Interview with Hai Phong
Haifog: I’m glad to have you here because there’s a lot of economic novelties. But your specialty is to highlight, and this channel is trying to highlight, the relationship between geopolitics and the economy, such as Radhika [Desai, and Ben Norton, and other great journalists have tried to do so.
The defeat in Ukraine
Let us talk first about Ukraine. Let’s start there. We are talking about all sorts of ‘deadlock’, in quotation marks, as far as Ukraine is concerned.
However, the realities, particularly economic and on the battlefield, are very different. So, Michael, I’m just going to let you talk about what you’d like to comment about Ukraine, because the situation isn’t as burning in the news, but massive changes are happening in this conflict.
Hudson: Well, it is the US that says the situation in Ukraine is at an impasse. What they mean is that the Ukrainian counter-offensives have been totally ineffective. Ukraine lost the war.
And there have been almost all the discussions you have, for example, on the interviews with Judge Napolitano, and the European press, the Russian press, the Chinese press, all say: Well, the war is over. Russia can simply continue to take as much land as it wants, but that is useless as Russia is trying to take more land now because Ukraine, or rather M.
He throws away all Ukrainians he can find, especially Hungarian Ukrainians, Russian-speaking Ukrainians and Romanian Ukrainians, into the competition to get killed.
So perhaps we can convince Russia not to waver, not to lock its victory. Why not just say that it is a dead end and leave things as they are, since you Russians are winning so strongly?
Well, of course, Russia has already said: we have already set the conditions for our peace. Of course, we can negotiate at any time. Our conditions are simple, total abandonment. We’re going to get rid of Nazism. We are going to ensure that Ukraine never joins NATO. And we’re going to make sure that the Russian-speaking regions and Crimea are part of Russia. Thus, whenever you wish to negotiate, that is to say yes to our conditions, we will be happy to do so. But in the meantime, we’re just going to sit here. And if you want to send more and more troops, it is not a problem.
Now, the Americans think that if Russia no longer takes land, we are on an equal footing. But it is really not a tie, because if you read the speeches of President Putin and Foreign Minister Lavrov, he says, “Ukraine is only the tip of the iceberg.” We are talking about an overview. The overall picture is, for example, that Russia became the main administrator of the BRICS on 1 January.
Losing the economic battle against Russia and China
And in the meantime, the United States is losing the battle all over the world. It is losing the economic battle against Russia and China. Russia is increasing its industrial production, not only military, but also in the production of aircraft and automobiles. China is growing, but not the US. Above all, Europe is sinking into a depression caused by the collapse, or should I say, the destruction of German industry as a result of sanctions against Russia. And also the sanctions that the US insists on Europe imposing on China.
The United States has told Europe that we can only trade with us and our NATO allies.
We want you to reduce your trade with China to what the EU leader, Borrell, said. He said, “Well, you know, China, we import far more from your country than we export. That must be equal. And China said, well, there’s a lot we’d like to import from you, Europeans, like the chip-making machines for ultraviolet engraving that are made by the Netherlands. And Borrell says, “Oh, we can’t, the United States won’t let us send you, sell you anything that is potentially used in the military. And China says that anything that can be used economically can be military because the military is part of the economy.”
I therefore assume that we are very pleased to agree with you and to have a balanced trade between China and Europe. We’re just going to reduce our interaction with you to maybe the 100 dollars a year that you have to talk to us.
Europe is involuntarily isolating itself, limiting its trade and investment with the US and cutting off its trade with Russia. And without Russian gas and oil, manufacturing, chemical, fertilizer, and German, French, and Italian agriculture will continue to decline.
Thus, the deadlock in America actually means that we are reducing the number of our allies in Europe. We are losing the third world. And what is happening in Ukraine, where we fight to the last Ukrainian, now looks like a similar fight in the Middle East, where there seems to be a similar impasse, which has really prompted the global majority and the global South to think that all of a sudden it is horrible. I will come back to that later.
But what is important is that I think the Americans have already understood that they are going to lose the war in Ukraine. And the problem, if you read the New York Times and the Washington Post, and especially the Financial Times, is that if we lose the war in Ukraine, how will Biden win the November elections? Because he insists, his entire policy is that we can destroy Russia. Our sanctions will lead to the collapse of Russian industry. The Russian people will be so upset by the war that there will be regime change. They will overthrow Putin and we can have another Boris Yeltsin who will really destroy Russia in the same way that our neoliberal advisers were able to destroy it in the 1990s.
Well, that didn’t happen. So what’s going to happen? Well, the public relations officers of the Democratic Party came together and they all decided: okay, what we want to say to people is that it doesn’t really matter in Ukraine. It doesn’t matter because we don’t need to win in Ukraine because America can fight with some kind of soft power. And we have other ways to dominate the world and keep America at the forefront, even if we deindustrialize our economy. Even though we are the largest debtor in the world, we will be able to dominate. And the Democratic Party’s new public relations campaign is called soft power.
In yesterday’s Financial Times, there was a long discussion. They had a whole page written by a man who had been an adviser to President Clinton, Joseph Nye, an adviser to the National Intelligence Council. For a whole page. And it was Nye who coined the term soft power. A few decades ago, when he was talking to Paul Kennedy, who said that Americans were in decline. And he came up with this idea that the US may still be able to exert a military, but not military-style, but financial-style, influence on regime change.
