WEBVTT - Xi’s Bromance Diplomacy Is Challenging Trump’s World Order

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>On the first day of September, Chinese President Shi Jinping

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<v Speaker 2>hosted Russian President Vladimir Putin, Indian Prime Minister, and around

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<v Speaker 2>the Mody and more than twenty other foreign leaders in

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<v Speaker 2>the port city of Tanjin. The occasion the annual summit

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<v Speaker 2>of the Shanghai Cooperation Organization or SEO.

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<v Speaker 1>So the Shanghai Cooperation Organization is a regional security block.

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<v Speaker 2>Daniel tan Kit is Bloomberg's executive editor for Asia Economy

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<v Speaker 2>and Government. He says, the SEO as an organization isn't

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<v Speaker 2>that important, but at the summit, there was one particular

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<v Speaker 2>moment that made the occasion significant.

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<v Speaker 1>Mody being really chummy with Putin and with she smiling broadly.

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<v Speaker 1>They were laughing about something. She was holding Mody's hand

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<v Speaker 1>at one point, a lot of backside. It was just

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<v Speaker 1>old friends getting together, and it was significant because Mody

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<v Speaker 1>hasn't actually been to China in seven years, so this

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<v Speaker 1>wasn't like we talk all the time. Now. She and

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<v Speaker 1>Putin talk all the time. They meet up regularly and

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<v Speaker 1>they do this all the time. But Mody joining the group,

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<v Speaker 1>that was highly significant. He's back in the fold, so

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<v Speaker 1>to speak.

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<v Speaker 2>China and India have clashed over border disputes for decades.

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<v Speaker 2>Their relationship hit rock bottom in twenty twenty after fighting

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<v Speaker 2>along the border in the contested Western Himalayas left soldiers

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<v Speaker 2>on both sides dead, But at Tinjin there were no

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<v Speaker 2>signs of hostility. Instead, Dan says Mody's presence at the

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<v Speaker 2>summit and his chummy interactions with Putin and She were

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<v Speaker 2>deliberate signals aimed squarely at one person.

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<v Speaker 1>All of this has to be seen in the context

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<v Speaker 1>of what happened last month, with Trump essentially putting on

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<v Speaker 1>punitive tariffs onto India, calling India's economy a dead economy,

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<v Speaker 1>really dialing up the insults to Modi. So when Mody

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<v Speaker 1>joins and he's smiling with Putin and She, that's essentially

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<v Speaker 1>a message to Trump saying, look, I don't need you,

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<v Speaker 1>I have options. I'm not going to be bullied and

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<v Speaker 1>pushed around by you. I'm not going to kowtow to

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<v Speaker 1>what you want. It doesn't really mean that Mody is

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<v Speaker 1>jumping into China's camp, but it does mean he can

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<v Speaker 1>be friends with everyone's too, and nobody's going to tell

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<v Speaker 1>him what to do. Especially Trump.

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<v Speaker 2>This is the Big Take Asia from Bloomberg News. I'm wanha.

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<v Speaker 2>Every week we take you inside some of the world's

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<v Speaker 2>biggest and most powerful economies and the markets, tycoons, and

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<v Speaker 2>businesses that drive this ever shifting region. Today in the show, China, Russia,

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<v Speaker 2>and India appear to be forming a new and powerful partnership.

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<v Speaker 2>What's driving the bromance between she Putin and Mody and

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<v Speaker 2>what could it mean for Trump? The image of she

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<v Speaker 2>Putin and Mody holding hands and laughing together in Tianjin

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<v Speaker 2>was a striking moment that went viral. But beyond the symbolism,

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<v Speaker 2>this apparent alliance could have big consequences politically and economically, Dan,

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<v Speaker 2>What does each country want from this alignment?

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<v Speaker 1>Russia needs money. It's got its two biggest buyers of

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<v Speaker 1>energy there, India buys a lot of oil from Russia.

