Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: I think we will have greater divisions than today between
Speaker 2: America and anyone who depends on America for their security,
Speaker 2: and let's call it China and potentially Russia. What I
Speaker 2: think is interesting is where will the rest of the
Speaker 2: world be in this divide.
Speaker 1: Welcome to voter Nomics, where politics and markets collide. This year,
Speaker 1: voters around the world have the ability to affect markets, countries,
Speaker 1: and economies like never before. We've created this series to
Speaker 1: help you make sense of it all. I'm alegro Stratton,
Speaker 1: I made Room Wooldridge, and I'm Stephanie Flanders. So at
Speaker 1: the top of the show you just heard from our
Speaker 1: guests this week. He's the former director of the international
Speaker 1: affairs think tank Chathamhouse, Robin Niblett. He joins us for
Speaker 1: a conversation about how China will factor into the US
Speaker 1: and UK elections. Steph, we did that one together, didn't we.
Speaker 3: Yeah, we did it. We did a few weeks back.
Speaker 3: We did not have the benefit of Adrian's wisdom, but
Speaker 3: it sort of took us back to China, which I
Speaker 3: guess we haven't focused on so much in the last
Speaker 3: few weeks and you know, he specifically you think of
Speaker 3: it a little bit when you see these sort of
Speaker 3: D Day commemorations. You know, he talks about the challenge
Speaker 3: for Europe of rethinking their position, their geopolitical positioning in
Speaker 3: the world, and whether or not governments are sort of
Speaker 3: stepping up sufficiently to that challenge, and actually contrast it
Speaker 3: with the Asia, where he feels they've always been much
Speaker 3: more engaged in the regional rivalry and the threat it pos.
Speaker 1: Also on the show today, we're going to talk about
Speaker 1: India once again. On Monday, exit polls, suggested Prime Minister again,
Speaker 1: we should now know, I mean we should have known.
Speaker 1: We have all covered politics and to know that you
Speaker 1: should never talk about an elections for the actual results
Speaker 1: as well.
Speaker 3: I mean, in our defense we did talk about it
Speaker 3: was just the exit poles. And Rushie Battier, who was
Speaker 3: correspondent on the ground, was mentioning that in some past
Speaker 3: elections the exit poles had not been very effective, but
Speaker 3: actually the last couple they had worked. And I think
Speaker 3: there is a very interesting question why Modi's BJP party
Speaker 3: performed so dramatically.
Speaker 1: Okay, well, we'll cross back over to New Delhi later
Speaker 1: in the show when I'm going to speak to one
Speaker 1: of our reporters, Swatty Gupta, on how India voted and
Speaker 1: how those coalition talks are shaking out. But first of all,
Speaker 1: shall we guys dip into the election that is happening
Speaker 1: all around us. It feels like a very busy week
Speaker 1: it has been, and.
Speaker 3: Adrian, I've been watching some of your tweets and writing
Speaker 3: this week and just you think things are just going
Speaker 3: to get worse for the Conservative Party.
Speaker 4: Absolutely. I thought up to now that this was quite
Speaker 4: a boring election. You know, a Labor victory, a Tory defeat,
Speaker 4: and you know, a change of government. Everything was going predictably.
Speaker 4: But then Nigel Farage came in and that raises the
Speaker 4: possibility that we'll get a Labor super victory and a
Speaker 4: Tory super defeat and a real transformation in the nature
Speaker 4: of the right in this country, the Trumpification of the
Speaker 4: right in this country. That Farage really is a trumpest figure,
Speaker 4: both in style and in his beliefs. He's very close
Speaker 4: to Trump, He's very involved with with Trump World. And
Speaker 4: if he wins his the seat clacton which he's standing for,
Speaker 4: and if the Reform Party is significantly responsible for splitting
Speaker 4: the right vote. He will be a major player in
Speaker 4: British politics and may well force the Tory Party to
Speaker 4: move to the right.
Speaker 3: So I guess the argument or the pushback on the
Speaker 3: longer term scenario would be, if they hadn't entered the race,
Speaker 3: you would have felt there was a strong ish possibility
Speaker 3: that Farage could become a leader of the Conservative Party
Speaker 3: after the election, and it would be the true trumplification
Speaker 3: because you would have what has often been the most
Speaker 3: sort of corrosive thing of having a established party taken
Speaker 3: over by a populist rather than an outside force that's
Speaker 3: going to find it harder to break through electorallease. You
Speaker 3: could argue that to have him double down on reform
Speaker 3: was long term less sort of if you like, dangerous
Speaker 3: for the nation.
Speaker 4: I think putting him in Parliament gives him even more
Speaker 4: of a platform than he's already got. He is as
Speaker 4: well positioned as he could be to trumpefy the Conservative Party.
Speaker 4: Now we may see in the next few days and
Speaker 4: weeks a lot of money going to Farage. We may
Speaker 4: see the Reform Party excelling the Conservative Party in terms
Speaker 4: of its polling. We may see some very high profile
Speaker 4: defections from the Conservative Party. So this is the greatest
Speaker 4: nightmare you could possibly have for the Conservatives. Now, this
Speaker 4: is an ancient party, it's got deep roots, it's got
Speaker 4: a fantastic brand name. So perhaps I'm begging up this this.
