The Duran Podcast
BRICS Meeting to Develop Multipolar World - Jeffrey Sachs, Alexander Mercouris & Glenn Diesen
Hi everyone and welcome. My name is Glenn Diesen and I'm joined today by Alexander Mark Kurz and Jeffrey Sacks, the very famous American economist and public policy analyst who has advised many governments around the world, including the Polish, Soviet Union, Yeltsin's Russia and many more. And well, I'm very happy to have both of you today because we have a meeting next month, a BRICS+ meeting in Kazan, Russia and the objective there is to charge its way forward and the institution is really going through huge changes. There's also very high expectations and plenty of topics on the menu as BRICS appears to become the main institution now to construct this new international economic architecture based on multiplarity. And I assume they must discuss the long list of countries that want to join including NATO member Turkey. They're advancing all these digital platforms to shift the way towards independent payment system in use more of national currencies. We see Russia is very eager to set up commodity exchanges and have all these other economic initiatives for integration. And well, there's some conflicting views on this because this could be a very exciting time as we see many members of this BRICS+ are adversarial countries and they come together to attempt to use economic conductivity to resolve political disputes. And it seems like an opportunity to reorganize a world which is undergoing changes. But I wanted to start off with you Professor Sacks. What do you expect from the BRICS meeting in Kazan and where, yes, this organization is heading overall? Well, first, great to be with both of you. It's always a pleasure. The United States defined itself and its foreign policy is essentially NATO plus its East Asia allies, Japan, Korea, Australia, New Zealand. And so the rest of the world said, well, okay, what about us? You know, if the U.S. uses this endless, and I find ridiculous phrase, friends and allies, friends and allies, well, everyone else is feeling as foes and enemies. And so the rest of the world is getting together because it can't really just be subjected to a kind of divide and conquer strategy. And that's essentially what pulled India, China, Brazil, South Africa, Russia together in the first place. The BRICS was originally just an interesting group of middle income or fast rising countries, but it became a geopolitical entity basically pushed by misguided U.S. foreign policy. Then as the U.S. increasingly weaponized the international economic scene, especially weaponizing the dollar, which is a shocking thing to do if you have the privilege of your currency being used by others as money, you shouldn't go around confiscating other people's money because that's the opposite of what money is supposed to be a means of transaction, not a foreign policy instrument in any event because of the weaponization of the dollar and the pervasive use of sanctions by the U.S. in addition to seizing other countries' assets. The BRICS took on yet another role, which was not only as a kind of geopolitical counterweight to U.S. bullying, but absolutely as a practical necessity to find ways to trade with each other. I was in, well, I've been in so many places in recent months where the problem of the sanctions on Russia hit countries you can't even imagine. The reason is they want to continue to do normal business. It's not their business. They don't like the U.S. sanctions, but their banking system is linked to the swift banking system. The U.S. threat to impose sanctions on these third countries is taken as absolutely credible. Even in China, many of the major Chinese banks are part of the swift system or are vulnerable to it. They have correspondent bank relations, and so the reach of the U.S. sanctions is significant right now. It's not that you can't work around it, but this was the normal system, and the normal system was that there was a means of payment that was integrated around the world, and then the United States weaponized it. What will happen in Kazan and what will happen in the coming months and years is creating an alternative system. There are many different variants under discussion. It's not simple because, again, even countries that don't want any part of these conflicts in this geopolitical opposition are trapped right now. This is what is under discussion. I don't think that there is a settled answer. We can talk about all of the different technical possibilities, but there will be non-dollar payments of a number of sorts, and that, I think, is going to be a bit of a game changer, not fundamental, but a bit of a game changer in the world, and will definitely further weaken the United States' claims to Germany, which are already delusional, but it will accelerate the fall of the U.S. role because of these successful workarounds, which are on the way. My own feeling about bricks and what we're seeing is that, to a great extent, this is something that was, in some form or shape, going to happen anyway. I mean, the world economically is very different from what it was when I was born in 1961. In 1961, when we talked about the world economy, it was the United States overwhelmingly. Europe was very important. Japan was, you know, important as well, but the rest of the world was just basically an addition. It was, you know, a broad supply of raw materials. It did all of those things, but it wasn't, but it didn't have a separate identity. Now, of course, it does. The world