Michael Hudson: The Economic Unravelling of the Political West

Yves here. Michael Hudson provides a forceful indictment of how America’s economic posture towards its nominal allies has changed from what Goldman Sachs called “long-term greedy” to openly predatory. Yet bizarrely nearly all of the leaders of the nation-victims are going along, with at most occasional bleating, out of what looks like a combination of Stockholm Syndrome and personal bad incentives.

And a note of caution: even though the so-called Collective West is driving off a cliff, it is not as if the rest of the world ex-Russia is in such hot shape. China has a massive private debt overhang, officially at more or less the US level, which means almost certainly worse. Reader PlutoniumKun says from what he can tell, it is even worse that Japan’s right before its real estate/stock market bubbles started to implode. China’s leaders have set about to try to rationalize destructive overcapacity in former “global champion” sectors like electronic vehicles and solar panels. Yet despite acknowledging that problem, China is not retreating from its export/investment driven model to shift to more of a consumer-driven economy. China is not only suffering from deflation but also exporting it, witness for instance 9 months of falling prices in Thailand (and yes, sports fans, deflation is most assuredly worse than inflation). Former UN economist Joma Kwame Sundaram has said that most developing economies are set to suffer financial crises due to their high levels of external debt.

In the words of the famed economic prognosticator Bette Davis, “Fasten your seatbelts. It’s going to be a bumpy night.”

Originally published on Glenn Diesen’s YouTube channel.

GLENN DIESEN: Welcome back to the show. We are joined today by Professor Michael Hudson to discuss the U.S. national security strategy and the unraveling of the post-World War II economic order. So thank you very much for coming on the program.

⁣MICHAEL HUDSON: Thanks for having me back in this ongoing unfolding dialogue. Things are happening so quickly each week.

⁣GLENN DIESEN: Yeah, it’s hard to keep up with things. I always make the point that in academia you spend very little time to follow current events, but these days a lot of time goes to look at these massive changes happening now on a week-to-week basis. We often see that the political discourse tends to often focus, I think, excessively on individuals. So when you look at the unraveling of the political West, the economic structures of the hegemonic order as well, its often attributed to Trump’s personality.

However, there’s a much larger phenomenon at play here, which people like you have been talking about for quite some time. That is the building blocks of this economic order are being undermined. But I thought a good place we could start is to get your views on how you interpret this new national security strategy, from, I guess, a somewhat economic perspective.

⁣MICHAEL HUDSON: Well, it really doesn’t explain the strategy as such. The American diplomats are not going to come right out and say, here’s our strategy, to force you to make sacrifices to your economy to promote America first. And your countries, Germany, European countries, Japan, South Korea, are also supposed to put America first, not your countries first. This reverses almost the whole last 80 years of the economic order that the American diplomats themselves put in place in 1945.

And that was a time when the United States was the dominant industrial power in the wake of World War II. It was a dominant monetary power on its way to holding 80% of the world’s monetary gold by 1950. And the rest of the world actually needed American support. And American interests were served by breaking up and absorbing the British Empire and the French Empire.

And there was a long discussion that I quote and describe in my book, Super-Imperialism, in the British House of Lords in the Parliament saying: we know that the American plans for free trade and free investment means no more Sterling area with blocked sterling of India and other Sterling area countries that have to be spent on British manufactures and British goods. In reality, we know that our economy is pretty devastated, and this free trade and investment means America is going to pick up all of these savings that, what we now call the global south countries, have accumulated during World War II.

So this order, sort of free trade and investment, was an almost evangelistic ideology. And it seemed that all of Western history was moving towards free trade, free investment, and the myth was that all of this would automatically stabilize and enable all the debts to be paid, and all countries were going to gain together. Well, this idea was a fantasy. And in fact, there was no anticipation at that time that America was going to end up in the position it is today.