Speaker 3: Litter we have all we usually spend our time talking
Speaker 3: about how it's the most successful political party in the
Speaker 3: history of political party.
Speaker 4: Absolutely, but it's been the most successful party partly because
Speaker 4: it's been willing to absorb other parties. You know, just
Speaker 4: could call the Conservative and Unionist Party and you know
Speaker 4: it's changed a lot over time, and perhaps we could
Speaker 4: see the Conservative and Reform Party.
Speaker 1: It was interesting to look at the events of the
Speaker 1: week because, as you say, Tuesday of the week that
Speaker 1: we're recording in, it feels like a couple of months ago,
Speaker 1: doesn't it. Tuesday he announces in the morning, I'm going
Speaker 1: to make this emergency announcement. The world of Westminster didn't didn't.
Speaker 1: There was a number of options. In the end, he
Speaker 1: announces he's going to take over Reform, but he's also
Speaker 1: going to run, and that was the sort of more
Speaker 1: extreme end of what people were predicting. So you know,
Speaker 1: on all of the events have played out as you
Speaker 1: suggest around you know, the reform is showing it's it's
Speaker 1: nudging up in the polls and there's only two points
Speaker 1: behind the Tories. But then interestingly, when you then on
Speaker 1: Tuesday night, get that debate and it focuses so much
Speaker 1: on tax, and then the next day Faras is not
Speaker 1: really in the conversation when he's talking about immigration, which
Speaker 1: is what they want to talk about. They talk about
Speaker 1: it being the immigration election. He is, you know, enormously effective,
Speaker 1: and he sort of dominates the agenda, but I am
Speaker 1: not sure that when the agenda moves on to other items,
Speaker 1: which the Labor and Conservative Party are making it do
Speaker 1: because they want to talk about the economy and they
Speaker 1: want to talk about tax from their different perspectives. He
Speaker 1: has so much to say and to your point about
Speaker 1: you know, taking over taking over the Conservative Party, all
Speaker 1: of those all of those prospects and his ambition in
Speaker 1: that regard are not hidden, right. He talks about it,
Speaker 1: but he to do that, you have to have a
Speaker 1: slate of policies.
Speaker 4: Sure it makes it, but it makes it more difficult
Speaker 4: for the two main parties to dominate the political agenda
Speaker 4: because both the Tory Party and Labor Party, for their
Speaker 4: own different reason, have a reason not to talk too
Speaker 4: much about immigration and the votes. Now, of course Farage
Speaker 4: has exactly the opposite set of incentives, so it makes
Speaker 4: it more difficult to fight on the old electoral battleground.
Speaker 4: You have these populous things which people are intensely worried about,
Speaker 4: particularly conservative voters, which the Conservative Party didn't want to
Speaker 4: talk about. Now they can't get away from. I also
Speaker 4: think in terms of the debate about the timing of
Speaker 4: the election this you know, a lot of Conservatives are
Speaker 4: very unhappy that Richi Suna called an election in the
Speaker 4: summer rather than in the autumn. And that is only
Speaker 4: accentuated now by Farage's arrival, because in November he would
Speaker 4: have been off in the United States doing his thing
Speaker 4: over there and acting as a lipspittle to Donald Trump.
Speaker 4: He's now, you know, using his summer doing what he
Speaker 4: likes to do.
Speaker 1: Do you think he's running because he thinks he's going
Speaker 1: to win this? Remember he has run seven times before
Speaker 1: sitting and has a twenty six thousand majority. What wasn't
Speaker 1: the easiest one to pick.
Speaker 4: It's a twenty six thousand majority, but it is pure
Speaker 4: Ukip Farag territories, white working class, you know, exiles, people
Speaker 4: who feel annoyed by multiculturalism, people who are very sensitive
Speaker 4: to the to the boats, people who are sort of
Speaker 4: down at heel.
Speaker 1: And he's a county lines crime.
Speaker 4: Problem, drugs and county line. He's a superstar and he
Speaker 4: really has galvanized this sort of thing. And if he
Speaker 4: does win, he's in a really good position to take
Speaker 4: over what is already a hollowed out party. I'm in
Speaker 4: the Conservative Party, but will be even more hollowed out
Speaker 4: after the election.
Speaker 3: Can we just spend two minutes to think about the
Speaker 3: Labor Party's perspective on this, because if you imagine if
Speaker 3: Labor Party was as single minded as the Conservative Party
Speaker 3: often has been on the future, on party and maintaining
Speaker 3: its power, and not necessarily always so focused on the
Speaker 3: nation and the good of the nation. If you're in
Speaker 3: that mindset and your Labor of course the temptation would
Speaker 3: be to say, ah, this is us in power for
Speaker 3: the next ten years, because you've got the Conservatives tearing
Speaker 3: themselves apart and going slightly crazy in just the way
Speaker 3: that we did with Jeremy Corbyn. I guess the alternative
Speaker 3: is to tele Actually, this this takes all of our
Speaker 3: politics in a really dangerous direction, and we've already learned
Speaker 3: from the Brexit debate that that can become very toxic
Speaker 3: and make governing very difficult. So this is not necessarily
Speaker 3: something we should welcome.