has changed radically. India is an economic colossus. China is still more so. Countries like Malaysia, Indonesia, they're all rising. The Russians are now part of the world trading system in ways that they were not in the 1961 or so. So, inevitably, these countries are going to want to trade with each other in some form. What we are doing, or at least what we in the West have done, is that we've taken this inevitable process and ensured, or so it seems to me, that it's going to evolve in a way that is adversarial to ourselves. It didn't have to be this way. We could have been absolutely part of it. We could have set up all the structures, you know, the shipping law that the British excelled in, the insurance, the swift. It could continue to be used. It could have been used in a more democratic way. The Bretton Woods institutions could have been reformed in a more democratic way, or a more representative way of the modern world. But of course, we didn't. We've tried, like, you know, the King Knute of English mythology to keep the tide back. And the result is, it's been done in a way that we don't particularly like. Anyway, that's my view to what your thoughts are about this. Yeah, I think you're absolutely right. There are two fundamental processes that are happening right now, or one really fundamental process, and then one geopolitical. The fundamental process is that after the end of World War II, the world economy started to change in a fundamental way. And it is this. From 1800, certainly through 1900, so in the 19th century, Europe and the United States became the predominant part of the world economy. This was itself the result of industrialization, of course, the industrial revolution, and the imperial age. So you combine those two, those went together. Europe and then the United States economically dominated the world. And Asia, which throughout human history, had been the center of gravity of world population and economy, shrank markedly. In fact, the share of Asia in world output fell from about 60% as late as 1822 by the end of World War II, 20%, even though the population was still 60% plus. So Europe and the United States, the North Atlantic, the West, whatever term one wants to use for this, became overwhelmingly the predominant part of the world. And it was based on early industrialization in the West combined with imperialism. What imperialism did was keep the rest of the world down. It stopped industrialization elsewhere in the world. It made the rest of the world a place for raw materials and commodities and extraction and exploitation. It kept the rest of the world down in part by preventing the spread of education, know-how, but also direct industrialization, which was not favored by the imperial powers. We'll do the industrialization. You provide the raw materials. Thank you. And so the world was built in this European-led and then European and US-led way up until 1950. Now, what changed, of course, after two World Wars and Great Depression, Europe lost its empires, sometimes peacefully, sometimes through 20 or 25-year wars of liberation. But by the 1950s and 1960s, there was now the opportunity for Asia and Africa and Latin America that in one way or another had been under the Western domination to start having their own development. This happened most dramatically, of course, in East Asia. This was the absolute takeoff point, starting, by the way, with post-war Japanese recovery and then the so-called Asian Tigers of Taiwan, Hong Kong, Singapore, Korea, and then the big one, China, beginning this very rapid ascent in 1978. But we call this an economic convergence. And the idea is that if there's peace time, open markets, no barriers like European or American imperialism to stop it, well, if there's a tendency for countries that are, for whatever historical reason, behind technologically or in income levels or in education levels or in literacy levels, to close the gap step by step. That's a fundamental process. What it is meant at a fundamental level is that by now, Asia is, again, more than 50% of world output. It's back to its historic center of gravity. That's a big shock to the United States, by the way, because my country is led by economic illiterates, I have to tell you, who don't understand what's going on. And when I wrote back in the 1990s, a book called Emerging Asia, which was just making basic economic extrapolations that, of course, Asia would catch up and have convergence, it was ignored by the grandiosity and hubris in the US that said the myth of the East Asian miracle, that was the famous expression that, "Now, we are the United States, we will stay in the lead," and so forth. And so, there was a lot of hubris in this. They didn't understand basic economic convergence as a phenomenon. Okay, that's one fundamental thing that's going on. The world's rebalancing, because, you know, there are a lot of smart people in India and in China and elsewhere, and they know how to use the technologies, and they're not only using them, they're innovating. Okay, the second thing is the geopolitical, and that is less a natural process and more of a political and, I think, deeply misguided process. And that is that the world that Alexander was talking about, of a kind of interconnected world that suddenly starts dividing, we actually thought, I mean, I believed that we were going to have that kind of interconnected world where there would be convergence and good. There would be a world economy in the US and China and Russia, and others would trade, and Africa would