It’s industrially dependent on foreign countries to provide industrial products that it used to produce at home. And it’s financially dependent. Its military spending abroad was so large that it accounted for the entire U.S. balance of payments deficit from the time the Korean War began in 1950. In those years, the U.S. balance of payments began its long, secular, constant move into a balance of payments deficit, flooding the world with dollars.

Well, other countries for the next few decades used these dollars to accumulate. They turned them into the treasury and redeemed them in gold. And General de Gaulle, but also Germany, was turning its trade surpluses into dollars because all the money being spent in Southeast Asia ended up in French banks, and money in other countries ended up buying imports from Germany.

So we used to sit at the Chase Manhattan Bank, where I worked in the 1960s as their balance of payments economist. Every Friday we’d look at the Federal Reserve Statement for the gold cover. How much gold are we losing and how much gold is legally required to back the paper currency here? Well, it was obvious that the United States was going to be forced off gold already by 1966 and 1967. And we could see where that is. Well, the United States did go off gold. And when it went off gold, it put in a system where, if foreign central banks can’t cash in their dollars for gold, what are they going to do with them?

Well, there was very little that they could do except agree to the pressures from U.S. diplomats to buy U.S. Treasury securities. So in effect, they were recycling all the dollars that Americans spent on military operations and military bases and wars throughout the world. All this was recycled to the United States to finance its trade deficit and its balance of payments deficit, and it enabled the government to keep spending & spending abroad at other countries’ expense.

Well, finally, this enabled the United States to deindustrialize, to not, as economists say, live within its means. And the result is that the National Security Report recognizes that the kind of free trade, free investment, and equal sovereignty among nations, the whole principles of the United Nations that was drafted in 1945, no longer serves American interests.

So, what they’ve done is reverse this whole philosophy that still is held to be Western values, and they use various forms of coercion. The most obvious forms long before Trump were: well, you control the world’s oil trade. So, if you can control oil, then you’re able to turn off the energy to countries that don’t follow your policies.

America’s policy has been not to create a peaceful world order, this was assumed 80 years ago, but to prepare for a war with Russia and China, or at least a conflict with Russia and China. The National Security study is not going to come right out and say, well, we want to control the oil, to turn off your power and make you suffer like Germany if you don’t follow the “America First” rules that we are laying down. America also wants to monopolize information technology, the whole computer revolution of computer chips, media, and social media; it wants to have monopolies over all of this. And that means it doesn’t want Europe to impose taxes on the American companies that are operating in Europe. It wants special privileges that no other countries have.

And so the Americans say, well, if we can no longer support ourselves industrially or financially, then other countries have to support us. How are we going to get other countries to support us? That’s the real problem.

And what is not acknowledged is the most problematic assumption that underlies all of this national security report. The idea is that if somehow America can put in place so coercive a trade, investment and monetary system on other countries, that somehow they will relocate their industry from Germany, from France, from Korea and Japan into the United States, and other countries will somehow be willing to reindustrialize the United States. None of this looks at why the United States is deindustrialized to begin with. What are these dynamics that have made industrial investment so much less remunerative than financialization and making money simply from money?

Well, that’s the problem that I think Europe and Asia are facing now. And if you look at today’s Financial Times, from the front page to the last page, it’s all about European worries that the whole U.S. financial economy has become a bubble, especially the artificial intelligence bubble and the heavy debt leveraging. And Donald Trump is following the same path that Margaret Thatcher and Ronald Reagan followed after 1980: deregulate the economy, take away all of the rules that protect investors, protect consumers, and just make a free-for-all.

Well, I think most of the money managers that I know and CEOs that I talk to all say: there’s going to be a huge crash in the making. How are you going to prepare for it? Well, the National Security Report says: we probably have only three years to lock in place what is going to be, we hope, a coercive “America first” order, “make America great again,” at other countries’ expense.

And they point out that America’s strongest backers in Europe: Macron in France, Starmer in England, and Friedrich Merz in Germany, are at the nadir of their popularity. The voters disagree with them. And not only are their economies being sacrificed by following the policies that these three leaders and the EU leadership under Von der Leyen and Kaja Kallas are promoting, but the political parties that are in power are also threatened.