Speaker 4: Choice. It channels the opposition into foolish politics. From a
Speaker 4: political management point of view, from a Kars Starmer point
Speaker 4: of view, purely in the short term, it's great news.
Speaker 4: From the point of view of the health of our democracy,
Speaker 4: it's a really bad news because healthy democracies, particularly when
Speaker 4: you have a large, very centralized system like ours, demand
Speaker 4: a healthy, responsible opposition that can keep you into account.
Speaker 4: But if I was sitting in Downing Strader, I wouldn't say.
Speaker 4: What I really want is a healthy, biggest opposition. I
Speaker 4: want a crazy opposition that's tearing itself apart.
Speaker 3: I mean, we're getting very ahead of ourselves. But I
Speaker 3: just wonder whether we be careful. You wish for a
Speaker 3: few of the Labor Party, because if you look at
Speaker 3: there is there is.
Speaker 1: They will be across this. They want this is because.
Speaker 3: But remember we had actually the last few years we
Speaker 3: have both We've all commented on it that actually politics
Speaker 3: have become more normal again, and if this takes us
Speaker 3: more in that direction, yes, the Labor Party may have
Speaker 3: a clear reign, may even win the next election after
Speaker 3: this one, but you could ultimately be a in a
Speaker 3: very unpleasant leant overall normalization.
Speaker 1: I don't think people think that exclusively.
Speaker 4: Just about to have European elections next week.
Speaker 3: I'm just talking about the UK. We had two boring
Speaker 3: people who are very you know, we've been saying we've
Speaker 3: normalized British politics.
Speaker 4: We are exciting people. Yes, be careful what you wish for.
Speaker 1: And I'm in charge, an't I? So I've got to move.
Speaker 1: But I think we've done a podcast right there anyway,
Speaker 1: So we are going to go now from Nigel Faraj
Speaker 1: in the UK election to our on the ground voice
Speaker 1: for the week. It's Bloomberg's reporter Swati Gupta.
Speaker 5: Swati, Hi, Hi, thank you for having me.
Speaker 1: Sweaty. So did you see this result coming to.
Speaker 5: Some extent, Yes, the reporting that we had done on
Speaker 5: the ground over the past six months, I would say,
Speaker 5: and the people that we had been spoken to, speaking
Speaker 5: to me and of a few colleagues in the office,
Speaker 5: it made us feel that unemployment and inflation would be
Speaker 5: major issues. Somehow they were not getting addressed when the
Speaker 5: campaigning began, and then the signs kind of silidified as
Speaker 5: soon as you know, the voting process began, which is
Speaker 5: over a period of six weeks. We spoke to party
Speaker 5: officials who started confirming a little bit that things may
Speaker 5: not be going that wealth for the B to B.
Speaker 5: It is really hard to estimate that in an electorate
Speaker 5: which is this large, and with the Prime Minister who
Speaker 5: is so incredibly popular.
Speaker 1: Here, Soswati, is it right to say that broadly this
Speaker 1: is a rejection of Moody Noomics, which essentially was an
Speaker 1: agenda and economic agenda that largely benefited billionaires and to
Speaker 1: a lesser extent, the middle classes.
Speaker 5: I would say it's a rejection Indians have overwhelmingly still
Speaker 5: voted for remnistroymoy and his allies. I think it is
Speaker 5: sort of, in a way, a check that the voters
Speaker 5: have delivered that yeah, everything else is fine, we are
Speaker 5: heading to the moon, or we are going to become
Speaker 5: a developed country by twenty forty seven. But don't forget
Speaker 5: that it is the poor people who elect leaders in
Speaker 5: this country. I think it's it's a reminder from the
Speaker 5: voters that you cannot forget the people at the lowest
Speaker 5: level and just forge ahead.
Speaker 1: What will it mean for his agenda in the next
Speaker 1: parliament then, once once his coalition has been formed, will
Speaker 1: what do you think he actually does to your to
Speaker 1: your very eloquent phrase, you know, to not forget the
Speaker 1: less well off.
Speaker 5: Yeah, I mean in the parliament. It is right now
Speaker 5: very difficult to estimate a lot of the things that
Speaker 5: they had scheduled for the first hundred days, and mister
Speaker 5: Body had been very clear that, oh, you know, we
Speaker 5: have it all planned out. That's now all gone up
Speaker 5: in the air. Because when you are running a coalition
Speaker 5: government in India, what you want no longer is a priority.
Speaker 5: You have to, you know, take everybody in the government
Speaker 5: along with you. And mister Body is not used to
Speaker 5: working in a collision. He never has. He's always ruled
Speaker 5: with absolute majority. So it would be interesting to see
Speaker 5: which of his reforms that will be sidelined. He was
Speaker 5: very keen to do labor reforms in India, but that
Speaker 5: pretty much, as an analyst told me a few days ago,
Speaker 5: that'll be in cold storage.
