1 00:00:05,949 --> 00:00:08,430 Speaker 1: This is Copy Time, a podcast series on markets and 2 00:00:08,430 --> 00:00:11,789 Speaker 1: economies from DBS Group Research. I'm Tamur Baig, chief economist, 3 00:00:11,909 --> 00:00:17,579 Speaker 1: welcoming you to our 166th episode. Delighted today to have, uh, 4 00:00:17,590 --> 00:00:21,329 Speaker 1: David Marsh for his first live appearance at this podcast. 5 00:00:21,790 --> 00:00:24,430 Speaker 1: We did have David with us 3 years ago in 6 00:00:24,430 --> 00:00:28,309 Speaker 1: the autumn of 2022, but that was a remote interaction. 7 00:00:28,739 --> 00:00:32,319 Speaker 1: Uh, David is the chairman of OMIF Research Group, former 8 00:00:32,470 --> 00:00:35,418 Speaker 1: Financial Times Europe editor. He has published a number of 9 00:00:35,418 --> 00:00:38,700 Speaker 1: books on the intersection of economics and geopolitics, the latest 10 00:00:38,700 --> 00:00:42,740 Speaker 1: one being Can Europe Survive The Story of a continent 11 00:00:42,740 --> 00:00:44,000 Speaker 1: in a fractured world. 12 00:00:44,540 --> 00:00:46,919 Speaker 1: Uh, as I said earlier that David was with us 13 00:00:46,918 --> 00:00:51,598 Speaker 1: on episode 86. Ah, in that episode, David minced no words. 14 00:00:51,848 --> 00:00:54,569 Speaker 1: He provided us with a strong critique of the policy 15 00:00:54,569 --> 00:00:58,909 Speaker 1: choices and communication lapses that had pushed the US economy 16 00:00:58,909 --> 00:01:02,869 Speaker 1: on weak footing, leaving it vulnerable to financial stability risks. 17 00:01:03,090 --> 00:01:04,690 Speaker 1: I expect nothing less from him today. 18 00:01:05,160 --> 00:01:06,800 Speaker 1: David Marsh, welcome back to Kobe 19 00:01:06,800 --> 00:01:07,539 Speaker 2: time. Thanks very much. 20 00:01:08,319 --> 00:01:10,830 Speaker 1: And I'm gonna make everybody look at this book one 21 00:01:10,830 --> 00:01:13,610 Speaker 1: more time on this for this camera angle. Ah, it's 22 00:01:13,610 --> 00:01:18,399 Speaker 1: available on all online retailers, I'm assuming. So they say. Ah, 23 00:01:18,599 --> 00:01:20,400 Speaker 1: I have been reading this book, but we will talk 24 00:01:20,400 --> 00:01:23,580 Speaker 1: about this book and more today. Uh, David, we talked 25 00:01:23,580 --> 00:01:26,279 Speaker 1: a lot about the UK last time, and it was 26 00:01:26,279 --> 00:01:28,440 Speaker 1: on teetering, to say the least, at that time with 27 00:01:28,440 --> 00:01:30,239 Speaker 1: the guilt crisis, the trust moment. 28 00:01:30,809 --> 00:01:32,669 Speaker 1: Would you like to relive those days and would you 29 00:01:32,669 --> 00:01:34,550 Speaker 1: like to compare those days with today's days? 30 00:01:34,809 --> 00:01:36,930 Speaker 2: It can't be ruled out that we could have a repeat, 31 00:01:37,040 --> 00:01:39,330 Speaker 2: but I think it's less likely. I think the Bank 32 00:01:39,330 --> 00:01:41,970 Speaker 2: of England and the Treasury have somehow regained the upper hand. 33 00:01:42,169 --> 00:01:44,690 Speaker 2: I'm not saying that all the roses in the garden 34 00:01:44,690 --> 00:01:47,650 Speaker 2: are lovely in the UK. There's a lot of problems there. Um, 35 00:01:47,730 --> 00:01:49,809 Speaker 2: and you could argue, of course, that we don't need 36 00:01:49,809 --> 00:01:52,610 Speaker 2: too much orthodoxy. Maybe we should have a little bit 37 00:01:52,610 --> 00:01:54,250 Speaker 2: more flexibility vis a vis debt. 38 00:01:54,680 --> 00:01:57,680 Speaker 2: Labour government under Keir Starmer has got itself into a hole. 39 00:01:57,959 --> 00:02:00,279 Speaker 2: It's dug deeper actually instead of getting us out of 40 00:02:00,279 --> 00:02:02,680 Speaker 2: the hole. So it's got to actually make peace with 41 00:02:02,680 --> 00:02:06,150 Speaker 2: the bond markets. It's got to appease the bond market villageantes. 42 00:02:06,800 --> 00:02:08,910 Speaker 2: I think in a way that means that we're gonna 43 00:02:08,910 --> 00:02:12,720 Speaker 2: have more austerity, uh, and more uh spending cuts than 44 00:02:12,720 --> 00:02:15,418 Speaker 2: we really need. But that is part of the legacy 45 00:02:15,720 --> 00:02:16,639 Speaker 2: of Liz Truss. 46 00:02:17,589 --> 00:02:20,479 Speaker 1: What is your assessment of this new government's performance 47 00:02:20,479 --> 00:02:24,639 Speaker 2: so far? I'd give them about 5 out of 10 actually. Um, Starmer, 48 00:02:24,788 --> 00:02:27,198 Speaker 2: a bit like in Germany, uh, Metz has not done 49 00:02:27,199 --> 00:02:29,179 Speaker 2: very well domestically, but he's done OK. 50 00:02:29,559 --> 00:02:32,190 Speaker 2: Uh, internationally, Islam has done well in shoring up the 51 00:02:32,190 --> 00:02:35,080 Speaker 2: alliance with the United States. He's made a lot of 52 00:02:35,080 --> 00:02:38,720 Speaker 2: unnecessary blunders. I think when it comes to the domestic economy, 53 00:02:38,960 --> 00:02:41,079 Speaker 2: there's this issue about whether or not they should be 54 00:02:41,080 --> 00:02:44,160 Speaker 2: putting up income tax in the forthcoming budget. I think 55 00:02:44,160 --> 00:02:47,399 Speaker 2: they should. They've got ready to do that, uh, breaking 56 00:02:47,399 --> 00:02:51,559 Speaker 2: a promise that they made in the election in July 2024. 57 00:02:51,639 --> 00:02:52,880 Speaker 2: And then at the last minute, 58 00:02:53,220 --> 00:02:55,339 Speaker 2: They got cold feet and so they reneged. They've done 59 00:02:55,339 --> 00:02:58,860 Speaker 2: two U-turns, therefore, on the budget. And that is a 60 00:02:58,860 --> 00:03:01,289 Speaker 2: sign of a government that doesn't have much confidence in 61 00:03:01,288 --> 00:03:03,779 Speaker 2: its own abilities. That said, I don't think we're ready 62 00:03:03,779 --> 00:03:04,520 Speaker 2: for a new election. 