But there’s not going to be an election for the next three years. And so that gives the United States three years to have its major supporters try to put in place this new economic order that is going to take the place of a multilateral economic order. And the main victims of this are going to be America’s closest allies, as usual: Western European countries, the NATO countries, Japan, South Korea, and the English-speaking Australia and New Zealand. It’s much harder to convince China and Africa and the rest of the global south countries or China’s Asian and Eurasian partners to go along with this.

And so the report acknowledges that the world is going to break up into spheres of influence. And we can’t really prevent that, but at least we can lock in America’s control over Latin America. And that’s why you’re seeing Donald Trump saying, despite the investment by China and Venezuela and Brazil, Latin America is our territory. These are our kleptocrats, our client oligarchies in power, our military dictatorships, and we’re not going to let you in.

But ostensibly, they say, okay, you have your sphere: China has its sphere of influence along with Russia and Eurasia. And it’s trying to shoehorn Japan into this group of five. The United States, its Western European satellite, Russia, and China. That’s four, but the U.S. wants a majority, so it has Japan that always votes with the United States. It’s another satellite.

And this is pretty fictitious because China and Russia immediately say, well, wait a minute. You want us to stay out of Latin America despite our investment there, despite the fact that China is buying Brazilian soybeans so that it doesn’t have to depend on U.S. soybean exports and the ability of the United States to weaponize its foreign trade to say: we can turn off our soybean trade and make you go hungry if you do policies that we disagree with.

But the United States is not staying out of Eurasia. It’s not staying out of Europe. It turned NATO Europe into a satellite. It’s not staying out of Asia. It’s trying to surround China with the Philippines and pressing Taiwan and Japan. It’s trying to make the Quad arrangements along with Australia to sort of ring China.

And so for Trump, the Monroe Doctrine means you stay out of South America, but we’re not going to stay out of your territory. So it really means the United States can somehow maintain its unique status as the unipolar power dominating the whole world. Well, this is a fantasy, and the National Security Report isn’t going to say that it’s a fantasy. They simply concentrate on the fact that Europe has a fantasy that somehow it can be an independent actor in all of this and it can make an independent decision to spend all of its economic surplus and planning a war with Russia.

It is inconceivable that Russia, or any other country, can invade Europe or a neighbor in today’s world, where wars are fought by bombs and drones and without infantry. And without infantry, you’re never going to occupy a country and take it over. You can only do it surreptitiously by backing the campaigns of politicians loyal to you.

That’s how the United States has controlled Europe, by its meddling in European elections ever since 1945, especially in Italy, when there was a threat of the Communist Party there, especially in the rest of NATO Europe. You’re seeing what happened today that it has created a kind of Frankenstein monster out of its control.

And here, the puppets that it’s put in power are elected, but the puppets are on automatic pilot: war with Russia, war with Russia – we have to cut back social spending in order to create our own military-industrial complex to finally provide industrial employment that we’re not able to do in the marketplace anymore because of our cutting off of trade with Russia.

Well, this is a quandary, and the National Security Report acknowledges the fact. And essentially, you could say that it’s meant very largely for Europe because the other countries of the world, the other regions, are all pretty much fixed in the direction that they’re going with. These regions have the same choice that Europe has: what is going to be their economic future?

And Trump’s national security policy that isn’t quite spelled out this clearly in the National Security Report is to confront other countries with a choice. Either you can live for the short term, and we will lower the tariffs that Trump has imposed and give you access to the American market for your exports, but you have to do a giveback. You have to follow American policy. In order for us to give you access to the American market, you have to join our sanctions against Russia, China, Iran, and any other country that we designate as not following American policy and therefore our enemy. And you have to agree to invest and move your major industrial companies out of your country into the United States.