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<v Speaker 1>Having India buy oil gives them hard currency. Same with China.

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<v Speaker 1>China has been the primary economic partner of Russia and

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<v Speaker 1>is stuck by Russia ever since Putin's invasion of Ukraine.

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<v Speaker 1>It's been its most important economic partner to the extent

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<v Speaker 1>where Putin really needs China to stay aflow and fight.

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<v Speaker 2>This war, and what about MODI in India? What's in

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<v Speaker 2>it for them?

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<v Speaker 1>India, they were buying Russian oil because it's cheaper, and

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<v Speaker 1>India's got a big population, it's very price sensitive. So

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<v Speaker 1>if they can keep costs down, keep inflation down, that's

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<v Speaker 1>politically good for Modian, good for India's economy. With China,

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<v Speaker 1>India also needs inputs for its manufacturing sector, so it

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<v Speaker 1>needs Chinese expertise, needs engineers, it needs inputs so factories

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<v Speaker 1>can get what they need to assemble in India and

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<v Speaker 1>ship that overseas. So if India wants to be a

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<v Speaker 1>manufacturing center, it also needs good relations with China, and

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<v Speaker 1>there's increasing realization in Delhi that that is essential to

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<v Speaker 1>move forward. And just politically, when Trump is going after you,

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<v Speaker 1>these are your friends, They're willing to welcome you with

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<v Speaker 1>open arms, and so it gives MODI some strategic depth

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<v Speaker 1>in that sense.

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<v Speaker 2>Now, energy is such a crucial component to these relationships,

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<v Speaker 2>and I want to into that a little bit more.

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<v Speaker 2>Following the summit and the military parade in Beijing, you

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<v Speaker 2>had gas Prom, Russia state controlled energy giant, saying it's

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<v Speaker 2>signed a binding deal with China to build a new

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<v Speaker 2>gas pipeline called Siberia two. What is that deal entail

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<v Speaker 2>and why is it so important?

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<v Speaker 1>So Russia has been wanting this deal to go through

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<v Speaker 1>for years and it comes up every time she and

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<v Speaker 1>putin me and we never really get anything. So the

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<v Speaker 1>fact that we got something on paper indicates that there's

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<v Speaker 1>progress here. So what does the deal entail? We got

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<v Speaker 1>some details from Gazprom. The chief executive officer, alexey Miller

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<v Speaker 1>said that Gasprom could ship as much as fifty billion

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<v Speaker 1>cubic meters a year for thirty years, so at full capacity,

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<v Speaker 1>it would be equal to nearly a third of total

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<v Speaker 1>Russian pipeline exports to Europe back in twenty twenty one.

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<v Speaker 2>Dan shays, while the deal is big, it wouldn't offset

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<v Speaker 2>what Russia would sell to Europe if it had the opportunity,

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<v Speaker 2>and it's not clear exactly when the project will move forward.

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<v Speaker 2>The two sides still haven't agreed on how much China

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<v Speaker 2>will pay for Russian oil, which is a key sticking point.

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<v Speaker 1>What people are saying is that they want a deal

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<v Speaker 1>that is far below what Gasprom charges customers in Europe

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<v Speaker 1>and is essentially what Russians pay for it. Which is

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<v Speaker 1>a low price. So for China, they're looking for a

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<v Speaker 1>deal here and they're probably going to get one.

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<v Speaker 2>This comes as the US and its European allies have

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<v Speaker 2>made sanctions on Russian oil and gas a pain point

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<v Speaker 2>right to bring putin to negotiate peace with Ukraine and

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<v Speaker 2>in the war. What does this mean for the US

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<v Speaker 2>then in terms of this.

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<v Speaker 1>Deal, Yeah, it's interesting if you look at how the

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<v Speaker 1>US is trying to pressure Russia right now, it's mainly

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<v Speaker 1>targeting India. So why is that the case. China's Russia's

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<v Speaker 1>most important economic partner. It's buying a lot of energy.

