Yves here. Michael Hudson returns to Nima’s Dialogue Works to discuss some of Trump’s latest provocations. It is revealing how many of the pols and pundits who decried Putin as a land-grabber seeking to reconstitute the USSR have little to say about this scheme.
By Nima Alkorshid. Originally published at Dialogue Works
NIMA ALKHORSHID: Hi, everybody. Today is Thursday, January 9th, and our friend Michael Hudson is back with us. Welcome back, Michael.
MICHAEL HUDSON: It’s good to be back.
NIMA ALKHORSHID: Let’s get started, Michael, with Donald Trump and his policy toward an island called Greenland. Here is what he said about this island:
[Video Starts]
DONALD TRUMP: Well, we need Greenland for national security purposes. I’ve been told that for a long time, long before I even ran. I mean, people have been talking about it for a long time. You have approximately 45,000 people there. People really don’t even know if Denmark has any legal right to it. But if they do, they should give it up because we need it for national security. That’s for the free world. I’m talking about protecting the free world. You look at—you don’t even need binoculars. You look outside, you have China ships all over the place. You have Russian ships all over the place. We’re not letting that happen. We’re not letting it happen. And if Denmark wants to get to a conclusion—but nobody knows if they even have any right, title, or interest. The people are going to probably vote for independence or to come into the United States. But if they did, if they did do that, then I would tariff Denmark at a very high level.
[Video Ends]
NIMA ALKHORSHID: Yeah. Go ahead, Michael. What’s going on in the mind of the policy?
MICHAEL HUDSON: Well, this fits into Trump’s policy that he said. A basic policy is ‘we win, you lose.’ And some of his plans actually seem to work. I think there is no—what’s striking is there has been no attempt to tell Greenland what they may benefit from all of this. So it’s pretty obvious that he doesn’t really care about a plebiscite. He’s talked about, well, [45,000] people there. Let’s offer them—if you have a plebiscite and you become independent and you vote for some national security alliance with the United States, just think, for [45,000] people times a million dollars, you know, that’s—for a few billion dollars, we’re going to get all of these natural resources, and we’ll get control of the North Atlantic sea lanes that have to go by Greenland on their way to Nova Scotia and Canada, and we’ll get control of the Arctic sea lines, the northern route through the Arctic Ocean that’s warming up now, and that will enable America to block other countries there. So it’s obvious what he wants.
He’s following the same advertising agency that George W. Bush used when he hired an advertising agency to say, “How can we convince the American people that we need to go to war in Iraq?” And they said, “Well, you want to claim that Iraq’s threatening us with weapons of mass destruction.” No truth at all, but it’s the old Joseph Goebbels idea that you can always get a population behind you saying that you’re under threat and it’s national security. So that’s sort of how Trump is dealing with the domestic audience. Almost all of the speeches are aimed at the domestic American audience, not at Greenland or other countries, not even at the European Union or Denmark that has Greenland as a protectorate. What he said is, “You have raw materials that we want. You can give us naval control. And if you don’t give it to us, we don’t want to have to use force.”
But as he said to Denmark, “Well, you know, we can use economic force. We don’t need military force. We can put special tariffs on Danish imports to America.” And in fact, we could extend these tariffs against the whole European Union if they don’t go along with it. And this seems to be working.
The Financial Times today quoted Denmark’s foreign minister, Lars Rasmussen, saying that he’s ready to talk to the United States about, quote, “How we can possibly cooperate even more closely to ensure that American ambitions are fulfilled.” Well, that’s about as much of a capitulation as you can get.
The Wall Street Journal says that what Trump wants is what he calls a defense-free association or a “free association for defense”, like America has with the tiny Pacific Islands that it appropriated and that always vote with America and Israel in the UN against all of the members.
So if there’s a kind of free alliance, he’ll treat Greenland like he treats American Samoa and other countries like that to make it a protectorate. So it’s obvious that he’s trying to have an opening wedge to occupy Greenland with, just say, well, we need a military base there to protect us. And the military base is going to expand into what happens to be whatever raw materials they decide that Greenland [has]. And all of a sudden, the United States will occupy Greenland.
