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Ian Bremmer and Kevin Rudd on Global Geopolitical Risks Ahead of U.S. Midterm Elections

Mar 18, 2024
- Let's make some presentations of our guests. Carla, it's your turn. Tell us about your background, what you've been doing. (Carla laughs) (audience laughs) - Wow! I was born on a small farm in... No, I'm Carla Robbins. I am a senior fellow at the Council on Foreign Relations and direct a master's program in International Affairs at Baruch College. And I'm a recovering journalist. (Audience laughs) I'm in the New York Times and the Wall Street Journal and it's a great honor for me to be here. - Good. And Carla's job is to try to maintain peace, harmony and order between him and me.
ian bremmer and kevin rudd on global geopolitical risks ahead of u s midterm elections
To you. (Audience laughs) - Ian Bremmer, former Prime Minister of Australia. (Audience laughs and applauds) -And he runs a very profitable

geopolitical

risk company (everyone laughs) called Eurasia Group. And I make more money than him. (Audience laughs) If so. - Good. - Back to you. Reestablish order. - Ian, if I could start with you. Can you just give us a quick assessment of where the war between Russia and Ukraine currently stands? And last week, my former Times colleagues reported that top Russian generals recently discussed when and how Moscow might use a tactical nuclear weapon. You know, how seriously should we take that threat with the caveat that tactical nuclear weapons is a very general term?
ian bremmer and kevin rudd on global geopolitical risks ahead of u s midterm elections

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ian bremmer and kevin rudd on global geopolitical risks ahead of u s midterm elections...

They could go from a fraction of a kiloton to something larger than what we dropped on Hiroshima, but under any conditions, it's pretty scary. - Well, I want to say, first of all, the fact is that this war has been going on for about nine months and has generally been increasing in terms of the danger it poses to the

geopolitical

order and, of course, to the

global

economy. , practically straight through those nine months. This has gone terribly wrong for Russia. Ukrainians have suffered immensely as a result. And there is also growing potential that is dragging the West down in a way that will have longer-term implications.
ian bremmer and kevin rudd on global geopolitical risks ahead of u s midterm elections
So I don't have good news on that front. The good news is that the West's ability and willingness to coordinate to punish the Russians and support the Ukrainians has been strong and consistent, and despite what some on the progressive left and some on the MAGA right have said, no I don't think that's going to change significantly in 2023. In other words, the United States will provide most of the military support and the Europeans will continue to provide most of the financial support, and that together will prevent the Russians from being able to return to Kiev. But the fact that the Russians are doing so badly and that Putin has had to announce a mobilization of 300,000 troops, which he did not want to do, has led Russia to start taking other measures that it had not been taking, such as going after civil electrical infrastructure in Ukraine.
ian bremmer and kevin rudd on global geopolitical risks ahead of u s midterm elections
And if you watch the state media in Russia, and I don't suggest you do it because it's not good for you, but when I do it, it's very clear, I mean the Russians are now admitting that they're losing territory, they're admitting that it's going wrong. , but it is not because they are fighting against the Ukrainians, but because they are fighting against NATO. So for me the big question is not about tactical nuclear weapons, although we can get into that conversation. It's about whether the Russians are going to turn the war towards NATO, whether they will engage in asymmetric attacks on pipelines, fiber, cyber attacks and espionage that would really affect NATO and especially frontline NATO countries.
I think it's a huge concern. And unlike the use of a tactical nuclear bomb, which would provoke an immediate and extraordinary American response against Russian forces in Ukraine and the Black Sea, and they know it, the response that would come from NATO if the Russians simply engaged in a asymmetric war against NATO. It's hard to know, because, I mean, they're being sanctioned to the max, and the supply of weapons and training and intelligence, I mean, has been as high as anyone wants, without taking steps that they believe would potentially escalate the war directly. So the West will be in a difficult position if Putin decides that is where he wants to go.
The last point for me on this is that we have to understand that one of the reasons I am so negative about it is because I don't see how the Russians end up in a normal position. As at least in 1962, when the Cuban missile crisis brought the world to the brink of a nuclear confrontation, when both sides decided to step back, they were in the status quo ante. The Soviets were still the Soviets, the Americans were still the Americans. This time, as we look

ahead

to the next 1, 2, 3, 5 years, under any circumstances, Putin's Russia will look like a rogue state, will have an economy that is collapsing, will be on the defensive against Ukraine, which will be the better armed state of Europe with an expanded NATO, which is entering the EU.
I don't know how to stabilize that in the face of Putin's Russia. And I don't think Putin is going anywhere anytime soon. So I think this is a really structurally dangerous turn of events for the geopolitical order. - Become a giant Iran, something like that. - Exactly. - Although I'm a little puzzled. I mean, I hope you're right. - I hope not. - No, I hope you're right that the aid stays together without reaching some kind of asymmetric war, and the way the alliance has stayed together so far is extraordinary. It will be a very cold winter for Europeans.
And in a way that I'm not sure we can tolerate here. And it is, let's face it tomorrow, the Republicans will most likely take over both chambers and we have heard not only Marjorie Taylor Greene, but also Kevin McCarthy, that the blank check for Ukraine is over. You do not believe it? - Oh no, I mean, I believe that. I don't think they are getting a blank check and I think that statement was taken wildly out of context by those who are incentivized to do so. But that's not helpful in terms of understanding where Republicans are headed.
I mean, Republicans overwhelmingly support Ukraine and will continue to do so, and I don't think that was McCarthy's message at all. I think in addition to Lend-Lease, which can be extended through 2023, we have this Congress that can provide funding that will last until the end of next year. And I don't think Republicans are planning to cut everything. So I'm not worried about that. And I'm not worried about the Europeans this winter either. They've done an extraordinary job of getting their gas storage to levels that even if they had a relatively strong winter in Europe, and so far, fortunately, it's been quite mild, they could get through it while they could.
We are willing to subsidize the poorest Europeans, and they are. Next year is a problem. Next year is a problem for America, assuming Trump is moving toward a Republican nomination and he's the guy most willing to give Putin room to run. And it is a problem for the Europeans, because then they will be under much more economic pressure, and perhaps the Russians will also have taken measures against Europe at that time that are beyond what we are seeing. And there will be a lot of Europeans who will say: why do we continue to make this kind of sacrifice when the Americans are doing so much better?
So I'm worried about 2023. I want to turn to Kevin and I'll come back to you on this asymmetric warfare issue because it intrigues me, but I'll turn to Kevin. So you wrote an article in Foreign Affairs that I do not recommend to everyone and that I also praise. GZERO has an amazing newsletter every morning, which I point out and praise. You wrote in Foreign Affairs that... - And you're from the Council on Foreign Relations, which produces Foreign Affairs. So we should congratulate you too. (Audience laughs) - I have nothing to do with that. (laughs) - Can I congratulate you on something? - Yes, sure. - Yes, okay.
Ian wears nice socks. (Audience laughs) - There are koalas in Kevin's socks, just so you know. (Audience laughs) - Okay, if we're going to do this and you haven't seen "Puppet Regime," you're really missing something. So Xi has pushed, you wrote in Foreign Affairs, that Xi has pushed politics to the Leninist left, economics to the Marxist left, and foreign policy to the nationalist right. And that his nationalism is, quote, "fueling an assertiveness abroad that has replaced the traditional caution and risk aversion that were the hallmarks of the Deng era." So now that Xi has been crowned at the Party Congress, do you expect even more assertiveness on a regional or

