WEBVTT - Globalization, Energy, And The War In Ukraine 0:00:03.840 --> 0:00:07.160 Welcome to Bloomberg Opinion listeners. I'm Bonny Quinn. This week, 0:00:07.520 --> 0:00:11.760 there's a question of the mindset of global CEOs now 0:00:11.840 --> 0:00:14.600 they're much less confident than they were that they have 0:00:14.920 --> 0:00:17.480 a global market to play with and that the world 0:00:17.560 --> 0:00:20.880 is getting ever more integrated. Adrian Woldridge on the fate 0:00:20.920 --> 0:00:23.639 of globalization as the US and Allies turn up the 0:00:23.640 --> 0:00:26.880 economic temperature on Russia. Also, there's very little in it 0:00:26.960 --> 0:00:29.080 for China to make this an easy fight and a 0:00:29.160 --> 0:00:31.680 quick fight. For the way, when they're finished in Ukraine, 0:00:31.680 --> 0:00:33.839 in China's do they will turn to China, and at 0:00:33.840 --> 0:00:37.680 that point chinaese Russia. Clara for Marquez and Julie Ran 0:00:37.760 --> 0:00:41.960 on China walking a tight rope between trading partners and allies. Later, 0:00:42.040 --> 0:00:45.879 John Authors joins on how some of globalizations discontented countries 0:00:45.960 --> 0:00:50.360 could potentially profit from deglobalization. We'll also speak with Heavier 0:00:50.440 --> 0:00:53.320 Glass on whether oil sanctions will materialize and how the 0:00:53.400 --> 0:00:55.760 market will cope. First to the idea that this may 0:00:55.760 --> 0:00:59.840 be a pivotal moment for the global system, Adrian Wildridge joins, Adrian, 0:01:00.080 --> 0:01:02.920 are we witnessing not just new atrocities in Europe so 0:01:02.960 --> 0:01:07.360 called blood lands, but also the demise of globalization, that is, 0:01:07.520 --> 0:01:11.560 open market economies driving towards economic integration, bringing freer trade, 0:01:11.640 --> 0:01:15.840 capital flows, migration even and ideally leading to increased prosperity 0:01:15.920 --> 0:01:19.959 for all. It's a very serious possibility. Everything depends on 0:01:20.440 --> 0:01:24.000 what happens. Everything depends on where the putin stays in power. 0:01:24.240 --> 0:01:28.240 But I think this has the feeling of what happened 0:01:28.280 --> 0:01:30.360 after the First World War, that this could be the 0:01:30.440 --> 0:01:34.600 beginning of a series of actions which lead to the 0:01:34.680 --> 0:01:38.440 end of globalization. Yes, the illusion that war is impossible 0:01:38.440 --> 0:01:41.119 given the interconnectedness of the world has now been shattered. 0:01:41.200 --> 0:01:44.560 But it had been under severe threats several times over 0:01:44.560 --> 0:01:47.720 the last twenty years. Why is this particular invasion the 0:01:47.760 --> 0:01:50.560 death knell. Yeah, it has been under a very serious 0:01:50.600 --> 0:01:52.960 threat over the last twenty years. And of course we 0:01:53.040 --> 0:01:56.680 all remember September the eleventh, which many people saw as 0:01:56.720 --> 0:02:00.360 the end of globalization, and we've had a lot of 0:02:00.360 --> 0:02:05.360 protests against globalization linked to globalizations effect on rising inequality. 0:02:05.440 --> 0:02:08.639 But I think to invade a European state in the 0:02:08.680 --> 0:02:13.040 way that Russia invaded Ukraine, for the leader of a 0:02:13.160 --> 0:02:16.200 state to threaten the use of nuclear weapons, to engage 0:02:16.600 --> 0:02:20.040 in what looks to be war crimes. It's something that 0:02:20.040 --> 0:02:22.560 hasn't happened since the Second World War, and it's something 0:02:22.600 --> 0:02:26.320 that's created an extraordinary backlash. We haven't seen a rupture 0:02:26.480 --> 0:02:29.400 in the global economic system like this since September the eleven, 0:02:29.440 --> 0:02:31.240 and we might well only be at the beginning of 0:02:31.240 --> 0:02:33.640 this rupture. There was a scramble to figure out what 0:02:33.720 --> 0:02:38.280 could be done legally and within the global international order. Obviously, 0:02:38.320 --> 0:02:42.000 sanctions economic warfare. That's one of the ways that Russia 0:02:42.040 --> 0:02:46.160 can be punished. But how do you champions sanctions as 0:02:46.160 --> 0:02:50.119 an economic weapon