Geopolitical Strategy in an Era of Uncertainty featuring Hal Brands

Join the conversation with the acclaimed Hal Brands, historian and strategist, as we navigate through the labyrinth of geopolitical shifts that are forging new narratives in world affairs. Our engaging dialogue traverses the precipice of global economic uncertainty, sparked by events such as the COVID-19 pandemic, the conflict in Ukraine, and the simmering tensions across the Middle East. Brands' expertise shines as he dissects the concept of mutually assured economic destruction, particularly spotlighting the precarious US-China relationship. By extrapolating insights from his book "Danger Zone," we also scrutinize the shadow of conflict that looms over these superpowers.

Strap in as we dissect the emerging alliances that are redrawing the geopolitical map in Eurasia, where powers like Russia, China, Iran, and North Korea are crafting a new world order through strategic partnerships. The intricate web of military and economic exchanges is laid bare, revealing a burgeoning alliance system that stands to challenge the existing US-centric global structure. We pay close attention to the pivotal role of Western military assistance in Ukraine, weighing the global support against internal American sentiment and the surprising outcomes that have arisen since the conflict's inception.

Finally, we cast an analytical eye on the American political landscape and the hurdles that face US aid to Ukraine. The intricacies of Capitol Hill politics are dissected, revealing the complexities behind aid allocations and the unexpected beneficiaries within the US military-industrial complex. The delicate dance of global oil prices and their influence on domestic politics, coupled with the cautious stance of the US and EU on Russian energy sanctions, are examined through a geopolitical lens. Brands and I conclude by envisaging the potential foreign policy pivots in a future US administration, pondering the strategic moves that could reshape US-China relations and the broader global economic fabric.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

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Transcript

Speaker 1: 0:08

my name is michael guyad, publisher of the lead lag report. Join me for the rough hour is hal brands. Hal, appreciate your time here. Introduce yourself to the audience and to me a bit more formally. Who are you, what's your background, what have you done throughout your career and what are you doing currently?

Speaker 2: 0:22

sure, and thanks for having me first. First off, it's a pleasure to get to spend some time with you and your audience. So my job is I'm a professor at Johns Hopkins University, where I teach at the School of Advanced International Studies here in Washington DC. I'm also a senior fellow at the American Enterprise Institute and I write a weekly column on foreign affairs for Bloomberg Opinion, in addition to writing for a bunch of other outlets.

Speaker 2: 0:45

More episodically, I'm a historian by trade. I came up studying the history of the Cold War and I got my PhD in that about 15 years ago, and since then I've kind of kicked around the academy, while also spending a little bit of time in government at the Department of Defense, working on strategic planning issues and otherwise kind of immersing myself in the policy world from time to time. So these days I spend most of my time either chasing kind of the big three so Russia's war in Ukraine, us-china tensions or the crisis in the Middle East while also doing a variety of more historical work that tries to put today's conflicts and competitions in deeper context.

Speaker 1: 1:29

Maybe a weird way for me to frame the question, but do you sense that history is moving faster when it comes to foreign affairs, that things are taking place over shorter time periods compared to history?

Speaker 2: 1:35

It certainly seems like the speed of events has accelerated, you know, really over the past four plus years.

Speaker 2: 1:42

And so if you think about the way that COVID really turbocharged the US-China rivalry and contributed to a really dramatic falling off of support for China in not just the United States but in advanced democracies around the world, or if you think about the way that the war in Ukraine has really accelerated the formation of what I've sometimes called the autocratic entente, so the set of relationships between Russia and Iran, Russia and China, Russia and North Korea and so on and so forth, that the countries that are increasingly supporting Russia as it comes under pressure in Ukraine and are getting some pretty significant benefits in return, while the war has also had the effect of tightening the ties between the US and its alliance partners in Europe and in the Asia Pacific, certainly we're seeing sort of a deepening of the global cleavages that had already started to emerge before that.

Speaker 2: 2:37

And then, of course, we're seeing the same phenomenon with the crisis in the Middle East. And so the crisis in the Middle East is having a variety of effects. It's demonstrating how geopolitical disruption can cause geoeconomic disruption, in the way that the war is spilling over into the Red Sea and the Gulf of Aden and really playing havoc with shipping through those regions. We're also seeing how it can provide a cover for some of the actors that just talked about to accelerate their activities, and so Iran, even though it has mostly stayed out of the actors that just talked about to accelerate their activities. And so Iran, even though it has mostly stayed out of the fighting directly, appears to be using the climate of regional confusion and US and Israeli distraction that the war is creating to advance its nuclear program in some troubling ways. And so yeah, in all three of those cases, we see that crises have the effect of speeding up history and exacerbating trends that are already underway in the international system.