global

level?
And he has personally surprised me, but I will say this, I'm not a Sinologist, that Xi hasn't done more to help Putin in Ukraine. And does he think that could change now or is it just Taiwan? - I think Xi Jinping's opinion of Putin is that Xi Jinping thinks Putin is a fool, (Carla laughs) a fool for going half-heartedly in a military invasion of another state when you weren't a fool militarily or, frankly, economically. and financially. prepared to do that. But while Putin may be a fool, he is my fool. I mean, he's the fool from China, he's on our team.
Therefore, there will be no public rift on this issue. Despite attempts by what I describe as diplomatically crabby to move away from 100% support for the Russian position. You saw it recently at the Shanghai Cooperation Organization conference, where Xi Jinping sent different messages and provoked Putin to say that he was happy to be in Samarkand to listen to China's, quote, "questions and concerns." That doesn't sound like the Vladimir you and I know. That sounds like a script the Chinese gave you. But I think the really interesting thing in terms of distancing, which relates to your earlier question about tactical nuclear weapons in Ukraine, was the statement you made in Beijing with Olaf Scholz during the German Chancellor's visit the other day, where he said My paraphrase is that nuclear weapons can never be used to resolve disputes on the vast Eurasian landmass.
Well, Ukraine is in Eurasia, and without using the U-word, Ukraine, or the R-word, Russia, what I was saying is, Putin, don't even think about that. So, the public distancing and that statement after Olaf Scholz's visit, I thought was significant. And if it was just posturing, which I think it must have been on Putin's part, it still doesn't explain the extent to which the administration here went into overdrive about a month ago in its public information campaign and asked all kinds of people. exert as much influence as possible on the Chinese, exert influence on the Russians so that they don't even think about this.
So let's hope, as Ian says, that the real threat of the use of tactical nuclear weapons, large or small, has been left aside. On the broader question of where China's foreign and strategic policy stands, now that it has narrowly passed the 20th Party Congress by a vote of 2,280 votes to zero. (Carla laughs) It was a no vote, now he's on a bus to Xinjiang. (Audience laughs) Very slow bus. - Do you think Hu could vote against it? -He's on the second bus, yes. It's a minibus with Hu Jintao. We can come back to that if you want. - I would love to come back.
Yes.-Yes. Now that he's past that, his central question is: Is China becoming systemically more assertive because nationalism continues, as we've seen evidence of in the 10 years of his time in office so far? I think it will go through two phases. And here's my prediction, which may come crashing down pretty soon if it turns out not to be the case. In the first phase from now and for a few more years, I think the predominant strategic impulse in Xi Jinping's office today will be to try to stabilize things in the short and medium term. There is simply too much going on around the world, which is uncertain and detrimental to underlying Chinese interests.
Russia and Ukraine are one in balance. Second, the state of the Chinese domestic economy, which is now in more trouble than we have seen since the global financial crisis, and possibly since the recession, which followed the imposition of repressive sanctions between 1989 and 1992. after Tiananmen. So you have headwinds geopolitically with Russia, headwinds with the domestic economy, headwinds with the global economy because of the various macroeconomic levers that are being pulled, in terms of a higher and more restrictive monetary policy regime, which reduces growth. I think the overriding imperative right now, as you perceive it, is to stabilize yourself tactically.
So that doesn't mean that everything is bad as far as Taiwan is concerned, but for those reasons they don't want to play with fire in terms of causing a crisis in Taiwan by accident. Furthermore, if it were to turn into a real shootout, the overwhelming position in Beijing right now is that they are still all too aware of what could go wrong. That is, there is no 110% guarantee of victory. And in those circumstances, Chinese strategic doctrine historically recommends caution. The first line of Sun Tzu's Art of War, which is engraved in the cerebral cortex of every Chinese leader, says that war is a great state affair that should not betaken lightly.
If you lose the war, you lose the State. Therefore, if you are really going to engage in armed conflict and you cannot win without firing a shot, which is the other stated precept of Chinese strategic policy, then you wait until you can pull a Norman Schwarzkopf and surprise. all the way to victory, which is what Putin didn't do. So my prediction for the immediate period

ahead

, I can't put a timeline on it, but is if they can get it done, starting with the summit with President Biden in Bali next week, which I think will happen, we should prepare for some signs, I think. , of some type of stabilization, while they, in the medium and long term, are still preparing for what they still see. as the inevitability of a confrontation primarily with the United States over Taiwan, they were now more prepared militarily and economically to win. - The reading of Scholz's brief trip was very much along the same lines and was very constructive.
But I agree with you on this for a broader reason, which is that if we look at Putin's horrible error in judgment in invading Ukraine, we have to understand that no matter how well orchestrated the alliance was in response to February 24 , in the period leading up to February. On the 24th, every signal given to Putin was pretty much that this will be an opportune time for you to eat something, right? I mean, you have to look at where the United States was in Afghanistan and how the allies reacted to that. If we see that Merkel is no longer there, if we look at France and its strategic autonomy.
Biden met with Putin, and when he did a year and a half ago, he wasn't talking about Ukraine, but about cyber and the Colonial Pipeline. Did you know? Putin responded to that, rolled those guys up and said, Okay, we'll stop attacking you on critical infrastructure. And then Xi Jinping met with Putin and said, "Yes, you are our best friend on the world stage." So I really think that Putin had every reason before February 24 to think that this was not going to be that big of a deal. Now, he also made huge errors of judgment about the state of his military, which is a different story, but in terms of how he assessed the international community and the response, I don't think Putin was all that wrong in terms of what he had. seen.
Walking up to him and hearing what Kevin just said, what Xi Jinping is seeing right now on the world stage is the exact opposite. It would be a really bad time to suddenly try to push the issue, either directly towards Taiwan or, more broadly, towards an openly confrontational stance towards the West, precisely because the West is so aligned, the G7 is so viable, China is on the defensive with the Russians, and many, many, and all of the economic reasons that Kevin just mentioned. So assuming a certain level of rationality on the part of both actors, which I think is always a good way to start, implies that Putin was going to take more