and still forge closer ties with countries 0:02:50.160 --> 0:02:53.280 that very much oppose them. I'm thinking obviously of China, 0:02:53.400 --> 0:02:56.040 which is very opposed to the effort by the US 0:02:56.120 --> 0:02:59.720 to pressure it into enacting sanctions. Well, I think it 0:02:59.760 --> 0:03:03.040 has to remembered that the West, broadly conceived, still constitutes 0:03:03.320 --> 0:03:07.840 about six of global g d P. The autocracies constitute 0:03:07.880 --> 0:03:11.560 about of global g d P, with a number of 0:03:11.600 --> 0:03:14.680 countries floating in the middle. And I think if the 0:03:14.720 --> 0:03:18.320 West can cohere as a unit, the Chinese will be 0:03:18.360 --> 0:03:21.600 confronted with the fact that if they side with Russia, 0:03:22.320 --> 0:03:25.080 they will be siding with a small chunk of the world, 0:03:25.080 --> 0:03:28.160 and they will be progressively excluding themselves from the biggest 0:03:28.160 --> 0:03:31.079 and most dynamic market in the world. So I think 0:03:31.120 --> 0:03:34.840 their self interest would dictate to them to remain neutral. 0:03:35.400 --> 0:03:38.520 They've seen what the West can do if it is 0:03:38.920 --> 0:03:43.120 united and angered. So I think the likelihood of China 0:03:43.320 --> 0:03:45.680 trying to take Taiwan is less now than it was, 0:03:46.440 --> 0:03:49.880 and the likelihood of China acting as a sort of 0:03:50.320 --> 0:03:52.960 rule breaker in the international system is less than it was. 0:03:53.640 --> 0:03:56.760 Does there need to be essentially a new Breton Woods 0:03:56.840 --> 0:04:00.920 type of agreement? And if that's the case, the trouble 0:04:01.000 --> 0:04:04.040 with Bretton Woods was that it was also a little 0:04:04.040 --> 0:04:07.640 bit designed to sort of promote American geopolitical influence. Would 0:04:07.760 --> 0:04:11.200 another type of Bredon Woods agreement even be possible? Oh? Absolutely. 0:04:11.240 --> 0:04:13.000 I think that what we need to do is to 0:04:13.240 --> 0:04:17.920 deepen the relationship between the democracies in order to link 0:04:18.080 --> 0:04:22.279 our political common interests with our economic common interests. So 0:04:22.400 --> 0:04:26.360 deepen and advanced trading relationships. I think that's absolutely the case. 0:04:26.400 --> 0:04:29.200 But that doesn't require a new Breton Woods. I think 0:04:29.240 --> 0:04:32.960 it requires a lot of trading arrangements like t TIP 0:04:33.040 --> 0:04:36.719 to be revived and reinvigorated. So I think in that 0:04:36.800 --> 0:04:40.320 sense it's a deepening and an extension, not the creation 0:04:40.360 --> 0:04:43.200 of new institutions. Now, there are other institutions that do 0:04:43.360 --> 0:04:47.120 need to be created to deal with global problems, primarily 0:04:47.520 --> 0:04:49.760 climate change problems, and I think in order for those 0:04:49.800 --> 0:04:52.360 to be created and to operate well, we have to 0:04:52.839 --> 0:04:55.919 realize that they have to involve non democratic countries, they 0:04:55.960 --> 0:04:58.080 have to involve China, and in the long term they 0:04:58.080 --> 0:05:00.760 have to involve Russia because this is the of the planet. 0:05:00.839 --> 0:05:03.479 So I would argue for deepening trading relationships and for 0:05:03.800 --> 0:05:07.040 very broad institutions that look at very specific things. Well, 0:05:07.080 --> 0:05:09.719 and I suppose that's you know, the final point. Really, 0:05:10.400 --> 0:05:14.279 can globalization as a force ever get weaker given the 0:05:14.360 --> 0:05:17.360 US dollars dominance as a global reserve currency, which after 0:05:17.440 --> 0:05:20.040 all is the currency of most nations if you include 0:05:20.040 --> 0:05:22.400 swaplines and so forth. Yeah, I think it can get 0:05:22.440 --> 0:05:26.039 weaker because China is likely to get significantly stronger over 0:05:26.080 --> 0:05:29.080 the next few years. It's still growing very rapidly. And 0:05:29.120 --> 0:05:31.240 also there are a number of countries that sort of 0:05:31.400 --> 0:05:33.960 strategically staying a bit in the middle, such as India. 