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<v Speaker 1>The problem is that Trump already is put massive tariffs

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<v Speaker 1>on China earlier this year, up to one hundred and

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<v Speaker 1>forty five percent. Then China cut off rare earths and

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<v Speaker 1>Trump realized he needed those for military applications and other things,

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<v Speaker 1>including cars and all sorts of sectors. So they reached

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<v Speaker 1>a deal where Beijing would keep the rear ears flowing,

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<v Speaker 1>they would bring taris down to a certain level, and

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<v Speaker 1>there's sort of a truce in an equilibrium now. So

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<v Speaker 1>there's not many options for Trump here. That's why he's

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<v Speaker 1>hitting India because he can raise Harris on India, and

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<v Speaker 1>there's not much India can do about it. What's interesting

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<v Speaker 1>is that she decided to announce this. Now, he didn't

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<v Speaker 1>give us many details, and this thing might all fall

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<v Speaker 1>apart still, but it certainly sends a message to Trump.

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<v Speaker 1>You know, you're hitting India for financing Russia's war effort

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<v Speaker 1>by buying cheap oil. Well, hey, we're going to buy

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<v Speaker 1>gas for thirty years and keep financing his regime. And

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<v Speaker 1>there's not much you can do about it.

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<v Speaker 2>Now, how is this Club of three good for China?

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<v Speaker 2>And she's image, she.

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<v Speaker 1>Jipig, wants to be this diplomat, the state's statesman, someone

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<v Speaker 1>in the world can turn to as an alternative to

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<v Speaker 1>the US led world order. Now, if you think about

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<v Speaker 1>the Biden administration, there was at one point, right after

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<v Speaker 1>Putin's invasion of Ukraine, the US is really trying to

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<v Speaker 1>isolate Russia on the world stage and isolate China along

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<v Speaker 1>with it, and get every country to gang up against

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<v Speaker 1>those two and put sanctions on and China was feeling

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<v Speaker 1>the pressure at that time. Now fast forward to today,

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<v Speaker 1>and it's the exact opposite. You have Putin going to Beijing,

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<v Speaker 1>and you have a bunch of other countries, including India,

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<v Speaker 1>including democracies. You know this notion that the Americans were

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<v Speaker 1>pushing for a long time, which is, you know, you're

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<v Speaker 1>an authoritarian regime. You're against the tide of history destroying

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<v Speaker 1>the rules based order. Now, Siziping is in Beijing talking

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<v Speaker 1>about how all countries need to be equal. Strong countries

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<v Speaker 1>shouldn't pressure weak countries. Everyone needs to follow international law.

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<v Speaker 1>Chiziping is using some of the same language that the

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<v Speaker 1>Americans were using against China for years. And because Trump

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<v Speaker 1>is in office and just breaking norms left and right,

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<v Speaker 1>throwing teriffs on everyone else, He's able to attract all

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<v Speaker 1>these countries looking to She is the more stable option

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<v Speaker 1>right now.

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<v Speaker 2>In the world, and Beijing's gain could be Washington's loss.

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<v Speaker 2>Narender Mody was one of the first world leaders to

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<v Speaker 2>visit the White House falling Trump's return to office. He

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<v Speaker 2>called Trump a great friend, and the two pledged to

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<v Speaker 2>double US India trade to five hundred billion dollars by

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<v Speaker 2>twenty thirty. Now Mody's seen holding hands and laughing it

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<v Speaker 2>up with the leaders of Russia and China, two of

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<v Speaker 2>the US's biggest rivals. How do we get here and

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<v Speaker 2>what could it mean for the US. That's after the break.

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<v Speaker 2>Just two days after President She Putin and Mody put

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<v Speaker 2>the bromance on display in Tanjin, she hosted a second gathering,

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<v Speaker 2>a military parade attended by more than twenty five foreign leaders.