risks

and Xi Jinping not as much, at least not. right now. - And I would certainly agree with you on that, but I would take it to the Obama administration and it's more of a non-response... - To 2008. - No, 2014.
The Bush administration. - Yes, Georgia 2008, Bush and then... Yes, but the same story. - Yes. Although I am not sure, and I would like to believe that you are right, that you can necessarily think that the alliance would remain united if it were China and Taiwan. I mean it's a very different economic circumstance and decoupling from China is very different from decoupling from Russia. - No, you are absolutely right. Because of my sins last month, I have many sins, I spent a lot of time- - Would you like to talk about them now? - Alright. And I need the intimacy of the confessional and for tickets to be sold on the side. (Audience laughs) That's how it worked in Australia.
For my sins, I have spent quite a bit of time in Europe over the last month, talking to our friends in Berlin, Paris, Brussels and London, if a government can be found in London. (Audience laughs) - You can, I'm told you can now. - Is there a government? - Barely. - Good. That's a good thing for all of us. All of that in the central question of where they are in terms of their individual and collective pan-European strategies for China, and it is an interesting journey of discovery, because the fundamental question is a school of European thought, which falls into this line of thought. , China, future, economic market opportunity, Volkswagen, BMW, BASF, Siemens, also, thank you, thank you, thank you, thank you.
Money money money. I have love in my belly. Second, China is a strategic problem for the Western alliance led by the United States. Okay, Uncle Sam, your problem with Asian allies, goodbye. Money money money. I have love in my stomach with the Chinese market. And thirdly, the human rights problems in Tibet... Ah! We will have a seminar on that at the Human Rights Council in Geneva. Problem solved in all three. Then there is emerging, however, a view in several European capitals that, in fact, what has been seen with the emergence of the Russian invasion of Ukraine is a precursor to a much more aggressive global geopolitical reality that China may be actively contemplating. . do the same.
That this would result in a change to the rules-based international system. And furthermore, at a deeper level of national economic interest, asking this question: Is China's economic miracle permanent or is Chinese growth beginning to peak? And within that, again, they ask this question, let's say there's a shooting at the OK. Corral over Taiwan. So, in those circumstances, should we in Europe make the same mistake that we made with the Russians on gas, when we became chronically dependent on a country that then became the target of US-led sanctions, in which case sanctions against the invasion of China?
Therefore, under such circumstances, Taiwan would fundamentally close the European market. They are the two schools of thought and they all compete for preeminence. What is China's opinion on Europe? China's vision of Europe, in my opinion, is still seen as a huge bowl of wobbly marshmallows, and they know very well where it is going to settle. And you're about to see the mother of all offenses to Chinese charm in Europe now that the 20th Party Congress is underway. - I hate the idea of ​​promoting the research of someone who is not on stage, but Adam Tooze spoke today about Germany-China, his newsletter is an absolute must read, and just talking about these German companies and how incredibly dependent they are on him Chinese economic market, whether it is BASF, Volkswagen, Siemens, I mean the chip company, it is 50% of Volkswagen. - Yes, and its market share is problematic.
I think they've reduced it from five to six billion a year to three, but they're actively trying to localize a lot of their production and management in a way to make sure they don't lose even more, that they turn it around. But the point is that the Germans, in addition to an industrial base that exports to China, which is very different from the nature of the American market, the idea that the Americans are going to say to the Germans: "No, you are going to just join us into broader decoupling as we define national security," that's just not right.
And so I think this is partly because it's hard to get allies because they're not convinced that the Americans can really be counted on for a long period of time. But partly because there are really strong, deep-rooted interests here that are actually very different. And that's not just true for America's European allies. Of course it's true with Japan, but it's also true with South Korea. - So I wanted to, following this whole debate about China, which is kind of an emerging thing here, Ian, you've talked about a new technological Cold War between the United States and China.
I mean, who wins, who loses and how does the new CHIPS bill fit into this and where do you fit into the summit debate on China? - Well, and I'm interested to hear Kevin's opinion on this. This plays into many different areas. TSMC, in my opinion, is the most important company in the world right now, period. It's not Saudi Aramco. No doubt. And the Chinese depend on TSMC, but so do the Americans. And if it's only 100 miles from mainland China, it's not clear to me that the Americans want a fight over TSMC in the medium term.
Because in the same way that the Chinese now have to invest massively to make sure they have the capabilities, the Americans have them too, right? I mean there's a vulnerability there. And okay, maybe it turns out that the Chinese, with their debt and growth challenges, may find it difficult to raise enough cash to be able to offset and close the semiconductor gap with the West. We have the money in the United States, but it is not clear to me that we have the political will and compliance in the United States. That's why I'm concerned that this isn't necessarily the time for us to want to have this fight.
One, due to political dysfunction in the United States. Secondly, because before the Americans announced the fight for semiconductors, the White House was trying to get the allies to join for months and failed, so they decided to go ahead on their own. And, of course, there are also many American companies that are not as in bed as, for example, BASF or Volkswagen, but which nevertheless have a vision towards China that is much closer to that of the German government than to that of the US. government. And I'm concerned that the reason it was comparatively easy to get on board with the semiconductor policy is not just because it's bipartisan in orientation, but also because America's big tech companies are the companies that couldn't get into the semiconductor policy.
Chinese market anyway. So a lot of them are very willing to lean into this in a way that the rest of the American private sector, whether you're talking about the NVA or whether you're talking about Walmart or Coca-Cola or Goldman Sachs, says no more or the Chinese equivalent. . , which, I mean, you can tell us what that is. What is the Chinese equivalent of no more? - What the hell is it no more? - That's it, that's not happening. No way. - What language is that? - Well, that's not Chinese. I was wondering... (audience laughs). Did you just invent a language? - I did, yes.
I did, yes. - Isn't he Japanese? - No no no no. - It's just Bremmer. - Yes Yes Yes. - Well ok. Alright. - No, you usually give us at least one or two solid geopolitical sentences in Mandarin. So I was hoping I could convince you to offer the first one. - (speaks in a foreign language). There you go. No chance. - Thank you! Thank you. Here we go. - Can I comment on that? Not the linguistic duel, the banjo duel or the lexicon duel, but China's peak on the domestic economy and the question of economic decoupling between the United States and China and where it leads, parenthetically, to Europe, and whether they join or not.
The debate is just beginning. The fact that we are debating whether the Chinese economy is peaking is, in my opinion, the most significant point. In the last 20 or 30 years, none of us would consider such a topic of debate relevant. And that's because we've had a consistent Chinese economic model that's been basically running on all cylinders for 20 or 30 years, you know, with some hiccups here and some problems there, but overall generating double-digit growth or close to it. two digits. , including through a massive fiscal injection during the global financial crisis. But the truth is, and this is pre-COVID, through a cocktail of factors, which is the accelerated impact of demographic change, aging, negligible birth rates, 1.16, the second lowest in Asia, plus of the exorbitant costs of childcare, elder care and everything else. care means that there is a problem in terms of the size of the workforce and also the impact on domestic consumption.
Xi Jinping then doubles down on demographic problems with new ideological problems. That's what I wrote about most recently in Foreign Affairs, that this move to the Marxist left has horrified the Chinese private sector, where they just said (speak in foreign language), who would have thought? - There you go. (Audience laughs) - That's a different real language than no more. (Audience laughs) - No more is actually a real language in defense of my other language. - Okay, good for you. Well. But I asked him what language it was. - I know. - Was he Japanese? - Not well.
What was it? - It is Spanish. - But you knew that. You knew it! - We are in the Asian Society. - You're just being problematic. - We are in the Asia Society. We don't do Spanish at Asia Society. (Audience laughs) - We are in the United States. We speak Spanish everywhere. (Audience laughs) - You win. (Audience applauds) Well, 15 loves, I lost. (Audience laughs) Where were we? We were talking about China's domestic economy. So we have demographics doubling down on China, we have ideology, a matter of political choice on Xi Jinping's part to go to the Marist left and abandon Deng Xiaoping's formula of 35years of reform and opening, private sectors that are in practice increasingly going on a national investment strike.
There is a Chinese word, second Chinese word for the occasion, it is very important, "tang ping", in Chinese it means "lying down", and lying down is what is ping tang, tang ping?... It is tang ping, lying down. , which is what a lot of younger people are choosing to do now, because they can't see the way forward. But there are also a number of companies that are stuck because they can't see where the next opportunities will come from. And much better to go out and play golf. Take advantage of COVID lockdowns and take advantage of net exports because you have a slowing global economy.