0:05:34.040 --> 0:05:37.120 And finally, I think it's important to remember that although 0:05:37.640 --> 0:05:40.599 the majority of the world's GDP, as it were, is 0:05:40.760 --> 0:05:43.720 siding with the West. The majority of the world's population 0:05:44.360 --> 0:05:47.800 did not support the condemnation of the invasion of Ukraine 0:05:47.880 --> 0:05:50.359 in the United Nations, so a large chunk of the 0:05:50.360 --> 0:05:52.960 emerging markets of the world sort of stayed neutral, didn't 0:05:52.960 --> 0:05:56.080 want to annoy China too much. So it's not quite 0:05:56.080 --> 0:05:57.919 as clear cut as it looks. And I think the 0:05:57.960 --> 0:06:02.320 logic of decoupling China from America, of a number of 0:06:02.600 --> 0:06:06.200 emerging countries playing sort of the spoiler role of sometimes 0:06:06.240 --> 0:06:10.160 stiding with America sometimes siding with China, makes globalization look 0:06:10.200 --> 0:06:11.839 a bit more tenuous. And also, I think one of 0:06:11.839 --> 0:06:14.040 the most important things to remember is that there's a 0:06:14.160 --> 0:06:18.960 question of the mindset of global CEOs, of global market makers, 0:06:19.160 --> 0:06:21.960 and I think now they're much less confident that they 0:06:22.080 --> 0:06:24.640 have a global market to play with and that the 0:06:24.680 --> 0:06:28.000 world is getting ever more integrated. They're worried that the 0:06:28.040 --> 0:06:32.320 world will split up into rival blocks. It might be 0:06:32.480 --> 0:06:35.720 Europe plus America against each other in some ways. In 0:06:35.800 --> 0:06:39.040 other words, multiple ways in which the world could fragments, 0:06:39.080 --> 0:06:42.000 and I think that is influencing CEO mentality is to 0:06:42.080 --> 0:06:45.279 be much more focused on regional organizations rather than on 0:06:45.360 --> 0:06:49.039 creating one world companies Adrian Wildridge. There, let's get to 0:06:49.040 --> 0:06:51.440 the question of China's role in the global response to 0:06:51.520 --> 0:06:55.040 Russia's war in Europe now, and specifically what choices China 0:06:55.240 --> 0:06:59.040 needs to make navigating between its trading partners and its allies, 0:06:59.200 --> 0:07:02.280 not to mention it's domestic economic struggles. We're joined by 0:07:02.279 --> 0:07:05.680 Schuloen in Hong Kong and Clara Frera Marquez in Singapore, 0:07:06.000 --> 0:07:08.480 So more and more rhetorical pressure is being placed on 0:07:08.680 --> 0:07:11.840 China too, if not join in with other countries on sanctions, 0:07:11.840 --> 0:07:14.920 at least not interfere with the economic warfare that Europe 0:07:15.000 --> 0:07:18.800 and the US are waging on Russia. But Julie, China 0:07:18.880 --> 0:07:21.240 is not having it. How much do we know is 0:07:21.320 --> 0:07:24.760 China actively helping Russia in any way? I think we 0:07:24.840 --> 0:07:27.720 know very little about what's really behind the scenes, But 0:07:27.800 --> 0:07:31.120 so far there's very little evidence that China is helping Russia. 0:07:31.400 --> 0:07:34.280 China has told it makes their own banks to be 0:07:34.440 --> 0:07:37.200 very careful in its dealings with Russia as well as 0:07:37.240 --> 0:07:40.600 the energy companies, because it's quite easy for China to 0:07:40.720 --> 0:07:44.240 be matching the so called secondary sanctions if you help 0:07:44.640 --> 0:07:48.160 sention the entity in the material matter, the Treasury Department 0:07:48.240 --> 0:07:51.280 can sention the third party company as well. For China 0:07:51.400 --> 0:07:54.960 is very careful with that. Clara, what calculation is China 0:07:55.000 --> 0:07:58.320 in particular making by protecting its relationship with Russia? Is 0:07:58.360 --> 0:08:02.080 it purely for economic logistical reasons? Well? Those I think 0:08:02.120 --> 0:08:04.040 two things to bear in mind. One is the China 0:08:04.160 --> 0:08:08.160 throughout this conflict, who's trying to juggle several imperatives. One 0:08:08.280 --> 0:08:11.840 is its ideological alignment with Russia. Then it's ideas of 0:08:12.240 --> 0:08:15.440 sovereignty and territorial integrity, which are called for China, and 0:08:15.520 --> 0:08:18.520 then of course it's economics. As Uley mentioned, here's