Speaker 1: Well, one thing is for sure, Spatia, you're going to
Speaker 1: be really, really busy. Thank you very much for taking
Speaker 1: time to come and speak to us here on a
Speaker 1: voteronomics and we'll speak to you again.
Speaker 5: Thank you.
Speaker 1: Now to a conversation Stephanie and I had with Robin Niblett.
Speaker 1: He's the former director of the international affairs think tank
Speaker 1: Chatham House. Nibbler also recently published a book called The
Speaker 1: New Cold War, How the Contest between the US and
Speaker 1: China will shape our Century. As he explains it, the
Speaker 1: book's central thesis is that the division between the US
Speaker 1: and China and the mistrust is unbridgable and it's here
Speaker 1: to stay. The two sides are, he thinks, reversing into
Speaker 1: a Cold War, and they're bringing in partners into either
Speaker 1: side of the conflict, one of China's partners being Russia.
Speaker 3: And I decided to ask him about Russia's invasion of
Speaker 3: Ukraine two years ago because I remembered him saying at
Speaker 3: the time that he felt it could serve as a
Speaker 3: wake up call to the West both to decarbonize the
Speaker 3: economies quicker because they'd want to reduce their alliance on
Speaker 3: Russian gas, but also to spur new alliances and a
Speaker 3: rethinking of European security, and having remembered him saying that,
Speaker 3: I just wanted to ask him whether he thought the
Speaker 3: West had actually seized those opportunities out of the crisis.
Speaker 2: My bottom line is yes. Now. Obviously, in democracies, turning
Speaker 2: a wake up call into action is difficult, and it
Speaker 2: requires explicit language and narrative. And I think it's been
Speaker 2: especially difficult for Europeans to adapt because the whole notion
Speaker 2: of European integration was built as a peace project, not
Speaker 2: as a war project. Easier in some ways for Australia, Japan,
Speaker 2: South Korea to get with the program more quickly because
Speaker 2: that sense of insecurity has been so much more present,
Speaker 2: and they've got US troops still deployed there and exercises
Speaker 2: carried out in much more explicit ways. But has it
Speaker 2: been a wake up call and have people acted? Absolutely?
Speaker 3: I guess the pushback on that would be there has
Speaker 3: been great rhetoric, but in terms of actual sacrifices being
Speaker 3: made in order to do more on defense, politicians governments
Speaker 3: have been quite unwilling to actually spend a lot more.
Speaker 3: I mean, climate was the other thing that looked like
Speaker 3: there was an opportunity. But actually, if anything, there's been
Speaker 3: quite a lot of backsliding. So I guess what you
Speaker 3: could say when it comes down to it, Actually politicians
Speaker 3: aren't willing to let people pay a price for this
Speaker 3: kind of change.
Speaker 2: Yes, there's a kind of transition phase which has to
Speaker 2: take place within a democracy. But it strikes me that
Speaker 2: where the German government, let's say, in particular on its
Speaker 2: climate change transition is taking place, is that it is
Speaker 2: dropped adaptations that would have an immediate short term impact
Speaker 2: on consumers heat pump requirements for example. At the energy
Speaker 2: production level, the transition is fully underway. They're trying to
Speaker 2: give something to their publics with one hand, but if
Speaker 2: you look at the reduction of gas importation and the
Speaker 2: adaptation of that away from Russia, that's carrying real cost.
Speaker 2: It's much more expensive to bring it in from the US.
Speaker 2: It's more expensive to bring it in from Katar. But
Speaker 2: the long term contracts have been signed by the German
Speaker 2: government on Katar gas for example, again at the great
Speaker 2: announceo of one hundred billion euros and be put more
Speaker 2: into German defense. Look, the problem is that they're so
Speaker 2: far behind the curve in Germany and being ready. The
Speaker 2: one hundred billion has literally been soaked up like water
Speaker 2: put into a garden that's parched. It's just disappeared and
Speaker 2: you see no added value. But that's because Germany was
Speaker 2: so unprepared. But Germany is hitting two percent of its
Speaker 2: GDP this year. That is a remarkable figure. Where we've
Speaker 2: come from in Europe and where we've got to in
Speaker 2: a democratic context. Things impressive.
Speaker 1: But it's two percent enough.
Speaker 2: Yeah, look, it's a fair question. It's two percent enough
Speaker 2: if we look ahead. If this is a new Cold
Speaker 2: War I believe it is. Then if we're looking ahead
Speaker 2: ten twenty years, two percent won't be enough. You could
Speaker 2: get to maybe two point five three percent. I think
Speaker 2: it would be enough.
Speaker 1: But let's just look think that is enough?
Speaker 2: Yeah, totally Without the US, European GDP is ten times Russia.