start its rapid growth, and it would be a more peaceful world. And I definitely held that view when I was asked and honored to be part of the Economic Advisory Group for Gorbachev at the end of the 1980s and early 1990s, and then for Yeltsin, I couldn't imagine, by the way, that we would be in the kind of geopolitical catastrophe that we're in right now between the US and Russia. I sat across from Boris Yeltsin and heard him talk about, oh, this is the new era of peace, we want to cooperate, we love you Americans, we want to be a normal country in Europe, there was no sense, it wasn't games, it was just okay, maybe that Bolshevik detour wasn't the greatest thing we ever did, we would like to get back to kind of a normalcy, and that was the mood. And remember, people talked about the borderless world, and Kenneth Oh my wrote books about the borderless world, and Thomas Friedman of the New York Times wrote the book The World Is Flat, and it's going to be dominated by worldwide McDonald's, for God's sake, you know, in countries that have McDonald's never fight each other, and every kind of slogan and so on. But even as late as the early 2000s, the idea that we were aiming toward, or not aiming, that we would arrive at an interconnected world and not a geopolitical divide still seemed plausible. And so this second phenomenon that we're seeing, the BRICS meeting in Kazan, the United States with its allies and friends, allies and friends, and Tom Friedman wrote today, an allies and friends column in the New York Times made me sick, by the way, completely the opposite of what he said 20 years ago, which was about The World Is Flat, now it's allies and friends, and Kamala Harris gets it, it's allies and friends, and Trump, on the other hand, would go with these dictators. And this kind of nonsense, by the way, this is a creation largely of the United States, and it's just weird, and it's self-destructive, but I mean, it could destroy everything, but it's absolutely self-destructive. Where did it come from? It came from a crazy idea in 1992, basically, by the way, but tapping into deep American arrogance, but in 1992, with the Soviet Union gone, it looked okay, we're the only one standing, we now run the world. And like some bad Western movie in the United States, we're the only sheriff in town, and we're going to clean up the world now in our image, and that is the second phenomenon that has brought us to where we are today. It's been 30 years of hubris. I don't see any other explanation of it, and now it's phrased as, like Tom Friedman today, and he's a good bellwether of kind of the ultimate in mainstream thinking in the US, allies and friends, allies and friends, that it's natural that the world is divided. So we have two phenomena, convergence of technology, know-how, military power, and so on, and we have divergence geopolitically. And this is a kind of multi-polarity, but a very unstable and dangerous kind, because it's actually, you wake up every day, or I just woke up and listened to the news, again, with more threats of nuclear war, World War III, the kind of rhetoric that we're using right now is so extraordinary, so dangerous, so reckless that an accident's going to happen if we don't stop this childish behavior. The reference to allies and friends, this is typically being a common criticism in the literature of peacetime alliances, but this is also a common hegemonic model, because if you divide the world into allies which are dependent on you and the adversaries which can be weakened, this is usually how hegemonts and also empires sustain themselves. Well, from my perspective, this has been some of the challenge, because this has made it very difficult to adjust to these new realities, for example, with the rise of China, the idea that, as Obama said, all the trade rules should be written, washing, not in Beijing, like they shouldn't have a role as the largest economy in purchasing power party to help to shape the international system. Same as we have in Europe, the idea that the largest country in Europe, Russia, should be the only one not to have a voice in any of the European institutions. It's not a great recipe for stability, and I think that's how maybe BRICS is significantly different, because it's not based on an alliance system that is within BRICS+, you have China, in India, Saudi Arabia, and Iran, Egypt, and Ethiopia. These are not countries who are working together to defeat America or anything. This is not an alliance system, and it's, again, we used to think this way in Europe after the Second World War. We're going to bring France, Germany, into the same club, so they're not going to fight in more news economics to create incentives. But somewhere along the line, we shifted to seeking security with other members, to seeking security against non-members, and going back to this old alliance system. If it was possible, leaving morals behind and all to restore this system of dominance, it would be one thing, but it's the feasibility of it, which I can't get over, because we would try, for example, to dismantle the supply chains and get China out of the supply chains. We do the same with the Russians with their energy, but it turns out the Chinese and the Russians are able to diversify towards other partners, while the US and Europe cannot, so it's not unclear to me what the endgame would be, because it's also very dangerous, because once economic coercion fails, economic disputes have historically turned towards militarized solutions. It seems like we haven't explored the