And I think I can figure out what the plan is. It’s very much like American companies dealt with Iceland. I’ve spoken to three Icelandic Prime Ministers about how it is that they let American companies in Iceland set up huge electric generation facilities off Iceland’s geothermal power. The fact that there’s all this volcanic activity that heats up the water. And the first thing, the companies built facilities to refine aluminum, which is basically made out of electricity. And later to set up bitcoin mining companies.
And I asked the Icelandic prime ministers, what did you get out of this? And they said, well, you know, they don’t pay much tax because the companies lent them the money to produce this electricity. And they, all of the income is expensed in interest.
What they said is they’d hire Icelanders to Icelandic labor. And they waved the flag of Icelandic labor. They hired altogether between 12 and 20 Icelandic workers, just as guards of the companies and porters to carry things around. So for, you know, this maybe half a million dollars of spending a year, they got $100 billion. I mean, just a total giveaway.
And I asked each prime minister, why did you do it? And they just shrugged. They said, well, you know, that was, you know, that was the deal that was offered. I think America thinks that it can treat Greenland and other countries the way that its companies treated Iceland and Fiji.
I’m sure that Trump will have American companies do most of the work in Greenland if there is something, but you can see that he’s trying to soften them up. I think he may end up telling Greenland, “Well, look, if you have a plebiscite, we’ll give each of you a million dollars. Isn’t that something?” The whole idea is that if a country can have a plebiscite and declare independence, in this case, independence from Denmark, this is the same principle of plebiscites that Russia has used with Luhansk and Donetsk. That legitimizes the whole idea.
When the United States carved out Kosovo from Serbia, it didn’t even have a domestic plebiscite. It just said, “We had a plebiscite in Washington, and the cabinet got together and we voted to create Kosovo.”
So the question is, who’s going to vote on the plebiscite? Well, this was just obviously a charade. And I think that what Trump is trying to do is not really going to invade Greenland because I think you might need congressional approval to declare war on something. I think the whole attempt is to negotiate with Denmark, for Denmark to give the United States what it wants, this national security agreement.
Well, the problem is that you can see that there’s some rankling among the European Prime Ministers because right now they’re all NATO Prime Ministers, and they’re threatened by nationalistic parties overthrowing them. And so they’re making a show of saying, “Oh, this is really bad. What are we going to do?”
Trump is using the big lever against them, is saying, “NATO isn’t pulling its share. We may have to withdraw from NATO if they don’t agree to spend 5% of their GDP on arms to defend themselves against the fact that Russia may walk right through Europe to England.” And imagine 5% of the European, the NATO GDP, for arms, would be ten times Russia’s military budget. I mean, way out of all proportion.
And as we’ve seen in Ukraine, the American arms don’t work, the European arms don’t work, and the European arms industry has a problem- making arms because it doesn’t have the oil and the gas to heat up the steel to make arms that have to be made out of steel and metals.
So you can see that Trump is boxing in Europe as a by-product of using Greenland as sort of a wedge into Europe for NATO.
If he said, well, we’re talking about national security, Russian ships and Chinese ships go across the North Atlantic, and we really need Greenland to protect this. And if you’re not agreeing to a national security occupation of Greenland by American military bases along the south of the North Atlantic and along the north in the Arctic, then we really don’t have any reason to be part of NATO. [If] you’re not defending us, [then] we’re not defending you. Unless you cut back your social spending by 25% and shift that to military spending on American arms. That’s really what it ends up all about. What a clever tangle. It’s almost like reading a detective story and tracing things back and back and say, how did it all begin? What was the opening wedge? You know, you can see that there’s a whole kind of plan that’s unfolded, and the plan’s discussed openly, Financial Times, the Wall Street Journal editorial page, all of this is in the open. And the Danish Prime Minister said, well, you know, I’m sure we can help American ambitions.