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<v Speaker 2>Mody wasn't there, but Vladimir Putin and North Korea's Kim

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<v Speaker 2>Jong un were the guests of honor. The events guest

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<v Speaker 2>list and its lavish display of weaponry caught the attention

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<v Speaker 2>of President Trump. He took a swipe but She on

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<v Speaker 2>social media.

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<v Speaker 1>He said, May President She and the wonder people of

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<v Speaker 1>China have a great and lasting day of celebration. Please

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<v Speaker 1>give my warmest regards to Vladimir Putin and Kim Jong

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<v Speaker 1>Un as you conspire against the United States of America.

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<v Speaker 1>So clearly he's watching that. He actually said something to

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<v Speaker 1>the effect of, they hoped I was watching, and I

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<v Speaker 1>was watching, So you know, Trump really wanted to meet

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<v Speaker 1>all of these leaders, actually Putin, Kim and She. So

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<v Speaker 1>you know, there's in subtle fomo there, right, I think so,

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<v Speaker 1>I mean, in some ways, I'm sure he wishes he

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<v Speaker 1>was there. He even said, I have great relations with

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<v Speaker 1>all these countries. Like, you know, he's trying to be

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<v Speaker 1>buddy buddy with them. He's really stuck here because in

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<v Speaker 1>some ways he knows that if he capitulates, he will

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<v Speaker 1>look weak. But at the same time he wants to

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<v Speaker 1>be part of this club.

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<v Speaker 2>The parade in Beijing and the summit in Tanjin put

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<v Speaker 2>China's global influence and ambitions on display, and it seemed

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<v Speaker 2>to unite world leaders who are sick of being pushed

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<v Speaker 2>around by Trump. Take India's Narrender Modi. New Delhi has

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<v Speaker 2>long standing ties to Moscow, the date back to the

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<v Speaker 2>Soviet era, and Russia is India's biggest weapon suppliers. Uh's

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<v Speaker 2>invasion of Ukraine has cast a spotlight on the relationship

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<v Speaker 2>and put India in a tough spot.

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<v Speaker 1>India wanted to have good relations with the West. It

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<v Speaker 1>wanted to wean itself off of Russian weaponry in particular

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<v Speaker 1>and get more into the American defense orbit, and of

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<v Speaker 1>course the US wanted India closer as a counterweight to China.

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<v Speaker 1>Now Mody and she, yeah, it wasn't great at all

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<v Speaker 1>since the twenty twenty clash, and India might have gone

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<v Speaker 1>even further than the US in some respects in banning

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<v Speaker 1>Chinese investment and taking kind of a hard line against China.

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<v Speaker 1>So there was certainly no love there and that was

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<v Speaker 1>pretty remarkable to go from that situation to holding hands

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<v Speaker 1>and laughing at like world best Place.

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<v Speaker 2>Now you mentioned how Trump has insulted Mody in the

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<v Speaker 2>past few months. Can you walk us through exactly how

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<v Speaker 2>this relationship has deteriorated to this point between the India

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<v Speaker 2>and US. I mean, how did we get here with

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<v Speaker 2>the US and India being in the state that they are.

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<v Speaker 1>Now If you look back in the beginning of the year,

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<v Speaker 1>Mody went to the White House restored the friendship. And

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<v Speaker 1>this goes back to Trump's first term when Mody invited

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<v Speaker 1>Trump to Goudarat, which is Mody's home state in India.

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<v Speaker 1>And then India was probably the first out of the

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<v Speaker 1>gate to try and negotiate a trade deal. They were

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<v Speaker 1>announcing progress really early after Liberation Day in April, so

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<v Speaker 1>it looked like India could be one of the first deals.

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<v Speaker 1>And then Trump realized what is his leverage against Putin?

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<v Speaker 1>That really took over everything. Mody was just caught in

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<v Speaker 1>that because India was the only bit of leverage that

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<v Speaker 1>Trump had against putin. Now, you could argue, did Trump

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<v Speaker 1>need to call India's economy a dead economy? I think

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<v Speaker 1>that's what stunned everyone was the way he did it.