And what he said, he gave five reasons why the US would not necessarily be overshadowed by China, Russia, or any other country. And it is hilarious to look at the five reasons put forward yesterday by the Financial Times to explain that there will be no threat to the US.
The first reason he invoked was geography and friendly neighbors. Well, in recent months, especially since Israeli fighting and attacks on Gaza, American public opinion has lost. And even Secretary Blinken said that the struggle in Israel created antagonism, not only against Israel, but that America had lost its moral dominance by supporting genocide and opposing any criticism of Israel within the United Nations. It is therefore a loss of foreign support. There is a growing anti-Americanism, not only in Asia, Africa and the countries of the South, but also in Europe.
The second reason cited by Nye was the supply of domestic energy. America controls oil. Not only does it produce its own oil, but it has simply succeeded in preventing the rest of the world from importing Russian oil, and it has been able to blow up the Nord Stream. And now, it pushes Israel to act essentially like another Ukraine. This pushes Israel to incite Lebanon and Iran to a provocation, to a military response to Israeli attacks, which will allow Israel to do what the leader of the majority in the Senate, the Republican leader, has advocated, and what Biden advocates, and what the neoconservatives have been calling for for 20 years, a war with Iran to seize the oil reserves of what was once Iran, Syria. And while it can control the Middle East’s oil reserves and block its energy exports to all other countries, just as it has been able to block Russia’s oil exports to Europe, then it can control the industrialization of other countries because the industry operates primarily on oil and gas. Industry is energy, and without energy, you won’t be able to have your own industrialization independently of the United States. So, US foreign policy, as we have already talked about, I think, in our last issue, in 100 years, the US has used oil to try to control the global economy.
The third point highlighted by Nye is the dollar-based financial system. Well, it’s amazing that he was able to say that in yesterday’s Financial Times, as the whole world was trying to de-dollarize. You hear speeches one after the other, not only from Russia and China, but also from the countries of the South. And even in the Middle East, it is said that now that America has taken over Russia’s foreign-exchange reserves, or 300 billion dollars, all the money we have saved in our domestic currency reserves is likely to be confiscated by the US. And they have already told Saudi Arabia that if they do not withdraw their international oil export reserves in the form of US stocks and bonds, it would be treated as an act of war. So, here in the Middle East, Saudi Arabia and Bahrain are under increasing pressure to support the Arabs attacked by Israel, and yet they are afraid to act because the US is holding its dollars hostage. Well, very quickly, you see other countries getting rid of the dollar as fast as they can.
And finally, Nye’s fifth argument for why America cannot lose is demographic and technological leadership. But this is the lethal Achilles’ heel of the US economy. His hope, his idea of technological leadership is to gain monopoly power over information technology, pharmaceuticals, and other areas that he can dominate in intellectual property through copyright, and primarily by suing countries that will adopt the technology developed in the US.
HaïphongHaifog: This summary, Joseph Nye presented it, and Professor Hudson dismantled it, broke the facade, or showed the reality behind the facade that the neoconservatives had believed to build. And what’s so interesting about this room is that Joseph Nye is a Carter and then a Clinton official, someone who was Undersecretary of State and Under-Secretary of Defense for those administrations. And that’s someone who was actually considered less warmonger, but if we read this article, you’d see that what he’s saying about soft power is actually a regime change by other means.
And this regime change is closely linked to the economic field, as Professor Hudson so eloquently pointed out. There are so many links to be established. We have a lot of them that I am going to talk to Professor Hudson, especially about Russia, which is now Europe’s largest economy in terms of purchasing power parity.
There is also the theory of China’s collapse. There has been recent news that China outperforms Japan and is now the world leader in car manufacturing and how its production of electric vehicles is so a matter of concern.
I now wanted to ask you a question about a development, given everything you have described about Joseph Nye’s assessment and analysis of the soft power of the so-called US benefits. I wanted to talk to you about this story here. Vladimir Putin had just met business leaders from the Far East, and he said that Russia was now Europe’s largest economy in terms of purchasing power parity (PPP), becoming Europe’s largest economy, despite pressure from all sides.
Russia, Europe’s largest economy
And here’s what he said. He said, “It seems that we are strangled and under pressure from all sides, but we are still the largest economy in Europe. We have left Germany behind and we have risen to fifth place in the world. China, India, Japan, Russia, United States. We are number one in Europe. Thus, in this conversation with business leaders in the region, it emerged from the reports that Russia is expected to grow by 3 percent per year, and that it is likely to be even higher, perhaps four to five percent.”
Now, there is also the news, as you have mentioned, but there is a huge stagnation in Europe. In an analysis also published in the Financial Times, 48 economists spoke of the eurozone’s weak growth this year. And the prediction of these economists was zero decimal six percent on average, and many indicated less than that. And of course, some people point out more. But the vast majority said it would be less than half a percent. So, Michael, your thoughts. How did that happen? And maybe you could explain the economic subtleties of how this happened.
The effects of offshoring
Hudson: :Well, we’ve discussed in the past how this happened. The US, starting with President Clinton and in fact President Carter, decided to help US companies make higher profits by relocating their labor outside the US, trying to move manufacturing first to Mexico, along the maquiladoras under Carter, and then under Clinton, to China, and Asia.