Well, American ambition is to control the whole world. And the important thing is that Trump realized and said explicitly, we don’t have to control the world militarily. We can control it economically by making economic threats. We don’t have anything to offer other countries. All we have to do is threaten them. That’s the only bargaining wedge the United States has. Only threaten. We can threaten their transportation. We can threaten not to support that. We can threaten them with tariffs. We can threaten them with financial regulations. But we really don’t have anything positive to offer them, except the agreement to sell them overpriced military hardware that doesn’t really work.
NIMA ALKHORSHID: Right now, I think in the mind of Europeans, they’re thinking, what’s going on with Donald Trump? Because after all, we know the main purpose of NATO is to protect Europeans from other powers like China, Russia, and the enemies, as they call it. But here comes Donald Trump, and he’s talking about Greenland, which is part of Denmark. He wants to capture. Here we see a NATO member against the other NATO member.
And how he can, how do they in the European Union, how do they understand it? How can they make it sensible in their mind? Because after all, the whole, when you look at Ukraine, when you look at what has happened in Ukraine, when you look at the propaganda machine, Sweden, Finland, all of them together, the new members of NATO, we want to protect you. And right now, Donald Trump wants to capture part of Denmark.
MICHAEL HUDSON: His way of making it sensible is transactional. The sensible is, we will hurt you if you don’t do what we want. It is in your interest not to be hurt. So, let’s make an agreement that we will not hurt you, and in exchange you will give us what we want. That’s his idea of the transaction. That basically is the principle of American foreign policy. All it has is the threat to destroy and to create chaos and to disrupt. And the gain that other countries have is, we won’t invade you if you do what we want. Well, that’s not the kind of deal that was usually thought. And just imagine the European countries saying, well, it looks like the European NATO countries need to defend themselves against an attack from the other side of the Atlantic.
Well, that’s not what the NATO head is saying. The NATO head, the new head, has said, we want to change the way that NATO spends money on arms. And in the past, all along, each country has decided how much it wants to spend on arms and to do its own negotiation for arms. We want a centralized negotiation through NATO so that all countries can negotiate together in surrendering to the United States and giving the United States whatever it wants.
So, the United States has made through NATO an official proposal for surrender that there are individual countries and voters of Europe will have no voice in what arms they buy, who they buy them from, and at what price they’ll buy them from. NATO, through the European Union leadership, independently of national leaders is essentially going to capture them. So, this is a move by the United States to capture the European political system and essentially by surrounding the so-called democratic elections of each country with this overall NATO and the EU are in charge of how governments are going to spend the money, how much their budget is going to be spent on arms or other things.
And to meet the objectives that the United States insists on for Europe to buy American arms, that means cutting back the social spending, cutting back the subsidies that the European countries have had to give their homeowners and renters to afford heat, oil and gas heating and electricity. It means absolute political crisis for Europe. And you can be sure that America can then talk to the individual leaders of the countries and say, well, you don’t want a political crisis, do you? That would throw you out of office. So, I really think you should surrender to us.
This is the opening ploy in an overall plan for America to defeat Europe economically and convince it to surrender on economic grounds, commercial, trade, financial grounds. Well, you can see already what’s happening. If you look at the Euro’s exchange rate, it’s plummeting because people realize, well, now that it’s not producing its own consumer goods, and so now that it’s not buying inexpensive energy from Russia and other countries and is even being blocked from China, its trade deficit is going to go way up. The Euro is falling. That means that prices are going up.
When a currency falls, that means that it costs more domestic Euros to buy commodities that are priced in dollars, not only from the United States, but from other countries all over the world, the price, raw materials in dollars and trade in dollars, not to mention all of the foreign debts and domestic debts that are denominated not only by governments, but among large corporations, in dollars. This is creating a financial squeeze on Europe.
So it looks to me like what Trump is going to be introducing in his administration is trade chaos, fiscal chaos, financial chaos, balance of payments, exchange rate chaos.
And if you are the largest economy and are the most self-sufficient economy and can prevent other countries from being self-sufficient, or having trade agreements that enable them to be self-sufficient, energy or whatever, then you’ve got control. You’ve got control of them. I think that’s basically what the United States is saying. What are you going to do about it?