Well, if you don’t do this, then you’re going to suffer unemployment and deindustrialization and layoffs, and many of your factories are going to close down, and the small companies, the Mittelstand companies of Germany, are going to go bankrupt. So the question for Europe is: is it worth avoiding this short-term disruption of their foreign trade in order to live for the long-term fact that, well, China, Russia, and its Belt and Road Eurasian neighbors are the most rapidly growing economies in the world. If Europe, which is really the centerpiece of this, ties its fortunes to the United States by having to relocate its industry here, to invest its savings in the United States, then it will have to forgo economic trade and investment relations with China, Russia, and the global majority. That’s the long-term gain. So, what is it going to choose?

Well, politicians live for the short term, and Europe’s politicians have two or three years before the next elections, and that’s their time frame. And so, they’re willing to sacrifice Europe’s long-term growth by agreeing to surrender to the trade policies, the givebacks, and the promise of investment in the United States that von der Leyen agreed to a few months ago with Donald Trump, and which the current leaders of Europe continue to support. Well, just as that makes them so unpopular with the voters, it leads the National Security authors to recognize the voters are right.

Europe can’t possibly survive this way, but we can use this interim to lock in a kind of “America first” international economic order on pretty much the same kind of pressure that we used in 1945 to serve America’s ends. It’s just instead of a multilateral order, it’s a one country take all. Our gain is your loss. Putting America first means that we win at your expense, and that’s going to be Europe’s expense if it wants to defend itself against Russia to rebuild its military-industrial complex.

That’s its problem. America’s washing its hands of it. And the hope of the National Security Report is that somehow it can promise Russia to drop the sanctions against it, to make a kind of U.S. investment in Russia. I mean, the ideal is to do to Russia, once again, what Americans did to Russia in the 1990s under Boris Yeltsin.

The dream of American foreign policy and the reason it failed, was the assumption that the war with Russia would lead to the population rebelling against Putin, saying; We don’t want our soldiers to die; we don’t want military spending; we want spending on consumer goods; we want to trade with Europol. None of that happens.

When you bomb a country, they don’t oppose the leader, they rally around the leader. So there’s a kind of fantasy underlying not only this report, but Trump’s policy. And the fantasy is that other countries don’t have an alternative but to surrender to Trump. And of course, there is an alternative, but the alternative of long-term open trade with Eurasia means the short-term loss of the American market.

So this is the tension that’s confronting Europe and also Japan, Korea, and America’s closest allies.

⁣GLENN DIESEN: It’s interesting. I was wondering, what do you see happening to Europe after this? I know you covered this to a large extent now, but the whole relationship between the Americans and the Europeans after World War II had a very different premise. That is, after World War II, the Americans were quite generous with a lot of the trade deals which were established.

Some of it, of course, was just geostrategic. That is, you wanted West Germany to be more prosperous than East Germany. You wanted Taiwan to be more prosperous than the other China. You wanted South Korea to be more prosperous than North Korea. So it was always this strategic incentive to have generous trade agreements for the frontline states, in addition, of course, providing for their security.

But also, due to the economic status of the U.S., there was an interest, of course, [in building] trust in U.S. banks, the dollar, and dependence on its tech and industry. And again, U.S. big business really grew a lot in the World War II period. The U.S. became this industrial powerhouse, the leading technologies. And in all of this possibility for dominance, of course, there was a concern for protectionism in Europe, which often happens after war.

So there was a need to open up these markets. And as you said, there was strategic interest in dismantling the European empires and absorbing them, of course, for the U.S. and containing the Soviet Union. So there were all these interests, which were strategic, but all of this translated into a very privileged position for the Europeans in an open economic system. And all of this in Europe, instead of looking at the strategic reasons why all this happened, we form kind of like this ideology of liberal democracies sticking together, transcending the international anarchy, which is kind of the language now the political leadership speaks in.

So, they don’t think alliances are a temporary construct, it’s permanent friendships based on values. This is the kind of language and assumptions they often run with. But when you look at the specific references now to Europe in this National Security Strategy, it envisions a decoupling. And the Europeans are portrayed, or European leaders at least, are portrayed as authoritarian and increasingly undemocratic. I would agree with this, by the way. The economic decline makes this hard to disagree with as well. And also being very irrational on Ukraine.