And the idea was to create growing industrial unemployment in the US to prevent wages from rising. And the theory that guided Democratic economists is that if wages are reduced, there will be higher profits, and higher profits will lead to greater prosperity.
Well, the reality is that we reduce wages by moving our industry outside the country, by deindustrializing. And that is still America’s policy. And it has replaced industrialization with financialization to make money, hoping that companies that have now turned to China, Asia, and other countries will be able to make higher profits and become essentially more prosperous for the Democratic and American donor class, also the Republican parties.
But what President Putin was talking about was much more than that. Russia and China have already started to produce their own aircraft. Take a look at last week’s news on Boeing, which once again has more accidents on its planes. Boeing was once a technology leader in aeronautics, but then merged with McDonnell Douglas and became a financial company. It therefore broke the Boeing aircraft manufacturing system and began subcontracting all small parts to various other companies. And Boeing now confines itself to assembling various parts that it buys from various suppliers, much like for televisions. You buy different parts from different suppliers.
Well, the reason Putin is making his speech in the Middle East is that Russia and China are working together for a huge industrial development in Eastern Siberia, which is clearly underpopulated because of bad weather for many centuries now, but is now beginning to warm. And the idea is to integrate Chinese industry and Russian industry and technology and design entire cities that will be technological complexes that will jointly produce all kinds of interdependent parts, computer parts, aircraft, trains, automobiles. China is already the world’s largest car exporter. And so you’re going to have this brand new center of industrial growth in East Asia.
So the idea is that it will lead to a great increase in prosperity. And as to how these cities are developing, when I first went to Russia in 1994, I stayed with the teacher who designed the city of Togliatti, the city where we were going to start producing cars designed by the Italians. And he explained how he designed the entire city to combine factories and production with workers’ housing, worker entertainment, workers’ health, and all the different forms of supply of car materials and parts hinged together. He was essentially an industrial engineer. And so Russia and China are developing the cities they create, as well as universities and training systems in East Asia and Siberia.
So, essentially, Putin tells the world: if you are a southern country or an Arab country and you want to see your economy grow and trade more, to whom are you going to link your economy? The world is divided into two parts, the US-NATO “garden” and the rest of the world, made up of 85% jungle. The jungle is growing. The garden does not grow because its philosophy is not industrialization. Its philosophy is to make monopoly rents, that is to say, rents that are made by sleeping without producing value. You simply have the privilege of the right to collect money on a monopolistic technology that you have.
But China and Russia are well ahead of the US in most of the growing technologies we are talking about, not yet in the ultraviolet engraving of computer chips, but in many areas.
Thus, all technological progress is moving away from North America and the United States, where it was since World War I, to Russia and China.
The rest of the world is industrializing
How will the US cope with the fact that the rest of the world is industrializing and no longer need any contact with the US?
President Biden keeps saying that China is our enemy. At the end of the day, our military say that we are going to have a war with China in two or three years’ time. We are currently at war with Russia in Ukraine. That is our goal, it is war.
But the response of the rest of the world, basically, is not a reflection of this situation, it does not mean that we can wage war. We are going to see Russia fight Europe.
In recent days, many US military magazines and, above all, European spokespersons have said that if we lose in Ukraine, Russia will cross Poland and Romania, until we recapture Germany. He will conquer Europe, and perhaps not even stop in England.
Well, that’s just absurd. The reality is that Russia and China no longer need Europe.
They don’t need the US. While under the Clinton administration, said Madeleine Albright, America was a single country. That was the country needed.
The fact is that the rest of the world not only sees America as useless, but that America and its NATO allies are the main threat to their own prosperity. They are therefore essentially divided in their own world. And the BRICS Group is expanding its trade relations, its investment relations, and, above all, its financial and monetary compensation operations to be independent of the dollar, de-dollarized, and certainly independent of the euro, which now does not seem to have any visible support, and are moving their own way.
But that is exactly what led the US to push Israel [essentially) to follow Netanyahu’s bellicism, because the US says, “We realize we are losing power.”
We know that we really are not at an impasse. We know that we have lost our chance to dominate the world. We can be re-elected by telling people, you know, that it doesn’t really matter.
But we know that it matters. The last chance we have to assert American power is military. And the main military issue is the Middle East today, just like after September 11, when Dick Cheney and Rumsfeld insisted on an invasion of Iraq in order to begin seizing its land and essentially creating a US foreign legion in the form of ISIS and other countries. America now has two armies that it uses to fight in the Middle East: the foreign legion ISIS/al-Qaeda (the Arabic-speaking foreign legion) and the Israelis. The plan is – and America is ready to fight to the last Israeli, just as it wants – to try to fight to the last Ukrainian to win the Middle East in the fight against Iran.
It is a crazy idea, but it seems to be exactly what is planned.
The new decolonization
General Petraeus, who lost the war in Afghanistan, said: we must conquer Iran. That will be the case: we can regain all the power we have lost by attacking Iran. And now it seems that President Biden hopes to make a political comeback by saying, “Well, we may not have blocked Russia in Ukraine, but at least we have conquered the Middle East.”