still 0:08:18.520 --> 0:08:21.240 trying to balance that. But on top of that, it's 0:08:21.280 --> 0:08:24.040 also seeing this conflict very much to the prism of 0:08:24.080 --> 0:08:27.640 its own relationship with the United States. And in that sense, 0:08:27.800 --> 0:08:29.760 there's very little in it for China to make this 0:08:29.840 --> 0:08:31.920 an easy fight and a quick fight. For the way 0:08:32.120 --> 0:08:34.520 when they're finished in Ukraine and China's do and in 0:08:34.520 --> 0:08:36.800 the view of many commentators we've seen in state media, 0:08:37.040 --> 0:08:39.240 they will turn to China and at that point China 0:08:39.280 --> 0:08:42.000 neese Russia. And this is a truly you've actually said 0:08:42.000 --> 0:08:45.040 that China inc could easily become collateral damage in the 0:08:45.080 --> 0:08:48.400 economic war the US and Europe are waging. But how 0:08:48.440 --> 0:08:50.800 would that materialize? It would be quite difficult for the 0:08:50.880 --> 0:08:55.040 US to actually do anything beyond trying to influence China 0:08:55.440 --> 0:08:58.920 by powers of persuasion. Right. I think US has been 0:08:59.360 --> 0:09:03.680 using re sensions on Chinese companies and uh China complains 0:09:03.679 --> 0:09:07.559 about the abuse and overuse of sensions a lot. But hypothetically, 0:09:07.600 --> 0:09:11.640 say Ali Baba has e commerce and business in Russia, right, Like, 0:09:11.720 --> 0:09:14.960 if Ali Baba continues that subsidiary, what does it mean 0:09:15.040 --> 0:09:19.400 do they provide material support to Russian entities? Technically Ali 0:09:19.440 --> 0:09:22.040 Babba could be placed on a sanction list, which means 0:09:22.080 --> 0:09:25.400 that US some managers can no longer buy Ali Baba's box, 0:09:25.600 --> 0:09:27.720 you know, like they are laws of ways, right, Or 0:09:27.760 --> 0:09:31.840 like the a company who buys technology and supplies from 0:09:31.880 --> 0:09:34.200 the US, that company can be placed on the pre 0:09:34.320 --> 0:09:37.680 human Control list that basically it can no longer imports 0:09:37.800 --> 0:09:39.840 stuff from the US. There are many ways for the 0:09:39.960 --> 0:09:43.360 US to sanction Chinese company Clara. Will there come a 0:09:43.440 --> 0:09:47.120 point where China and indeed India too, In fact, you know, 0:09:47.160 --> 0:09:49.880 to the largest populated countries in the world, where they 0:09:49.960 --> 0:09:52.480 need to choose where there will be so much pressure 0:09:52.520 --> 0:09:54.920 placed on them, and we've seen it this week. Brands 0:09:55.440 --> 0:09:58.160 actually called out India and said that the White House 0:09:58.200 --> 0:10:01.240 was disappointed by new DELI will there come a point 0:10:01.080 --> 0:10:03.079 at which they have to choose? And in that instance, 0:10:03.120 --> 0:10:05.640 wouldn't it make more economic sense for both of them 0:10:05.640 --> 0:10:07.360 to stay on the good graces of the EU and 0:10:07.400 --> 0:10:10.640 the US. Well, I mean, let's take China. So at 0:10:10.679 --> 0:10:13.280 the moment, it hasn't really had to choose because Russia's 0:10:13.320 --> 0:10:16.240 economy has been remarkably resilient. So it was hit with 0:10:16.280 --> 0:10:18.640 the sort of wave of sanctions initially obviously that was 0:10:19.080 --> 0:10:21.760 very painful. That it has to a large extent adapted. 0:10:21.840 --> 0:10:25.040 The Central Bank has been able to intervene and sustain things. 0:10:25.040 --> 0:10:27.000 There's a lot of measures that they've put in place 0:10:27.360 --> 0:10:29.880 as the situation becomes worse in Russia. If the Russian 0:10:29.880 --> 0:10:32.640 economy looks like it's going to fall over, at that point, 0:10:33.120 --> 0:10:35.720 China will be asked to come in and help, and 0:10:35.760 --> 0:10:38.160 they're the choice we have to is the West have 0:10:38.240 --> 0:10:40.840 to make that choice very very clear that if you 0:10:40.920 --> 0:10:44.480 support Russia, you will be putting yourself at risk for 0:10:44.520 --> 0:10:47.920 all the reasons that Shu they mentioned, and beyond especially 0:10:47.920 --> 0:10:51.800 if secondary sanctions are brought in your risking