63 00:03:04,919 --> 00:03:08,169 Speaker 2: Uh, let alone a new prime minister anytime soon. I 64 00:03:08,169 --> 00:03:09,649 Speaker 2: think the star will hang on in there. 65 00:03:09,970 --> 00:03:13,410 Speaker 1: But David, you therefore would not necessarily expect a no 66 00:03:13,410 --> 00:03:15,970 Speaker 1: confidence motion as far as the Prime Minister is concerned, 67 00:03:16,050 --> 00:03:18,889 Speaker 1: with something the British politics and politicians specialize 68 00:03:18,889 --> 00:03:19,110 Speaker 1: in. 69 00:03:19,288 --> 00:03:23,929 Speaker 2: Well, there's two things aren't there. One, would be a motion, uh, 70 00:03:24,199 --> 00:03:27,639 Speaker 2: with his own MPs, uh, who might want to depose him. No, 71 00:03:27,690 --> 00:03:30,770 Speaker 2: I don't expect that. I, I think that he's a 72 00:03:30,770 --> 00:03:33,350 Speaker 2: safe pair of hands despite the blunders that he's made. 73 00:03:33,839 --> 00:03:36,520 Speaker 2: Certainly it's going to be no vote of no confidence 74 00:03:36,520 --> 00:03:39,279 Speaker 2: in the House of Commons because you've got a thumping 75 00:03:39,279 --> 00:03:42,479 Speaker 2: great majority. And from that point of view, uh, Britain 76 00:03:42,479 --> 00:03:44,720 Speaker 2: is in a better state than France or Germany. They're 77 00:03:44,720 --> 00:03:47,199 Speaker 2: in the least bad position, I think, because we do 78 00:03:47,199 --> 00:03:49,949 Speaker 2: have a modicum of political stability. 79 00:03:50,279 --> 00:03:52,679 Speaker 1: When you and I had spoken 3 years ago, we 80 00:03:52,679 --> 00:03:55,539 Speaker 1: were basically about to have a new Chancellor of the Exchequer. 81 00:03:56,000 --> 00:03:57,710 Speaker 1: Your assessment of the current Chancellor of the 82 00:03:57,710 --> 00:03:58,160 Speaker 1: Exchequer. 83 00:03:58,320 --> 00:04:00,759 Speaker 2: I, I think Rachel Reeves has made a number of blunders, 84 00:04:00,789 --> 00:04:03,600 Speaker 2: and she looks unsure of herself, and this, uh, lack 85 00:04:03,600 --> 00:04:06,520 Speaker 2: of surety, I think transmits itself to the government as 86 00:04:06,520 --> 00:04:09,589 Speaker 2: a whole. It's a pity because she's the first, uh, 87 00:04:09,600 --> 00:04:12,889 Speaker 2: female Chancellor of the Exchequer that we've had in 800 years. 88 00:04:13,119 --> 00:04:15,360 Speaker 2: And so she's really had quite a lot of pressure 89 00:04:15,360 --> 00:04:18,070 Speaker 2: on her. That said, I think some of these mistakes 90 00:04:18,070 --> 00:04:21,459 Speaker 2: have been homemade. I would expect that she would be replaced, uh, 91 00:04:21,470 --> 00:04:22,359 Speaker 2: after the budget. 92 00:04:22,700 --> 00:04:26,480 Speaker 2: Uh, in due time, uh, and she'd be given another 93 00:04:26,480 --> 00:04:30,239 Speaker 2: slightly more safe, uh, post somewhere else in the government. 94 00:04:30,339 --> 00:04:32,140 Speaker 2: It's not been a happy time for her, I have 95 00:04:32,140 --> 00:04:35,700 Speaker 2: to say. And that's transmitted itself to a general feeling 96 00:04:35,700 --> 00:04:38,859 Speaker 2: that the Labour government with this great big majority that 97 00:04:38,859 --> 00:04:40,609 Speaker 2: it has, hasn't really got a game plan. 98 00:04:40,700 --> 00:04:42,619 Speaker 1: If I can narrow the discussion down to just the 99 00:04:42,619 --> 00:04:45,579 Speaker 1: City of London in terms of its attractiveness of doing 100 00:04:45,579 --> 00:04:49,219 Speaker 1: business with respect to cost of housing, law and order, 101 00:04:49,329 --> 00:04:52,339 Speaker 1: as well as ability of international financial institutions. 102 00:04:52,589 --> 00:04:55,829 Speaker 1: To operate out of London, but service Europe. Where do 103 00:04:55,829 --> 00:04:56,390 Speaker 1: you see all this 104 00:04:56,390 --> 00:04:56,799 Speaker 1: going? 105 00:04:57,029 --> 00:04:59,269 Speaker 2: Yes, it's not been a happy time. Um, you, you're 106 00:04:59,269 --> 00:05:05,059 Speaker 2: quite right, time looking at the cost of living, uh, healthcare, childcare, housing. 107 00:05:05,190 --> 00:05:06,589 Speaker 2: It may be OK for the people right at the 108 00:05:06,589 --> 00:05:09,950 Speaker 2: very top of the scale. But for many, uh, operatives 109 00:05:09,950 --> 00:05:13,390 Speaker 2: who are working at more medium term or medium range 110 00:05:13,390 --> 00:05:15,730 Speaker 2: or junior levels in banks, it's not a good place 111 00:05:15,730 --> 00:05:16,100 Speaker 2: to 112 00:05:16,299 --> 00:05:19,100 Speaker 2: Uh, have a house or, or bring up children. And 113 00:05:19,100 --> 00:05:21,899 Speaker 2: also when you do have banks now requiring their people 114 00:05:21,899 --> 00:05:24,130 Speaker 2: to be in the office every day, they can't just 115 00:05:24,130 --> 00:05:27,359 Speaker 2: work from home, from somewhere else in the provinces. Uh, 116 00:05:27,880 --> 00:05:30,219 Speaker 2: on the regulatory side, uh, I think we haven't seen 117 00:05:30,220 --> 00:05:34,119 Speaker 2: this max exodus of banking professionals that some people have 118 00:05:34,119 --> 00:05:38,899 Speaker 2: been predicting. Uh, there's still, still about 600,000 professionals, I 119 00:05:38,899 --> 00:05:41,659 Speaker 2: think in different sorts working in the City of London. 120 00:05:41,899 --> 00:05:43,380 Speaker 2: There clearly has been some attrition. 121 00:05:43,690 --> 00:05:46,289 Speaker 2: There's no place in Europe that is quite like London 122 00:05:46,290 --> 00:05:49,339 Speaker 2: in terms of the ecosystem, but that comes as a 123 00:05:49,339 --> 00:05:52,450 Speaker 2: as a cost. The asset management side is doing quite well, 124 00:05:52,529 --> 00:05:55,209 Speaker 2: I think. It's the wholesale banking side where there's been 125 00:05:55,459 --> 00:05:58,700 Speaker 2: Uh, some, uh, exodus, uh, and also, of course, in 126 00:05:58,700 --> 00:06:02,220 Speaker 2: the securities trading and so on. But no one city 127 00:06:02,220 --> 00:06:05,220 Speaker 2: has profited from this. There's no winner out of all this. 128 00:06:05,450 --> 00:06:08,700 Speaker 2: There's been some attrition, but London still remains by far 129 00:06:08,700 --> 00:06:10,980 Speaker 2: and away the best place to do business. I think 130 00:06:10,980 --> 00:06:13,859 Speaker 2: it probably lost ground to New York in, in some ways. 131 00:06:14,178 --> 00:06:16,959 Speaker 2: Europe as a whole, of course, has lost ground to America. 