Speaker 1: 3:29

That term crisis and tension. Those two terms get thrown around a lot. I think most people tend to think of the extreme in terms of that inevitably leads to war, and China is obviously a big part of those concerns. But arguably there's a lot of ways that you can. You can have a war without bloodshed. I mean you can have cybersecurity war or you can have a currency war, which may be potentially at our doorstep. I'm curious here thoughts on how geopolitical tensions have have increased fragility when it comes to international trade and currency value, because it seems to me that that's where it actually impacts us here in the US as citizens.

Speaker 2: 4:10

Well, there are a handful of ways in which geopolitical tensions can really ripple through into the global economy, and so we've seen a few examples of that over the past few years, and so we saw, obviously, the supply chain disruptions that were created by COVID and its aftermath.

Speaker 2: 4:29

We have seen the ways in which international shipping, which is really at the heart of the global economy and has impacts on the way that Americans live on things as mundane as how long does it take you to get the thing that you ordered from Amazon.

Speaker 2: 4:43

We've seen how shipping timelines have been extended and costs have been increased by the conflict in the Middle East. We saw back in early 2023, how the war in Ukraine had an impact on global food markets and that was not an issue that I think was felt so much directly in the United States, even though it certainly had an impact on a number of more food insecure countries and populations around the world but then also the way that the war and some of the dynamics associated with it roiled the energy markets in ways that were economically and perhaps politically disruptive in the United States. And so what you have right now, just to kind of simplify things, is you have an international economy that is still very closely and tightly integrated, even though that has gone in reverse a little bit in recent years, upset by geopolitical tensions, and so that combination is likely to produce geoeconomic shocks, geoeconomic implications that will be felt even by people in the United States.

Speaker 1: 5:54

Integration with tension is probably standard right in a globalized economy. When I think about China, I always am skeptical of the real doomsday scenarios, because the reality is there's a degree of mutually assured economic destruction in terms of any kind of real severe conflict between China and the US. What are some of the things that you focus on that you think people get wrong? I know you have a book that you put out, danger Zone. That's why I renamed the space. You know the coming conflict with China. Maybe lay out some of the thoughts in that and where we are currently.

Speaker 2: 6:30

Sure. So Danger Zone, which was a book that I co-authored with a guy named Mike Beckley at Tufts University, who's a friend and a colleague and a really incredibly brilliant geopolitical thinker. That book advanced two main arguments. The first argument was that China is not doing nearly as well as you think, particularly economically. And so you know, we conceived this book back in 20, which was still where you were seeing the tail end of kind of the Thucydides trap superpower marathon, china overtaking the United States, type themes in a lot of public and academic discourse, and our argument there was that that that wasn't going to happen.

Speaker 2: 7:12

Now that wasn't the problem that the China's economy was already suffering from a handful of very deeply rooted structural problems that were going to be extremely difficult for China to escape, and those structural problems are everything from the demographic crunch that is coming and is in some ways already here with respect to China, sort of the reversal of the reform and opening process that had begun in the 1970s and really climaxed during the 2000s, the increasingly neo-totalitarian turn of the political system, the increasing scarcity of key resources in China, and so on and so forth, and so, when you put all of that together, china was going to be looking at a future, most likely of economic stagnation, where even the official growth numbers which you really can't rely on would be dramatically lower than they had been during the 2000s and the 2010s, when we were used to double digit or at least 8% Chinese growth. Now we're really looking at 5% growth according to the official statistics, with a lot of people suspecting that the real number is much, much lower, and so that was argument one. So you got to remember, this book came out about 18 months ago, and so that argument seemed a lot more controversial at the time than it does now, because what everybody has observed over the past year plus is that China finally came out of zero COVID and did not get the big rebound that everyone was expecting, in part because of a lot of these deeper structural problems that are now coming into sharper relief. So that was argument one. Argument two was that a stagnant China, a China that was facing growing international resistance to its ambitions from the US and a variety of US allies and partners, not just in the Asia Pacific but in Europe as well, that could actually be a more dangerous China, because, when you think historically about revisionist powers, so powers that just wish that the system worked differently than it does.

Speaker 2: 9:15

Those countries tend to become most dangerous not when they are extremely confident about their future trajectory, but when they worry that their power is peaking relative to their rivals and perhaps even starting to decline.