Speaker 2: So America could pull out uld say, and theoretically we
Speaker 2: should have the capacity to be able to take Russia
Speaker 2: on Ukraine. So this is not just about the amounts,
Speaker 2: it's about how the money you're spent. So, as people
Speaker 2: have always said, the problem with Europe is the defense
Speaker 2: part has been a kind of free rider. The ten
Speaker 2: Kin kind of thing on top of the European project.
Speaker 2: And now people are realizing that you're perhaps going to
Speaker 2: have to start, for example, borrowing money to spend on defense.
Speaker 1: Are people talking about that?
Speaker 2: Absolutely, this is one of the new projects. Could you
Speaker 2: extend what was the two year renew Europe post COVID
Speaker 2: seven hundred and ninety billion euro fund that was created
Speaker 2: for two years to adapt the economies to a post
Speaker 2: COVID and to a more energy efficient environment, that is
Speaker 2: meant to end at the end of two years. Europe
Speaker 2: could collectively in the market borrow very large amounts to
Speaker 2: then be able to apply to defense production, for example,
Speaker 2: to start building up long term ammunitions production. So it's
Speaker 2: not the amounts, it's the organization. Europe has not been
Speaker 2: organized around security and defense. And I think this wake
Speaker 2: up call and the fact that America is not reliable
Speaker 2: for European security at least in the long term, I
Speaker 2: think his acting is a wake up call. So I'm frank.
Speaker 2: I'm not worried about the two percent. To be honest,
Speaker 2: most people never thought Germany would get to two percent
Speaker 2: within two years. There are on one point three. This
Speaker 2: is a big chunk of money. When you look at
Speaker 2: the size of the German defense budget.
Speaker 3: But in nineteen eighty nine the US was spending six
Speaker 3: percent something like that, and then probably most countries, certainly
Speaker 3: the UK was probably spending something like that seven percent
Speaker 3: of GDP. So I guess if we're in the kind
Speaker 3: of really transformed situation geopolitically that you describe in the book,
Speaker 3: I just it feels like that conversation around twenty two
Speaker 3: percent is symbolic of politician's willingness to really say, look,
Speaker 3: we're in a different world now. We can no longer
Speaker 3: be sort of enjoying the benefits of this peace diffideny
Speaker 3: that is gone that since nineteen eighty nine, we have
Speaker 3: to face up to things being different. But are we
Speaker 3: anyway close to that? We're looking for these two massive elections.
Speaker 2: I think the most important point I want to make
Speaker 2: it is that we're not sitting on a trigger environment
Speaker 2: across a long front line between a nuclear armed Soviet forces.
Speaker 2: They were at the time potentially about to pour through
Speaker 2: the Folder gap, which led to the kind of high
Speaker 2: levels of events, spending, and high levels of concern and
Speaker 2: conscription that you had during the last Cold War. We're
Speaker 2: talking about a Cold War with China, which from a
Speaker 2: European standpoint is a long way away, and where the
Speaker 2: competition is going to be competed much more geoeconomically and
Speaker 2: in competition with the global seuse and in competition over
Speaker 2: regulation on AI. Then it is going to be in
Speaker 2: the kind of Cold War. I spent a lot of
Speaker 2: time in the book is talking about that. What's different
Speaker 2: about this cold water the last war? We can take
Speaker 2: on Russia with two percent of GDP. The problem is
Speaker 2: that if we're going to see China as a competitor globally,
Speaker 2: we're going to have to be rethink on our economic
Speaker 2: model in a different way, and that'll be expensive, but
Speaker 2: you won't see it on the defense budget.
Speaker 3: So that's interesting we were talking about as an Allegra
Speaker 3: has been on the inside of some of these conversations
Speaker 3: about how the approach to China, how you describe it
Speaker 3: to people all. Do you think there is an understanding
Speaker 3: within the government that you we need to reframe our
Speaker 3: relationship with China. What does that even look like?
Speaker 1: Well, the new language they're now using is that they
Speaker 1: want to not decouple, but they want to de risk.
Speaker 1: So to explain they're framing it's let's get with the program.
Speaker 1: We have these huge economic dependencies on China. There's going
Speaker 1: to be a price impact if we pull out, or
Speaker 1: it's not to pull out too aggressively. But equally there's
Speaker 1: all these industries where it's highly sensitive. Every time they
Speaker 1: try to stake out that new position, they get pushed
Speaker 1: and pushed by new allegations of China's interference in the UK.
Speaker 1: So I think that I think we probably haven't seen
Speaker 1: a settled position on this from the government, but I'd
Speaker 1: love to know what you think.
Speaker 2: I agree there's not a settled position, and it's interesting
Speaker 2: compared to the US one as well, where they thought
Speaker 2: the administration in a way, the Biden administration jumped on
Speaker 2: a Sula vander Lyon's term of de risking because they
Speaker 2: realized the decoupling language, which was, as you said, starting
Speaker 2: to dominate the debate, was too extreme even for America,
Speaker 2: which had its largest trade ever with China in twenty
Speaker 2: twenty three, and of course would like to be able
Speaker 2: to keep a lot of that trade in agricultural products.