in essence 0:10:51.840 --> 0:10:55.640 your position in the integrated global economy. So India it's 0:10:55.679 --> 0:10:57.960 a slightly different position. And I would say that this 0:10:58.000 --> 0:11:01.120 week they've actually come out against massacre in Butcher and 0:11:01.160 --> 0:11:04.920 condemning the massacre in Butcher, So a little step towards 0:11:04.920 --> 0:11:08.200 the West, but in many other ways, still extremely cautious. Yeah. 0:11:08.240 --> 0:11:10.120 Julie Clara brings up a great point there that that 0:11:10.160 --> 0:11:12.800 there may indeed come a time where China will be 0:11:12.880 --> 0:11:15.320 forced to make a decision where China will be forced 0:11:15.360 --> 0:11:18.520 to pick sides. But China has its own domestic problems, 0:11:19.040 --> 0:11:22.120 not to mention its own domestic ambitions. Its property industry 0:11:22.320 --> 0:11:24.960 is slumping. We know that at zero COVID policy, which 0:11:25.000 --> 0:11:28.000 turned into dynamic clearing and now something else, has also 0:11:28.080 --> 0:11:31.320 been extraordinarily difficult for that economy. And it's saiming for 0:11:31.360 --> 0:11:33.280 a growth rate of five and a half percent this year. 0:11:33.679 --> 0:11:37.360 If it needs to get more involved somehow in this 0:11:37.400 --> 0:11:40.559 war by Russia on Ukraine, can it make its five 0:11:40.600 --> 0:11:43.280 and a half percent growth milestone if it alienates you know, 0:11:43.320 --> 0:11:46.440 any of its trading partners. I think at this point, 0:11:46.480 --> 0:11:51.280 I haven't half growth target is you know it's offensisy um. 0:11:51.320 --> 0:11:54.520 I absolutely like as Clara said, at some point China 0:11:54.559 --> 0:11:56.800 will have to choose right. As we have seen in 0:11:56.800 --> 0:11:59.720 the last basically year during the pandemic, one of trying 0:11:59.760 --> 0:12:03.679 to on this economic fields is exports. China was exporting 0:12:03.760 --> 0:12:05.679 to the rest of the world at racks of page right, 0:12:05.720 --> 0:12:08.960 and then US and the European unions I get biggest fires. 0:12:09.200 --> 0:12:11.920 So China has a lot of insensive to keep exports 0:12:12.000 --> 0:12:14.840 up when as you said, there's so many domestic issues. 0:12:14.960 --> 0:12:18.240 I mean, cities accounting for a quarter of China's GDP 0:12:18.360 --> 0:12:20.840 are in some kind of lockdown bline now, like they 0:12:20.920 --> 0:12:25.240 really really need this exports going Clara, you know, slightly 0:12:25.280 --> 0:12:28.880 obliquely to this topic, you've pointed out that China has 0:12:28.920 --> 0:12:32.200 long studied Soviet and Russian errors as a means of 0:12:32.240 --> 0:12:35.840 avoiding its own errors. In terms of witnessing the fallout 0:12:35.880 --> 0:12:40.360 from Russia's invasion of Ukraine. What does it mean implication 0:12:40.440 --> 0:12:43.480 wise for China's ambitions when it comes to Taiwan. Does 0:12:43.480 --> 0:12:45.840 it not make it less rather than more likely that 0:12:45.920 --> 0:12:48.240 China would make a move now having seen how the 0:12:48.280 --> 0:12:51.960 international response has been well, it's a very complicated question, 0:12:52.000 --> 0:12:53.520 and I think we should be clear at the outset 0:12:53.559 --> 0:12:56.559 that China does not see parallels between Taiwan and Ukraine. 0:12:56.600 --> 0:13:00.680 For China, the two very different situations. However, if the 0:13:00.720 --> 0:13:03.040 West continues to sort of at the end of the 0:13:03.160 --> 0:13:06.200 sanctions ladder act in it in a way that isn't united, 0:13:06.240 --> 0:13:08.360 the risk here is that China sees this as a 0:13:08.440 --> 0:13:11.760 how to guide looking to Russia, as you know, the 0:13:11.840 --> 0:13:14.320 litany of errors that it needs to fix a lot like, 0:13:14.480 --> 0:13:16.440 as you said, the way they see that the end 0:13:16.480 --> 0:13:18.800 of the Stuviet Union. So for example, in this case, 0:13:18.920 --> 0:13:21.080 it would be we need to dedolarize their economy, we 0:13:21.120 --> 0:13:23.440 need to sanction to prove better, we need to work 0:13:23.440 --> 0:13:26.520 on nuclear deterrents, we need to have military