132 00:06:17,579 --> 00:06:20,739 Speaker 1: Is Europe still keen on inflicting pain on the UK 133 00:06:20,738 --> 00:06:21,339 Speaker 1: for Brexit? 134 00:06:21,809 --> 00:06:24,250 Speaker 2: No, I think we've got over that, uh, partly because 135 00:06:24,250 --> 00:06:27,010 Speaker 2: we have got a more professional government, uh, whatever these 136 00:06:27,010 --> 00:06:30,049 Speaker 2: domestic mistakes, uh, Starmer is thought of as being a 137 00:06:30,049 --> 00:06:34,059 Speaker 2: serious fellow. Um, Rishi Sunak was as well. Uh, Sunak 138 00:06:34,059 --> 00:06:36,529 Speaker 2: was the prime minister beforehand at the tail end of 139 00:06:36,529 --> 00:06:40,890 Speaker 2: the Conservative administration, uh, a clever man. Uh, I think 140 00:06:40,890 --> 00:06:44,209 Speaker 2: not a bad prime minister to stop the rot after, uh, 141 00:06:44,220 --> 00:06:47,570 Speaker 2: Liz Truss and Boris Johnson, not a good politician. 142 00:06:47,940 --> 00:06:49,549 Speaker 2: And I think he's spending quite a bit of time 143 00:06:49,549 --> 00:06:51,829 Speaker 2: in Singapore and no doubt something to do with his 144 00:06:51,829 --> 00:06:54,260 Speaker 2: new job as a well-known investment bank. 145 00:06:54,589 --> 00:06:54,988 Speaker 1: Indeed, 146 00:06:55,070 --> 00:06:59,428 Speaker 1: indeed. Um, let's talk a little bit about the relationship 147 00:06:59,428 --> 00:07:02,469 Speaker 1: between the UK and the US because you initially mentioned 148 00:07:02,470 --> 00:07:05,510 Speaker 1: that in terms of domestic issues, Starmer government seems to 149 00:07:05,510 --> 00:07:08,268 Speaker 1: have a lot of challenges. But you seem to think 150 00:07:08,269 --> 00:07:10,690 Speaker 1: that internationally, at least vis a vis the UK, they 151 00:07:10,690 --> 00:07:11,769 Speaker 1: played their cards pretty well. 152 00:07:11,950 --> 00:07:16,269 Speaker 2: Well, there's a lot still that binds the United States 153 00:07:16,269 --> 00:07:17,470 Speaker 2: and the United Kingdom. 154 00:07:18,029 --> 00:07:22,309 Speaker 2: Now, I, like others, uh, somewhat uneasy about what might 155 00:07:22,309 --> 00:07:25,350 Speaker 2: appear to be a kind of fawning between the UK 156 00:07:25,350 --> 00:07:28,010 Speaker 2: Prime Minister and the US President. I think up to 157 00:07:28,010 --> 00:07:32,350 Speaker 2: a point, this kind of theatricality is allowable in in diplomacy. 158 00:07:32,589 --> 00:07:36,470 Speaker 2: Churchill did the same with Roosevelt is nothing that new. Um, 159 00:07:36,519 --> 00:07:39,429 Speaker 2: I think I would say that Starmer needs to do that. 160 00:07:39,549 --> 00:07:41,989 Speaker 2: I don't think he's gone so far. But Starmer's got 161 00:07:41,989 --> 00:07:46,170 Speaker 2: to protect fundamental UK interests, which is difficult to protect 162 00:07:46,170 --> 00:07:47,649 Speaker 2: at the best of times, let alone when. 163 00:07:47,910 --> 00:07:51,670 Speaker 2: You're in a fight with the two superpowers, both the 164 00:07:51,670 --> 00:07:55,269 Speaker 2: Chinese and the United States trying to get certain benefits 165 00:07:55,269 --> 00:07:59,429 Speaker 2: from weak players in Europe, and the UK is astonishingly 166 00:07:59,429 --> 00:08:03,109 Speaker 2: vulnerable to both of those superpowers. So, um, even though 167 00:08:03,109 --> 00:08:05,380 Speaker 2: there's a part of me which feels a bit upset 168 00:08:05,380 --> 00:08:09,230 Speaker 2: about too much kowtowing to, uh, either the US or 169 00:08:09,230 --> 00:08:11,410 Speaker 2: the Chinese president, I think he's allowable. 170 00:08:12,160 --> 00:08:15,760 Speaker 1: David, I had similar reactions during the ASEAN summit in 171 00:08:15,760 --> 00:08:18,880 Speaker 1: Kuala Lumpur and also when Trump went from ASEAN summit 172 00:08:18,880 --> 00:08:21,880 Speaker 1: to Korea and then Japan, that there was a lot 173 00:08:21,880 --> 00:08:25,079 Speaker 1: of kowtowing going on. My take is that a lot 174 00:08:25,079 --> 00:08:28,040 Speaker 1: of these gestures are not doing being done in a 175 00:08:28,040 --> 00:08:31,078 Speaker 1: great deal of good faith. I think that the theatricality 176 00:08:31,079 --> 00:08:35,119 Speaker 1: is something that these countries see as relatively cost-free, uh, 177 00:08:35,150 --> 00:08:37,340 Speaker 1: simply because they don't think that any deal that they 178 00:08:37,340 --> 00:08:40,320 Speaker 1: signed with the Trump administration is sacrosanct and can just slip. 179 00:08:40,640 --> 00:08:41,539 Speaker 1: So might as well. 180 00:08:42,049 --> 00:08:43,719 Speaker 1: Pursue the path of least resistance. 181 00:08:44,090 --> 00:08:47,369 Speaker 2: What he's trying to avoid the worst outcome, every leader 182 00:08:47,369 --> 00:08:49,569 Speaker 2: these days who goes to the Oval Office, uh, has 183 00:08:49,570 --> 00:08:53,630 Speaker 2: in mind, uh, President Zelensky in February to avoid this 184 00:08:54,010 --> 00:08:56,630 Speaker 2: worst case scenario. You, you want this to come out 185 00:08:57,239 --> 00:08:59,809 Speaker 2: looking reasonably OK from a soundbite point of view. We 186 00:08:59,809 --> 00:09:03,049 Speaker 2: have to remember that the US president is above all 187 00:09:03,049 --> 00:09:06,489 Speaker 2: a reality TV star. That's how he made his name. 188 00:09:06,570 --> 00:09:09,348 Speaker 2: That's how he made his fortune. That's how he became. 