But the way he conquers it has become a catalyst to bring the world’s majority, the rest of the world, especially Africa, South America, and South Asia, to think: Wait a minute, what is happening in Israel and today’s Palestine is exactly what happened to us in our early days.
In the United States, what have Americans done? The Whites came, the Anglo-Saxons and the other Europeans, and they killed 90% of the Indians, drove them out, isolated them, put them in concentration camps. And then, when they discovered that there was oil under these concentration camps, they essentially murdered the Indians or drove them out again to seize the oil.
Same thing in Latin America. When the Spanish arrived in Latin America, they seized the land, granted land concessions, and these land concessions created latifundia, which was the great problem of Latin America over the past five centuries, as it prevented Latin America from cultivating its own food. It fought to prevent the indigenous population from feeding themselves in order to turn their land into export crops, much of which was led by the World Bank.
The same is true in Africa. They say, wait a minute, what is happening in Israel is what has happened to us, with the colonizing powers. That is what Germany has done in Africa. This is what the Dutch did in South Africa. It is Germany in Namibia, the Dutch in South Africa, the English throughout Africa, and especially the French in its territories. All of this has already happened.
And all of a sudden, as Americans go to the movies and cry more in front of the Westerns, they encourage Indians against cavalry. The rest of the world encourages the oppressed because the oppressed is what it was. The outsiders are them today.
And this idea turns into a sense of, “Let’s shoot down all the barriers of colonialism.”
Let us start with French Africa, from which we reject the French there. We are not going to let the French banks, the French mining companies, the French oil companies take all our wealth because they conquered it five centuries ago. We can identify with… we know why the Palestinians are fighting.
And yet, in a way, they also say: Well, wait a minute, look at what Israel is doing.
Israel says: God has given us this land. We had it. Well, South Americans, Africans and Asians say, “Well, that’s our land, but we’ve never left it.” We’re still on earth. And even if we are on earth, we are still locked up, as Israel treats the Palestinians.” We don’t have to live that way. We can decolonize.
And here we have all the split of the world and the turn to China, Russia, Iran, and the BRICS, is an attempt to reverse, reverse and reverse all the colonial expansion that has occurred over the past five centuries.
HaïphongHayphong: You have just given an incredible summary by breaking down the interconnections of these developments, and that is what I wanted to do, given that the Middle East and West Asia are particularly ‘hot’ at the moment.
Iran has just launched numerous strikes in Erbil, Iraq, against a Mossad headquarters, as well as other targets locating some Israeli-backed terrorist groups. There are now reports on Pakistan, also in northern Pakistan.
There is also the situation in Yemen, the continuing Red Sea crisis. The Ansar Allah movement has just hit an American ship. There’s a constant activity there. And of course, there is still the conflict that you mentioned, the fighting under way in Gaza, the brutal attack on the Palestinian people, which has rightly been described as genocide.
And this is what Joseph Nye had to say, and I’m answering you, Michael. He said that about American soft power. In this article in the Financial Times, he said, “The United States, despite this, may seem powerless. They failed to convince their ally, Israel, to act with restraint in Gaza. Could that have been the case in the past? It is not clear that they could have done so 20 years ago. George W.”
Bush suggested in 1991 that US aid could have been reduced and that it might have helped to stimulate the Oslo process, but this did not lead to the creation of two states. Israel is not the only ally that has proved to be fully capable of resisting the US, such as Saudi Arabia and other countries. For the time being, Israel is harming its own soft power and, by extension, American soft power.
Hudson: That is the great lie that America is trying to promote. The idea that when Blinken goes to talk to Netanyahu, he will tell him: when you drop the next bombs and kill the next 20,000 Palestinians in the Gaza Strip, be lenient with them. Please respect the laws of war and stop bombing ambulances, stop bombing hospitals.
These are just public relations bullshit. The reality is that he tells Netanyahu to move forward.
This is America. All these bomblets that are dropped are manufactured in America and sent to Israel to be dropped. Every week, America says, “Here’s a new delivery of bombs.” Go ahead. Here are billions of dollars more to enable you to survive while you enlist your labor force in the military. America is pushing Israel.
Fifty years ago, I was traveling to work with the main leader of the Netanyahu Mossad and now a national security adviser, Uzi Arad. I remember, I think I mentioned it on one occasion, that we were going to Japan and that we stopped in San Francisco for some discussion.
An army officer approached, threw his arms around Uzi and said: you, the Israelis, are our aircraft carrier landing in the Middle East. Well, that was 50 years ago.
Last week, in The New York Times, I hear exactly the same sentence. Israel is our aircraft carrier. For the US, Israel is American Ukraine in the Middle East. It is the US that is pushing Israel to induce Lebanon first, then Iran, to do something that would justify a massive US attack, trying to do to Iran what Hillary Clinton did to Libya, completely destroying it and destroying its people. In the process, we did not know what was being prepared, by taking over its gold reserves, by installing ISIS as a foreign legion in as much of Libya as possible and by taking up Libyan oil reserves.
In The New York Times, in the Wall Street Journal, and on television, whenever they talk about Hamas or Hezbollah, they do not say Hamas and Hezbollah. They speak of “Iran-backed Hamas,” “Iran-backed Hezbollah.” They don’t talk about the Yemeni army, or the Houthis. They say the “Houthis supported by Iran.” There is a huge public-connection effort to convince the US people that Iran is the great enemy, and President Biden keeps repeating that Iran is the enemy. The army, Petraeus and the neo-conservatives have declared from the outset that Iraq and Syria are just the general rehearsal for where we really want to go, Iran.