Speaker 2: Think of the air market. Can Boeing survive as a
Speaker 2: global air carrier and not be penetrated to the Chinese market,
Speaker 2: which is already by passenger numbers apparently the largest market
Speaker 2: in the world, overtaking the US recently. So either bid
Speaker 2: demonstration jumped on that more subtle framing. Should we say
Speaker 2: that the European side is provided that Oliver Dowden actually
Speaker 2: repeated about de risking being the goal and not decoupling.
Speaker 2: The problem is that de risking implies that you understand
Speaker 2: the boundaries of the threat, and the initial notion of
Speaker 2: de risking, and the initial notion of the Jake Sullivan
Speaker 2: US National Security Advisor, We're going to build a small
Speaker 2: yard with a high fence of protections, was that it
Speaker 2: would be artificial intelligence, quantum computing, and semiconductors. Fine, you
Speaker 2: could say, we don't want those areas China to be
Speaker 2: contributing to China's capacity to use those technologies to further
Speaker 2: improve its military threats to US, given that we do
Speaker 2: see China's arrival in the Indo Pacific and who knows
Speaker 2: what they're going to provide maybe to Russia some day
Speaker 2: down the line. The problem is that we've already discovered,
Speaker 2: even in the technological military space, cloud computing could be
Speaker 2: an alternative to having to use lots of very high
Speaker 2: end the semiconductors and ships from America. Why not just
Speaker 2: lob into cloud computing? And you said that when then
Speaker 2: be able to draw the models and the imaging you've
Speaker 2: had biotechnology. Now people are worried that biotech could be
Speaker 2: used in a military sense and for military purposes. So
Speaker 2: suddenly it's already expanded.
Speaker 1: And in the UK example, evs are interesting, aren't they
Speaker 1: because in the high fence they wouldn't necessarily be in
Speaker 1: the yard, would they? Exactly that they might be regarding
Speaker 1: to America. But in the UK a lot of people
Speaker 1: think we need cheap evs in order to make some
Speaker 1: of those EV targets possible. But then there's all these
Speaker 1: concerns about the tech that could be in the cars
Speaker 1: if they were imported, whether or not that's.
Speaker 2: Exactly right they're mongering or not. Joe Biden has warned
Speaker 2: that Chinese cars in the tech could be a national
Speaker 2: security threat as they're driving around they're picking up information.
Speaker 2: But the Chinese already did that. The Chinese don't allow
Speaker 2: Tesla cars to drive near government areas in China today,
Speaker 2: So I said, the Chinese are always one step ahead on.
Speaker 3: This with a slightly more kind of economic bent. It's
Speaker 3: just that it's it's not a stable equilibrium. Even just
Speaker 3: the idea of we were going to draw lines between
Speaker 3: things that are economically are important to our national security
Speaker 3: and economic areas where we can continue to be entangled.
Speaker 3: The logic of everything you've described, as long as you
Speaker 3: have two distinct blocks, or at least superpowers with fundamentally
Speaker 3: different values, a fundamentally different approach to governing, one authoritarian,
Speaker 3: one more open, it's not a stable situation to have
Speaker 3: the degree of economic entanglement that we have now. And
Speaker 3: once you accept that you're going to decouple in some areas,
Speaker 3: that the decoupling will have its own momentum or is
Speaker 3: just not all means nothing. I just wonder whether you think,
Speaker 3: if you're writing this book in twenty or thirty years time,
Speaker 3: that we will be in a much more divided global economy,
Speaker 3: that we will have much more lines between the two sides, Will.
Speaker 2: We will have deep divisions and greater divisions than today.
Speaker 2: Between America and its allies, are both Pacific and Atlantic,
Speaker 2: European and Pacific, anyone who depends on America for their security,
Speaker 2: and let's call it China and potentially Russia, which in
Speaker 2: particular they are joined at the hip at the moment
Speaker 2: for all the reasons we know. What I think is
Speaker 2: interesting is where will the rest of the world be
Speaker 2: in this divide. I talk about the countries in the
Speaker 2: Global South term we all use now having much more
Speaker 2: agency in this new Cold War, a more capacity to
Speaker 2: triangulate between the two sides, play one off the other,
Speaker 2: which they've done. Certainly a country like India has done effectively.
Speaker 2: You could argue some of the Southeast Asians like Indonesia
Speaker 2: doing it quite effectively. Saudi so far has done it
Speaker 2: quite effectively. Thy worried a little the Middle East may
Speaker 2: force it a little bit back into the American camp.
Speaker 2: But the interesting thing is will a country like Indonesia
Speaker 2: be forced to choose between the two technologies or not?
Speaker 2: I think not. Will countries in Latin America be forced
Speaker 2: to choose between the two? I think not because they
Speaker 2: do not rely on America for their security and China
Speaker 2: in a way is not a direct threat to them.