189 00:09:09,789 --> 00:09:12,739 Speaker 2: Uh, a politician. And so we have to think that 190 00:09:12,739 --> 00:09:16,679 Speaker 2: we are in a reality TV show nearly all the time. Uh, 191 00:09:16,739 --> 00:09:19,979 Speaker 2: this is a bit unedifying, and it can lead to 192 00:09:20,059 --> 00:09:24,380 Speaker 2: a case that where some of the diplomacy is somewhat amateurish, 193 00:09:24,500 --> 00:09:25,580 Speaker 2: shall we say, and 194 00:09:25,880 --> 00:09:30,159 Speaker 2: Uh, neither the professionals in this area, nor the people 195 00:09:30,159 --> 00:09:32,679 Speaker 2: who have to deal with the practicalities of it, people say, 196 00:09:32,880 --> 00:09:35,679 Speaker 2: who are fighting Ukrainian war, uh, feel this is a 197 00:09:35,679 --> 00:09:37,710 Speaker 2: very good state of affairs. I think we have to 198 00:09:37,710 --> 00:09:40,520 Speaker 2: live with it, uh, uh, for the time being and 199 00:09:40,520 --> 00:09:41,880 Speaker 2: practice damage limitation. 200 00:09:42,359 --> 00:09:44,750 Speaker 1: Well, with your reference to Ukraine, you have nudged us 201 00:09:44,750 --> 00:09:47,239 Speaker 1: toward the next subject. Uh, David, let's talk about Europe. 202 00:09:47,559 --> 00:09:52,559 Speaker 1: You've written an exhaustively detailed book, ah, and I'm almost 203 00:09:52,559 --> 00:09:54,640 Speaker 1: done with it. I'm actually looking forward to our conversation 204 00:09:54,640 --> 00:09:57,390 Speaker 1: about this book at a separate event, um, but Europe 205 00:09:57,559 --> 00:10:00,619 Speaker 1: and the here and now of Europe. What is your sense? 206 00:10:01,239 --> 00:10:03,919 Speaker 2: This has been a long time coming. Um, when I 207 00:10:03,919 --> 00:10:07,039 Speaker 2: started doing the book, um, I had the feeling that 208 00:10:07,039 --> 00:10:09,799 Speaker 2: Europe was very vulnerable. I felt that the Americans had 209 00:10:09,799 --> 00:10:10,500 Speaker 2: immense power. 210 00:10:10,989 --> 00:10:13,789 Speaker 2: And would continue to go on amassing power, not least 211 00:10:13,789 --> 00:10:17,330 Speaker 2: because the full scale invasion of Ukraine by Putin in 212 00:10:17,330 --> 00:10:20,789 Speaker 2: Russia in February 2022 did give the Americans, I think, 213 00:10:20,869 --> 00:10:22,909 Speaker 2: a lot of leeway in in what I call the 214 00:10:22,909 --> 00:10:28,549 Speaker 2: four vital spheres of the political economy that that is money, industry, energy, 215 00:10:28,609 --> 00:10:31,020 Speaker 2: and of course in the military, in all those areas, 216 00:10:31,030 --> 00:10:31,510 Speaker 2: I felt. 217 00:10:31,820 --> 00:10:35,900 Speaker 2: The Americans had untrammeled power. And I felt that the 218 00:10:35,909 --> 00:10:39,569 Speaker 2: Europeans were very loath to come to terms with the 219 00:10:39,570 --> 00:10:42,299 Speaker 2: realities of that situation. Also making it worse, I thought 220 00:10:42,299 --> 00:10:43,979 Speaker 2: that the Americans didn't really know what to do with 221 00:10:43,979 --> 00:10:47,570 Speaker 2: that power, how to use it in a sensible, straightforward way. 222 00:10:47,820 --> 00:10:50,739 Speaker 2: Add to that the uh Chinese accommodation. 223 00:10:51,030 --> 00:10:53,030 Speaker 2: The trade war that we've had between the United States 224 00:10:53,030 --> 00:10:55,780 Speaker 2: and China really does lead to more attrition for Europe 225 00:10:55,780 --> 00:10:59,468 Speaker 2: because there will be some unloading of extra Chinese exports 226 00:10:59,469 --> 00:11:02,789 Speaker 2: towards Europe. So Europe is in a double bind. Add 227 00:11:02,789 --> 00:11:06,070 Speaker 2: to that the energy costs, uh, heaped up on Germany 228 00:11:06,070 --> 00:11:08,780 Speaker 2: now as a result of this unwise bet that Russia 229 00:11:08,780 --> 00:11:09,849 Speaker 2: would always be their friend. 230 00:11:10,250 --> 00:11:14,530 Speaker 2: Add to that Angela Merkel's astonishing blunder, I believe, over 231 00:11:14,530 --> 00:11:18,489 Speaker 2: quitting nuclear energy after the Fukushima mishap in 2011. You 232 00:11:18,489 --> 00:11:22,119 Speaker 2: can see really, if the heart of Europe, uh, Germany 233 00:11:22,119 --> 00:11:25,239 Speaker 2: is not beating, and it's been stagnating now for five years, 234 00:11:25,489 --> 00:11:27,090 Speaker 2: then you can hardly think there's going to be a 235 00:11:27,090 --> 00:11:29,549 Speaker 2: rosy future for Europe as a whole. 236 00:11:29,809 --> 00:11:30,289 Speaker 1: But when I 237 00:11:30,289 --> 00:11:32,640 Speaker 1: traveled through Europe, particularly Southern Europe, 238 00:11:32,974 --> 00:11:35,983 Speaker 1: Same part that was very, very sickly a decade ago. 239 00:11:36,405 --> 00:11:40,364 Speaker 1: I see a thriving Spanish economy, Italy doing pretty well, 240 00:11:40,484 --> 00:11:43,614 Speaker 1: Greece coming back from the brink. When I go to Scandinavia, 241 00:11:43,765 --> 00:11:46,164 Speaker 1: I see them doing pretty well. Even when I go 242 00:11:46,164 --> 00:11:51,155 Speaker 1: to the Baltics, despite their massive fear around Russia's proximity, uh, 243 00:11:51,244 --> 00:11:54,843 Speaker 1: they're embracing financial technology, uh, fairly open economies is doing 244 00:11:54,844 --> 00:11:58,905 Speaker 1: pretty well. So, is it a case of two large 245 00:11:59,510 --> 00:12:02,469 Speaker 1: stagnant powers, meaning France and Germany and the rest sort 246 00:12:02,469 --> 00:12:03,210 Speaker 1: of doing OK. 247 00:12:03,669 --> 00:12:05,469 Speaker 2: There is an element to that. You could say if 248 00:12:05,469 --> 00:12:08,109 Speaker 2: you're being optimistic, and I'm really forcing myself in the 249 00:12:08,109 --> 00:12:10,630 Speaker 2: book to be at least slightly optimistic. You can say 250 00:12:10,630 --> 00:12:13,429 Speaker 2: there's strength in diversity, and there is some resilience there. 