Their hatred of Iran stems from the fact that they overthrew the Iranian government of Mosaddegh in the 1950s, with British help as usual. And they are sure that, we hurt the Iranians so much that they must hate us. And since we know that you hate us because of what we did to you, we have to attack you because we made you an enemy by overthrowing your government when we recovered your oil and set up the Shah that ran a murderous regime, a torture regime in Iran for a few decades. American policy is dragging us into a war that is likely to be more disastrous for the US than the war in Ukraine was.
At least in Ukraine, all the lost Americans were… Ukrainians. And I guess they had hired a few mercenary troops there. But in the Middle East, they will lose far more than would have been at stake in Ukraine alone. They are likely to lose Israel’s role as a disembarked aircraft carrier. And in fact, they’re going to lose a lot of their own floating aircraft carriers that are nearby. And they have already lost control of the Red Sea and the oil gulf, between Iran and Egypt.
And it is also possible that they will lose the support of Egypt and Saudi Arabia.
For even though in the Arab Spring, the Americans had unleashed a “color revolution,” the Arab Spring, where they replaced Egypt’s hated President Mubarak with his own protégé, Sisi, who now directs him, Sisi is entirely in US pockets. And yet, it goes without saying that the Egyptian people, being largely Arab, support Gaza, not the United States.
Similarly, in Saudi Arabia. Here, Saudi Arabia and Ukraine were making a rapprochement, in fact an alliance with Israel, in the same spirit as Greece had concluded one with Israel for a Mediterranean military force. Well, now, a large part of the Saudi population is Palestinian. They have found work in Saudi Arabia, and they are outraged that Saudi Arabia is trying to sit on the fence, even as it joins the BRICS.
Saudi Arabia realizes that all its foreign-exchange reserves are being held hostage by the US. What is going to be the most important for Saudi Arabia? Fighting to protect the attacked Islamic population, or to save its own reserves in the US, which is not at all to help Saudi Arabia.
Same thing with Egypt
The population between Egypt, Saudi Arabia and Bahrain was the main American strongholds in the Middle East. And now, America risks losing them if, in the event of war, they are subjected to political pressure and enormous instability.
And the more in the west, in Africa, you have the former French colonies that are also Islamic.
You can imagine, you know, that they not only separate from France and support the rest of Africa, Central Africa, in their break with France, but that they are essentially moving towards an alliance with the BRICS countries, with Russia and China.
And all of a sudden, America’s decision to go to war with Russia in Ukraine after the 2015 war, the Maidan massacre, and regime change, the integration of neo-Nazis, is what is happening in Israel. And these two US-sponsored attacks had exactly the opposite of that promised by American politicians. Just as they had promised that Russia would break down and that the economy would collapse under sanctions and under the weight of war, they believed that the Israeli army was so strong that it would simply be able to annihilate Hamas.
The world on the move towards socialism
And the fighting – there is not a word in the US press – but the greatest fighting is taking place in the West Bank. Netanyahu says, well, while they watch all what we do, we bomb civilians, hospitals and ambulances and Hamas-hook Gaza, we distracted the world and we can now eliminate Arabs from the West Bank and move directly into Syria in the Golan Heights. And apparently, the US has promised Israel that it could take whatever it wants from Syria, which it has always opposed.
We do not know what Russia is going to do in all of this. Russia and China have remained completely silent on all of this. And I can understand that they are silent. China has moved warships into the region because it is itself highly dependent on the Red Sea and the sea lanes leading to Saudi Arabia’s oil.
When the US continues to say and threaten, “Oh, Yemenis will bomb ships there and block trade,” that is what they want. The US realizes that if it succeeds in urging Yemen and Iran to block the Strait of Hormuz and the Gulf, it will effectively end the oil trade. And it is true that, as Yves Smith pointed out in Naked Capitalism Today, the sea lanes to Saudi Arabia were closed for many years after the 1967 war. They were closed several times for several months. And it is not unthinkable that they are closed. But times have changed.
From now on, if you close them, it will be the main energy buyers in Asia, China and other countries who will suffer. And that, from the US perspective, will give it even more power to control global oil supply, as a bargaining chip, in an attempt to renegotiate this new international order.
So the US essentially embraces the only tactic that it can actually use.
They can’t use the tactic of saying, “We are a growing economy and you want to trade with us, not with China and Russia, because these two countries are growing faster than the US and Europe.” They really have nothing to offer, except the ability to disrupt foreign trade and foreign monetary and financial systems, and agree to stop disrupting it if other countries simply allow the US to make unipolar decisions.
And I should have added this dimension earlier when we were talking about China, Russia, and the development of Siberia. Eurasian countries have a great advantage over the United States and Europe. The United States and Europe have largely privatized the entire public infrastructure system. And since their privatization, they have become natural monopolies. And they’re managed in the same way that, for example, Thames Water is run in England. They are managed as monopolies that underinvest and simply use a strangulation to increase their monopoly rents, which they declare as profits.