These are the four sets of factors that are making economists around the world wonder: Is this historical assumption we've had about Chinese growth until mid-century still sustainable, or is it going to be a curve like that? What is the summit debate on China? I don't know the answer yet, but in terms of any course correction, the 20th Party Congress, there was none. As for the second question, which has to do with decoupling and the US decision to ban technology exports, Ian is absolutely right. The administration worked on this for six to 12 months, trying to get the allies on board.
It didn't work out very well because none of them did. So they have done it unilaterally with the expectation of being able to take advantage of allies from this moment on. It will be a work in progress. Obviously the case study is what happened with 5G, but 5G is a very different issue than this, because it's really about denying imports of technology now in the real world, not about what infrastructure is built for advanced telecommunications . So this is still a story that will unfold. Why have they done it now? I think they came to the strategic conclusion that China was progressively narrowing the gap in semiconductors in particular and in the other five to ten technology categories that they looked at more carefully, and they concluded that strategic action was necessary.
I think when the history of this period is written, the administration's decision on October 7 to ban high-tech exports to China... a turning point. - It's a turning point. It is a central advance, which we will analyze retrospectively in the evolution not only of technological decoupling but also of broader economic decoupling. - I think Scholz's speech after the Russian invasion was a turning point for NATO and for Europe and the end of the peace dividend. And I completely agree with Kevin that the US decision is a turning point in the US-China relationship. I would like to remind us that when Biden first announced that he would run for president, he disparaged China as irrelevant and lacking technological capabilities compared to the Americans.
And everyone was stunned and said, well, how could Biden believe that? And I think, I think over the course of the last few years, you've become absolutely educated about the fact that the China that you used to know has actually caught up with the Americans in all sorts of core technologies and is actually ahead of the Americans. Americans on some things that matter. The interesting thing is that when you talk to the German chancellor, he believes, still as someone from Hamburg and very aligned with his industry, that China is actually not relevant technologically, and that they cannot act together and that it needs to get up to speed.
I mean this is a rapidly moving transition, and whether the Chinese can get there or not, I think American intelligence agencies now view this as a major national security threat to Americans, it can't happen in a environment in which the Chinese are potentially dominant in core technologies would make the Americans too vulnerable. And Biden has been convinced of this. - So I'm going to quote myself and my age here, which is having covered technology export regimes in the 1980s and noting, let's not sell supercomputers to the Russians until we get to the point, there used to be a company called RadioShack , we got to the point where you could... - By the way, there is still a Twitter account, which I don't recommend you follow, for those who know what I'm talking about. - You get to the point where you buy a faster computer, basically a RadioShack, than the one we were still preventing IBM from exporting to Russia.
I mean the idea that somehow you can prevent technology from being exported, I'm quite skeptical. That is first. - However, I think the administration's opinion is that they can't stop it. They can stop it. And if the critical timeline here is what I have long believed is Xi Jinping's preferred timeline for advancing Taiwan, which is the 2030s, to be much more militarily prepared, technologically resilient, and financially and economically independent Of the possible impact of US sanctions, I think the United States sees this as a slowing device, not a definitive blocking device for the reasons you just indicated. - I agree with that, but I also think that Americans have a very important problem in that American technology companies are not necessarily patriotic- (Kevin gasps) and their (audience laughs) and their willingness to align themselves with US national security policy on this is all over the map.
I mean we've seen this, again, in Russia. If you go and ask the White House which countries are doing the most to support Ukraine, they will tell you: number one, the United States, number two, the United Kingdom, number three, Microsoft, number four, Poland, in that order. Microsoft's number three. Very interesting, right? About three or four months ago, they would have included Starlink on that list. They won't do it now. And that has nothing to do with the national security of the United States. It has to do with the one-man decision-making process. And what happens if there is a different CEO, there is a different business model?
How do you, as Americans, get these tech companies on board with the idea that not only are they not going to do certain types of business with the Chinese, that they can legislate to a certain extent, but also that they are going to invest in certain types of business? things that will align with the Americans. We're a long way from that, in part because the U.S. government doesn't understand what many of those things are. Decisions are being made. I mean the reason why Microsoft is so important to Ukrainians is because they themselves took it upon themselves to get the Ukrainian cloud up after the NotPetya attacks by the Russians.
But it wasn't as if NATO had a very good idea of ​​what needed to be done on cyber. Tech companies just did it. So this makes the fact that there are technology companies as functionally sovereign actors in the digital space and that that becomes increasingly critical when we talk about national security is actually a fundamental nexus in determining whether the American geopolitical strategy in this theme is successful or not. . The Chinese have different problems: their efficiency and their ability to continue having the goose that lays the golden eggs while they strangle it or limit it politically.
But there is no problem for companies to be patriotic and aligned with the national security line. That's not your problem. - Well, we legislated in the Cold War. I think the problem on Capitol Hill is that no one understands technology. - That's how it is. - That is absolutely true. -And so, I mean, if you look at Facebook audiences, we don't want to...-There's a broader point to Ian's question about what he described as the patriotism of American technology companies. And the question is whether you can get the economic establishment, the private economic establishment of this country to support a coherent long-term national security strategy of the United States vis-à-vis China, that element.
There is a broader element: can the United States entice its allies to engage in a similar range of, say, restrictive economic actions? The first volume of this particular manual, as I said before, was 5G. The second volume is being developed now, which is what is happening with the list of technological bans announced on October 7 and the administration's efforts to go international. But the third is, actually, when you start looking at the detailed content of the Inflation Reduction Act, the IRA, I love the way Americans call your legislation strange things. What does all this have to do with reducing inflation? (Audience laughs) - Very little. - Thank you.
I thought I was missing something. Anyway, if you look at two big engines, that's kind of... It's called Jedi mind tricks. - Jedi mind tricks, well, he fooled me. So we have the CHIPS Act part and the renewable technology part. Both are enormous instruments of US industrial policy, which now massively subsidize US industry. - At the expense of many allies. - At the expense of the allies. So I was recently and... South Koreans were angry about this. - And the Europeans are increasingly... - I couldn't use that word, but the Europeans were upset. - Deeply. - Deeply upset.
And in India, where I was recently, when they looked at the fine print of what the level of subsidy will now be under the IRA renewable energy provisions and their massive subsidy to American green hydrogen, when they are trying to boost their own green hydrogen industry, and the impact that has on the confidence invested there as subsidized American companies enter the global market, replete with their own domestic subsidies, my general macro message in the United States, if you are serious about a long-term strategy. In terms of China's national strategy, the assumption so far is that we will all march together for national security and when it comes to everyone's economic interests, it is the law of the jungle.
But we will set the rules and have the subsidies we want. That is not sustainable in the internal democratic politics of its allies. So the United States wants to change that. This profound rethinking of geopolitical security and strategy as separate from, let's call it, the international economy, is not sustainable. Critical point. They either have to be that way or they won't prevail, because China continues to simultaneously prevail globally. - Because the United States does not have a trade policy. You don't have a Trans-Pacific partnership. You cannot explain what the Indo-Pacific economic framework really is. Democrats and Republicans go back and forth on these issues; the allies do not find it remotely acceptable.
Whether it's a can of infant formula or whether it's something like the Europeans on steel or... These are all problems. I agree completely. -And if you mention free trade in the Capitol these days, you think the Salem Witch Trials were about to befall you, because it's so popular. - And tomato tariffs, of course. - Yes. - Yes. - And we're still fighting over Softwood Lumber with the Canadians 40 years later, and there's... - That's a very obscure reference by the way. It didn't arrive. Alright. - Which brings us to the question of whether President Biden will be in Asia this week and next.
First, in Phnom Penh for the annual US-ASEAN summit and East Asia summit, and then in Bali, ah, for the G20 summit, where you may or may not, but you believe he will meet Xi. - Yes. - So, for all the talk about a turn toward Asia 2.0, it's no surprise that this administration has become consumed with what's been happening in Europe. Real quick, because we're going to run out of time and I want to get to the