possibility of taking advantage of BRICS to seek a better approach to the international system, because I saw now that the US has a trillion dollar of interest payments alone here on this debt. Surely, this is not a sustainable model. We should be seeking or have some political imagination to pursue alternatives, but it seems that any alternative emerging is seen as a threat to the status quo of the unipolarity. If I might, I just wanted to pick up on one crazy thing that occurred and that you briefly mentioned, which is Obama's attempt in the so-called Trans-Pacific Partnership to create a new trading system for Asia that didn't have China in it. When China was the the main trade partner of every one of the countries involved, and it reminded me somehow of a bad junior high school scene where you form a clique, so that that one's not in our clique, you're not going to be our club. The idea that a president of the United States would say, "Well, we're going to have a trade system with Asia that excludes China and that we write the rules," and not just think this as a kind of daydream, but actually express this. He's a grown-up. He wasn't in junior high school when he said that. He was actually president of the United States. It was so absurd. I thought it was so childish, and yet all the grown-ups, TPP, we're going to do this. Of course, the thing failed in the end, but the whole idea was worse than juvenile, because when I say they act like children, my wife always says, "You're insulting children." Children are more clever than that. They actually do end up playing again together on the playground, but we're not clever right now. What is it that happened? In the case of China, the TPP, in my interpretation, I keep putting it out. No one refutes it. You never can be sure of this because I don't have inside information and can't see the archives, and we won't see them for decades, but my feeling is that sometime around 2010, and really around 2013-14, the US said, "Okay, now we must contain China." In other words, another simple-minded idea out of an outdated, outmoded playbook that never was exactly right, by the way, but anyway, from the Cold War, now we dust it off and we apply the Cold War to China. For me, there was a telltale article in the Council on Foreign Relations, which people can find online, by a former colleague of mine at Harvard, Robert Blackwell, who went on to become a senior US diplomat and ambassador at India and other things, and another scholar named Ashley Tellis, and they wrote in 2015, "We need a new policy to China," and they said very explicitly in the opening, America's grand strategy is to dominate the world, and China now poses a threat to that, and so they say, and it's not in so many words, it's basically in these words, though I'm paraphrasing, China's rise is no longer in America's interest. Are you kidding? As if the United States is going to say, "Okay, you 1.4 billion people, your economic well-being, it's not in our interest," so they made a list of all the things that the US should do, and it included number one, trading system without China that actively aims to exclude China. Again, you can't make this up, it's like junior high school, and then strengthening the military around China's rim, which of course is office, and the new stepped-up alliances of Korea and Japan, the Quad, and so forth. Technology bans, which are, of course, put in place, and Biden is just up the ante again on new technology bans on China. Well, they made a list in this Council on Foreign Relations article in 2015. Every item on the list is played out, and just for listeners interested, when you see a piece in a Council on Foreign Relations like that, it's pretty sure it's not the authors giving their views. It's pretty sure the authors telling the members of the Council on Foreign Relations what Washington has already decided. What does Washington mean here? Washington means the security state. It means a set of secretive policies. The politicians are then told basically you implement this, and the things that are on this list have been played out now for a decade. So this was a conscious decision, a swerve in the U.S. deciding that China's rise is no longer in our interest. If you look at the consequences on the ground, China's exports to the United States stopped rising. They fell. This is extraordinary because they were rising, rising, rising because China has great industrial capacity. It's building capacity. Now we use the term terrible, stupid term over capacity. What does that mean in economics? It means you're very good at what you do better than we want you to be. So the United States now tells China you have over capacity. It's a new concept, by the way, in any event. This was a conscious decision. It's being played out. My only problem is I can't believe grownups do it, and it's very dangerous, and in the end, people are getting killed because of this by the hundreds of thousands, and we talk about nuclear war every day. And this is the absolute insanity of this, because the basic idea of convergence and why not China having decent living standards after 150 years of Western plunder and internal unrest, why not? If we took the normal view that it's not clubs and friends and allies and cliques, but it's a world trying to find its way together and avoid the shoals and the other potential disasters would be a lot better off. Well, absolutely, because if China becomes rich and prosperous, and Chinese people become well off, that is a good thing. It is a good thing if it