Yves here. Michael Hudson provided a short update on RT (yes, it’s still operating) about how the economic war with Russia is accelerating the shift away from US-led hegemony to multipolarity.
However, twp things worth noting:
A major change in the economic order is often accompanied by a financial crisis. Some of the explanations of the Great Depression focus on how efforts to restore the gold standard after it broke down in World War I were destructive; others give prominent play to the slow end of the sterling as the currency for trade and the difficulties the US had in changing from being export led to consumption led. The period before World War I featured extensive international trade, which broke down and only in the last 20 years or so has approached that level. The sanctions against Russia are producing changes in trading patterns and sourcing that are breaking supply chains and may lead to more of a focus on domestic markets (witness grain producing countries clamping down on exports).
What is happening with NATO is very much in play. The West smugly thought the Russian invasion of Ukraine would make NATO stronger, as proven by the expected entry of Sweden and Finland. But shockingly no one consulted Erdogan, when Turkey could lay claim to being the most important member by virtue of its location and by having NATO’s second largest army. Not getting all NATO members on board before inviting Sweden and Finland was rank presumption.
Erdogan may be playing the hardest of hardball (he’s sent in a list of big asks), since this remarkable screw-up puts NATO in a desperate position. But he may also genuinely be extremely insulted and thus not amenable to negotiating any of his demands. Oh, and Croatia has also said it’s inclined not to go along and Lega Nord’s Matteo Salvani has also voiced opposition. This means the air of inevitability the deal once had is slipping. Mind you, NATO will be very motivated to get the entry process back on track, but the outcome isn’t certain, a development that seemed inconceivable a couple of weeks ago.
Peter Scott, RT anchor: Joining us now is Michael Hudson, economist and author of “Super-Imperialism” and the recently-published “Destiny of Civilization”. Welcome to the programme, Michael.
Michael Hudson: It’s good to be back.
PS: Let’s say all these European programmes like the REPOWER Programme come into effect, how do you expect the EU standing to be on the stage after that?
MH: Well, the EU standing will be squeezed economically. It was trying to be a powerhouse in the world economy but in the last month the euro has been declining steadily against the dollar and it’s on the way to one dollar per euro. That’s because it’s having to pay much foreign exchange for energy, for food, for weapons. It’s shrinking in terms of other economies.
PS: Where do you think the EU’s standing will be in relation to powerhouses such as China?
MH: Well, it’s obviously out of the game. Instead of putting its own interests first, it’s really putting the US interests first. It’s acting more like a satellite of the United States thank trying to its own destiny. The whole plan of the EU 20 years ago was to get rich by investing in Russia, investing in China and a mutual exchange. And now it’s decided to stop that. The US has absorbed Europe. The war in Ukraine is a war by the US primarily to pull Europe into the US orbit, prevent European transactions with Russia or China. So Western Europe is being left out, while Russia, China and Eurasia are going with the rest of Asia. Europe is simply going to be left behind. It’s losing its export markets, it’s being squeezed and -as you just mentioned- it’s pushed up the retirement age because it’s spending its budget on replenishing American military arms instead of investing in industry as it had been doing since 1945.
PS: You did indeed write that Europe has ceased to be an independent state. You’ve almost mentioned that the United States wanted to sever EU trade ties with Russia and China. How exactly did you get to that conclusion and do you think that this alleged US plan is succeeding?
MH: Well, I simply read the speeches of President Biden and his team. They’ve said that China is America’s number one enemy. If you’re going to call a country your number one existential enemy, you’re not going to be increasing your trade and mutual dependency with it. And it’s already insisted that its allies sanction -meaning boycott- Russian sports not only of oil and agriculture but of titanium, helium and all of the other exports that Russia has been making. Europe is been following US directions not to have contact with Russia and without contact with Russia it’s not going to have contact with China because China sees that Europe is going to do to it exactly what it’s been doing to Russia.