midterm

s just for a little while. - You can take the

midterm

exams. - You both can... - It's way beyond my pay grade. - You know, Biden...
This goes exactly to the heart of the issues that will come up in Biden's meetings. What message does Biden have to bring to these meetings with allies? - Well, let's make it clear that the G20 is going to be the most tense and fascinating G20 since the global financial crisis. And there is a big question about the G20: is Putin there? He supposedly leaves. This is an impossible situation either way, because if he leaves, the G7 will not directly engage with him. It will be immensely embarrassing for him. He will be waiting as he was for the Kyrgyz president at the SCO, cooling down.
The Chinese and other friends of his are not as close or as warm as they were to him. This is nothing compared to Mohammed bin Salman's post-Khashoggi appearance at the G20, none of that. But if he doesn't show up... MBS who came to look for Putin. - Oh, absolutely, he's the one, he's the one who will be with him. But even that is a bit problematic for MBS considering everything else. And yet, if he doesn't do it, if Putin doesn't show up, then all of Russia in the G20 and the G7 is working very hard to get increasingly skittish friends in the developing world to join this war that has to finish. as Xi Jinping said directly to Scholz: "We want"This war ends now." They were surprised, the Germans were surprised, at how willing he was to do this.
So let's be clear: As much as the Americans don't have a consolidated Asian strategy outside of security right now, the issue of The day for the G20 will be Putin, and one way or another that will consume all the oxygen in the room. It will be fascinating, but deeply, deeply destructive. And one of the things I would say, and I don't normally think about this, is that the The fact is that where this war will go and even whether or not a tactical nuclear weapon will be used has a lot to do with Putin's decision. Personality, feeling of being cornered or humiliated.
So how this G20 plays out It could be the most important summit of our lives, right? And we have to think about it in those terms. It fascinates me, but it also terrifies me a little. Putin is not in a good place right now and there are not many people who think on it from your perspective. - The complicated thing about a G20, when I was prime minister, I was a co-founder of it and I was in several of them over the years, is that the table is not that big. When people say, you know, "we have nothing to do with it," it's like the table fits on this stage and the Russians are sitting there and whoever organizes the session plan, there will be a group of G7 and other countries democratic countries of the world on this side as far as possible.
But the table is not such that you can just ignore someone sitting there. There will inevitably be an exchange, there will inevitably be an argument, regardless of what the Indonesians do as hosts. My hope is that Putin decides not to go. I think that is also Indonesia's hope, although they will never say it: they are the hosts. I think that's the Chinese hope as well, but they'll never say that, because we've seen this series of actions now by China that seek to push the Russians onto, so to speak, a peaceful trajectory over Ukraine, as we've seen more recently. in tactical nuclear weapons.
But I think the key message or the key meaning of the G20 in Bali, I hate to say it, but it's not just because we're in the Asian Society, it actually has nothing to do with Russia. And this is where I partly disagree with Ian. I think it will. It mainly has to do with whether or not China and the United States find a mechanism to begin to stabilize the relationship rather than the continued structural downward spiral of this relationship, which has been in free fall for the last three years, and the aggregate geopolitics, and We are here to talk about the