Speaker 2: 9:29

That was the position that Germany found itself in just prior to World War I, which is one reason why the German leadership took such extreme risks in the July crisis of 1914. That was, in some ways, the position that Japan found itself in in the run up to World War II. And so when you get countries that want to change the way the world works but worry that they are running out of time in which to do so, those countries are more likely to take big risks to lock in gains while they still can. And I'm happy to talk in more detail about sort of the notion of a peaking China economically and militarily and so on and so forth, about sort of the notion of a peaking China economically and militarily, and so on and so forth. But the basic concern we had was that you get a China that would be increasingly aggressive in the latter part of the 2020s because it would worry that the future was no longer on its side as you get into the 2030s and beyond.

Speaker 1: 10:18

That, of course, immediately makes me think of that means they're going into Taiwan too.

Speaker 2: 10:23

That is one of the concerns, and so, you know, we sketched out a handful of scenarios in which China could become more assertive.

Speaker 2: 10:29

I mean, it's everything from really getting tough with India on the shared border and the Himalayas, to picking a fight with the Philippines over one of these disputed features in the South China Sea.

Speaker 2: 10:42

Maybe, second Thomas Scholl, where tensions are ticking up right now, maybe taking a swing at Japan and the East China Sea, but the one that I think is most worrying, because the effects would be most catastrophic, would indeed be a Chinese move on Taiwan, and I think you've got a really dangerous combination of influences that are brewing in Beijing right now, and so, on the one hand, china's military position vis-a-vis Taiwan and the United States is getting better as we get into the latter part of this decade, because China's military reforms are proceeding.

Speaker 2: 11:19

The US is having trouble generating military power on short timelines because of the challenges of defense industrial base, and so the military picture looks better and better from Xi's perspective. The challenge, though, is that the political picture looks worse and worse, because Taiwan has now handed victory three times in a row to the political party, the DPP, that Beijing really doesn't like because it believes that it is dangerously pro-independence. And so you have a scenario where Xi's military options are getting better vis-a-vis Taiwan, while his confidence and China's ability to manipulate the political trajectory of Taiwan is probably decreasing. Whether or not that leads to a big invasion is anybody's guess and it's a bit of an open question, but certainly I think it puts us in a position where we're likely to see greater Chinese coercion of Taiwan as the decade goes on.

Speaker 1: 12:10

What about on the currency side? I would think that if you're a major superpower and you're worried about peaking, you're going to most want to protect your currency and try to get more adoption right Not quite get to the reserve currency status of the US, but try to at least do everything you can to defend it. Yuan has been getting some headlines recently. It looks like China is ordering some of these state-owned banks to come in and support the Yuan. How does the currency side impact policy decisions with China?

Speaker 2: 12:41

I think there's a pretty low chance of the yuan ever well, ever is a long time, but anytime soon rivaling the dollar as an international reserve currency.

Speaker 2: 12:51

And I know that's not what you're saying, but you sometimes hear that, and so it's worth taking a minute just to kind of explain why.

Speaker 2: 12:57

And the major reason for that is that the currency just isn't sort of freely convertible in the way that the dollar is, and it's very hard to create a system in which your currency becomes a pillar of the international exchange system if that's not the case.

Speaker 2: 13:11

But I actually don't think that that's what China is going for.

Speaker 2: 13:14

I think the Chinese government sort of understands the way in which their economic model inhibits the currency from rising to global reserve status, but that's not really what China needs. What China needs is an international financial and economic set of arrangements that insulates the Chinese economy to a degree from the threat of the sanction, of sanctions of the sort that the West has applied to Russia in the context of the Ukraine war, has applied to Russia in the context of the Ukraine war, and we are seeing some progress along those lines If you look at sort of the deepening of economic and financial ties between Russia and China, between China and a number of other countries in the global south, particularly some of the Eurasian autocracies, you can see sort of the beginnings of a Eurasian economic and financial bloc that is going to be oriented toward China, that is probably going to feature payment systems that are less susceptible to US and Western sanctions and that's a strategic good from China's perspective because it provides some insulation in case of a crisis between Beijing and Washington.

Speaker 1: 14:22

I know you've put out quite a few pieces on sort of these new alliances that have been forming, new political spheres of influence, or blocks, for a better way of saying it. Let's talk about some of these newer, stronger alliances that have been forming. I think a lot of people focus on Russia and China, but it's more than just Russia and China.