Indeed, you see this also in the language now. It appears that our leaders in Europe are cosplaying World War II. The assumption that if we can defeat Russia, it’s just like defeating Nazi Germany and this will usher in a new golden era for Europe or something along those lines. And you may see the German leader now comparing Putin to Hitler. He argues, you know, Russia won’t stop. We have to stop him. This is the main goal.

This [frames] offensive actions against Russia as something defensive. The rules are gone, it seems. Now, I’m assuming that the European powers, several of them, are at least assisting Ukraine in the attacks on civilian Russian ships. Of course, the seizure of Russian funds, which are illegal on their own, but even the rules within the EU are now turned on its heads. There’s no more voting every six months to renew it.

The EU leadership decided to ban this. From now on, these will be permanent seizures of Russia’s funds, as all 27 member states now have to unanimously agree to release them, which I can’t see happening.

But again, this open talk about fighting a war which they can’t win, they don’t have the troops, they don’t have political support, and public support. What of this do you see as just the EU being systemically lost or strategically lost? Is it a strategic vacuum? Is it that it doesn’t have a new place, an economic role in the new world, or is it just good old-fashioned Russophobia? How do you make sense of this?

Because all the things which identify the EU over the past few years: being an economic powerhouse, good governance, choosing diplomacy over war, and most important of all, rules-based, all of this is now out the window. How do you make sense of this? And what does this mean for Europe’s relationship with the United States, even after Trump is gone?

⁣MICHAEL HUDSON: Well, you’re right to bring up World War II remaining the key. The United States is steering the world to re-fight World War II. The United States says: World War II didn’t end; we’re now going to finish World War II. But instead of America and Western Europe allied with Russia, we’re now allying with Nazi Germany. That’s why we have people like von der Leyen and Kallas and officials with family backgrounds in the Nazi movement.

Basically, the United States is saying this: that the Nazis were right in wanting to go to war against Europe; that Japan was right to invade China with the Nanking massacre; that the Nazis were right to hate Russian speakers and Slavic peoples as genetically subhuman; and that the Japanese were right to treat the Chinese as racially subhuman and to attack them.

That’s why we are supporting in Ukraine the neo-Nazi government that we continued to support right after World War II and maintain influence with their racist Nazi philosophy. That’s why, in Japan, MacArthur found the way to oppose the nascent or incipient socialist movement in Japan by working with the criminal gangs to basically fight against the socialists and to put puppet right-wing leaders there.

So, right now, you have this violently passionate female leader in Japan preparing for a war with China. The United States is trying to promote Taiwan to fight to the last Taiwanese against China, as Japan fights to the last Japanese by threatening to fight over islands in the China Sea by putting American arms and missiles on these islands, which will lead China to protect itself with a takeover. So, the United States basically is in the position of Nazi Germany in creating a new Nazi alliance. Western Europe, Ukraine, Japan, and elements in Taiwan and other countries in the same way that it used Argentina and other right-wing military dictatorships in Latin America.

And the rest of the world seems blind to the fact that World War III is not going to be fought in the same way that World War II was. It’s not going to be armies of different countries attacking each other. As I mentioned, it’ll be by missiles. And President Putin said in the last few weeks of the whole fiction of Trump’s hope in making a ceasefire and an arrangement between Ukraine and Russia: Our fight isn’t with Ukraine, it’s with Western Europe.

Ukraine is only the arena, the battlefield for the fight of the right-wing European parties, the British Labour Party under Starmer, Orwellian doublespeak name for it, the Merz’s Christian Democrats, and Macron’s party, which he began as a socialist and then created his own party in 2016. These are the leaders who are sort of joining in this new war if it’s really these three countries that are supplying arms to Ukraine by steering and organizing its attacks on Russian shadow shipping for its oil, and orchestrating, along with the Americans and with the American satellites, the missiles that are being sent from Ukraine into Russia to attack its oil refineries to try to disrupt its oil.