happens to Indians. And Latin Americans and all of these people, it is a good thing if we are being completely realistic and honest with ourselves. For us in Europe and for you in America, it's a good thing for everybody. And we can trade better. We can exchange ideas better. We have more reasons to want to be peaceful with each other, because we then have a joint interest in our shared prosperity. Trying to keep someone down in that way, because that's what this demands to. It's about being people down. It is profoundly oppressive. It is extremely wrong. And by definition, it is going to provoke resistance. It's bound to. And when you look at the West, who we are, you know, Europe, the United States, we're only a small part of the world and important part of the world. But we're not the majority. The majority is elsewhere. We're going to set ourselves in that way, that we're going to try and keep the majority down. Well, unsurprisingly, they're going to resist us. And they're going to start coming together. And they're going to start creating their institutions, their alternative institutions to our own. And then, of course, presumably, we will want to sabotage them and all that. And then we will get into that very cycle of confrontation and block politics, which is the one we're in today. But this is completely counterproductive. It is misguided. It is anti-historical, by the way, just to say, it absolutely is. And it is fundamentally antithetical to the system that, you know, once I believe the United States and for the United States, that was instrumental, for example, in creating the United Nations, which was the political expression of convergence, if you like, treating all states, all societies, all nations, as equal with each other, understanding that everybody has a stake in the system and seeking to preserve peace. Anyway, there we are. That's our question. No, no, no, no. The U.S. was the lead force for the World Trade Organization. And the attack at the time is, oh, the U.S. is trying to open markets for everybody for U.S. advantage. But in fact, the open markets allowed this rapid convergence, because open markets for the world enable the convergence of China and India and other countries, which famously had export-led growth. And of course, they benefited. And that's a wonderful thing. And the core idea of economics that Adam Smith brought in, that is a right idea, is this is not a zero sum game, where China's game is somehow America's loss. Are you kidding? This is mutually beneficial. And I was in California recently in a wonderful visit, and somebody asked me, wasn't it a huge mistake to let China into the WTO? And I said, are you kidding? This was a tremendous thing. Not only did it help China raise living standards for 1.4 billion people, but this has been good for the world. And this person said, oh, but it hurt the United States. And I thought, no. By the way, it made California rich because California sold a lot of technology and was engaged in a lot of trade with China. And China was the manufacturing base for all those wonderful gizmos, these things that we hold. They're all made in China with very efficient production processes. Thank you. That's mutual gain. And so this idea that this is somehow was terrible for the United States and so forth, if your only interest is we're number one, and we don't want anyone else, and we'll hold anyone else down. Well, maybe if you're in that absolutely zero or negative sum mentality, then yes. But if you're in the mentality that actually prosperity is a good thing, peace is a good thing, not going to war is a good thing, and trying to hold down even if you could, which you can't. But in our age, although the imperialist did it, hold down other places in the world, no, that is not a good thing. But that is actually the prevailing mentality in Washington, I'm afraid. I think it's probably because there's a tendency to conflate what's good for American interest with American hegemony. And this is one that should be separated now, especially now that we see that international trade system can't be developed without China that will lead to an economic war, which really can't be won. And also European security architecture with Russia would also predictably result in a great power war, also which can't really be won. So I think the struggle for restoring dominance or going back to the 90s, as it was, that this is not necessarily consistent with US interest theater, which is why it keeps surprising me. There's no course correction. Because we are not defeating the Chinese. We're not defeating the Russians. But there's no discussions about alternatives. And I think that's why bricks could be interesting. If the West could try to find a way of working with bricks, as this would reduce or mitigate this zero sum mentality, and it would allow us to define our interest in other ways than hegemony, which we can't restore. It becomes frustrating to see the logic. And I'm almost afraid in this country to express my optimism about bricks, because you're then seeing us taking the other side. You're not loyal to us. And it's very strange that we can't divorce ourselves from this idea that the international system has to be dominated by the West, even though this reality is already gone. And I think Europe is the most misguided of all. The United States living in its delusions between two big oceans can get away with things. But Europe is in Eurasia. It needs cooperation with Russia. It needs cooperation with China. It needs a safe, shared, continental