But China, Russia, and Asian countries have retained basic infrastructure – transport, education, health care, communications – as public services. And they invest, they’re led by engineers, they’re industrial engineers, not financial engineers. And not only are they managed much more efficiently, but they do not have the financial costs and royalties to the monopolies that weigh on the privatised infrastructure. Thus, the cost of production in the non-neoliberal world, I suppose, can call it the world marching towards socialism, is so much more effective than that of the neoliberal financialized West that we can see the magnetic attraction of Africa and South America.
And it turns out that they are also the world’s largest suppliers of raw materials. So if the US and Europe do not have raw materials, they do not produce their own oil, except that Europeans have to pay huge surcharges to American producers, Europe will look more or less like post-Soviet Latvia and Estonia. The population will emigrate. They’re going to shrink. You’re going to have a flowering of interactions throughout Eurasia and Africa.
And, in essence, the US can try to stop this development by sparking a new oil war in the Middle East. But it’s really the last breath. It is very unlikely that it leads Taiwan to say: Well, you know, we will follow Ukraine and Israel and you will be able to fight to the last Taiwanese, just as you are fighting against the last Ukrainian, the last Israeli. I believe that the United States is creating a turmoil that demonstrates to the rest of the world the need, essentially, I will not say an iron curtain, but to follow its own path and break economic systems.
And, as President Putin has repeatedly said, this is a war of civilization. It is a war to say in which direction civilization is going. Is it going to go to neo-feudalism, or to return to feudalism, which is the 1% neoliberal in search of rent? Or will it move toward the path to which industrial capitalism was originally moving toward socialism, and rising living standards instead of imposing the IMF’s financial austerity on the dollar bloc? So that is the choice that America is currently seeing in the Middle East and in other countries.
Will you have a future of austerity or essentially prosperity and economic growth?
HaïphongHaifog: I don’t think there is a better way to link all of these events, especially with regard to what is happening in the Middle East, or what some call the Middle East, or what others call Western Asia. I mean, the clashes are intensifying. There are even clashes between Egypt and Israel, which is almost unheard of.
With everything you have said, you say that it will not work at all, that the United States will not be able to fight as it seeks in the region. How do you see what happens next? Perhaps we can conclude on this point, as it will not work.
And if it doesn’t work, what other options does the US and perhaps the West as a whole have? Because you have described it perfectly, it is an economic war, it is a war for economic domination and control. So, will the American West collapse on its own, or is the US and all the US and all the ones they can train with them, you know, are they going to set the climb and maneuver in a way that we should all be aware?
Hudson: The US has a stronger dynamic than any other country in the world, and that is rage. That is the feeling you are currently feeling in Washington. Not only rabies, but as with most rages, it is combined with fear. Democrats fear losing the election, and Donald Trump will clean up the FBI police state and get rid of the CIA. This is essentially what he has pledged to do, with the deep state.
The deep state therefore fears that this may be the case, not that the US is stagnating, but that it, with its control over the US, will back down.
And the deep state is ready to destroy the US economy. The Democratic Party, since Clinton, aims to destroy the US economy to take advantage of the control of the 99% of the 1%. And he is willing to use military war to fight, to intensify his efforts in the Middle East, Ukraine and, presumably, in the China Sea, to provoke in one way or another and, in essence, say, “Well, we are going to wage war, because who, at home, wants to live in a world that we do not control? ”
Well, you know, that’s how Russia said when America threatened to bomb atomically by withdrawing from arms deals. Russia said, “Don’t think we’re going to retaliate. Who would want to live in a world without Russia? Well, the U.S. government is wondering, who wants to live in an America that we can’t control? That banks, the military-industrial complex, the pharmaceutical complex, and, fundamentally, the monopolistic financial sector cannot control. If we cannot control it, we are ready to see the whole country sink. That’s really what’s going on. And they use press control for all of that.
For example, on Saturday and Sunday in Washington, D.C., major protests took place against attacks on Palestinians. Not a word of that in The New York Times or on television. There is no word about what is happening in the Middle East or what Presidents Putin and Xi are saying in the media. It is as if the world were already divided into a visible world, the world according to the Deep State, and the invisible world, the reality, of the 95 or 85 percent.
The political struggle by November is whether people will really believe that the Biden administration is helping the economy instead of defending the CIA, the FBI, the state of national security, the military-industrial complex, the pharmaceutical complex, the real estate, and Wall Street against the population, by deindustrializing? Or has all this been just a detour that has impoverished us? That will be the question.
And the fact that you already have on social media the blocking of any criticism of Israel or the United States, you have here a kind of control that is very similar to the one you have in Ukraine.
HaïphongHaifog: It’s really mind-blowing to see how quickly all these processes are, in many ways, gone uncontrollable. Even though we can look at this in years, but even in the last few months alone, of course, on 7 October being another breaking point.
HudsonHudson: I think you should say on October 2. This was the attempt to destroy the Al Aqsa Mosque. It was on 2 October that triggered all this. The Israeli attack on the mosque was aimed at saying: We are going to destroy the Islamic presence in Palestine so that it is entirely non-Islamic. That was the declaration of war. So don’t get carried away by The New York Times by saying that everything happened on October 7.