Putin has said we realize that even though these missiles are coming from Ukraine, it’s really not Ukraine that’s doing it. Ukraine is a puppet government installed by the United States in Maidan in 2014, and now it’s supplied with arms largely by Europe. We will retaliate against the countries that send these missiles to us and that are attacking us.

And so the fight in Ukraine is essentially the opening phases of something like World War II. And Putin has said we’re going to start by bombing the factories that produce these missiles. We’ll bomb the electric facility companies that provide the electricity for these. And we’ll let Western Europe fight to the last European because it’ll be a very short war. And after the first few days, there really won’t be any European leaders to negotiate with anymore because there won’t be a viable Europe.

Europe has agreed to it, saying, we think it’s a bluff. Well, that’s the question. The assumption is that Russia has been militarily weakened by the war and that it’s losing to Ukraine. That’s what all of the Council of Foreign Relations is saying here. That’s what all of the pro-U.S. media are saying. And as you know from the guests that you’ve had on your show, Glenn, that it’s all a fiction, that that’s not what’s happening at all.

So what’s being challenged here is, you could say, the materialist approach to foreign policy, and in fact, to history for that matter. The assumption of the materialist approach is that countries are going to act in their economic self-interest. Well, that’s not happening. Europe is not really acting in its economic self-interest or even its instinct for survival.

It’s acting in what Trump calls the “America first” interest, but this interest isn’t really that of the United States, except it means that what is left of the remnants of German industry and technology and that of France and other countries, that are going to be, so Trump and his team hope, moved to the United States. Europe is going to be emptied out. Western Europe is going to look like the Baltics losing one third of their population, emigrating for work, essentially just depopulating.

And as the Latvians say: will the last emigrant in 2035 please turn off the lights at the airport when you leave. That seems to be the dynamic of depopulation, deindustrialization, unemployment, and breakup of Western Europe.

Well, the fact is that, before this really happens, the European Union itself is going to probably break up. That’s what’s seen, and that’s why the United States, in the last couple of weeks, has said: we think that Italy, Hungary, the Czech Republic, and Slovakia, for starters, should withdraw from the European Union.

Well, you’re seeing that already. What are they going to do? You mentioned the whole fight that occurred over the Euroclear confiscation of the $250 billion equivalent of the Russian national savings that it put in Euroclear. Europe wants to give this to Ukraine. Well, not really to Ukraine. Europe wants to give it to its own military-industrial complex to build factories.

It doesn’t intend any actual money at all to go to Ukraine, because it would all be stolen, as you’ve also seen in the last few weeks of all of the exposés of the money that’s been siphoned off. Maybe one third of all the money that’s been spent in Ukraine ends up in the pockets of the kleptocrats that have taken power and made Ukraine for the last 15 years, according to the World Bank, the most corrupt country in the Northern Hemisphere.

Well, do they really want to give any money to this obviously corrupt country? Well, they don’t. Except that a lot of this money that they give to Ukraine has all been recycled back to the European leaders, who’ve been approving the money to Ukraine. It’s a circular flow. The European leaders get a back flush into their own campaigns and personal accounts for all of this. It’s not really spent on Ukrainian defense at all.

That’s why Ukraine’s losing so much. That’s why there are so many desertions from the army, with the soldiers saying: wait a minute, we were supposed to have barriers built up here. We were supposed to have all this military support. None of this support was ever made. It seems that the generals in charge of the money have just put it all in their pockets.

Well, that’s the situation we have. This is not a stable situation. That’s why it’s unfolding week by week. And I think every week that you have your guests on, there’s a new story, a new revelation, a new shift in this balance that is very rapidly unfolding in a way that it’s very hard to forecast whether there’s going to be a risk of an accident happening. That seems to be the case.