NIMA ALKHORSHID: And shifting from Greenland to Canada, which is a huge country and it’s again, a U.S. ally, but what is the main purpose for Canada, Michael? What is the main reason that Donald Trump is talking about Canada right now?
MICHAEL HUDSON: Well, for the last 40 years, America has been exploiting Canadian industry and also the Athabasca tar sands. So the, I guess the basic model for U.S. trade with Canada was the auto agreements that were made in the late 1970s. I think everybody’s, I think everybody’s forgotten about them, but America threatened Canada with not allowing their importation of automobile parts. So America’s big car-making city is Detroit and right across the Detroit Bridge, I guess, is Windsor over the water and the auto parts agreement basically imposed huge costs on Canada.
The United States obviously wants Canadian resources and as Trump says, it wants to avoid it. Well, here again, he’s simply made threats.
Here’s what he could have done. There’s a lot of resentment, as I think we spoke in the last program, by the prairie states, Alberta and Manitoba against Ontario. Here, since World War II, all of Canada’s industrial and financial concentration was in Ontario at the expense, not only of the French-speaking Quebecois, but against the prairies. And there was almost, there was talk in the 60s and 70s about, is Canada going to break up? Are these prairies going to go on their own way? Now, Trump could have gone to Canada. If he really were serious about trying to absorb Canada, he would say, “What’s in it for you, Canada, for joining us? Here’s how we can treat you. We can give you the same wonderful agreement we’ve given Puerto Rico or Haiti and talked it all up, some kind of an agreement.” And he could have played on Canada’s, the resentment of parts of Canada against Ontario. Instead, he’s talked about all of Canada together.
Well, Ontario doesn’t have the resources that the rest of Canada have. He’s made no attempt to do that at all. All he’s trying to do is bluster and that’s counter-effective. And essentially, we don’t know exactly what he wants yet. He hasn’t said it, but what he has said was, “If you don’t give us what [we] want, we’re going to impose 20% tariffs against you.” Those tariffs against you are going to force the Canadian dollar way down. And the Canadian dollar has gone, I think it’s now $1.43 in Canadian dollars to buy a US dollar, you know, up from about $1.23 or something a few months ago. Well, you can see if the Canadian dollar is plunging in its exchange rate, that makes its imports denominated in dollars much more expensive. There’s a big Canadian inflation. That’s part of why they really want to get rid of the Prime Minister and the Liberal Party.
But also a lot of Canadian industry corporations denominate their debt in US dollars or even foreign currencies. Well, this is causing a huge financial squeeze on corporate profits, on the government that owes money in US dollars. The cost of basing its economy on dollars is as bad for Canada as it’s been for the Global South countries that owe their foreign debt in US dollars as their prices for energy are going up and as they’re being squeezed, as we’ve spoken before.
So the rest of the world is sort of confronting the fact that it’s in a squeeze of using the dollar on the one hand, and depending on trade with the United States or with US corporations on the other hand. And the American government, Trump is now using this really in the way that the US government has been doing all along, as a wedge to gain diplomatic control of Europe and other countries that are using the dollar, trade with the dollar or trade in commodities that are priced in dollars.
So Trump has essentially said, well, we’re going to use economic and financial leverage to get what we want. We don’t need military leverage anymore. Well, especially because America is out of military arms and Ukraine has shown that it’s sort of a paper tiger for all of that.
So I was going to suggest in the past that what I called Hudson’s Law that I thought would peak under Trump, that every US action attacking other countries tends to backfire and create a counter reaction that costs America at least twice as much. I thought of that when it comes to the trade sanctions that America has imposed against Russia.