Speaker 2: 14:40

Yeah, it is, and so you can think of, you know, russia. China is at the heart of it, because those are the two strongest revisionist, autocratic great powers, and so their relationship matters to be a relationship where, you know, russia kind of sold Iran some military goods, but not really the state-of-the-art stuff. That's changing in two respects. So now Iran is providing Russia with drones, with the ability to make Iranian drones, with ballistic missiles and other things that are useful in the battlefield in Ukraine, and they're thereby increasing Russia's stamina in that war, and in exchange it looks like they're going to get more advanced air defenses, more advanced fighter jets and potentially other defense technology as well. You're seeing the same thing in the Russia-North Korea relationship, and so we don't think of North Korea as being sort of the provider of anything except chaos, but it's provided Russia with, by some estimates, upwards of 3 million artillery shells in the context of the Ukraine war. Even if half of those are duds, that's still 1.5 million plus artillery shells, which is really gold in an artillery-centric war like the one that Russia is fighting with Ukraine. So what does North Korea get in exchange for that? It's hard to say, and that's kind of the worrying thing. And so because the Russians haven't been entirely clear about what the quo is for the North Korean quid.

Speaker 2: 16:18

We and I think the South Koreans suspect that it's happening in areas that are very sensitive, that perhaps the Russians are helping North Korea with their missile programs or with their WMD programs or otherwise helping them in ways that would help North Korea get to certain military milestones quicker than Western intelligence agencies might suspect.

Speaker 2: 16:39

And so if you add in then the Russia-China relationship, and so if you add in then the Russia-China relationship, what's happened there is that China hasn't provided Russia with arms for use in Ukraine, as far as we know, in large part because the US and Europe threatened China with pretty significant sanctions if that happened.

Speaker 2: 16:57

But they've basically given Russia a lot of dual-use goods, so microchips, navigational equipment, things that are technically civilian goods but have lots of military application, and then just to help give Putin the economic wherewithal to continue the war, because Russian trade has increasingly been reoriented toward China and toward Asia more broadly. And so if you look sort of across Eurasia, you have this crisscrossing network of strategic relationships taking shape between and among US adversaries and those relationships, even though they don't look exactly like the alliances that the United States has with its European allies or with its Asia Pacific allies, they still create very specific geopolitical effects and they still worsen the challenges that US adversaries pose, both by themselves and collectively to the US-led international, create very specific geopolitical effects and they still worsen the challenges that US adversaries pose, both by themselves and collectively to the US-led international order.

Speaker 1: 17:51

Do you get a sense that those relationships are strengthening or maybe being emboldened by what seemingly is not really helping Ukraine all that much anymore, which is all this, you know, constant funding by the US government, right, kind of sending, you know, the proxy war idea, right, sending capital to Ukraine to fight Russia? It doesn't seem like it. First of all, it seems like, in the US at least, the public sentiment around that is waning in terms of continuing it. But because it hasn't been, I think maybe as successful in combating and pushing back Russia, is that emboldening some of these other relationships?

Speaker 2: 19:02

Well, I think, in general, the Ukraine war has created sort of a geopolitical hothouse environment in which tensions rise and countries on both sides of the international dividing NATO, the revival of NATO, the way that you know, european countries are investing more in their defense industrial bases and so on and so forth. We're seeing it on the other side of the international dividing line as well, so there's definitely something there. I would just make a couple of points about the Ukraine war, and so one is I think it is fair to say that the 2023 Ukrainian offensive did not accomplish much of what Ukraine or the United States hoped. It really didn't budge the front lines in any meaningful way, and now, of course, ukraine is on its back foot a little bit, and so that is a fair critique. But let me make two additional points. The first is that if you think about what expectations for Ukraine were, not in June 2023, but in February 2022, when the war started well, if that's your starting point, then the war has actually gone remarkably well from Ukraine's perspective, because very few people thought that Ukraine was going to be able to survive as an independent entity after the Russian invasion. Certainly, they thought that Russia would capture much more territory than it's captured to date, and one of the reasons that has not happened is because of all the foreign support that Ukraine has had, whether it was the US intelligence support or the arms and ammunition that the US and European and a few Asian countries were providing, or the defense planning support. It was really crucial in everything from the defense of the capital back in February and March 2022, to holding the line in the east during the summer of 2022, to retaking the offensive around Kherson and Kharkiv in sort of the late summer and fall of 2022. And so it's worth just taking a moment to know how much Ukraine and its Western partners have achieved over the past two years.