⁣GLENN DIESEN: I think the model many envision in their head is to almost emulate the British and U.S. offshore balancer strategy. That is, have first your proxies fight, much like in World War II, have them exhaust each other. That is using Ukraine to exhaust Russia. And once this war comes to an end, the assumption would be that if Russia hasn’t lost, then at least it would be so exhausted that towards the end, some powerful Western country would step in and then be able to dictate the outcome of the war.

But, of course, this is very different. Russia slowballed this to a large extent in order to also make sure that it could make preparations for a wider war. Because as you said, they know who’s pulling the strings behind. So from what I’m hearing, they now have the Oreshniks on mass production. They are also clearly signaling that if the Europeans plan to enter this war and attack Russia, then they will not be fighting brotherly Ukrainian people. They will be fighting Western Europeans, in which the gloves would come off in terms of the weaponry that they would deploy.

So I think we’re walking down a very dangerous path. And also now that the Americans are trying to hand this whole thing over to the Europeans and the Ukrainians are falling apart on the front line, the Europeans will have this incentive to step up much harder on the Russians with more direct attacks, while the Russians will now see that they have more freedom to act. That is, if you have British or French planes or drones flying across along the Black Sea to pick targets which should be struck, why would the Russians let them do this?

I think you’re going to see a much heavier hand by the Russians. They will start to shoot these things down, and just at a time when the EU is also stepping up its aggressive posture. So I think the illusion of escalation dominance in Europe is going to lead to a disaster, probably sooner than later.

But do you have any final thoughts on where we are moving beyond the economy?

⁣MICHAEL HUDSON: Well, America was not exhausted by World War II. America emerged from World War II much stronger industrially and financially than it was before World War II. Same thing with even Germany: it had increased its industry during World War II. Russia, obviously, has become much more rapidly growing during the Ukraine war than NATO Europe.

So it’s just a fantasy that Russia is somehow the economy is falling apart. That’s exactly the opposite of what is happening. And that’s what the American military and State Department and American diplomats can’t acknowledge.

And here’s the problem. It’s a bureaucratic problem with America’s national security reports. There’s a feeling that you have many researchers in the CIA and other agencies that are reading the Russian speeches and the Russian newspapers, and they say, well, the reality that we’re getting from the battlefield and from the speeches is just the way that you’ve described, Glenn. Russia’s getting stronger.

And the force to come with a single uniform report is that, well, if you think that Russia’s getting stronger and that Russia is winning the war in Ukraine, then you’re Putin’s puppet. You must be sympathetic with Russia. You’re saying that because you want to believe that Russia is getting stronger, and that is not a patriotic thought.

And people who are reality-based observers decide that, with advancement closed off in the CIA and with having no receptiveness for the reality that they’re describing, they’ll leave. Ray McGovern, who used to work for the CIA, has been very explicit in describing this: either agree with this or leave, our way or the highway.

And so the CIA, the State Department, and the Pentagon have a bureaucracy of “yes men” who are not going to disagree or point to the flaws in this strategy. And this is what’s so crazy. There’s no real open dialogue or checks and balances. And it’s as if everybody believes what’s reported in the New York Times and Washington Post, the pro-war anti-Russian neocon, neoliberal press.

So there’s a lack of understanding either of the enemy or oneself. And as Sun Tzu said in the Art of War: if you don’t understand yourself and you don’t understand your enemy, you’re sure to lose. So that is the sort of a built-in bureaucratic structuring of the mentality at work that guarantees a walk into disaster.

⁣GLENN DIESEN: Yeah, the whole thing is very frustrating to watch from Europe, I would say, because there’s all the things which we should have done. We’re doing exactly the opposite. That is, if you see the U.S. in decline, relative decline, deprivatizing Europe, you know, you would then end the dividing lines in Europe, you would seek to make peace with the Russians. Everything would be in place really for this, though.