That obviously one effect is going to be, well, America may end up losing Europe. Because you can see the European nationalist feeling against being cut off from trade with Russia and now with China, too. But I think that Trump and the deep state in America have anticipated that, yes, there’s a reaction. We don’t want to lose Europe as a result of what we’ve done during the war against Russia and Ukraine. So now it’s the time to really lock in America’s economic and political leverage over Europe so that it really faces the choice: either we give in to American demands, whether it’s to buy more American arms, to buy American liquefied natural gas instead of trade with Russia, Or to cede our protectorate, Greenland. Greenland is not part of the EU, but it’s supposedly a protectorate, just like the Dutch have the Dutch Antilles, the Dutch West Indies, that it’s made into offshore banking and tax avoidance centers. That’s the system that’s been put in place and there’s such a momentum for such systems and inertia that other countries really are not able to break away from their dependency on the dollar and trade with the dollar and financing their credit system and banking system with dollars.
They really don’t have much of a choice unless they move on a system-wide basis to change how the system works. Well, that’s not how European governments think. That’s called socialism. And they’re not about to go that route. So that inertia benefits the United States.
It’s as if the United States is in a position of being the only mover in international affairs. Other countries are passive and being passive, they can be threatened. And all these threats only work under the existing economic and trade and financial system that’s in place. What are they going to do?
Well, the only countries that are trying to find an alternative to this are the BRICS and the global majority. And I don’t see Europe and Latin American dependencies joining the global majority, at least for another 30 years, which is as far as you can possibly see. They accept the fact that they’re locked into the system. And unlike other countries, they’re not saying, is there an alternative? Europe is in a mental depression, an ideological depression. They think that there isn’t any alternative. That’s the problem.
NIMA ALKHORSHID: Michael, before going to BRICS and the fight, the biggest fight that we are going to see in the future. But here in Panama Canal, he’s talking about the Panama Canal, which in his mind, is in the hand of China. China is manipulating everything in Panama. And that’s why we have to capture the canal. We have to get the canal from Panama. How is that going to work out for Donald Trump? And is this the main reason for what he is [saying] about Panama?
MICHAEL HUDSON: Well, what he’s talking about is fantasy. So it’s not really what he intends. He said two things. On the one hand, as you said, well, China’s running the Panama Canal. Well, what China is doing is, it’s organized two ports. China’s specialty that it’s gone throughout the world as part of its Belt and Road initiative is port development, as it has in Athens and Greece and other countries. It’s developed sort of the ports for loading and unloading in Panama. That’s not control of the Panama Canal. It has nothing to do with the Panama Canal. It’s only running a port.
The second thing Trump has said is that Panama charges American ships more than other ships. And it’s anti-American. Well, that’s not the case at all, as almost all the American papers acknowledge. Panama charges the same price for any country. And there’s no way to avoid that because there are so many flags of convenience that you really don’t know what country has what ship. So Panama charges each ship according to how big it is. What’s the volume, what’s the tonnage of what it’s carrying, because that is the only logical way of charging users for what they’re doing.
And the fact is that the drought, and the same drought that’s caused all of these forest fires in California right now has occurred all along the Pacific coast and on Panama too. Panama has a drought. It doesn’t have the fresh water that it needs to pump into the canal to have the canal’s water level high enough that the big ships can get by.
So obviously, it has to charge the big ships more because there’s an enormous sacrifice of domestic water for this. Water probably becoming more valuable than oil on balance for the whole world. Fresh water is needed everywhere that there is a drought, and there’s a drought throughout Africa, there’s a drought throughout the whole Southern Hemisphere and all along the Pacific Coast
So I think what Trump wants is to say, well, instead of charging ships by the tonnage and the size, we want you to just charge them by the country so that a big oil tanker will pay the same rate as a small yacht going through or whatever is going through there.
I think he’s trying to get some kind of rewriting the principle on which canal fees are based in a way that will favor the large American ships. That’s the only thing that I can see because what else would America want in Panama? There’s a client oligarchy there that is rather unpleasant, and I don’t think there’s anything that America really wants.
But to control the canal and by regaining the canal, it can close it to countries that don’t follow American foreign policy, like a Danish ship that won’t give us Greenland or a European ship that won’t pay its NATO fees.
You can see that Trump is looking for choke points. A choke point is, as we said, trade with the United States, that’s a choke point that can be turned off with tariffs, whether it’s Canada or the EU, canal and transportation, that’s a choke point. Energy, oil and gas, that’s a choke point, which America is solved by its actions in Syria, Iraq, all throughout the Near East.