parity with 0:13:26.640 --> 0:13:29.200 the United States before we put the gun on the 0:13:29.200 --> 0:13:33.000 table in the relationship with Taiwan. If, on the other hand, 0:13:33.040 --> 0:13:35.400 the West act in a united way, it's a lot 0:13:35.480 --> 0:13:38.640 more off putting. Surely perhaps I could get your thoughts 0:13:38.640 --> 0:13:41.439 on that as well. I think there is one school 0:13:41.440 --> 0:13:44.840 of starts in China. There's the actor looking at Russia 0:13:44.840 --> 0:13:47.120 and what Clara said, and China is not ready right, 0:13:47.160 --> 0:13:50.040 They have to prepare for their own, you know, international 0:13:50.160 --> 0:13:52.599 payment system. What China is going to do with this 0:13:52.800 --> 0:13:56.200 massive foreign exchange reserves basically a lot of it in 0:13:56.240 --> 0:13:59.440 yours treasury, fiance or forth. So there is the schools 0:13:59.559 --> 0:14:01.760 of far saying that China needs to wait for a 0:14:01.760 --> 0:14:05.160 few years to make it truly to be santioned Julie 0:14:05.160 --> 0:14:08.199 When in Hong Kong and Clara Ferrero Marquez in Singapore. 0:14:08.840 --> 0:14:11.800 Listeners do get in touch via Twitter at Vonni Quinn 0:14:11.960 --> 0:14:14.280 or send you an email at v Quinn at Bloomberg 0:14:14.360 --> 0:14:18.520 dot net. Opinions and comments always welcome. As the West 0:14:18.600 --> 0:14:21.800 ups the anti on Russia, the stakes remain pretty moderate 0:14:21.840 --> 0:14:25.000 for Russia, that is, unless and until oil and gas 0:14:25.080 --> 0:14:28.120 become the target of embargoes with US. Now heavier blasts 0:14:28.200 --> 0:14:31.560 in London haveavier winter is coming not for several months. 0:14:31.560 --> 0:14:33.480 But as you point out that you wants to fill 0:14:33.520 --> 0:14:37.080 its underground gas storage to eighty percent of capacity by October, 0:14:37.320 --> 0:14:40.320 it's only at about twenty six percent. Now you've done 0:14:40.320 --> 0:14:43.200 the math, and that's thirty six billion dollars for Vladimir 0:14:43.200 --> 0:14:46.600 putin more than half his annual defense budget, which presents 0:14:46.640 --> 0:14:50.480 a huge moral dilemma. Is there a solution here, Well, 0:14:50.880 --> 0:14:53.800 it's a very difficult situation for the European Union because 0:14:53.920 --> 0:14:56.320 if he wants to fill up gas toll it, it 0:14:56.400 --> 0:15:00.560 really needs to continue buying Russian gas, and that obviously 0:15:00.640 --> 0:15:04.680 means pain Russia. At current prices around two hundred million 0:15:04.720 --> 0:15:08.000 dollars a day for the next six months. Ellen g 0:15:08.240 --> 0:15:11.160 from elsewhere from friendly nations to Europe, such as cat 0:15:11.160 --> 0:15:13.360 out of the United States is going to help. But 0:15:13.640 --> 0:15:17.400 if Europe cannot get Russian gas, then inventories aren't want 0:15:17.400 --> 0:15:20.120 to still up to eighty percent, perhaps they get to 0:15:20.600 --> 0:15:23.960 something like sixty s and that means that next winter 0:15:24.120 --> 0:15:28.360 the situation will be difficult and will result on higher prices. However, 0:15:28.520 --> 0:15:31.080 it seems like some European countries are willing to make 0:15:31.080 --> 0:15:34.960 bigger sacrifices right now. Is it just Hungary, Austria and 0:15:35.080 --> 0:15:38.680 obviously Germany that have to get on board, those are 0:15:38.800 --> 0:15:41.640 the three ones. But I think that some European countries 0:15:41.680 --> 0:15:44.320 are saying publicly that they don't oppose an embargo because 0:15:44.360 --> 0:15:46.000 they know that the Germans are going to block it, 0:15:46.120 --> 0:15:48.880 so it costs them nothing. They can say something for 0:15:48.920 --> 0:15:51.200 public opinion. We want to do the right thing. We 0:15:51.280 --> 0:15:55.040 want to punish Russia, knowing very well that there is 0:15:55.160 --> 0:15:59.240 zero chance whatsoever of a gas embargo because immediately Germany 0:15:59.280 --> 0:16:01.720 and Hungary and House will block it, but above all 0:16:01.800 --> 0:16:05.120 Berlin will block it. So it is quite convenient for 0:16:05.160 --> 0:16:07.640 them just to kind of hide