251 00:12:13,750 --> 00:12:16,590 Speaker 2: The peripheral countries have actually learned from the Germans how 252 00:12:16,590 --> 00:12:19,750 Speaker 2: to be competitive. That's why the Germans could no longer 253 00:12:19,750 --> 00:12:23,030 Speaker 2: clean up by simply exporting any surplus goods to the 254 00:12:23,030 --> 00:12:25,820 Speaker 2: rest of Europe, because those countries are now more competitive 255 00:12:25,820 --> 00:12:28,429 Speaker 2: than they were. So you're right, there are some bright spots. 256 00:12:28,510 --> 00:12:32,510 Speaker 2: It would be wrong to paint everything in dastardly black colors. 257 00:12:32,789 --> 00:12:34,960 Speaker 2: But I do think that if you've got these two 258 00:12:35,190 --> 00:12:38,949 Speaker 2: very important parts of Europe, France and Germany, not performing adequately, 259 00:12:39,030 --> 00:12:42,020 Speaker 2: and also the Franco-German relationship, although it's been patched up 260 00:12:42,020 --> 00:12:45,510 Speaker 2: a bit lately, partly because of Trump not again, performing 261 00:12:45,510 --> 00:12:47,669 Speaker 2: as well as it has done in the past, then 262 00:12:47,669 --> 00:12:49,539 Speaker 2: I do think it's very difficult for Europe as a 263 00:12:49,539 --> 00:12:50,280 Speaker 2: whole to be healthy. 264 00:12:50,510 --> 00:12:54,190 Speaker 1: And in terms of dealing with the US, whether it 265 00:12:54,190 --> 00:12:57,739 Speaker 1: is with respect to Ukraine or this trade war situation. 266 00:12:58,690 --> 00:13:02,530 Speaker 1: The institutional aspects around European Union dealing with the US 267 00:13:02,530 --> 00:13:05,760 Speaker 1: versus Germany or France dealing with the US. How is 268 00:13:05,760 --> 00:13:07,079 Speaker 1: this being balanced? Well, it, 269 00:13:07,289 --> 00:13:12,169 Speaker 2: it's not a very healthy picture because the great strength 270 00:13:12,169 --> 00:13:14,569 Speaker 2: of Europe was always that it could do trade deals. 271 00:13:14,719 --> 00:13:17,689 Speaker 2: That's why you bring together these countries in the European Union. 272 00:13:17,969 --> 00:13:19,109 Speaker 2: They have power over trade. 273 00:13:19,539 --> 00:13:22,179 Speaker 2: But then you see the abject way in which Trump 274 00:13:22,179 --> 00:13:25,218 Speaker 2: was able to really run rings around the Europeans over 275 00:13:25,219 --> 00:13:29,210 Speaker 2: the trade deal uh with the EU earlier this summer, 276 00:13:29,580 --> 00:13:31,859 Speaker 2: where the Europeans were very much in the case of 277 00:13:31,859 --> 00:13:35,579 Speaker 2: being supplicants. It's put very generally, it seems to be 278 00:13:35,580 --> 00:13:37,609 Speaker 2: very difficult for Europe to come to a common line, 279 00:13:37,940 --> 00:13:41,340 Speaker 2: although always anything, whether it's uh foreign policy, take Gaza 280 00:13:41,340 --> 00:13:44,140 Speaker 2: and Palestine and the Middle East, take Ukraine and the 281 00:13:44,140 --> 00:13:45,979 Speaker 2: way one deals with, say things like, 282 00:13:46,090 --> 00:13:50,960 Speaker 2: Oil embargoes or gas embargoes against uh Putin's Russia or 283 00:13:50,960 --> 00:13:53,320 Speaker 2: trade with the French and the Germans and other countries 284 00:13:53,320 --> 00:13:56,520 Speaker 2: to have got different views about, say, tariffs on cars, 285 00:13:56,869 --> 00:13:59,440 Speaker 2: very difficult, and, and even more difficult at a time 286 00:13:59,440 --> 00:14:02,479 Speaker 2: of crisis and stagnation to come to a common position. 287 00:14:02,719 --> 00:14:06,669 Speaker 2: That's really been the fundamental problem. That's why I think that, uh, 288 00:14:06,719 --> 00:14:09,829 Speaker 2: and I'm not alone. I'm not being very original here. Uh, 289 00:14:10,080 --> 00:14:12,520 Speaker 2: I believe a kind of pragmatic federalism. 290 00:14:12,830 --> 00:14:16,359 Speaker 2: The concentric circles idea, uh, which I think you can't 291 00:14:16,359 --> 00:14:18,718 Speaker 2: say is very realistic. There aren't any real circles any longer, 292 00:14:18,820 --> 00:14:20,919 Speaker 2: but I think the variable geometry idea. 293 00:14:21,270 --> 00:14:25,419 Speaker 2: That Jacques Delor in the 1980s pioneered, it basically means 294 00:14:25,419 --> 00:14:28,380 Speaker 2: that different countries going at different speeds to do different things, 295 00:14:28,630 --> 00:14:30,869 Speaker 2: not waiting for the rest of Europe to catch up. 296 00:14:31,109 --> 00:14:35,469 Speaker 2: I think that idea, much more pragmatic, less ambitious, less 297 00:14:35,469 --> 00:14:39,500 Speaker 2: wholesome way of dealing with Europe. Um, I think different 298 00:14:39,500 --> 00:14:42,830 Speaker 2: countries doing things in a kind of convoy principle could 299 00:14:42,830 --> 00:14:44,669 Speaker 2: be the way forward. And I think that should. 300 00:14:44,859 --> 00:14:48,260 Speaker 2: include countries like Britain or Switzerland or Norway or Turkey, 301 00:14:48,340 --> 00:14:50,299 Speaker 2: which are not in the EU. So I believe in 302 00:14:50,299 --> 00:14:53,659 Speaker 2: a wider Europe. And if we could just agree on 303 00:14:53,659 --> 00:14:56,539 Speaker 2: various common denominators where we can get our act together, 304 00:14:56,859 --> 00:15:00,219 Speaker 2: not necessarily every country together, and if we can forge 305 00:15:00,219 --> 00:15:03,299 Speaker 2: a a a a an alliance of common interest, a 306 00:15:03,299 --> 00:15:07,059 Speaker 2: kind of commonwealth of of common interest with the United States, 307 00:15:07,340 --> 00:15:08,359 Speaker 2: I would very much hope we 308 00:15:08,409 --> 00:15:11,390 Speaker 2: We could actually discover far more things that unite us 309 00:15:11,530 --> 00:15:14,289 Speaker 2: and where we, we, I mean, the Europeans and the 310 00:15:14,289 --> 00:15:16,929 Speaker 2: Americans together could do good things for the world as 311 00:15:16,929 --> 00:15:20,789 Speaker 2: well as for each