It started a week earlier, as in Ukraine. The war in Ukraine did not begin when Russia took steps to protect its population, its Russian-speaking population of Donetsk and Lugansk.
This began not only with Maidan, but also with the bombing of the Ukrainian army, the bombing of residential buildings and civilians in the Russian-speaking territories, the refusal to pay for social security or health care in Russian-speaking territories and the ban on the Russian language. Russia was the country attacked, not the attacker.
Again, you have to be very careful when you’re dating this to begin. And Americans want to date all wars as responses to attacks and when other countries protect themselves. They call other countries protecting themselves as an attack on the US.
HaïphongHailog: 7 October, 22 February 2022. I mean, it’s a tactic. So that is an excellent point that you have raised.
And perhaps, Michael, we could close our conversation on China because China, you mentioned earlier in your analysis. And, you know, I believe that China is the end point. And there are some new events. You mentioned that China is outperforming Japan in terms of car exports and car manufacturing and is becoming the world leader.
There are also the boards of the major car manufacturers, the monopolies in a state of shock against BYD, the Chinese carmaker that has essentially conquered the global market for electric vehicles. And there are also reports that China will meet its 5 growth targets as a percentage. Despite the fact that I am sure you have seen this, Michael, there is a theory of cascading collapses that is being evoked in the mainstream media by the deep state. “China is about to collapse. China’s economy is in trouble. That is down. It’s crashing.”
So, Michael, I’m going to collect the pieces as I go along. But perhaps you can give your point of view, your reaction to this evolution, and the idea that China is the last shot for neoconservatives and the monopolistic system of post-industrial capitalism, the financial capitalism on which you write and analyse so much.
Hudson: Well, there are a number of reasons why China is becoming the main car producer. This is due to the transition to electric vehicles. And there’s a key dimension of electric vehicles.
First, they’re electric. You need electricity. How are you going to produce electricity: with US oil, with Russian oil? How are you going to achieve this with atomic energy? The other thing is that once you have the electricity in the car, how are you going to get a battery to run the car without having to stop at the gas station even more often than going to the toilet?
Well, the answer is that you need lithium for that. And China controls most lithium deposits. And we also need computerized vehicles. You need all kinds of materials that are cobalt, rare earths that are also controlled by China. And China has taken control of most of the metallurgy, the refining of the key metals needed for car production, and other industrial production.
China is therefore an integrated economy that produces all this. And the West is becoming dependent on obtaining these same metals. Now let’s see what could have happened in 1990. Suppose there was no cold war. Suppose that in 1990, when the Soviet Union dissolved, America dissolved NATO and actually experienced a kind of mutual growth with open and continuous international trade.
Well, without the division of the world into two parts, in one way or another, other countries would not have had enough motivation to explicitly effect a civilizational break between neoliberalism and socialism. There would have been a kind of social democracy in Asia, but it could have been an oligarchic social democracy, as is the case, for example, in Sweden, which was once known as a great social democracy. And it is now the most unequal country in Europe. This development could have happened slowly, but there would have been world trade and anyone could have bought the different metals, lithium, rare earths. There would have been oil. Trade could have continued, and the global economy as a whole could have grown.
All of this has been shattered by the American insistence that if we cannot control world trade, there will be no world trade. If we cannot control global international finance and force the entire world to use the American dollar that we can print on computers, print and issue to finance all military expenditures aimed at surrounding the rest of the world with military bases, if we can. If we do not do that, there will be no global financial system because the US thought that without the dollar there could be no de-dollarization because there was no alternative.
They are deceived by the slogan Margaret Thatcher: “There is no alternative.” And they sincerely believe that the rest of the world could not prosper without the dollar. They wouldn’t be able to thrive without selling and privatising their utilities and creating natural monopolies that would be bought back by American buyers by printing dollars to say, we’ll print dollars and we’ll buy your transportation system, your communication system, and your factories. They could not believe that there was an alternative to neoliberalism. And yet, you see that. They couldn’t believe that if they just bombed another country, the people of that country would say, “Oh, we don’t want to be bombed.”
We will overthrow our government and support a government that supports you so that you no longer bomb our country.
Instead, the effect of a country’s bombing when the US does is the same as a country’s bombing when any other country does. This brings people together to oppose the country that is bombing it and defend the attacked country. So the overall picture of the United States is that there is only one actor in the world, and that is us. And we can destroy other countries. And if that doesn’t work, we’ll flip the chess board and ruin the whole game.
The United States therefore acts as a destroyer and other countries as a manufacturer. And the entire global majority says: on which side do you want to be, the demolishers or the builders?
And you can view Ukraine as an example of how the United States would like Russia, China, and the Arab countries to exist. You would suspend the elections once you get your guys, your president there. You would become the most corrupt country in your region, as is Ukraine. You would ban local languages and religions that are not Judeo-Christian.
You would essentially prevent strikes.
And you know the joke about aristocrats. A group of actors on stage talks about a family that is coming and committing all sorts of horribly deneaky sexual acts and incest, and it continues over and over again. The producer to whom this act was proposed is asking: what do you call this act? And the answer is: aristocrats.