behind them. But certainly 0:16:07.720 --> 0:16:10.200 Germany has a big problem. It relies more on gas 0:16:10.240 --> 0:16:13.840 and other countries. About of all the guys that Germany 0:16:13.840 --> 0:16:17.840 consumes comes from Russia, and Germany doesn't have lergy options 0:16:17.880 --> 0:16:20.280 to import, so we will have to rely on neighbors 0:16:20.320 --> 0:16:23.480 for that. So I don't see the German government changing 0:16:23.680 --> 0:16:27.880 his view right now. But obviously the longer the word 0:16:27.960 --> 0:16:31.160 goes and the stronger the public pressure, the more likely 0:16:31.240 --> 0:16:35.080 Germany may accept some kind of change, perhaps lower in 0:16:35.120 --> 0:16:38.720 every month the percentage, or set in a screw account 0:16:38.760 --> 0:16:42.040 where the money gets paid but it doesn't be used 0:16:42.040 --> 0:16:45.560 by by Russia to buy military equipment. I don't see 0:16:45.560 --> 0:16:48.640 the current situation being able to last forever. You mentioned 0:16:48.680 --> 0:16:51.400 there is something you can to Ricardo Houseman's proposal of 0:16:51.440 --> 0:16:55.080 attacks on Russia's exports of oil and gas. He says 0:16:55.120 --> 0:16:58.120 that Russian producers would bear the costs and not Western consumers, 0:16:58.120 --> 0:17:00.960 which would ensure that Russia doesn't profit for its war, 0:17:01.120 --> 0:17:03.320 but the rest of the world can still import its 0:17:03.320 --> 0:17:06.280 fossil fuels. What kind of consensus would it take for 0:17:06.320 --> 0:17:09.359 this proposal to be enacted? Is it even a possibility. 0:17:09.840 --> 0:17:12.119 It's very difficult to get a consensus in Europe for 0:17:12.200 --> 0:17:14.800 that because Hungary most likely will block it. So it 0:17:14.840 --> 0:17:18.080 will have to be several European countries taking that decision, 0:17:18.400 --> 0:17:21.920 which could happen the French government, who is pushing for 0:17:22.000 --> 0:17:24.919 some sort of penalties on Russian oil, I said that 0:17:24.960 --> 0:17:26.920 he's willing to wait a few more weeks to see 0:17:26.920 --> 0:17:29.560 if the German government chains his view. But I don't 0:17:29.560 --> 0:17:33.080 see a full European Union consensus that includes Hungary on 0:17:33.119 --> 0:17:36.200 this happening anytime soon. And for the Ukrainians a few 0:17:36.200 --> 0:17:39.000 more weeks is a lot different than for the rest 0:17:39.000 --> 0:17:41.919 of the world. Indeed, Goldman's Jeff Carry points out that 0:17:41.960 --> 0:17:45.840 coal is fungible oil less, so gas is almost impossible. 0:17:45.880 --> 0:17:49.119 It's almost completely non fungible. Is there a way around 0:17:49.119 --> 0:17:53.480 this somehow? The only way for gases really aided use 0:17:53.600 --> 0:17:56.640 less and that should be an effort, and I think 0:17:56.640 --> 0:17:59.080 that that has been the biggest piece missing. We saw 0:17:59.119 --> 0:18:02.200 that the population is willing to do significant sacrifices. We 0:18:02.240 --> 0:18:04.399 saw that during COVID, and I think that there is 0:18:04.440 --> 0:18:06.560 a lot of public support for Ukraine. So you link 0:18:06.640 --> 0:18:09.080 that you are helping Ukraine by lowering your thermal state 0:18:09.160 --> 0:18:11.400 a bit and just we're in a jumper at home. 0:18:11.800 --> 0:18:14.199 I think that there will be support for that. But 0:18:14.280 --> 0:18:17.919 burying our reduction in demand and just bringing different supply, 0:18:18.000 --> 0:18:20.840 and for that you need an energy import terminal, which 0:18:20.920 --> 0:18:23.560 Germany lacks. Gonna fast track one, but that's going to 0:18:23.640 --> 0:18:26.119 take a bit of time. In the meantime, there is 0:18:26.160 --> 0:18:29.680 not much solution to Russian gas that just continue buying it. Yeah, 0:18:29.760 --> 0:18:31.560 And how I want to ask you about the huge 0:18:31.680 --> 0:18:34.720 energy problems we're seeing in places like Sri Lanka, Pakistan, 0:18:34.760 --> 0:18:37.959 also Argentina and other Latin American countries. We're seeing massive 0:18:37.960 --> 0:18:42.320 protests and even electoral challenges because of this. Can the 0:18:42.359 --> 0:18:45.760 world cope with any further energy adjustments given that as 0:18:45.760 --> 0:18:49.600 already shortages and inability to pay by many of these countries. 