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<v Speaker 1>He could have done it in a way that was

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<v Speaker 1>more I really don't want to do this. This is

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<v Speaker 1>important now, and you could have done it in a

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<v Speaker 1>way that could save Mody some face. But that's just

0:14:05.400 --> 0:14:07.920
<v Speaker 1>not Trump's style. You know, he goes full in when

0:14:07.920 --> 0:14:10.679
<v Speaker 1>he goes all scorched to earth, all scorched earth, and

0:14:10.800 --> 0:14:13.480
<v Speaker 1>he's used to just you know, using his charm. He'll

0:14:13.480 --> 0:14:15.520
<v Speaker 1>insult you one second and then he'll be your best

0:14:15.520 --> 0:14:19.040
<v Speaker 1>buddy the next. But that's not going to work in India.

0:14:19.520 --> 0:14:23.840
<v Speaker 2>The idea of a strategic triumvit consisting of Russia, India,

0:14:23.880 --> 0:14:27.080
<v Speaker 2>and China goes back to the nineteen nineties, and for

0:14:27.160 --> 0:14:30.800
<v Speaker 2>decades the US has courted India as a counterweight to

0:14:30.880 --> 0:14:35.840
<v Speaker 2>China in Asia, with some success. Still, India has long

0:14:35.920 --> 0:14:39.240
<v Speaker 2>maintained a neutral stance on diplomacy that goes back to

0:14:39.280 --> 0:14:43.320
<v Speaker 2>the Cold War. It rarely shows outright support for either

0:14:43.440 --> 0:14:47.200
<v Speaker 2>China or the US. That's why Dan says this sudden

0:14:47.320 --> 0:14:51.040
<v Speaker 2>souring of relations between the US and India is baffling

0:14:51.160 --> 0:14:52.280
<v Speaker 2>to almost everybody.

0:14:53.360 --> 0:14:57.120
<v Speaker 1>I took to former US officials all over the region.

0:14:57.160 --> 0:15:00.720
<v Speaker 1>I mean everyone is talking just about Trump's you turn

0:15:00.840 --> 0:15:04.880
<v Speaker 1>on India. I'm sure the Indians are wondering the same thing.

0:15:05.640 --> 0:15:08.160
<v Speaker 1>It was so abrupt and in a matter of weeks,

0:15:08.200 --> 0:15:11.560
<v Speaker 1>you just undid really decades of work, and it's going

0:15:11.640 --> 0:15:13.040
<v Speaker 1>to cause decades of damage.

0:15:13.080 --> 0:15:17.040
<v Speaker 2>And how are these new and old relationships that China's forming,

0:15:17.560 --> 0:15:20.280
<v Speaker 2>How are they reshifting the world order? Are we seeing

0:15:20.280 --> 0:15:24.040
<v Speaker 2>a geopolitical realignment of the world order here that China

0:15:24.200 --> 0:15:25.920
<v Speaker 2>is orchestrating and leading at the.

0:15:25.840 --> 0:15:30.200
<v Speaker 1>Moment in some respects, yes, I mean everything is caveated

0:15:30.240 --> 0:15:32.720
<v Speaker 1>in a way because there's no country that really wants

0:15:32.760 --> 0:15:36.520
<v Speaker 1>to choose between the US and China. When countries lean

0:15:36.600 --> 0:15:41.240
<v Speaker 1>more towards China, that's a natural reaction to the US

0:15:41.440 --> 0:15:46.200
<v Speaker 1>using every financial weapon it has to squeeze every country

0:15:46.240 --> 0:15:49.160
<v Speaker 1>out there. If China were to do anywhere near the

0:15:49.200 --> 0:15:52.880
<v Speaker 1>same thing, countries would shift back to the US. That's