The whole reason why we had to split from the Russians and redivide Europe was to give NATO a stronger role or a dominant role in the post-Cold War era. But now we could really fix everything by restoring relations with Russia, and improving relations with China. Instead, we’re throwing away all the other relationships in the hope that the U.S. might stay after all. It is incredibly frustrating to watch. And whenever they are called on it and asked: why aren’t we taking a different approach, why not just settle relations with Russia?

They get some crazy answers: well, we can’t betray Ukraine. But this confrontation with Russia is what destroys Ukraine. Or you get some fantasies about Putin being Hitler. They want to conquer Europe. All of this nonsense.

And again, as you suggested, there’s no real discussion when the main logic is that the USSR is the Russian Empire and just wants to conquer all of Europe, and anyone who disagrees is a Putinist. It’s a great way of making sure that there is no debate because it’s either agreeing with the nonsense or being a traitor effectively. So it’s very extremely frustrating to watch, and it’s also one of the consequences, I think, now of Europe essentially betraying all the core values it argued that it was standing for.

⁣MICHAEL HUDSON: Well, the National Security Report wants to blame European leaders, Macron, Starmer, and Merz, for this, but what’s really stirring them all really is the United States. The National Security Report in criticizing Europe doesn’t say it’s the United States that has installed these leaders who specifically support the U.S. policy, certainly prior to Trump under Biden. And I think Trump still holds this same policy of confrontation with Russia, confrontation with China. There’s sort of a good cop, bad cop in negotiations between the American bloc and Russia, China, and the global majority.

The U.S. and Trump are trying to say, I’m the good cop, and Europe is the bad cop, but actually, they’re both bad cops. Trump has sought to make it appear as if he wants the peace prize, but he doesn’t want the peace prize. He wants to conceal the fact that he’s the most warlike leader that America has had.

But he’s trying to conceal it by saying, well, I’m for peace. Peace is my business, not war. When actually he’s fully in-line, along with Rubio as his Secretary of State and of the Senate leadership, Mitch McConnell. They’re all neocons, they’re all neoliberals in the same boat, but if they can get the Europeans to blame their own leaders and somehow elect people, another sort of European Zelensky who says he wants peace and then immediately turns around and follows whoever’s giving him the paycheck to make war, that’s the American dream.

I think there’s beginning to be an anti-Americanism in Europe. And you see that in the Financial Times, saying Europe has to realize it has to go its own way. It has to be independent. And it has to talk about where is our real economic interest and our real military interest in all of this, and how does it diverge from what President Trump is trying to impose, which is “America first” and make America great gain, with your own foreign resources, as if somehow foreign resources can reindustrialize America without America having to change the whole way in which its own economy is structured.

The fact is that Europe and the United States have a malstructured, financialized economy. This is the real problem. And it’s also lost its democratic context for the economy. Everything has changed, and all that the United States and Europe has to promote this worldview is a fictitious narrative. And the fictitious narrative is broadcast through politicians’ statements and the public media.

And whom are you going to believe, your eyes or the public media? That’s the question. The European voters obviously reject the policy of their leaders, and they don’t realize that their leaders themselves are sort of American puppets.

Whereas the proponents of the alternative are not Putin’s puppets. They’re the realists. And they realize there’s no need for war. It’s fictitious. It’s not that they’re pacifists, but there’s just no need for war, and there’s no war that Europe can win against Russia now that it doesn’t have any more arms.

It has used them all up in Ukraine and sent them to Israel. So it’s disarmed. It has no money. Its industry is unable to operate without the inexpensive oil and gas that powered it before. There’s been no accounting for what are the costs and benefits of the future. It’s so obvious once you sit down and do it, but that’s not what the national Security Report comes right out and acknowledges.

And that’s the real problem. It’s as if the American establishment doesn’t know what is in its own self-interest. It’s so pulled into this neoliberal, neocon, “war with Russia” mentality that’s been in place for the last 40 years.

⁣GLENN DIESEN: Well, Professor Hudson, thank you so much for your time. And these are, yeah, interesting times, so thank you.

⁣MICHAEL HUDSON: Thanks for having me, Glenn.