0:18:50.400 --> 0:18:53.160 You're right, and that's a very important situation. Is that 0:18:53.160 --> 0:18:56.320 the province of the wall on energy pree day, the 0:18:56.400 --> 0:19:00.080 invasion of Ukraine. We went already on a tight l 0:19:00.160 --> 0:19:04.040 and demand situation for things like call and natural gas, 0:19:04.040 --> 0:19:07.240 perhaps less so for oil. It's gonna be difficult for 0:19:07.400 --> 0:19:10.320 developing countries and poorer countries to cope with very high 0:19:10.440 --> 0:19:13.919 energy prices because it's not just one particular energy product 0:19:13.960 --> 0:19:16.080 that is expensively was in the case of the seventies 0:19:16.080 --> 0:19:18.480 when the price of oil went through the roof. It 0:19:18.640 --> 0:19:23.040 is every form of energy where there is oil, gas, call, electricity, 0:19:23.119 --> 0:19:25.480 and even if you think about the energy transition, the 0:19:25.560 --> 0:19:29.040 metals use on batteries are very expensive now, so they're 0:19:29.040 --> 0:19:31.880 gonna face a situation in which they cannot just try 0:19:31.920 --> 0:19:35.879 to reduce guys and buy call while call is equally expensive. 0:19:36.080 --> 0:19:38.760 And the main problem for them is that they can 0:19:38.800 --> 0:19:41.119 be outbeait by the richer countries. So one of the 0:19:41.160 --> 0:19:43.840 things is happening at the moment is that Europe is 0:19:43.880 --> 0:19:46.359 getting the extra supply of LNG, but as at the 0:19:46.400 --> 0:19:51.200 cause of poorer countries in particularly Asia simply not getting supplies. 0:19:51.560 --> 0:19:54.400 Have your plus in London, Thank you listeners, don't forget 0:19:54.440 --> 0:19:57.560 to reach out all thoughts, suggestions and o Binion's welcome. 0:19:57.920 --> 0:20:00.639 I'm at monequent on Twitter or emails v Quinn at 0:20:00.640 --> 0:20:03.480 Bloomberg dot Net to the markets now. Very happy to 0:20:03.480 --> 0:20:05.560 be joined by John authors in New York and near 0:20:05.600 --> 0:20:08.320 case are in Washington, d C. John, I want to 0:20:08.359 --> 0:20:10.680 start with you first about a piece you wrote this week. 0:20:11.320 --> 0:20:14.240 We are seeing the partial the solution of globalization as 0:20:14.440 --> 0:20:17.240 the predominant force among market economies. That's just a fact. 0:20:17.280 --> 0:20:19.960 The debate has been raging. It's in full swing that 0:20:20.040 --> 0:20:22.040 this might be the beginning of the end for those 0:20:22.080 --> 0:20:24.680 who enjoyed the spoils of things like freeer trade, more 0:20:24.680 --> 0:20:27.439 open borders. You point out this week, though, that for 0:20:27.480 --> 0:20:30.400 those who missed out on globalizations upside the so called 0:20:30.520 --> 0:20:33.399 discontented countries, there might actually be an opportunity to profit 0:20:33.400 --> 0:20:36.400 from the decline of the liberal world order. There really 0:20:36.400 --> 0:20:39.600 should be such an opportunity. The question is whether those 0:20:39.600 --> 0:20:41.960 countries are going to take it now. I I wrote 0:20:42.000 --> 0:20:44.600 specifically about Mexico because I you know, I worked there 0:20:44.520 --> 0:20:46.440 as a report from Mexico for four years when the 0:20:46.480 --> 0:20:49.480 current president was mayor of Mexico City, so I feel 0:20:49.560 --> 0:20:53.560 qualified to comment on that particular country. Mexico was the 0:20:53.680 --> 0:20:57.159 classic example it through in its lots with globalization, with 0:20:57.200 --> 0:21:00.480 the nap to Trade Agreement, the Mackeladora sect, which is 0:21:00.520 --> 0:21:03.080 the idea of sending components from the US to be 0:21:03.160 --> 0:21:06.360 assembled on the Mexican border and then sent back leveraging 0:21:06.600 --> 0:21:09.239 Mexican cheap labor. And then a few years after and 0:21:09.240 --> 0:21:12.920 after China joined the w t O and Mexico absolutely 0:21:12.960 --> 0:21:16.200 got it in the neck from Chinese competition. China's labor 0:21:16.320 --> 0:21:19.240