism.
Pearls and Irritations is an Australian platform for the exchange of ideas from a progressive, liberal perspective, with an emphasis on peace and justice.

Cross-posted from Other News

Picture by FORES

Q: Help us understand the history of the war in Ukraine. How did we get here? How do we get out of it? And if the United States isn’t the country to help broker that peace, what country is?

Jeffrey Sachs: This conflict is actually decades in the making. It didn’t just come out of a Russian invasion in 2022, as is often said in the Western mainstream media. The war is often defined as an unprovoked attack in 2022. Actually, the roots of this war go back to the end of the Soviet Union and to the geopolitics around that.

In 1990, the US and Germany promised the Soviet government at the time, Mikhail Gorbachev, the President, that NATO would not move one inch eastward if Gorbachev went ahead and disbanded the Soviet Military Alliance. In other words, there would be a deal that on the Soviet side, the military alliance, the so-called Warsaw Pact, would be ended, and on the Western side, NATO would not take advantage and Germany would be reunified, but NATO would not move one inch eastward. The US cheated on that because as soon as the Soviet Union ended in 1991, the policymakers in Washington, especially in the Pentagon and in the permanent state in the United States, immediately planned for the Eastern expansion of NATO.

So this war started, in my opinion, because the United States could not accept a peace in which the military alliances of both sides of the Cold War would stand down. Well, many things happened over the 30 years between the early 1990s and today, but probably the highlights to mention are that in 2008, George W. Bush forced NATO, pushed NATO, but really pressed that NATO would announce that Ukraine would become a member. And that happened at the Bucharest NATO Summit in 2008. The Russian leadership was furious. They had warned again and again: Don’t do that. We don’t want your military right up against our 2000-kilometre border with Ukraine. Then a Ukrainian President won the election in 2010 on the program of neutrality for Ukraine. Viktor Yanukovych won the election based on the idea that Ukraine doesn’t want to become the battlefield between two superpowers and called for neutrality, which had been enshrined in the original Ukrainian Declaration of Independence, but then was abandoned by some of the NATO-oriented politicians of Ukraine.

So in 2010, Jankovich called for neutrality, but he was overthrown violently in early 2014 with US participation. So this was really a terrible escalation because the relatively pro-Russian president, but one who called for neutrality, which I think was the only safe course for Ukraine, was overthrown. And the United States played a significant role in that. People know about the famous tape of Victoria Nuland, who is now our Under Secretary of State. At the time, she was the Assistant Secretary of State and she described who the US would see as the next government three weeks before a violent overthrow.

The US signed several statements in 2021 confirming that NATO would enlarge. I think this was all absolutely irresponsible. Russia massed troops on its border and put on the table a draft US-Russia security agreement on December 17th, 2021 based on no NATO enlargement. The Biden administration formally replied that it was not willing to negotiate over that issue in a response in January. Then Russia invaded on February 24th, 2022, making clear that it was the failure to reach an understanding on the NATO question that was central to Russia’s action.

Four weeks later, Zelenskyy declared that Ukraine was accepting of neutrality. In other words, the initial Russian invasion brought Ukraine to the negotiating table, and during the second half of March, with the Turkish government being the mediators, Russia and Ukraine hammered out a peace agreement.

Incredibly, the United States blocked it because the United States told the Ukrainian government you fight on because American policymakers had two ideas. One was that Ukraine should not be neutral. It should be a NATO country. And second, that the war would be won by some combination of Western armaments and financial sanctions.

Q: Right now the US is not looking after the prosperity of its own citizens but is going out conducting these irresponsible wars when it could be focusing on other things: the environment, education, health care, infrastructure… Ironically, what seems to be behind it all this insistence on a unipolar world and dominance, is the US wants to hold onto its status as a reserve currency but under the economic sanctions the US has also suffered. It might even be hastening the strengthening of currencies of other countries.