Speaker 2: 21:15

The final point I would offer about this is that you know right now, the problem is not that Ukraine is using American aid ineffectively. The problem is that Ukraine hasn't had any meaningful American aid in several months at this point, because funding for Ukraine aid has been stuck on Capitol Hill, even though it still has majority support among the US public, even though it still has majority support among senators and representatives. It's sort of a weird thing having to do with the narrowness of the Republican majority in the House and then sort of the Trump critique of US aid to Ukraine. If Ukraine doesn't get US aid, I think there is a very significant chance that Ukraine will lose the war in some significant sense Not that Russia is going to capture the entire country, but that Ukraine will lose additional territory and they will have to make peace on unfavorable terms. If they get more American aid, I think there's every prospect that they can defend effectively over the course of this year and maybe build forces for another offensive or at least a stronger negotiating position in 2025. Finally and I know I said this is already the last point, but let me add one more One common misconception about Ukraine aid that is worth addressing has to do with where the money goes.

Speaker 2: 22:42

When we talk about Ukraine aid, it sometimes creates the impression that the US is sending a ton of money to Ukraine. What's actually happening is the US is and then uses the money that Congress appropriates to replenish those stockpiles, and so the way this works is we give Ukraine older stuff, we appropriate money and we buy newer stuff to replace it with, and so this is actually not a bad deal for the US military, which comes out of it with better kit. It's actually a very good deal in terms of the US defense industrial base, because this money is helping to expand production of artillery shells and other important goods that would be useful in a variety of different geopolitical contexts, and so I think that the aid issue, despite how it's sometimes framed, is much more of a positive sum game for the United States than a zero sum game.

Speaker 1: 23:48

One of the headlines that's been making the rounds comes from JP Morgan, which is arguing that Putin can push oil to $100 in advance of the election. You constantly hear these arguments being made about Putin impacting the US through the mechanism of oil. I'm a little bit skeptical, but I am curious to hear your thoughts on just how much sway Putin has through oil as an influencing factor happens to domestic politics.

Speaker 2: 24:18

Well, one way of thinking about this is to recognize that the US has been deliberately pulling its punches on the Russia sanctions, precisely because of the dynamics that you talk about, and so the sanctions that the US and Europe have imposed on Russia have not been meant to take Russian oil and gas off of the market altogether in the way that the United States tried to do with Iran during the Trump years, where the idea was simply to drive Iranian oil sales down as close to zero as possible.

Speaker 2: 24:55

The US and Europe have not done that in the Russia context because they are fearful that that would be profoundly disruptive to the global economy, including the economies of several Western democracies that are coming into elections in the coming months, britain and the United States being the most important of those, but also because it would dramatically increase the global economic pain that the war causes, including for some of the more ambivalent countries, many of them in the global South. And so you know, if you were to really take Russian oil off the market, that would have a pretty significantly negative effect on India, for instance, which is a country that the United States is trying to cultivate geopolitically in the US-China context right now, and so certainly fear of economic disruption has been one of the reasons why the US and EU have pursued this approach of trying to reduce the price that is paid for Russian energy resources and redirect those energy resources away from Europe to decrease the strategic dependency that Europe had on Russia, but not to take those things off the global market altogether.

Speaker 1: 26:08

Speaking about oil, I had a person on a space I'm in a bucker talking about OPEC and oil and you know we talked a little bit about this idea of geopolitical tensions impacting, you know, opec member decisions and she seemed to be skeptical that that really does have any kind of major impact. It's just something that's often said in the headlines, doesn't actually make too much of a difference in practice. Let's talk about the evolution of OPEC on the geopolitical stage, in terms of their influence on global oil, in terms of their political ambitions anything there that you can add to some color to.

Speaker 2: 26:41

Yeah, I mean I won't pretend to be sort of an energy markets expert, no-transcript were worried about, but nonetheless, this was really seen as a pretty strong arm move from MBS and dealing with a President, joe Biden, that he simply had not gotten along with. It was also part of a broader Saudi repositioning geopolitically, or at least the threat of such a repositioning and that was followed up in early 2023 by the announcement that China had brokered a diplomatic normalization agreement, basically a resumption of normal diplomatic ties between Saudi Arabia and Iran, and this too, I think, sent a certain number of shockwaves through Washington, because it raised the specter that Saudi Arabia, which had really been at the heart of the US strategic position in the Persian Gulf for decades, was now realigning itself in this contest between the United States and China and Russia. And so since then, I think what's become clear is that MBS's preferred posture is still to have the US as his primary partner, particularly in security and intelligence terms, where the US can just provide benefits and assistance of a sort that neither the Russians nor the Chinese can. But what he was doing was basically showing how much trouble he could make for the United States as a way of driving up the price of his alignment with the United States, and so what's happened over the past year is that MBS has made clear that he actually wants a deeper security relationship with the US, and he wants something that the United States has never given Saudi Arabia in the past, which is a more formal defense guarantee, somewhat akin to the North Atlantic Treaty, or US alliances with countries in the Asia Pacific, in addition to a civil nuclear program, in addition to more sophisticated weapons and a variety of other things, and he's going to get it most likely, and so the way this is supposed to play out, is that Saudi Arabia and Israel will normalize relations at some point, presumably after the war in Gaza is over, and the US will basically provide side payments to the two parties to get them to make this deal, which will help create a stronger anti-Iran axis in the Middle East.