Speaker 2: So the question is then are they able to pick
Speaker 2: and choose between different options? Should be called literally Chinese
Speaker 2: evs and Chinese technology mixed up, maybe with some European
Speaker 2: or American technology and say we will play, we will
Speaker 2: take both and force the two to compete. That's the
Speaker 2: kind of almost positive side of the New Cold War,
Speaker 2: if I can call it. I try to be a
Speaker 2: little bit positive in the book, and I do talk
Speaker 2: about the fact that in a way the Agency, the
Speaker 2: economic heft and weight of these emerging and growing markets
Speaker 2: in terms of population, in terms of resources, in terms
Speaker 2: of markets, gives them some capacity to say we will
Speaker 2: not be dominated by the new Cold War of the
Speaker 2: Northern hemisphere. As real as that is and as dominant
Speaker 2: as that is. Now, if we end up in war
Speaker 2: hot war, all bets are off and then you're forced
Speaker 2: to choose sides.
Speaker 1: And I just want to hear you on the price
Speaker 1: implication or all of this, The price is implication for
Speaker 1: UK punters to use the crew the term that Stephanie
Speaker 1: and I you always used to use back when we
Speaker 1: were both in TV having to go in to report
Speaker 1: some of these issues. If we have that economic distance
Speaker 1: thing from China, what are the price implications for the voters.
Speaker 2: Anything that minimizes the capacity for the efficient exchange of
Speaker 2: goods financing technology is going to have a price increasing impact.
Speaker 2: The question is how much, in what segments and how
Speaker 2: important are they for day to day living for let's
Speaker 2: call it middle class voters. And the biggest risk is
Speaker 2: probably in the energy space, because energy is an important component,
Speaker 2: whether it's through transport or through heating bills and so
Speaker 2: on for the average a voter. So the using questions,
Speaker 2: can we do an energy transition, which we in Europe
Speaker 2: desperately need to do. America doesn't without Chinese inputs because
Speaker 2: the Chinese inputs give us speed and cheap price. So
Speaker 2: I think we're going to face some real conundrums here.
Speaker 2: I think you can probably get away in terms of
Speaker 2: central price impacts with the new Cold War. Life would
Speaker 2: be a bit more expensive, but not cataclysmically so except
Speaker 2: on energy. And energy is the area where I think
Speaker 2: we could see a divergence as well between America and
Speaker 2: Europe in how he managed the Chinese relationship.
Speaker 1: Robin, what does a president Trump the second do for
Speaker 1: all of this?
Speaker 2: It does not change the fundamentals of their being a
Speaker 2: new Cold War, the dangers it could It's unlikely, but
Speaker 2: it's possible that he could hot it up. But I
Speaker 2: think the biggest risk of it is what it does
Speaker 2: to the alliance is that the Bide administration has been
Speaker 2: trying to build to manage this new Cold War. Personally,
Speaker 2: I think he's got four years. Four years are not
Speaker 2: going to change the dynamic of America needing allies to
Speaker 2: compete against China and Russia. And although it might be
Speaker 2: a bumpy phase for four years with Trump, I don't
Speaker 2: think he's going to destroy the infrastructure of this competition.
Speaker 2: But yeah, I suppose my big risk for who's in
Speaker 2: this administration hows he manage it? If we get very
Speaker 2: personally here, we go unstructural and we go down to
Speaker 2: literally personalities, because if we know from the last Trump
Speaker 2: administration he wants to do one thing one day, he
Speaker 2: wants to do something the next, and whoever advises him
Speaker 2: last has most impact. There are people who served in
Speaker 2: the Trump administration. There are people on the hard right
Speaker 2: in the Republican Party who believe we should not be
Speaker 2: managing this new Cold War, which should be winning it.
Speaker 3: It's interesting ran Chatham House for all those years, the
Speaker 3: sort of premiere think tank on international affairs that I
Speaker 3: guess reflects the sort of foreign policy establishment, certainly in Europe,
Speaker 3: certainly in the UK. So the fact that you're not
Speaker 3: projecting the end of the world if Donald Trump gets
Speaker 3: re elected, I think is interesting and shows the sort
Speaker 3: of long view that you're taking. But I guess if
Speaker 3: you were judging President Trump by the results of his
Speaker 3: leadership as opposed to what he said day to day,
Speaker 3: he probably did more to increase European defense spending and
Speaker 3: commitment to natively than President Obama had ever done. If
Speaker 3: you look at President Biden's approach to the Middle East crisis,
Speaker 3: that has, if anything, diminished a sense of US power
Speaker 3: and ability to influence very close allies. And when it
Speaker 3: comes to China, to have an unstable genius as he did,
Speaker 3: or what does he say there were very stable genius,
Speaker 3: have an unstable non genius who's very unpredictable, contradictory in
Speaker 3: his statements, never quite clear about whether whether he's in
Speaker 3: with the Hawks or with the people who would coexist
Speaker 3: with China. Is that actually, ironically the kind of leader
Speaker 3: we might need in this weird period of transition, which
Speaker 3: would prevent the Chinese from really knowing what they were
Speaker 3: dealing with.