JS: The basic point is the US has 4.1% of the world population. So how could it presume to be the world leader? You know, the US is a powerful country. It’s a rich country, but it doesn’t run the world, and it should not aspire to run the world. That’s a kind of madness, and the US ideology for a long time has been that the US should run the world.

It’s, to my mind, unbelievable. But then again, I’ve spent most of my career outside the US seeing the other 95.9% of the world. And I know that the other 95.9% of the world doesn’t want the United States to run the world. It’s not against the United States. It just says: let us have our own part of the world. We don’t want you running the world. We don’t want you deciding what our government is, who we are, how we rule ourselves. You know, you’re just one place. And this, the United States leaders don’t understand. They’re very arrogant. They’re very ignorant because of the two big oceans. They’re very unaware of the history of other parts of the world. And we end up with this arrogant and naive and dangerous foreign policy because, there’s no doubt the United States is rich and powerful, and it makes lots of weapon systems. And I’m 68 years old and the United States has been at war almost every year of my life from Vietnam and Laos and Cambodia and Nicaragua, Afghanistan and Iraq and Syria and Libya, and now Ukraine. Come on, give it a break.

Q: In this United States of Amnesia, we keep starting these proxy wars. So what is the through line to China and Taiwan?

JS: Well, this situation in Taiwan is like the situation in Ukraine, very explosive, very dangerous, and requires cool heads to avoid a conflict. The fact of the matter is that actually all three governments, the United States, Taiwan, and China have a policy that there’s One China. And whether it is the government in Taiwan or the government in Beijing, they both say there’s One China. They disagree on what happened in 1949 and how China should be governed, but they don’t say there are two countries. And the United States, when it established diplomatic relations with the People’s Republic of China very clearly said that there is One China and has One China policy. And that is how to keep peace, and to make sure that this tension between Beijing and Taipei does not boil over to open conflict. But the United States started to play games with this. It started to form a military alliance with Taiwan, in effect, which is really coming into a military alliance in the middle of one country. And this is an extremely dangerous and imprudent thing to do. And Biden starts talking about how we’re going to defend Taiwan. And the American politicians talk about how a war is coming. It’s all utterly reckless, irresponsible, and what we should have is trying to reduce tensions, diffuse tensions through negotiation, through talk, through peace-building ideas, rather than stoking the idea that some conflict is inevitable.

A conflict would be devastating, of course, first and foremost, for Taiwan – but actually for the whole world. And so this needs to be avoided, and we need cool heads. And we shouldn’t have American politicians saber-rattling. We should not have Speaker Nancy Pelosi fly to Taiwan after the Chinese government has repeatedly said: don’t do that. Don’t provoke, don’t stir up things, don’t make conflicts where there don’t have to be conflicts. But the United States leadership doesn’t listen very well. It’s the same thing that when Putin said many, many, many times: do not expand NATO to Ukraine. The United States said, Oh, sorry, we don’t hear you. That is, you have nothing to say about that. That’s none of your business. And then war comes. This is very typical of American foreign policy because American foreign policy leaders are too arrogant, and they don’t listen.

The US is also experiencing the reality that other places in the world are catching up on technology, indeed leading on technologies as well. And China is a very successful, very industrious, very hardworking society, which in the last 40 years has gone from poverty to a very significant world-important economy. And the US has a very hard time accepting that. The US attitude, if you listen to congressmen, who don’t seem to know anything, is Oh, if China’s successful, must be because they’re cheating. What about because they’re saving more than 40% of GDP, that the Chinese people have been engaging in a remarkable upgrading of education, hundreds of thousands of PhDs minted each year, and massive scientific research programs? Come on, this is the truth. And so this arrogance is not allowing the truth to come through.

Q: One of the other things that you’ve written about, but is not often reported about China, is that where America’s policy has been destabilising and destructive in the Middle East, China has stepped in as a peacemaker.