Speaker 2: 29:54

And what the US will get out of this as well is a certain limitation of China's relationship with Saudi Arabia, and so presumably you'll get some restrictions on the degree of technological interdependence that Saudi will pursue with China. They're going to deal with Saudi Arabia, and so presumably you'll get some restrictions on the degree of technological interdependence that Saudi will pursue with China. They're going to deal where the Saudis won't allow Chinese military bases in their country, and so on and so forth, and you'll also presumably get a Saudi commitment to providing some stability in the global oil market. And indeed, if you look at Saudi moves over the past year or so, they have not been disruptive from a US perspective in the way that they were in late 2022. They really have emphasized a greater degree of stability in the markets, and so that's an important evolution to track and it has a lot to do with the larger geopolitical panorama, the Gulf and globally.

Speaker 1: 30:43

And it does seem like Saudi Arabia in general is going through a bit of a the Gulf and globally and it doesn't seem like Saudi Arabia in general is going through a bit of a. Maybe renaissance is too strong of a word, but you know their economy is thriving and it seems like there's just, in general, better, better progress politically going on.

Speaker 2: 30:57

Yeah, I mean certainly there's been a huge amount of domestic change since MBS emerged as the de facto leader of that country several years ago.

Speaker 2: 31:06

And, just to be clear, it's still a thoroughly autocratic system, still deeply repressive in many respects, and yet there has been significant progress in terms of allowing greater participation by women in aspects of society, whether that's driving or going on dates without male chaperones, or whatever the case may be.

Speaker 2: 31:30

Mbs has also really limited the power of the conservative religious establishment in Saudi Arabia, which had stood in the way of a lot of these more progressive domestic changes, but had also been at the heart of sort of spreading Wahhabism internationally in ways that sometimes fueled jihadist activities. And so you know, the irony is that you've had tensions foregrounded in the US-Saudi relationship over things like the killing of Jamal Khashoggi, who was the Saudi journalist, a US permanent resident, who was murdered by agents of MBS back in 2018. And you certainly don't want to downplay those issues, but in some ways, the broader evolution of Saudi politics over the past five years has been relatively positive from the US perspective in terms of making a society that's still deeply authoritarian somewhat more open and tolerant really, than it has been at any time in the modern era. How do you?

Speaker 1: 32:59

suspect this election to play out in terms of the next four years of geopolitical dynamics, meaning, you know, if Trump were to get reelected, what changes when it comes to our relationship with China versus what's going on now? I mean, the reality is, tariffs never really went away with Biden right Just from an economic perspective. Obviously there's other dynamics there too Russia, ukraine clearly another wild card. But talk through some scenario analysis on Trump getting reelected, what changes?

Speaker 2: 33:31

Yeah. So it's a little bit hard to say at this point because we don't know quite who would be around Trump in the second term, but my assumption is that the folks around Trump would be Trumpier in the second term than they were in the first term. Types mainly because there just weren't a lot of MAGA foreign policy advisors and intellectuals in the system at that point, and so those advisors whether it was Jim Mattis as the Secretary of Defense or Rex Tillerson as the Secretary of State tended to have a somewhat constraining effect on Trump's ability to put his own preferences into action. My expectation is that will be different the second time around, because Trump has learned the lesson of the first term, and you know the lesson is don't appoint people who fundamentally disagree with you on policy issues and, in many cases, don't appear to like you very much personally, to key positions within your administration. So I would expect we will get a somewhat purer version of MAGA slash America first in the second term than we did in the first term. Now, in terms of what that means on, say, us-china relations, the reality, as you pointed out, is that there will be a fair degree of continuity, just in the same way that Biden really maintained and in some ways expanded upon a number of Trump-era initiatives in his own presidency, whether that was the tariffs or the tech controls. You know, under Trump the US went after Huawei. Under Biden it went after the Chinese chip industry more broadly, and so there will still be a significant amount of competition in the relationship. The US and China will still define each other as geopolitical enemy number one.