other. So I'm groping towards that, uh, 312 00:15:20,809 --> 00:15:22,830 Speaker 2: optimistic conclusion at the end. 313 00:15:23,010 --> 00:15:23,130 Speaker 1: I 314 00:15:23,130 --> 00:15:23,330 Speaker 2: want to 315 00:15:23,330 --> 00:15:23,729 Speaker 1: talk a little 316 00:15:23,729 --> 00:15:24,359 Speaker 2: bit about, 317 00:15:24,369 --> 00:15:27,440 Speaker 1: uh, more about Ukraine and the US momentarily. But first, 318 00:15:27,760 --> 00:15:30,369 Speaker 1: just going back to the Southern Europe question, which looked 319 00:15:30,369 --> 00:15:34,489 Speaker 1: in dire straits a decade ago. Did Europe pay too 320 00:15:34,489 --> 00:15:37,330 Speaker 1: high a price for stabilizing the debt? 321 00:15:37,700 --> 00:15:41,260 Speaker 1: And employment situation, the internal devaluation they sort of forced 322 00:15:41,260 --> 00:15:44,570 Speaker 1: through Southern Europe, which led to some would argue that 323 00:15:44,570 --> 00:15:46,460 Speaker 1: the rise of populists both on the left and the 324 00:15:46,460 --> 00:15:47,140 Speaker 1: far right side. 325 00:15:47,440 --> 00:15:49,280 Speaker 1: Uh, was that too high a price to pay, or 326 00:15:49,280 --> 00:15:51,799 Speaker 1: is that the greatest stress test of all that Europe 327 00:15:51,799 --> 00:15:52,349 Speaker 1: can stand? 328 00:15:52,559 --> 00:15:55,400 Speaker 2: It was too high a price, I, I believe, as 329 00:15:55,400 --> 00:15:58,159 Speaker 2: you said, Tama, um, Greece is doing better now, but 330 00:15:58,159 --> 00:16:01,690 Speaker 2: they've lost a huge amount of output. They'll only be back, uh, 331 00:16:01,719 --> 00:16:04,440 Speaker 2: to the same kind of trajectory that they would have had, say, 332 00:16:04,599 --> 00:16:08,159 Speaker 2: before the financial crisis, uh, in the year 2032. They've 333 00:16:08,159 --> 00:16:09,770 Speaker 2: lost a lot of people as well. There's been a 334 00:16:09,770 --> 00:16:10,919 Speaker 2: lot of depopulation. 335 00:16:11,239 --> 00:16:14,479 Speaker 2: In countries uh in Southern Europe, also in Central and 336 00:16:14,479 --> 00:16:18,590 Speaker 2: Eastern Europe. I think if uh the Europeans have been, uh, 337 00:16:18,599 --> 00:16:22,400 Speaker 2: somewhat more flexible regarding debt, but still maintained a certain 338 00:16:22,400 --> 00:16:24,520 Speaker 2: steeliness in terms of the long term. 339 00:16:24,880 --> 00:16:28,400 Speaker 2: Over overall trajectory, it would have been better. It's obviously 340 00:16:28,400 --> 00:16:30,559 Speaker 2: easy enough to say that with hindsight, it was a 341 00:16:30,559 --> 00:16:33,559 Speaker 2: very difficult set of circumstances at the time. I, I 342 00:16:33,559 --> 00:16:36,320 Speaker 2: think it was right that Greece did not leave the euro. 343 00:16:36,400 --> 00:16:38,840 Speaker 2: I thought at one stage that they, they should, and 344 00:16:38,840 --> 00:16:41,599 Speaker 2: they would, so I was wrong there, uh, maybe, um. 345 00:16:41,969 --> 00:16:43,909 Speaker 2: Uh, 12 years ago, I thought it might be more 346 00:16:43,909 --> 00:16:46,960 Speaker 2: salutary for them. I now realize that that would not 347 00:16:46,960 --> 00:16:48,559 Speaker 2: have been the right thing to do. But I think 348 00:16:48,559 --> 00:16:51,440 Speaker 2: one could have made it easier for the Greeks to 349 00:16:51,440 --> 00:16:54,320 Speaker 2: remain in and kept us a modicum of dignity. They 350 00:16:54,320 --> 00:16:56,799 Speaker 2: have done better now, but they've lost a huge amount 351 00:16:56,799 --> 00:16:58,059 Speaker 2: of ground in the meantime. 352 00:16:58,599 --> 00:16:58,760 Speaker 1: Are 353 00:16:58,760 --> 00:17:00,539 Speaker 1: you pointing a finger to the Germans? 354 00:17:00,719 --> 00:17:00,880 Speaker 2: I 355 00:17:00,880 --> 00:17:06,458 Speaker 2: am somewhat. I think the Germans have been, um, unduly, uh, 356 00:17:06,560 --> 00:17:09,979 Speaker 2: sensitive about moral hazard. It's difficult. 357 00:17:10,760 --> 00:17:14,119 Speaker 2: Not to say that because after all, um, the whole 358 00:17:14,119 --> 00:17:16,939 Speaker 2: point about the European Economic and Monetary Union is that 359 00:17:17,040 --> 00:17:19,010 Speaker 2: other countries do take a bit of a free ride 360 00:17:19,239 --> 00:17:22,760 Speaker 2: on the back of the German stability policy. That was 361 00:17:22,760 --> 00:17:24,760 Speaker 2: the whole point of our monetary unit that other countries 362 00:17:24,760 --> 00:17:28,199 Speaker 2: would somehow learn from gain from, uh, the Germans giving 363 00:17:28,199 --> 00:17:31,520 Speaker 2: up sovereignty over the DM, they would gain something from it. 364 00:17:31,949 --> 00:17:35,589 Speaker 2: So you can, you can't really say that the Germans 365 00:17:35,589 --> 00:17:38,379 Speaker 2: is totally wrong in saying this moral hazard aspect. I 366 00:17:38,380 --> 00:17:41,180 Speaker 2: just think they could have done this with a modicum 367 00:17:41,180 --> 00:17:44,419 Speaker 2: of greater sensibility, shall we say, uh, and they could 368 00:17:44,420 --> 00:17:48,060 Speaker 2: have in their own interests, um, themselves expanded their economy. 369 00:17:48,180 --> 00:17:51,060 Speaker 2: That's maybe the, the big black mark about the Germans. 