JS: Well, probably the most remarkable diplomatic achievement of recent years, I would say, is China brokering a peace agreement between Saudi Arabia and Iran. In the American idea, those two countries were implacable foes. They could never agree. And for the United States, Iran was the enemy, and Saudi Arabia was the ally. But the whole idea of US foreign policy is: you bring countries under your authority as an ally of the United States, like Saudi Arabia, and you fight your enemies on the other side. But China has a different idea, which is that Saudi Arabia and Iran had no fundamental reasons for this dissension, but they have plenty of reasons for cooperation. For one thing, they’re both being hard hit by climate change. They need to cooperate because the water crisis is quite severe. They’re both hydrocarbon economies. They need an energy transformation which is very profound. And so, the Chinese facilitated a reconciliation between the two. I’m very happy about that. Reconciliation, by the way, the fighting between, the bitterness between Iran and Saudi Arabia divided Western Asia. It contributed to an absolutely devastating war in Yemen in which the United States gave its military support that killed a lot of people. And it destabilised a region that needs a lot of economic transformation, technological upgrading, and change. And so this agreement is really a big help for the whole region, not only for the two countries involved. And China gets a lot of credit, in my view, for having the wisdom to see that that was a conflict that could be solved, not just exacerbated. But the US approach was always to push at it. Even when the US made an agreement with Iran in the nuclear agreement called the JCPOA, the US government walked away from it, and then it maintained sanctions on Iran because the US is not really serious at making peace most of the time. It’s got an us-versus-them mentality. And I find that very destructive and not in the US interest.

Q: So what happens with the loss of dominance? When the dollar is no longer the reserve currency? Do you think the United States can have economic hegemony without political hegemony?

JS: Part of the US strength after World War II is, well, the US was basically the only economy standing. And it was a technologically advanced, rich, large economy; the world’s largest. And the dollar was really the only international usable currency for quite a long time. So the dollar system became the center of how you do international trade. When you trade in goods, they’re denominated in dollars when you buy. The imports you pay in dollars, meaning you use accounts in US dollars. Typically in the US banking system, when the transaction is closed, it’s closed through the so-called SWIFT interbank system. And so the US has had what France long ago called “an exorbitant privilege”, that it could print a lot of money because the rest of the world was holding dollars, using dollars. The dollar was the basis of the world economy. That’s changing now. And it’s changing for three basic reasons. One is the share of the US and the world economy is diminishing, so this means that the predominance of the US is bound to diminish. The second is technologically settlements are going to occur in all sorts of ways other than through US banks. So-called digital currencies, especially Central Bank digital currencies will mean other ways to make settlements. We’ll settle in renminbi when we buy in China, or settle in rubles or settle in rupees when trade is with India, and so forth. So there will be multiple currencies. And then the third part, which is really a matter of a bad set of decision-making, the US has militarized the dollar. Meaning that usually, you think about money, well, you have it, you can use it, you can spend it. But the United States has come to say: if we don’t like you, you don’t necessarily have access to your money anymore if it’s in our banks. So the US froze the dollar holdings of Russia. The US has frozen the dollar holdings of Venezuela. The US froze the dollar holdings of Afghanistan. My advice to any government that’s not getting along with the US government is be careful about your money because the US might come in and freeze your money. And so countries are looking to hold their reserves in other ways now. Perfectly understandable. And I think that this is another part of the move to an international system from a dollar-based international system.

Q: As you think about the future of the prospect of nuclear war, the kind of world that we’re leaving the next generation, what would you like young people to know, preserve, and remember?

JS: Young people should lead the way to a safer, cooperative, peaceful, environmentally sustainable, and fair world. We need to build the future. We want not to feel trapped in this mindless cycle of violence and environmental destruction. The problems that we face are solvable, and they are not driven by the needs of the people. They’re driven by greed or the power-seeking of elites. And we need to have a new generation say: this is not working. We want a world that is at peace, that is shared in prosperity and that solves the environmental crises which have become so deep and are neglected, in part because we are wasting our time, our lives, our resources on these useless wars.

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