Speaker 2: 35:18

I think there are maybe two areas where you could see, or at least two examples of areas where you could see, a meaningful difference between Biden and Trump, even if it's a subtle difference. So one is that you know the Biden administration has said that it prefers sort of a narrow, selective decoupling with China, not a broad based decoupling, but one that's really focused on areas where there's a real national security implication. That's broadened out a fair amount over time, but still that's Biden's preference. I think there are people around Trump who would like to see a more broad-based economic decoupling between the United States and China people like Robert Lighthizer, for instance and so you could see an increase in economic frictions as a result of pursuit of that decoupling or simply because Trump is going to layer additional tariffs on Beijing as a way of pursuing whatever trade agreement he hopes to achieve with China. That's one difference.

Speaker 2: 36:19

The second one might involve Taiwan. I think Trump is far less persuaded of Taiwan's strategic importance to the United States than Biden is, and he said a number of times in the past that if China were to attack Taiwan, there's just nothing the US can do about it. I don't think that's true, but nonetheless that's the way he feels about it, and so you'd get a US president who was somewhat less committed to the security of Taiwan than Biden has been, but one who's also willing to sort of weaponize the Taiwan issue for leverage in the broader US-China relationship. And so back in December 2016, after he was elected the first time, trump took a congratulatory call from Tsai Ing-wen, the president of Taiwan, which was the first time, you know, a Taiwanese leader and an American leader had interacted at that level in decades. It really annoyed Beijing, and so you could see Trump do that sort of thing because he thinks it gives him leverage in the broader relationship. And so that's potentially kind of a fraught combination If you have a US president who's less committed to Taiwan but more willing to weaponize it.

Speaker 2: 37:25

On the Russia issue, just briefly, trump has given every indication that he doesn't think the war in Ukraine is going particularly well. He would like to bring it to an end. That he doesn't think the war in Ukraine is going particularly well, he would like to bring it to an end, presumably through some sort of negotiation. You know, look, trump tried to bring off a bunch of big deals during his first term and he succeeded on relatively few of them because they often demanded a degree of discipline and preparation that a Trump administration found it hard to summon.

Speaker 2: 37:53

I think that that could indeed happen again here, and so if Trump just sort of goes to the Ukrainians and Russians and says, hey, it's time to end the war now, in February 2025, one or both parties might simply say no. They might say, look, we're not done fighting yet, right? The Ukrainians aren't done liberating their territory, the Russians aren't done trying to gain more of that territory. And so if that negotiation falls apart, then the question of what Trump does next, I think, is anybody's guess, and because he personalizes policy so much, it might depend on who he blamed for the failure of the first initiative, right? And so if the Russians go along with it but the Ukrainians buck, then he might, you know, blame the Ukrainians and cut off aid. If you know it looks like Putin who has done him wrong. You know, maybe he increases aid and so after that sort of first move it becomes a lot harder to predict what might happen.

Speaker 1: 38:45

I got to say I think it's hard to envision, since you use that term, economic decoupling. I find it hard to imagine that you can do that at this point in the cycle with any degree of efficacy, because economic decoupling implies more inflation, because you're getting rid of the labor arbitrage right from globalization and that becomes challenging because part of the geopolitical dynamic is just, you know, debt and who owns it.

Speaker 2: 39:08

Yeah, that's true, and I think that is one of the reasons why the Biden administration has been disinclined to pursue a broader based economic decoupling. But, you know, there's maybe two or three things to keep in mind. One is that, even though you know, nobody's talking about a total decoupling, but the areas of the US-China economic relationship that are going to be controlled in some way or another, those areas have broadened just over the course of the Biden administration, and so, you know, you had the semiconductor controls back in October 2022. You've had outbound investment regulation, which is now subject to the rulemaking process, and, you know, most recently you've had sort of the first shot fired and what I anticipate will ultimately be, you know, significant US and allied restrictions on access of Chinese made EVs to their domestic markets. Biden administration has said where it thinks the US needs to fairly aggressively use controls in order to protect competitiveness and advantages. Well, those three areas are advanced computing, slash AI, biotech and biomed, and clean slash green energy. Those are three pretty expansive pieces of the modern economy. And then, if you throw in the new concerns about data security, well, that's potentially broadening the area that could be controlled to encompass the Internet of Things, which, as you know, is enormous, right, and so the Biden administration has talked about this small yard high fence approach, but the reality is that the yard is getting steadily larger with time. So that'd be point one. Point two is that this is being driven from the Chinese side as well, and so, as the Ministry of State Security increasingly dominates policymaking within China, we are seeing the foregrounding of national security concerns and ways that are going to drive a degree of decoupling from the Chinese side. And so when you have, you know, MSS or the police raiding the accounting firms or the consulting firms that are doing due diligence or helping out with mergers or acquisitions involving foreign companies and Chinese companies, that obviously sends a signal right. When you see that China is trying to indigenize production of as much critical technology as possible, right, that's going to drive decoupling as well. And so this process is going to play out slowly and it's never going to be a complete decoupling, but I would expect that it will have expanded significantly from where it is today five to seven years from now, even if current trends continue.