risks

posed by both, but for the three countries in this strategic triangle, it is the China-US trajectory that scares the hell out of me in the long term.
The Russian question scares me less if the nuclear question is out of the question. But there is a danger of horizontal escalation in terms of a fight with NATO. But what I'm focused on is whether they're going to look for a formula to authorize their officials, to put some stabilizing barriers around the relationship. I don't know if they will. But I think the sentiment in both capitals, as I said earlier in our debate today, is to lower the temperature by one or two degrees in the short to medium term, because neither of them want to end up in an accidental war in the short to medium term.
And there are many other things that are problematic. - Yes, Kevin's point is that certainly what arises from the relationship between the United States and China is the most important, broader, strategic and long-term issue. My fear is that what is happening around Russia and Putin is actually a much more dangerous risk in the short term and increasingly reflects that. So whether or not you agree with my or Kevin's perspective depends in part on your filter, I definitely agree with Kevin that it's better for everyone if Putin doesn't go away. Warning: it won't just go. You need a reason not to go.
And I hope that the reason he gives for not going is not a false flag, it is not an injustice that was just committed against him that is false, but that he has been talking about for the last month, for example, A bomb is used dirty. And Kevin asked and said, Why has the White House suddenly been talking about all this? It was directly in response to Defense Minister Shoigu going around and not just mentioning, "Oh, they're going to use a dirty bomb," but demanding bilateral meetings with the Europeans and the Americans and the Indians and the Chinese saying, " We have "This is serious information, they are going to do this, we have to take it to the security council." This is unusual in Russia, unless there is something behind it.
And something is not, the Ukrainians are about to do it. The something is that the Russians are looking for an excuse. Excuse for what? We don't know. But the problem is that Putin doesn't have the ability to turn the war in his favor on the ground. He doesn't have that ability. We know that. So, what? What else are you going to do? At least in the case of the United States and China, there are many reasons to slow the deterioration or stabilize it, perhaps not to generate much confidence, but at least to get out of what seems like a sudden train wreck.
Putin's perspective on the war right now has no such incentives, which is why when I think about the G20, I focus on that. - Therefore, it seems minor compared to dirty bombs and a greater potential for conflict with China. But we certainly have Asian allies who will wait for the president to say something, to give them some reassurance. We seem to have given up space when it comes to trade policy. We're just not participating, as you said. We don't have a trade policy and we have these strange acronyms for things that really aren't, they're not trade agreements and they're supposed to be rules of conduct, but they're rules of conduct with no incentives attached.
What do you think everyone else in Asia wants to hear from Biden, particularly as it seems like the turnaround has once again stalled, because it's all Ukraine all the time? - I think there are two things. First, the president cannot deliver, because he is a Democrat and not a Democrat and a Republican. And that is the long-term continuity of the US strategic direction on China in the Indo-Pacific region. Because at the back of every regional government's mind is the question: If Trump returns or a figure like Trump returns to the White House, will everything that has been demanded of American allies until now become null and void?
Therefore, the president can be reassuring on this issue. And to be fair to the administration, the strategies so far, despite their missing economic component, which I'll get to later, have been remarkably consistent and remarkably bipartisan so far, particularly considering where we were at the end of the Trump administration in terms of China's strategy. If we add together what Blinken has said about China strategy, what Sullivan has said about national security strategy, what is now in Lloyd Austin's national defense strategy, and we can debate the impact, but the elements of the technology export bans announced on October 7, these fit within a framework.
The question that allies ask themselves is: is it politically sustainable? As for the second point, which you will be expecting from the president, and it will be difficult for him to say anything substantial about it, is to try to open the door that was slammed shut on the first day of the Trump campaign. Presidency, which was the Trans-Pacific Partnership, a true free trade agreement for the area, for the region. I think Gina Raimondo has done an extraordinary job, and given the absence of any interest in Congress or the administration on market access to create what's called IPEF, the Indo-Pacific Economic Framework.
And if you look at its three or four pillars, there is an opportunity to develop at least one of those pillars in terms of pan-regional digital trade regimes. That has some possibilities, but it is not market access. And I return to the strategic point that I made much earlier: until the United States of America, until Uncle Sam finally realizes that his allies are not stupid, they are not stupid and they cannot be treated like economic idiots, totally compartmentalizing their economic interests and have them, so to speak, trampled on the implementation of a broader American national security strategy, the CHIPS Act, any other action, until the United States crosses that rubicon and considers this as a pan-allied issue of access to market, the democracies of Asia, the democracies of Europe, the democracies of this hemisphere, then China has this residual strategic advantage because of its growing global economic footprint. - The most exciting IPEF defense I have heard so far. - I read my briefing note from the White House. - I wasn't going to ask you to predict tomorrow, but I will.
You are a creator of probabilities. What is your spread? - Oh, I mean, look, the problem we have is that the United States is going to appear much less coherent, much less competent than the Americans have demonstrated on the global stage over the last nine months in response to Russia. And this has an impact. You know, the fact is that Biden has framed this election as either voting for Democrats or voting against democracy. Now, I think that's a very unfortunate framework for a couple of reasons. First of all, because you only make a frame like that if you're pretty sure you're going to win or you're desperate.
Well, he's not going to win and he's not really desperate. I mean, they're doing this as if they're, you know, like voters are testing it in the short term. But the reality is that that's going to make them look weak after the election is over and he's going to have to stand up and say, well, I guess Americans aren't for democracy anymore. What the hell is that, right? So that's number one. And number two, it's simply not true. Democratic leaders have not governed as if they were concerned about the future of democracy. They are governing as if it were a normal administration.
They are focusing on the IRA and want to just pass regular laws. And I'm going to go further. The fact that the democratic leaders of the party were willing to finance the electoral deniers so that they would win the Republican primaries and thus have a better chance of confronting them is not something that should be done if one fears that democracy is coming to an end. . end. That's something you do when you simply think about the usual game of politics. Let's be clear, right? (Audience applauds) So yeah, I mean, even in a Democratic crowd in Manhattan, there will be people, because it's the Upper East Side, there will be people (audience laughs) who will applaud or laugh at those two points.
The thing is that we have money here, we have money in the Asia Society (audience laughs) but... We are also well equipped. - We are definitely well supplied. - No, but I do, I'm really concerned, of course, that as much as Kevin was talking about the fact that we're just going to push it like we did 5G in semiconductors, and the allies will join it. us, and the feeling is that they will do it because we have the power. And it is true that American power on these issues has not diminished, but American credibility is seriously diminished.
And we can't pretend that it doesn't matter. The fact that the United States simply does not have a foundation on which to stand as a representative democracy in terms of values ​​with our allies, much less with our adversaries... I mean that is a serious blow to American power. And let's also remember that, I mean, I hate to say this, really, but the presidential race starts tomorrow, and ugh, I mean two years of that, who wants that? Nobody here wants that, but it will be ugly, unpleasant, dysfunctional, it will make America look weak, divided and incompetent. We're going to have two years of one of the most brutal, nasty, un-American fights insofar as that means anything, you know, fights we've ever experienced in our lives.
And you think that won't have an impact on our allies? Of course it will be. Of course it will be. I think Biden will look terribly weak as a result of that. And he will be caught in the crossfire and it will be bad for us. - Can I add two footnotes? - Yes please. - Now, as a mere foreign observer of the way you run your wonderful, if somewhat chaotic, democracy, all democracies are chaotic, and it is better than the alternative. - You had your own level of chaos. - Yes, we have been. All democracies are chaotic, reminding us of Churchill's aphorism: "The worst system of government in the world, except for all the others." Ian is right, the world will be watching closely how this country is governed over the next two years, whether they like it or not.
And I share that some in Washington won't care that the world is watching closely, but it is one of those periods in history when the world will watch not only closely but closely, and if they begin to draw conclusions that the The country is teetering towards long-term ungovernability, which has profound global strategic consequences. However, the other thing I would say is that there is still a greater respect around the world for the automatic system that stabilizes the American system, it isThat is to say, its democracy is self-correcting as all democracies are self-correcting. The question is whether a series of results are produced, whether in the midterm