And the monetary checkpoints that it’s trying to impose. So if you look at American policy as looking for the choke points to disrupt other countries’ traditional patterns of trade and investment, then you see America’s role as a chaos creator. And a lot of people have said, well, America’s policy is chaos. They haven’t really spilled out exactly how to create this chaos economically. And I think that’s what Trump realizes in which other countries or their politicians are too embarrassed to talk about explicitly. So that’s why we can talk about it, they can’t.
NIMA ALKHORSHID: As you know, he wanted to build a big wall between the United States and Mexico in his first term. And he couldn’t finish the wall before leaving Washington. That was one of the main problems between Donald Trump and Joe Biden and his administration about the wall between the United States and Mexico. And right now he’s talking about, it’s not a wall. It’s about the countries, about the island, about the canal. These are huge objectives in his mind.
Do you think that for these people who are going to work with him, is that achievable in his mind? Is he really thinking that he can achieve these objectives before leaving Washington? Because he has four years in power. If he couldn’t build a wall, how can he capture these territories, these countries?
MICHAEL HUDSON: Well, the key word is what you said, in his mind. In his mind and in the mind of American negotiators, they don’t take into account what other countries may do in response. I think he didn’t finish the wall because he can now say, you know, we have a choice. We can finish the wall and isolate your trade and then you won’t be able to trade with America. Or we can agree to leave trade open and you can have your maquiladoras, your assembly plants export at the United States. You know, we can avoid disrupting your trade by imposing the wall, not only against immigrants, but against you, Mexico.
Well, what has changed the equation is that Mexico has just elected a new president who’s a socialist president, basically, and is trying to redevelop Mexico. So Mexico realizes that it was the big loser from President Clinton’s NAFTA agreement of the 1990s.
The NAFTA agreement for free trade meant that all of a sudden America’s low prices subsidized grain exports flooded Mexico. And that made domestic Mexican agriculture unprofitable. And the result is that Mexico, as a result of NAFTA, lost its ability to feed its own people and became dependent on American food trade. So I guess you could say America, among all of the trade categories that America wants to threaten, food is a basic category there.
But now Mexico can say, well, you’ve changed the rules of NAFTA. We’re not going to be part of that anymore. We may lose the trade with the United States, but we’re talking long term. We have to begin growing grain in Mexico again. And Mexico has the ability to ban Monsanto, Bayer, the special seed varieties. They can go back to domestic Mexican grain and somehow revive domestic farming there.
Well, that would give Mexico an option to actually use its immigrant labor that was on the way to the United States. What if Mexico was to decide, we want to develop our own agriculture in the way that the United States did in the 1930s with its Agricultural Adjustment Act that produced the largest productivity of any industry in the world up to that time? We can be productive. We don’t need corporate farms. We don’t need to rely on American control of the platform to sell our goods. We can have our own marketing agency in Mexico so we don’t have to depend on American companies.
And we can begin to industrialize our own countries. You put in place the maquiladoras, the industrial parts. We can now become independent of the United States in industrial goods. We can make agreements with Asian countries to help develop our industry. Putting it here. We have a lot of labor and we’re having more and more labor as America’s driven labor out of Guatemala, out of Honduras, out of the countries where it’s installed client dictatorships into Mexico. Mexico could become a new America.
I think that Donald Trump realizes this and why he’s become especially nationalistic to say, let’s change the name of the Gulf of Mexico to the Gulf of America. I mean, you can see the belligerence, the bellicosity of the US towards Mexico for its thoughts that it can become independent of American foreign policy and economic policy and financial policy.
This is all taking place there. And imagine what would happen if Mexico were to join the BRICS, ultimately, saying, well, the United States is trying to disrupt any attempt we have to create prosperity for our people. So we’re going to join with the rest of you in a new collective group of mutual self-support. Imagine if that were on the line.