Speaker 2: 41:52

The third point and the last point I'll offer here is that I don't and I didn't really get into this before I don't think Trump is actually a decoupling hawk. I think there are people in a Trump administration who would genuinely like to see a much deeper and broader decoupling between the US and China. I'm not sure that Trump is one of them. During his first term, he applied a lot of tariffs, but the tariffs were meant to generate leverage to produce this big, beautiful trade deal, which he thought was going to materialize in 2020. We all remember some of the phase one trade deal announcement.

Speaker 2: 42:23

I believe it was in January 2020. So about six weeks before COVID really upended the world and the United States, there's a non-trivial chance that Trump would try to run the same playbook in his second term right to show that he is uniquely capable of delivering this deal. That will resolve the economic frictions between tariffs broader tariffs and they will create bureaucratic running room for people who do actually want a sharper decoupling between the US and China. And so I agree with you that I don't think we're ever going to get to a full-on US-China economic decoupling. I don't think that would be a good thing economically or strategically, but my suspicion is that under Trump or Biden, we will have two economies that are less tightly interwoven five years from now than they are today.

Speaker 1: 43:22

So we touched on Russia, ukraine, china, middle East From your vantage point. I'm curious to hear what you think are underplayed geopolitical risks that you don't often hear about, but it could become a bigger issue over time. Yeah, I mean, one of them is North Korea.

Speaker 2: 43:38

So you know, there has been some pretty concerning rhetoric coming out of the DPRK in the past few months that has led some North Korea watchers to suggest that they think Kim Jong Un has made a strategic decision for war. I don't think that's true. I think if that were true, it wouldn't make much sense for him to sell, you know, 3 million artillery rounds to Russia, because if North Korea is going to war, it might need those things itself. I do think it is not. It is not a trivial possibility that we will see a more bellicose North Korea doing things like provocations below the threshold of outright war. And so there were a couple of incidents 15 years ago where North Korea shelled the South Korean island or it torpedoed a South Korean naval vessel, and so you could see things provocations of that order of magnitude.

Speaker 2: 44:29

What would make it more flammable this time around is that this South Korean government has made clear it's not just going to sit back and let that happen. It will respond if these sorts of things are done, and so you could get a certain escalatory dynamic there, and so that would be one crisis worth watching. I mean the other one just involves Haiti and sort of the state of Latin America more broadly. State of Latin America more broadly. If you think about the region, latin America is trending in a bad direction on a variety of different metrics economic and political in ways that I think are going to complicate US influence there. Haiti has basically experienced a total collapse of governance in ways that are going to create a severe humanitarian crisis that is going to further add to the stresses in that regard, and so these things aren't getting as much attention as the war in Ukraine or the war in the Middle East or tensions with China, but they could have some pretty disruptive effects as well.

Speaker 1: 45:23

Hal, for those who want to track more of your thoughts, more of your work, where would you point them to and maybe do a quick pitch on the book too?

Speaker 2: 45:29

Sure, so you can follow my weekly stuff at Bloomberg, where I have an ongoing column. I have an edited book that is just out today, in fact. It's called War in Ukraine, and it is a compilation of essays from real who's who in the field on the origins, the course and the implications of the war. And then I have another book coming out at the very beginning of 2025, which is called the Eurasian Century, and it is about the way in which great power conflicts dating back to the 19th century have shaped the world that we live in today.

Speaker 1: 46:03

Everybody. Please check that out as well, as make sure you follow Hal Brands here. I'm going to have this as an edited podcast in a couple of days and stay tuned. In about 10 minutes I have another space. Hopefully I'll see you all there. Appreciate it, Hal, Thank you. Thanks so much for having me. Cheers everybody.