elections

or the next presidential election, that go far beyond the parameters of normal self-correction.
And that's where the analysis will be. My final point is that the danger in the China angle is this: I am concerned that Xi Jinping has won his narrow election victory in the National People's Congress, minus Hu Jintao's vote, apparently: - One vote. (The audience laughs) - The former secretary general. That, and I would warn our Chinese friends against this, does not mean assuming that Biden arrives in Bali with the United States structurally or strategically weakened. That would be the wrong conclusion. There is something about the strength of American foreign and security policy that the establishment will not allow that.
But I sometimes worry that some of the arrogant comments within China about the state of American democracy lead to a strategic conclusion that this country is now somehow ungovernable, which is not the case. - And this, as Ian pointed out, has been one of the extraordinary things, particularly after Afghanistan, about Ukraine: with all the anxiety that everyone felt about the leadership of the United States after Trump, what is Trump going to return? ? , Biden screwed up Afghanistan so terribly, the relief in Europe for American leadership, there is certainly still a hunger for it. - They have done a fantastic job.
They have kept Europeans informed and engaged every step of the way. They are sharing their concerns. And two tracks simultaneously, because it is recognized that there is not total alignment with Zelensky, but it is also understood that putting too much pressure on him too soon puts the alliance at risk. I give the Biden administration full marks for the way it has responded to this crisis after February 24. The best notes. - And on the question of scale, as the audience turns to Afghanistan, the administration is failing on every measure, including the perception of allies. China's strategy, seven and a half out of 10, considering where it was at the end of the Trump administration.
Its coherent. It has the support of allies in Asia and Europe. But a huge hole called the economy is emerging. Third, Ukraine, I agree with you: this is a nine out of ten result for the administration that is holding this extraordinary coalition together thus far. The question, which none of us have addressed, and probably will not have the opportunity to do so today, is what is the final negotiated outcome in Ukraine to finally resolve this issue? - I'll have to go back and do that, or maybe that's one of the questions. So there are people with microphones.
I can't see anything out there because they are so... So we have time, concise questions please, because we would like to receive as many as possible. And question one. - There is a question here. I can see that one guy has his hand raised about two or three in front of you. There you go. A microphone is approaching you, sir. - Historically, to what extent do you think NATO could or should have acted more to the benefit of Russia? And if so, when and how? - The way I would describe it, I think there were two different points where he missed the boat in Russia.
The first is that in the days of Yeltsin and the early days of Putin, the ability and the interest in making the joint NATO-Russia Council something more than what it really was, more than a fig leaf, trying to really integrate them, I think , It'd be enough. Has it been useful. The idea of ​​doing more than just shock therapy, but trying to help rebuild the Russian economy, would have made a difference. So one is the active pull, the other is the push. I think Bush's idea of ​​inviting Georgians and Ukrainians to join NATO, especially despite the fairly marked reservations of other NATO allies in Europe, was a bridge too far and was a bit of a rag before a bull. that the Russians were going to have important structural problems, but without creating the deterrent element.
Because if you say we'll let you in, but you don't let them in, then they don't really have any of the guarantees, the security guarantees that would prevent the Russians from invading. And again, we saw that in 2008 in Georgia, we saw that in 2014 in Ukraine, and then we saw that again in 2022. So I would say, at the margins, both of those things were mistakes. But that does not mean that Putin is anything less than 100% responsible for the unjust invasion of sovereign territory on February 24. I want to be clear about that. - There is someone there, sir, in the middle, in your...
I'm just more used to this stage. I can detect people. - Thank you so much. I just want to mention something that hasn't been mentioned and ask your opinion on this: is COP27 or climate completely off the table now? - Let me answer about the weather. If you carefully analyze what Xi Jinping said at the 20th Party Congress on climate and review his work report, there is, what I identify, no retreat with respect to the previous Chinese position, nor in its three great commitments, which is carbon neutrality by 2060, peak carbon by 2020 and no more exports... - 2030. - Or financing of...
Did I say 2020? I mean 2030. There will be no more funding through the Belt and Road Initiative for overseas coal power plants. So there is nothing in the document that deviates from that. You have a phrase in the document, which has been used elsewhere and has now been elevated, that worries me because it says that we should not remove the old until we have brought in the new. And that's been around for a while, but now it's been elevated to the status of a Party Congress report. And that is, in part, an amber to green light for the domestic coal power plant lobby to keep going until it is sure that installed capacity from renewables and batteries can do the job.
That's why I fear that this could slow down the transition. As far as international collaboration goes, I hope that one of the outcomes of Bali, if there is a summit between Xi Jinping and Biden, which I assume there will be, is to find some stabilization mechanism that, given that it happens, will happen. almost at the same time as Sharm El Sheikh and Cop27, which will be held there imminently or now. - Now yes. - That some kind of mechanism be found to reopen the lines between Xie Zhenhua and John Kerry, which were suspended after Pelosi's visit to Taiwan and China's retaliation at that time.
So it's not a brilliant set of results, but I see some possibilities still emerging. - I mean, my personal concern here, of course, we haven't talked about this, but the debt limit could become a major crisis if the Republicans take back the House, which it looks like they will. And they're talking about potentially reversing part of the Inflation Reduction Act as the price of this. And there are great green possibilities there, if we could see it. - I think that the will to reverse it is very, very low because people, once they see the subsidies, their voters are very happy with them. (Kevin laughs) I'm not worried. - They are national voters.
Are there no foreign voters? Yes. This gentleman. There is something there. - A microphone. - You have not yet mentioned Latin America and Africa in this geopolitical struggle that you are describing. Are they important flanks of the struggle or are they not really that relevant? - I do Latin, you do Africa, okay? So on our rating scale, I would have given the Biden administration a three so far in Latin America. The Summit of the Americas was a non-event that we probably should not have held, even though most of the region's leaders are ideologically sympathetic to the Biden administration, there is no strategy for the region.
There are some efforts to contain the migration. Frankly, Trump was more successful because he was willing to shake his fist more and be more transactional with Mexicans on that front than the Biden administration. If I think about Venezuela, there are some marginal options for the Biden administration, because now we will begin to see negotiations with the opposition that will lead to additional marginal oil production through Chevron, a few hundred thousand barrels per day. It won't make any difference. But in the meantime, the Colombians are actively opening the border and participating in bilateral negotiations. Why aren't Americans leading the way on that issue?
They should be, they could be. They are not. So I think this has been, look, you've got the Russia problem, the China problem, transatlantic relations, big problems with the Iranians, the Saudi thing blew up. I just think that Latin America is not getting much attention from the Biden administration. That's unfortunate. - I think that if we look at geoeconomics and geopolitics, the fact is that there are 1.1 billion people on the African continent and 600 million in Latin America, right? Approximately. The United States cannot afford for these to be missing elements in its global strategy. Secondly, if I look at China's global strategy, the things that I mapped recently in that book I wrote called "Avoidable War," China's strategy...
I shoot right there. - It's a shot. Thank you so much. It's a promotion. It is a very good book. (Audience laughs) And if you buy a dozen copies, I'll send you free state notes. (Audience laughs) Now I'm in retail. I do not have shame. But yes, as I recently recorded in the book, China's strategy in each of these regions is comprehensive and is driven by commercial investment, as well as several plus one agreements. Therefore, the missing elements in the United States' global strategy are the continent, Africa, Latin America and the Middle East. It seems that the current US global strategy towards China focuses on, let's call it Asia, the Pacific and Indian oceans plus Europe.
And that's an asymmetry in the way these things are processed. And if we talk to our Latin American friends and our African colleagues, the flows of foreign direct investment from China are significant. If you look at the neighboring United States in the Caribbean, the Caribbean, the FDI flows out of China and now reaching all the island states are enormous, relative to the residual investments of this country. And it's not that these regions have inherently turned against the United States. They have not done it. But let me say that, as Ian said before, there is a sense of structural and strategic neglect, which I think is something that fundamentally needs to be fixed.
This gentleman here in the front also has two fingers up. - That makes it an urgent question, right? Two fingers. - Ask. - Yes. - Well, in Australia, when the two fingers are up, it usually means something else. - Oh yeah, that's a good point actually. Yes. - It seems that Russia itself has confirmed that they have indeed meddled in the