space. That is the absolute magnificence of what Gorbachev envisioned. He was, to my mind, although he's reviled in Russia as having presided over economic catastrophe, the truth is he was the greatest statesman of our time, because he was a person of peace at the end of a system that wasn't delivering and that depended on force. And he said, "No more force. We're going to do it peacefully." And the tragedy is that the U.S. took that as, "We win. You lose," rather than as saying, "We all win. We now have peace," which was certainly how I heard things as a young person working to try to fulfill Gorbachev's vision of a common prosperity from Rotterdam to Vladivostok, as he endlessly repeated, and as we always said at the time, the idea was Eurasia should be at peace. It should be cooperative. It should be productive together. By the way, European leaders once believed that. And they knew many of them thought, "Okay, now we don't need NATO anymore." They certainly knew in 2008, including some in your country, Glenn, who absolutely knew at the time that the U.S. push for NATO enlargement to Ukraine was a direct provocation. And what's a mystery for me is why Europe has gone silent at the political level of basic truths that what's happening right now is destructive of Europe. It's a threat to Europe's security, not because of Russia, but because of this divide. And we need to stop the divide, not to go to war with Russia. Where is, where are European leaders that 20 years ago would have said these things? And now they don't say them. I just want to make two very last points. One is about Europe, which is very briefly, I think you're absolutely correct. We've had a report from Mario Draghi about how there is this deep economic malaise in Europe, which I think is true, by the way. But as many people are pointing out, he's not identifying the elephant in the room, which is the reason we are in the economic malaise is because of the geopolitical policies which we have been following, which is completely misguided. That's the one thing I want to say. The second point now, it's a very brief one. It is that I obviously live in Britain. I'm very familiar with the politics and society of Britain. Any system, which is what the British Empire was, which is built on ultimately oppression, is deeply atrefying for the people at the core. If you look at the problems that Britain has wrestled with for the last 50, 100 years, they are very much the products of the system that it created in the 18th and 19th century. And which of to this day not been overcome? And if we have problems starting to appear in the United States that people talk about, I think they are the product of the same cause. I think that's where it ultimately comes down, not because the Chinese are good at producing things. It's because America itself is prioritizing geopolitical and power objectives over its own prosperity. And isn't it extraordinary to this moment when Britain can't hold it together in the NIH or on the streets that Keith Starmer's priority is deep missile strikes into Russia? How can this be this delusion of grandeur? Because for Britain, the US has a delusion of grandeur. It's not forgivable. I don't want to forgive it. But at least it's recent in its bizarness, whereas for Britain, after so many decades, a government comes in facing massive social problems, and the priority from the first moment is war with Russia. As if it's 1853, and Keith Starmer is Palmerston. How can this be? Well, it can be if you have become addicted to this thing over hundreds of years, which is what we have become. We think of that ourselves always in this way, and we can't kick the addiction. That is the fundamental problem. And the United States is a very, very serious risk of going down the same route, just to say. Yeah, I couldn't agree more. I think Glenn Alexander and I are both appealing to Norway, your voice of reason. Can you get some more reason in your fellow Norwegians? Because we need some rationality in this to say this is not right, stop behaving like children, children with nuclear arms, by the way. It's a bad combination. And so, peace with Russia, peace with China, it would make a good deal for the world. I think all common sense kind of went away, especially after 2022, because the switch went off, a very primordial instinct that once we felt war close, it's all us versus them. Everything was good versus evil. You can't really discuss what is good for our security. Has any of this benefited Ukraine? None of these discussions are, they're only assessed by the extent to which you demonstrate loyalty towards the in-group and show your hatred of Russia as a symbol of how good you are. So, I even had this discussion, it's asked, wouldn't it be good if we have gone back to 2014, not topple the government? Ukraine would have its territory, all these people wouldn't be dead, they would have, this would have been very different. But no, no, no, this would have been what Russia would have wanted. And you're saying with China, wouldn't it be great if we wouldn't have gone into this economic war? Surely, it's devastating American tech industries, while China is able to pursue self-sufficiency and diversify. No, but that would be surrender. So, we would never begin at the point of departure. How would we enhance our economic or military security? It's always just pick the right side, good versus evil. Yeah, it's poison to the mind, I think. But yeah. Anyways, Jeffrey Sachs, Alexander McCurris, thank you so much. Great to be with you.