Well, if you’re part of the deep state here, you’re always saying, “what if other countries did something that we don’t like? What if other countries became independent of our ability to impose choke points on them, to force them to do whatever we want in the world? How do we derange the interconnections to prevent this? How do we break up China’s Belt and Road, interrupting it with nationalistic or al-Qaeda terrorists to do that?”
This is American foreign policy. And at some point, all of this policy is going to end up backfiring and the attempt to hurt other countries will end up hurting America twice as much by leaving America isolated all by itself.
Well, America can live isolated. I mean, America has the ability to become self-sufficient in absolutely everything, but that’s not enough for it. Being self-sufficient isn’t enough for the US. It wants to be able to gain all of the economic surpluses from the rest of the world. And that’s really what it’s had. It’s a colonialist country, not a military colonialist in Greenland or others, but an economic and financial colonialist. That’s what’s taking place. And this is considered something that you don’t talk about in polite company. And it needs to be taught. I’m sure that the BRICS countries in their meetings together, certainly the Chinese and the Russians are talking about it, but it’s not being talked about in the countries that are the most immediate targets of American foreign policy. And needless to say, these are the countries that are the friendliest to America.
These are the easy-picking countries. These are the countries that already, they’re not client oligarchies, but they’re client politicians. The whole neoliberal politicians that are the mainstream of Europe and are now threatened with being voted out of office. I think the nightmare to America is, what if these nationalistic parties get together and say, there is an alternative. Well, the problem is that the nationalistic, the alternative is socialism of one form. It’s mutual aid and the nationalistic parties are right wing. So how on earth are you going to get the nationalistic parties to ever come about with a kind of agreement to protect their own economic interests independently from the United States?
America has basically poisoned the left-wing parties, the social democratic parties, the labor parties throughout Europe to convert them to neoliberalism so that you had Tony Blair being twice as neoliberal as Margaret Thatcher doing things that Thatcher couldn’t even think of doing like privatizing the transportation system and things like that. So how on earth can you have other countries becoming independent of the United States without a program? And the program has to be spelled out. Here’s what we have to do so that if America threatens to disrupt trade with America, we can trade with each other. We have a plan B. There’s been no attempt by Europe or by America’s closest allies to develop a plan B. There’s only plan A and the alternative to plan A is chaos. That’s the present. How can these countries develop a plan that’s not chaos?
If the only alternative to neoliberalism is a kind of right-wing nationalism that doesn’t have an economic program, which would have to be what is called, let’s say, a social market economy. Basically, you don’t have to call it socialism, just social market economy like the United States to begin to create in the 1930s and indeed like the United States was creating in the 1980s and 1890s when it was becoming a protectionist country that enabled it to become the leading industrial country and leading financial country of the world. That’s what other countries can look at. But there’s no discussion. Why don’t we try to enrich and create prosperity in our countries the way that the United States did in the 19th century by following what it itself did? That’s how it ended up in the position to do to us what it’s threatening to do to us today. We are victims of the threat to create chaos in our country that would lead to certainly us politicians being voted out of power, but also leading to the economy to undergo a traumatic shrinkage as you pulled out the interconnections, just like you pulled out the oil and gas connections with Russia and the trade with Russia. You’re trying to pull out the connections between the EU and China now.
NIMA ALKHORSHID: We’ve learned that Indonesia, which became a BRICS partner on January 1st. Two days ago, they have announced that Indonesia has BRICS membership, full BRICS membership. Here comes the question, as BRICS is trying to be more charming, building trust among the countries that are interested to be part of BRICS. On the other hand, we are witnessing that the United States is destroying the European Union, European countries with the war in Ukraine and what has happened to the German economy. And right now they’re talking about Canada, Mexico and all of that. How is that going to help the United States in the long run? Because I don’t see any sort of victory in the long run for the United States. BRICS is just growing and growing stronger. At the same time, the United States can be stronger, but they’re weakening their allies. That’s the problem.
MICHAEL HUDSON: American policy lives in the short run. Financial policy lives in the short run. Trump will be out of office in four years. So will most politicians in the world. Politicians live in the short run. Diplomacy lives in the short run. And America feels that if it can smash up the world and make a grab bag that it can, in the short run— yes, it’ll interrupt American trade and finance too. But in the long run, America can be self-sufficient. Europe can’t. And Mexico can’t. And Canada can’t.