elections

. How serious is this? What is the impact? Or is this really the big question for Elon Musk? (Audience laughs) - Well, since he's not here, let me take that. (Audience laughs) - You are very close. - It wouldn't be the first time exactly. - I thought you were Elon's spokesman. - Yes Yes Yes.
I think we all need to recognize that no one can damage American elections like Americans do internally. (Audience applauds) Yes, there were efforts in the lead-up to 2016 to provide disinformation. There was a Facebook group, I remember, Black Lives Matter was taking on a group with 450,000 members. It was the largest group of its kind. It turned out to be a Russian cutout and was actively trying to stoke racial dissent. Those kinds of things bothered me a lot. But nothing close to the level of dissent, disharmony, hatred, growth of white nationalism, I mean all these things, within the United States.
That's our problem. And yes, what I have seen so far from the new ownership of Twitter implies a higher level of anger, hatred and violence promoted by social media in our country, in our civil society. I don't think this is Elon's intention. I think it turns out to be incidental to the business model. That is a problem. It's not just a Twitter issue, it's a Facebook issue, a social media issue. We, for too long in this country, have allowed AB testing to be performed on ourselves, on the body politic, and on our children, not on the basis of what is best for civil society, but on what is most addictive to ensure that our data can be controlled and sold.
No one needs to tell anyone here that that's bad for our democracy, right? (Audience applauds) I don't think I just stepped into an applause line. This is horrible. That's why I don't run for anything. But it is very clear to me that the combination of the country's disunity right now and social media platforms that have more influence than ever before, is not only a principle, but a fundamental danger to American democracy that is far greater than that of China. -Russia is, but is also, one of the main export products of the United States worldwide that is undermining the democracy of our allies.
In my opinion, we musttake this more seriously than anything else that affects us in this country after this election. (Audience applauds) - Now, for the sake of non-interference, I will not comment on the state of America's internal democracy. I think Ian said it all. - I think we have time for one more question. - Here is a lady in front. - Thank you very much for a wonderful conversation. And I have to ask the question: how do you see the outcome of the war in Ukraine? - Okay, I'll start, but you have to answer this too.
Look, I think, like so many things in the world today, we're not looking for sudden harmony and peace. We are looking for an exit ramp, we are looking for stabilization. We want to stop the escalation. So can we do that? In the short term, I think we can do it. I believe that the 300,000 Russian soldiers going to the front cannot take territory. They will not be well armed or trained, but they could dig in and prevent the Ukrainians from advancing and surrounding Crimea or even attacking it. I think that is the most likely outcome in the next two to four months, especially if we are talking about winter months with a lot of suffering in Ukraine and no ground cover.
So you need to dig instead of places where you are exposed and the satellites can... Then I could see a situation in the next few months where the front lines don't move much and we don't seem to talk. As a result, Ukraine is making headlines. But that's phase one. I still do not see any negotiated progress in that environment. I don't see, I mean, I was looking at the Russian ports today and I saw that St. Petersburg, since the war started, is actually producing about 10% of the volume that it did last year. I know the Russians are producing about 3% as many cars this year as they did last year.
This is an economy that is going to become isolated from the West like Iran has, as Kevin said. That's not a 5% contraction. This represents a contraction of 40-50% in the next five years, let's say. I don't see anything good in that. Never before have we decoupled a G20 economy from the West. We are doing it now. And it's Putin's fault. But we are doing it now. I mean, as much as I see a short-term likelihood of some level of stabilization, I fear that the medium term is incredibly dangerous. And this is where we're going to need to work with the Chinese, the Indians, the Turks, the Kazakhs and others who still have a direct involvement with Putin to see if there is a way to prevent them from massively escalating what is happening. otherwise, a downward spiral.
Because if you think about what Iran means to the Middle East, there are rogue states with ballistic missile attacks, drone attacks, espionage, proxy wars, radicalism, terrorist violence, you name it. Well, if Russia is that to NATO with 6,000 nuclear warheads, that really doesn't bode well for the next 5 to 10 years or for our children. It's really not like that. So I think, yes, there is a real possibility of a Cuban missile crisis in the next eight weeks. I think it's 5%. The White House believes it is more like 20%. Either way, those numbers are too high. But I also think there is this 1, 2, 3, 5 year danger that is enormous and certainly unprecedented after the fall of the wall in 1989.
And we still don't know how to manage it. While we try to manage the risk of the Cuban missile crisis with a lot of effort in the short term. In the medium term, I don't see anyone doing anything yet in the medium term. - Well, if there is a 20% risk of a missile crisis in Cuba, I'm glad we order a lot of alcohol for the reception here. So we probably all need a stiff drink after this. Some thoughts on Ukraine and then we will close our conversation because I am aware that people also have commitments. First, we must be aware of what the strategic objectives of the United States and Ukraine are, where they are consistent, and where they partly differ.
But the strategic objective of the United States until now and that of its European allies in general has been along these lines. And, for example, also to its Asian allies. We have about 150, this is Australia, we have about 150 armored personnel carriers in Ukraine right now as part of the international effort. But the goal has been to allow Ukraine to defend itself and regain lost territory through American resupply, training and intelligence. And so that it does not exceed Putin's war ambitions, whether in phase one or phase two. And doing so without triggering a general war with NATO is an extraordinarily delicate balancing act for which I commend the administration.
This is a really difficult thing. The next time you see Jake Sullivan on TV, he looks like he hasn't slept in two weeks. That's probably because Jake hasn't slept for two weeks because it's so hard to calibrate him day to day, to achieve that clear political goal without crossing the tripwire into a general war. Secondly, therefore, if the Ukrainians continue to triumph on the front lines and regain those large chunks of territory they lost outside the Donbas, both in the northeast and southeast of the country, then there is nothing wrong with that. But then comes what happens with the future of Donbas and the future of Crimea.
The real question for the future of the negotiations is whether the parties, at the appropriate time, agree that the Russians will continue to have some kind of landing point around Crimea and Donbass, but that the rest of the Ukrainian territory will be returned to Ukraine, and that Ukraine will join the European Union, that Ukraine will then be put, so to speak, on a long-term waiting list for NATO membership, awaiting Russia's future strategic behavior. The creative imagination, which is now necessary to start building the architecture around it, is really important. And I'm not advocating that as the landing point.
All I'm saying is that sooner or later negotiators are going to have to address the ugly part of where the landing point is. So this is a task which, as Ian rightly said, involves a whole series of unlikely intermediaries, including the Turkish Republic, who were present under Erdogan or whoever succeeds him, have managed to maintain good offices with the various parties. in conflict. And finally, do the third thing along the way, which is to ensure that not only do we not have vertical escalation, but the use of nuclear weapons. And I'm more confident in that now than I was last week, in part because of the Chinese intervention, the Russians were going to lose to the Chinese politically, diplomatically, economically if Putin used a nuclear device.
And then, frankly, Putin has nowhere to go. I am more concerned, as Ian said from the beginning, about the future means by which they will escalate horizontally with NATO countries in general, not through tanks crossing the border, but through any other means that goes unnoticed, a military strategy and paramilitary involvement, including the destruction of infrastructure. So that's my best analysis of where it goes from here. I think we're... This level of alignment is extraordinary, it really is. Not just among broader allies, but specifically here tonight. I think that's great. (Audience laughs) - Thanks, guys. (The audience applauds)

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