Well, what do you call the Ukrainian act of suspending elections, banning foreign languages, and murdering criticism? We call this democracy. Well, it’s hilarious. That is indeed what America calls it. America has two models of democracy: Ukraine and Israel. The press repeatedly claims that Ukraine is the model of democracy that we want for what was once the entire Soviet Union. And you have Latvia, Estonia and Lithuania applauding, and we want democracy in Israel: “Israel is the only democratic country in the Middle East.” We want Israel to be a model for the Middle East.
Well, what do they say? That there will be no Arabs in the Middle East? That they will all be Americans with dual nationality? That is what everything ends in. We live in an Orwellian world that tries to deter people’s awareness of the reality of work and the dynamics at work. And how long can you convince people that they really don’t go well just because the 1% are all right? How can you convince people that America is really a model leader when it is trying to destroy the rest of the world instead of helping it, as it could at least pretend to do in 1945, at the end of World War II?
You are witnessing a real upheaval in the entire global system of the World Bank, the IMF, the United Nations, and the entire global diplomatic system that was established in 1945, which is now outdated. And we can see the failure of the United Nations to deal with the war in the Middle East, to face the war in Ukraine. It is the death knell of the old world. And you see a new world being created spontaneously, not ideologically, but essentially spontaneously and ad hoc with China, Russia and the 99%.
HaïphongHaifog: Last thing, you went to China and you studied the Chinese economy very thoroughly. To conclude, help our audience understand why China’s economy is capable of industrializing as it is now.
Europe is about to endure this situation. I do not know whether you have heard of this investigation into Chinese car manufacturing, especially on electric vehicles, because of these harmful subsidies from the state. Can you tell us about this, about the Chinese economy, how it works, and why Europe and the US, of course, are also waging an economic war, why do they resort to what seem to be counterproductive measures?
Hudson: Well, the key to understanding the West is that neoliberalism is the privatization of basic public needs and services. Throughout history, the most important public utility has always been the ability to create money and credit.
And what China has that no other country has is that its central bank has created its own currency.
And when the government creates money through the Treasury, investing money in the economy, it spends money really building things, mostly to build real estate, to house the Chinese, but also to build high-speed railways, to provide an education system, universities all over China, to build communications.
Other countries, such as the United States, do not have this system. Money is created, especially in the US, by commercial banks, and they don’t create money to finance new factory constructions or new investments of any kind. Banks lend money in the West for guarantees that are already in place. You can turn to a bank for money to buy a building that exists, an office building, even if the prices of these office buildings are currently collapsing. You can borrow money to buy an entire business. This is what private capital does. We buy money to buy Sears. This leads him to bankruptcy, collapse and layoff workers.
You can buy Toys R Us, drive it into bankruptcy, you can get it down, you can’t do it, and you’re going to go. You can buy and plunder companies, and then close them and turn the factories into gentreified buildings for the 1% of financial agents who are looted.
But Western banks don’t fund public services, and once you’ve cut taxes and forced a government to deficit, you finance the deficit by privatizing your roads, turning them into toll roads. You privatise your postal system. You privatise your health system so that there is no longer much health care, as is the case in England, for example, with the crisis of English medicine and hospitals and privatisation. You make the whole of Western economics look like England, according to Margaret Thatcher, where people who are actually employees can no longer afford to live in London. This is aimed at foreign investors or people working in the financial sector. Employees must live in suburbs in order to be able to use privatised rail transport.
In the United States, for example, Greyhound, the bus system, has just been bought by private funds. They did exactly what Stagecoach, England’s largest bus company, did in England. They sold the bus terminal that was in the center of the city where people were going to take the buses, and they sold it for a gentrified real estate. Then they told people that there was now a parking lot outside the city. You’re going to wait in the parking lot.
We hope that it will not rain, that it will not be too cold or that it will not snow, but we no longer have a terminal. Well, you can imagine this way of doing things. This turns into a race down.
But China, while maintaining control over finance, really controls who will get credit, and credit is actually the economic planner. Western neoliberalism says that the government should not plan. Wall Street should do the planning because it is Wall Street that provides the credit that determines who will get the resources and what they will do with them.
Well, Wall Street gives credit to financial engineers who are trying to make money by increasing stock prices, increasing capital gains, and earning money.
It is true that China has made many billionaires. This was part of the Let 100 Flowers grow program, but now that there has been this spontaneous growth, we now see which shapes work and which shapes do not work. The aim now is to consolidate the economy essentially to create credit to finance tangible industrial growth, tangible infrastructure growth, tangible agricultural modernisation and a general improvement in living standards.
The sole objective of the Chinese economy is growth, not looting, downsizing, and the destruction of corporate raids. There are no corporate raids in China. There will be no financial interest in buying Huawei or other Chinese developers. There is no parasitic financial class that has become the centrality of America’s economic planners.
Because that’s libertarianism. Libertarians want a centralized economy, not government-led but led by Wall Street and the financial sector. Libertarians are essentially the proponents of what was usually called fascism, central planning of the rich financial sector, and monopolies against the population as a whole.
You have the Republican Party and the Democratic Party, both supporting the dismantling of the government with a different kind of rhetoric, but the same policies, the same military policies and the same anti-industrial policies. China, Russia, and now more and more BRICS countries are rejecting this entire path of neo-feudal, self-destructive growth.
HudsonHudson: Thank you for inviting me. We were politically lucky, but the whole world was at a turning point this week, it seems.