That as long as other countries don’t create their own mutual agreements for Plan B, then they’re going to be subject to living in the short run. And in the short run, America can always win. In the long run, as you just pointed out, it loses if countries act in their self-interest.
So the question is, how can the United States prevent countries from acting in their self-interest? Well, this brings into question the whole materialist approach to history. The materialist approach is, countries will act in their self-interest and the most efficient, productive economies are going to win in a kind of Darwinian struggle for existence and dominate the world. But that’s not what’s happened. America is not the most efficient economy. It’s de-industrialized its economy. It’s financialized its economy. So somehow this materialist approach to history is a long-term approach. And as long as you can say, well, that’s the long run. If we can continue to keep the whole world living in the short run, living on a response from one emergency to another, living from one state of chaos to another state of chaos, with each state of chaos enabling us to grab a little bit more, then we’re going to be able to control them by creating chaos. This is the opposite of how America thought, how the world thought America was going to gain power after World War I and after World War II.
America at that time said, well, we’re the leading industrial power. European industry has been destroyed by World War II. You’re dependent on us. We’re the leading financial power. By 1950, when the Korean War began, America had 80% of the world’s monetary gold supply. So America had gold. It had the industrial power. It had the agricultural power. It had control of the oil trade. For the long run, everybody thought that, well, all America has to do is let other countries be a part of this. And yes, America will be the big gainer, but other countries can also gain because they’ll have access to America and American finance as well as trade.
Well, all of that somehow has been lost in the last 75 years. Other countries have not realized that they’re living in a world where the main institutions that were created at the end of World War II, 1944, 1945, the International Monetary Fund, the World Bank, the United Nations, all of these groups that were created under one set of conditions no longer serve today’s conditions of what the rest of the world needs to be prosperous for itself. Somehow they’ve turned what America promised to be leadership into a we win, you lose. And that if that’s the principle of every transaction that America makes, Trump’s transactional approach of any deal that’s made, then the rest of the world has to lose more and more and more. And it will be like a salami tactic, cutting off one thing after another until all of a sudden other countries have lost their ability to become self-sustaining.
They’ve all been cut up and just like the United States has said, well, we want to cut up Russia into five or six countries. We want to make China look like Yugoslavia, cut up into provinces. They want the whole of the whole world to be cut up into parts.
And in Europe, it’s sort of the opposite. In Europe, they said, well, our solution there is to have NATO control all of the parts under U.S. control. And it doesn’t matter what other countries do. And I think that’s what the United States wants to create. A world in which it doesn’t matter what other countries, politicians or voters want to do. They really have no choice. And if you look at the aim of American foreign policy is to prevent other countries having a choice to create any alternative to America’s resource grabbing, annexation of raw materials, creation of military bases along the world’s major trade routes, the ability to cut off trade linkages like the Panama Canal or trade in the North Atlantic, then you have the key to American foreign policy.
But I don’t see any organized group that is coming right out and spelling out this kind of international strategy that is implicit, is the counterpart to everything that the United States is doing. That’s what’s so surprising that there’s a lack of the rest of the world acting in its self-interest, because in order to do that, it would need a program. It would need an economic model. What is the model for our economy that we want? What kind of trade agreement do we want, if not the World Trade Organization that America’s paralyzed? What kind of financial and credit arrangement do we want, if not the International Monetary Fund telling us to impose austerity on our labor force as if that’s going to enable us to export more instead of preventing us from industrializing? There’s no economic theory. There’s no political theory. That’s what’s so amazing. The passivity of the rest of the world in all of this.
NIMA ALKHORSHID: Thank you so much, Michael, for being with us today. Great pleasure, as always. And next week, we’re going to have Richard with us, joining us.
MICHAEL HUDSON: I always try to end on an up note. That’s my up note. There is no alternative presence. Yeah.
NIMA ALKHORSHID: Okay.
MICHAEL HUDSON: Bye-bye.