0:15:53.000 --> 0:15:55.760
<v Speaker 1>just the way things work now. I think the worry

0:15:55.800 --> 0:15:59.960
<v Speaker 1>among some US strategic planners is that as China grows

0:16:00.160 --> 0:16:04.320
<v Speaker 1>more powerful in countries increase their dependencies on China. It's

0:16:04.480 --> 0:16:08.120
<v Speaker 1>then very hard to reduce those dependencies, particularly if China

0:16:08.640 --> 0:16:12.920
<v Speaker 1>continues to control all the world's manufacturing. The fact that

0:16:13.040 --> 0:16:17.160
<v Speaker 1>China can make all this stuff, the US can hardly

0:16:17.200 --> 0:16:20.040
<v Speaker 1>build a ship anymore. That's why you see the tensions

0:16:20.120 --> 0:16:23.280
<v Speaker 1>that are emerging. And the worry is that, Okay, if

0:16:23.320 --> 0:16:26.680
<v Speaker 1>that gets entrenched, then there is no alternative to China

0:16:27.040 --> 0:16:30.000
<v Speaker 1>for things that you need to run a country. And

0:16:30.080 --> 0:16:33.880
<v Speaker 1>if the US can't provide a credible alternative, then maybe

0:16:33.880 --> 0:16:38.800
<v Speaker 1>you capitulate to some of these geopolitical demands that China wants,

0:16:38.840 --> 0:16:41.440
<v Speaker 1>which is like, you know, you're going to keep quiet

0:16:41.520 --> 0:16:45.080
<v Speaker 1>if China wants to take Taiwan one day or something

0:16:45.160 --> 0:16:49.560
<v Speaker 1>like that. India is not going to jump in bed

0:16:49.600 --> 0:16:53.360
<v Speaker 1>with China. There's just too many obstacles for that to happen.

0:16:54.040 --> 0:16:58.320
<v Speaker 1>They have constant disputes along the border. There's a lot

0:16:58.320 --> 0:17:02.720
<v Speaker 1>of concern about Chinese filtration of the economy. But for

0:17:02.760 --> 0:17:07.359
<v Speaker 1>the moment, those divisions are put aside for a bigger

0:17:07.400 --> 0:17:10.200
<v Speaker 1>problem right now, which is Trump. Trump is the bigger problem,

0:17:10.560 --> 0:17:13.600
<v Speaker 1>And so you put aside all your differences and you

0:17:14.040 --> 0:17:15.959
<v Speaker 1>smile with each other, and you hug each other and

0:17:16.000 --> 0:17:18.520
<v Speaker 1>you focus on the thing that unites you at the moment,

0:17:18.880 --> 0:17:22.639
<v Speaker 1>and the thing that's uniting everybody is the need to

0:17:22.680 --> 0:17:25.879
<v Speaker 1>push back on Trump and not be pushed around by Trump.

0:17:26.320 --> 0:17:28.680
<v Speaker 1>And that's what we're seeing play out in Beijing.

0:17:36.480 --> 0:17:39.800
<v Speaker 2>This is The Big Take Asia from Bloomberg News. I'm Wanha.

0:17:40.520 --> 0:17:43.280
<v Speaker 2>To get more from The Big Take and unlimited access

0:17:43.320 --> 0:17:46.320
<v Speaker 2>to all of Bloomberg dot Com, subscribe today at Bloomberg

0:17:46.359 --> 0:17:49.920
<v Speaker 2>dot com slash podcast Offer. If you like the episode,

0:17:50.080 --> 0:17:52.719
<v Speaker 2>make sure to subscribe and review The Big Take Asia

0:17:52.760 --> 0:17:55.920
<v Speaker 2>wherever you listen to podcasts. It really helps people find

0:17:55.920 --> 0:18:00.680
<v Speaker 2>the show. Thanks for listening, See you next time. He

0:18:03.880 --> 0:18:04.920
<v Speaker 2>ever part to