PS: Obviously as a result of this current situation, for many years now, Russia and China have been growing closer diplomatically and economically. How do you see a global shift in power evolving over the next 5, 10 years or so?
MH: The current war is dividing the world into two parts. There’s going to be a US dollar area of the US, Europe and its satellites. And there’ll be a multipolarity; there’ll be a group of Russia, China together and basically they will be making their proposal of a different way of organising the world economic affairs to Africa, Latin America and other Asian countries. And other Asian countries, Latin America and the global south will see that it can get a better deal with Russia and China than it can get with the United States.
PS: On the flip side of that coin, one could argue that the existing situation, world order, has only been cemented by this war. You see NATO more aligned than ever, you see Europe more aligned than ever. You see Finland and Sweden on the brink, perhaps, of joining NATO. What would your response to this be, Michael?
MH: This integration of Europe into the United States sphere is like the new Berlin Wall. It’s isolated the US from the whole rest of the world. So instead of a victory for the United States it’s self-isolated itself because US strategists have realised that they’re losing the economic war with China, Russia and the whole group of emerging nations. All they can try to do is hold on to Europe as their one source of income to exploit from Europe what it can no longer get from any other country.
PS: As well as being a war on the ground, this is obviously an economic war. You yourself have noted that Nord Stream 2 (the gas pipeline from Russia to Germany) was one of the first victims of this crisis. To what extent are we now seeing an international conflict for energy resources? We obviously have the EU now weaning itself off Russian energy, the US trying to fill that gap to a certain extent with LNG. Then we have Russia now selling oil to India and China.
MH: The important thing about Russian oil being sold to India is that they’re sold in roubles, they’re no longer in dollars. The entire oil trade is now de-dollarised. It will be in roubles, in Chinese Yuan and in other currencies. But the dollar will be left out. The whole idea of dollar diplomacy, of the dollar’s free ride and monetary imperialism has ended. Everyone thought it would take 10 years for Russia, China and other countries to break away. Yet the United States itself has broken away from the other countries by grabbing the foreign exchange reserves of Afghanistan, Venezuela and now Russia. Nobody is going to trust to transact oil, trade and invest in dollars anymore because the United States can simply grab whatever money they want from countries that don’t agree to turn over their economic surplus to American investors and American traders. The United States has isolated itself. It’s shot itself in the foot.
PS: Talking of currencies, Russia is currently the most sanctioned country in the world but the rouble has recovered to way before pre-war levels. To what extent do you think the sanctions imposed on Russia by western countries have negatively impacted the countries imposing them?
MH: It’s certainly been very positive for Russia. The first sanctions were imposed on Russian agriculture like cheese from Lithuania. So now Russia produces its own cheese. When you sanction a country, you force that country to be more self-reliant on its own productions. President Putin has already said that now he’s going to be investing in import substitution. If he can’t buy imports from the United States now he’ll set up factories in Russia to produce themselves. There’s no reason Russia cannot do this and be its own industrial power. It doesn’t need the West. But the West still needs Russia. You mentioned Europe doing without Russian oil, and instead getting US liquefied natural gas. But it doesn’t have the ports to import that natural gas. It will have to spend $5 billion to build ports. It will take many years for this. What are Germany and Europe going to do for the next few years? Are they going to let their pipes freeze in their houses? So that their pipes break and flood the houses? Will the factories slow down? Already German fertiliser companies have closed down because they can’t get gas and it’s going to be years before they can get gas. Without fertiliser how are the Germans going to make their agricultural yields sustainable? Well, they won’t be. So Europe is going to increase its food deficit. It’s going to increase its energy deficit. It’s basically committing suicide on behalf of the Americans. I don’t know how long the political system of Europe can go along with leaders who represent America instead of their own national interests.
PS: Michael, I’m afraid we’re going to have to leave it there. We could easily discuss the shifting world order for hours to come but I’m afraid we’ve run out of time. That was author Michael Hudson. Thank you very much for joining us on RT.
MH: Good to see you. Thank you for having me.