Speaker 2: No. I say no for one reason, though not because
Speaker 2: I do not discount the points you make. You could add,
Speaker 2: you know, obviously we've done two things after Trump number one,
Speaker 2: he asked two things, spend more new defense and don't
Speaker 2: buy your gas from Russia, ending you what the hell
Speaker 2: you're doing. Of course, we're now doing the other thing
Speaker 2: he asked, which is buying the bulk of ar liquified
Speaker 2: natural gas from America rather from from Russia. He's definitely
Speaker 2: got what he wanted. There's one problem, however, I was
Speaker 2: looking at these figures recently for a little article I
Speaker 2: wrote Foreign Policy Magazine. The G seven has a larger
Speaker 2: trade deficit in goods with America today than China has
Speaker 2: with America.
Speaker 3: Except the US. But the UK is the UK is.
Speaker 2: Seven seven billion exactly. Think we got seven billion the
Speaker 2: last number I saw exactly trade deficit with America. So
Speaker 2: we might be left out of his revenge. But the
Speaker 2: danger is that he would create instability in the emerging
Speaker 2: what I call G seven plus G nine grouping of
Speaker 2: countries that are allied to America. That America needs to
Speaker 2: take on China and Russia, and we need America to
Speaker 2: take on China and Russia. So the danger is that
Speaker 2: he could break those alliances by making a much more
Speaker 2: transactional imposing tarists on. However, as I said, this is
Speaker 2: a structural conflict that's going to go on for twenty
Speaker 2: thirty years. To be honest, I think the G seven
Speaker 2: will just do like Japan did with the transpecific partnership. Now,
Speaker 2: do you know what, We'll hang together while America's out.
Speaker 2: We'll wait for America to come back, because America is
Speaker 2: not going to be able to manage this new call
Speaker 2: war without our lives.
Speaker 3: Robin Niblett, thank you so much.
Speaker 1: Okay, two quick things that I found interesting. Firstly, he
Speaker 1: thinks that defense spending should go to about three percent,
Speaker 1: but that that will be manageable. Obviously we're at two
Speaker 1: point five now, but it isn't that kind of quantin
Speaker 1: point five percent difference will be interesting. And then also
Speaker 1: he did accept that it will make things more expensive
Speaker 1: for domestic audiences, having this Jake Sullivan high fence small
Speaker 1: yard policy around, for instance, China's exporting of evs.
Speaker 3: Which we had heard. We've had that discussion with a
Speaker 3: few other people whether that was going to become a bigger,
Speaker 3: bigger thing. And I can't help given that we're recording
Speaker 3: this on the day of the commemorations of eighty years
Speaker 3: since the D Day landings. It is quite striking, and
Speaker 3: we've written about it today and Bloomberg that Vladimir Putin's
Speaker 3: not invited to those commemorations. He has participated in the past.
Speaker 3: He participated ten years ago. Soviet Union lost more people
Speaker 3: than anybody in the fight against Nazi Germany, and arguably
Speaker 3: Stalingrad was as significant Russians would say, much more significant
Speaker 3: on the Eastern Front and defeating Hitler than D Day was.
Speaker 3: And it just sort of goes to some of the
Speaker 3: points that Robin was making about the challenge that Europe
Speaker 3: has had in rethinking its approach to security.
Speaker 4: I think he tore up his own invitation and he
Speaker 4: invaded you great, Yeah, exactly.
Speaker 3: I'm not saying, but it sort of it just it shows,
Speaker 3: you know, we're still hanging on quite rightly to this
Speaker 3: very important date and what it symbolizes, and yet we
Speaker 3: have this completely new environment, and I think we are
Speaker 3: we are just struggling to hold those two things in
Speaker 3: our minds because.
Speaker 4: We're moving from a post war world to a pre
Speaker 4: war world, or what feels increasing like a pre war world.
Speaker 4: I'm afraid one of the things that strung me about
Speaker 4: what Nimble was saying, and what interests me about his
Speaker 4: book is that he's focused on China and that he's
Speaker 4: unusual for a European to be focused on China. What
Speaker 4: you get at the moment is Europeans tend to be
Speaker 4: focused on Russia and the East, and the Americans are
Speaker 4: absolutely obsessed by China. And I think our debate in
Speaker 4: this continent is behind the US debate. We're not sufficiently
Speaker 4: thinking about China.
Speaker 1: So I think are we behind? Are we in a
Speaker 1: different economic position, which is we need them more?
Speaker 4: America also needs them, But I don't think we have
Speaker 4: recognized the extent to which China is an aggressive military threat.
Speaker 5: Right.
Speaker 1: I think that's it for now from Votomics. Thanks for
Speaker 1: listening to this week's Votonomics from Bloomberg. This episode was
Speaker 1: hosted by Stephanie Flanders, Adrian Woodridge, and myself at Legostratum.
Speaker 1: It was produced by Samasadi with help from Chris Martlou
Speaker 1: and Julia Mann's. Sound designed by Moses and am Brendan.
Speaker 1: Francis Newnham is our executive producer. Sage Bauman is head
Speaker 1: of Podcasts and Special Thanks to Robin Niblett and Swati Gupta.
Speaker 1: Please subscribe, rate, and review wherever you listen to podcasts.