370 00:17:51,099 --> 00:17:54,219 Speaker 2: They should have used that period of ultra low, sometimes 371 00:17:54,219 --> 00:17:57,300 Speaker 2: negative interest rates to borrow more, not to be so 372 00:17:57,300 --> 00:18:00,939 Speaker 2: obsessive about the, what they call the, the black zero for. 373 00:18:01,540 --> 00:18:05,109 Speaker 2: Uh, deficit, they, they, they should have, uh, brought about 374 00:18:05,109 --> 00:18:08,790 Speaker 2: this new flexibility in the debt break five years earlier, 375 00:18:08,829 --> 00:18:10,688 Speaker 2: instead of just doing it earlier this year under the 376 00:18:10,689 --> 00:18:13,750 Speaker 2: force of circumstances. Don't forget that was in the constitutional as, 377 00:18:14,030 --> 00:18:17,589 Speaker 2: as of 2008, 2009. I think the time to relax 378 00:18:17,589 --> 00:18:18,449 Speaker 2: that would have been. 379 00:18:18,800 --> 00:18:23,369 Speaker 2: In 2014. Again, easy to say that with hindsight. Um, 380 00:18:23,479 --> 00:18:25,050 Speaker 2: I'm not saying I would have done better if I'd 381 00:18:25,050 --> 00:18:28,369 Speaker 2: been the finance minister. But now with the benefit of 382 00:18:28,369 --> 00:18:32,250 Speaker 2: what's happened, they, they clearly were too austere for too long, 383 00:18:32,489 --> 00:18:35,170 Speaker 2: and they brought themselves down as well as the rest 384 00:18:35,170 --> 00:18:35,869 Speaker 2: of Europe. 385 00:18:36,410 --> 00:18:36,750 Speaker 1: But 386 00:18:36,969 --> 00:18:39,589 Speaker 1: better late than never, the Germans are loosening their purse 387 00:18:39,589 --> 00:18:40,689 Speaker 1: strings. Yes, 388 00:18:40,800 --> 00:18:43,510 Speaker 2: I do think it's too late actually. I, I think, 389 00:18:43,530 --> 00:18:45,728 Speaker 2: and don't forget it's under the force of circumstances. Once again, 390 00:18:45,770 --> 00:18:47,630 Speaker 2: it was the Americans that forced them to do that. 391 00:18:47,949 --> 00:18:50,810 Speaker 2: Because Mr. Metz, the new Chancellor, was so afraid that 392 00:18:51,079 --> 00:18:54,670 Speaker 2: Trump more less overnight with withdraw the United States from 393 00:18:54,670 --> 00:18:57,900 Speaker 2: NATO that he said we must therefore start to be 394 00:18:57,900 --> 00:19:00,989 Speaker 2: much more free and easy regarding deficit spending for defense. 395 00:19:01,229 --> 00:19:06,589 Speaker 2: And then they added the infrastructure side also necessary. Um, now, unfortunately, 396 00:19:06,670 --> 00:19:09,948 Speaker 2: we see that the, uh, infrastructure package in particular has 397 00:19:09,949 --> 00:19:11,589 Speaker 2: been loaded up with all kinds of things that have 398 00:19:11,589 --> 00:19:14,829 Speaker 2: got much more to do with government or personal consumption 399 00:19:14,829 --> 00:19:15,489 Speaker 2: rather than 400 00:19:15,660 --> 00:19:19,219 Speaker 2: Uh, investment. And the defense spending side, which I think 401 00:19:19,219 --> 00:19:21,219 Speaker 2: we have to applaud is taking a long time to 402 00:19:21,219 --> 00:19:23,780 Speaker 2: get rolling. And I still don't know how much of 403 00:19:23,780 --> 00:19:27,170 Speaker 2: that extra money on defense will go towards a German 404 00:19:27,170 --> 00:19:31,420 Speaker 2: armaments industry, towards a European armaments industry in which maybe 405 00:19:31,420 --> 00:19:32,060 Speaker 2: the British could play. 406 00:19:32,314 --> 00:19:36,234 Speaker 2: role as well, or to buy more F-35s. That's, I'm 407 00:19:36,234 --> 00:19:39,474 Speaker 2: sure people within the defense establishment do know that. But 408 00:19:39,474 --> 00:19:42,594 Speaker 2: I think for economists on the outside, it, it remains 409 00:19:42,594 --> 00:19:44,554 Speaker 2: a moot point, how much of that will spill over 410 00:19:44,555 --> 00:19:46,314 Speaker 2: to the rest of Europe, and how much of that 411 00:19:46,314 --> 00:19:49,155 Speaker 2: will help more Mr. Trump's America. Yeah, 412 00:19:49,194 --> 00:19:52,805 Speaker 1: I, I personally see tremendous potential symbiosis between the UK 413 00:19:52,805 --> 00:19:54,895 Speaker 1: and Europe in terms of defense technology. 414 00:19:55,459 --> 00:19:58,819 Speaker 1: Because I think the days of, you know, piloted manned 415 00:19:58,819 --> 00:20:01,530 Speaker 1: aircraft are sort of behind us, and I think that 416 00:20:01,660 --> 00:20:04,800 Speaker 1: the tech stack that comes from the UK defense technology 417 00:20:04,800 --> 00:20:07,219 Speaker 1: ecosystem could be very, very beneficial for you. Glad 418 00:20:07,219 --> 00:20:09,099 Speaker 2: you say that. I believe that too in some of 419 00:20:09,099 --> 00:20:11,459 Speaker 2: these high tech areas like say drone warfare, which as 420 00:20:11,459 --> 00:20:14,359 Speaker 2: you say, is going to be um much more important 421 00:20:14,540 --> 00:20:16,140 Speaker 2: in the future, anti-submarine. 422 00:20:16,459 --> 00:20:20,659 Speaker 2: Um, cyber, uh, cyber, I always say cyber crime, but 423 00:20:20,660 --> 00:20:24,839 Speaker 2: it is a crime, cyber armaments and so on, anti-cyber 424 00:20:25,180 --> 00:20:28,179 Speaker 2: warfare mechanisms and so on. Those kind of things are 425 00:20:28,180 --> 00:20:31,260 Speaker 2: where you could put together the tech establishments of France, 426 00:20:31,420 --> 00:20:32,099 Speaker 2: the UK. 427 00:20:32,420 --> 00:20:35,420 Speaker 2: Uh, Germany and the United States and come up with 428 00:20:35,420 --> 00:20:38,660 Speaker 2: some really powerful mechanism, kind of thing that our former 429 00:20:38,660 --> 00:20:41,300 Speaker 2: Prime Minister that you mentioned just now might be involved in. 430 00:20:41,380 --> 00:20:43,379 Speaker 2: I would heartily applaud that. And that would be a 431 00:20:43,380 --> 00:20:47,040 Speaker 2: very good sign of variable geometry at work. 432 00:20:47,739 --> 00:20:49,800 Speaker 1: Right. And as far as 433 00:20:50,250 --> 00:20:54,369 Speaker 1: Europe going forward, uh, with in, in terms of, you know, 434 00:20:54,449 --> 00:20:56,889 Speaker 1: dealing with Ukraine. I mean, we are discussing this in 435 00:20:56,890 --> 00:20:59,649 Speaker 1: the third week of November 2025. Europe is sort of 436 00:20:59,650 --> 00:21:02,729 Speaker 1: beside itself because a very large deal seemed to be 437 00:21:02,729 --> 00:21:05,399 Speaker 1: being sort of coercively being signed between the Americans and 438 00:21:05,400 --> 00:21:08,229 Speaker 1: the Ukrainians, and Europe is being sort of asked to 439 00:21:08,369 --> 00:21:09,369 Speaker 1: just go along with it. 440 00:21:09,939 --> 00:21:14,219 Speaker 1: How does Europe manage the US with respect to its, uh, 441 00:21:14,579 --> 00:21:16,419 Speaker 1: benign neglect on Ukraine? Yes, 442 00:21:16,660 --> 00:21:19,459 Speaker 2: very difficult. Uh, there is this feeling it's been going 443 00:21:19,459 --> 00:21:22,660 Speaker 2: on now, ever since Mr. Trump came back for the 444 00:21:22,660 --> 00:21:26,579 Speaker 2: second term, that he's rehabilitating Putin for whatever reason. I 445 00:21:26,579 --> 00:21:28,579 Speaker 2: don't myself think it's because of some blackmail. 446 00:21:28,959 --> 00:21:30,560 Speaker 2: Uh, I don't think that's the case at all. I 447 00:21:30,560 --> 00:21:34,599 Speaker 2: think it's genuinely the case that, um, Trump feels that 448 00:21:34,609 --> 00:21:36,319 Speaker 2: Europe has had it too easy for too long, to 449 00:21:36,319 --> 00:21:39,020 Speaker 2: be riding on the bootstraps of the Americans, needs to 450 00:21:39,020 --> 00:21:41,560 Speaker 2: step up to the plate. Uh, he also wants to 451 00:21:41,560 --> 00:21:44,550 Speaker 2: end the war. He knows that Putin is in a 452 00:21:44,550 --> 00:21:47,719 Speaker 2: relatively sound position because he's got a war economy. He's 453 00:21:47,719 --> 00:21:51,079 Speaker 2: a totalitarian leader. He doesn't have to worry about elections. 454 00:21:51,170 --> 00:21:52,500 Speaker 2: So instinctively, 455 00:21:52,750 --> 00:21:56,430 Speaker 2: Trump is drawn towards Putin. And clearly that means that 456 00:21:56,800 --> 00:21:59,560 Speaker 2: Europe is not only beside itself, as you said, it's 457 00:21:59,560 --> 00:22:02,640 Speaker 2: also beside, uh, anything else that's going on. It's on 458 00:22:02,640 --> 00:22:05,400 Speaker 2: the sidelines. And I think this is in a way 459 00:22:05,400 --> 00:22:09,280 Speaker 2: Europe's worst nightmare to have a deal being done by 460 00:22:09,280 --> 00:22:13,920 Speaker 2: this relatively small economy, uh, the Russian state, it's, it's 461 00:22:13,920 --> 00:22:16,239 Speaker 2: about 1/8 of the size of China. 462 00:22:16,640 --> 00:22:18,849 Speaker 2: And the United States, which is the supreme economy of 463 00:22:18,849 --> 00:22:21,719 Speaker 2: the world, that these two states come together and decide 464 00:22:21,719 --> 00:22:25,849 Speaker 2: things over the heads of the Europeans and without paying 465 00:22:25,849 --> 00:22:29,050 Speaker 2: respect to the interests of the EU. Uh, that is 466 00:22:29,050 --> 00:22:33,930 Speaker 2: clearly a huge affront to Europe's dignity, and also to 467 00:22:33,930 --> 00:22:37,050 Speaker 2: its practical purpose. But you could say that Europe has 468 00:22:37,050 --> 00:22:39,489 Speaker 2: brought that upon itself, because it's allowed itself to be 469 00:22:39,489 --> 00:22:42,770 Speaker 2: brought into this position of vulnerability. And in the book, 470 00:22:42,849 --> 00:22:43,369 Speaker 2: I use this. 471 00:22:43,500 --> 00:22:47,280 Speaker 2: Phrase that Richard von Weitzer, the very eloquent former president 472 00:22:47,280 --> 00:22:49,719 Speaker 2: of West Germany before the fall of the wall, he 473 00:22:49,719 --> 00:22:52,400 Speaker 2: said at the time before the wall fell, that West 474 00:22:52,400 --> 00:22:55,218 Speaker 2: Germany as it was then could become a quotes plaything 475 00:22:55,219 --> 00:22:58,520 Speaker 2: in quotes, of the superpowers by then, by that he 476 00:22:58,520 --> 00:23:01,560 Speaker 2: meant Soviet Union and the United States, because it will 477 00:23:01,560 --> 00:23:05,359 Speaker 2: be tossed between each side, uh, whether it would succumb 478 00:23:05,359 --> 00:23:07,979 Speaker 2: to the blandishments of the Soviet Union to be neutral, 479 00:23:08,160 --> 00:23:10,319 Speaker 2: for example, in return for unification. 480 00:23:10,969 --> 00:23:13,979 Speaker 2: But that didn't happen. Luckily enough, it, it did join NATO. 481 00:23:14,300 --> 00:23:18,669 Speaker 2: That kind of dilemma of being tossed between the superpowers 482 00:23:18,949 --> 00:23:21,900 Speaker 2: as a quotes, plaything, end quotes. That's exactly what we 483 00:23:21,900 --> 00:23:25,500 Speaker 2: see now. And that's an enormously difficult position for the 484 00:23:25,500 --> 00:23:27,139 Speaker 2: Europeans to be in one of the chapters in the 485 00:23:27,140 --> 00:23:27,430 Speaker 2: book is 486 00:23:27,755 --> 00:23:30,984 Speaker 2: Called squeeze between the superpowers. The only way to get 487 00:23:30,984 --> 00:23:33,494 Speaker 2: out of that is to become more united in various 488 00:23:33,584 --> 00:23:37,635 Speaker 2: fields and also to recover some economic dynamism and some 489 00:23:37,635 --> 00:23:40,755 Speaker 2: economic strength. Without that, all kinds of fine words, all 490 00:23:40,755 --> 00:23:43,675 Speaker 2: sorts of commissions, all sorts of jaggy reports won't cut 491 00:23:43,675 --> 00:23:44,234 Speaker 2: the mustard. 492 00:23:45,010 --> 00:23:45,729 Speaker 1: I was gonna bring up 493 00:23:45,729 --> 00:23:48,800 Speaker 1: the Dragi report, but I think you just, um, uh, 494 00:23:48,810 --> 00:23:51,209 Speaker 1: sort of, you know, touched upon that. Um, David, when 495 00:23:51,209 --> 00:23:54,680 Speaker 1: I look at consequential technologies, it is easy to say that, 496 00:23:54,729 --> 00:23:56,689 Speaker 1: you know, that the Chinese and the Americans are doing 497 00:23:56,689 --> 00:24:00,129 Speaker 1: most of the innovation and Europe is not. Um, but 498 00:24:00,130 --> 00:24:02,800 Speaker 1: when we talk about say the GLP one drug revolution, 499 00:24:03,170 --> 00:24:08,010 Speaker 1: Novo Nordisk and uh Scandinavian companies did a substantial amount 500 00:24:08,010 --> 00:24:10,560 Speaker 1: of pioneering work in that. When I think about the 501 00:24:10,560 --> 00:24:13,208 Speaker 1: most critical component of the global semiconductor supply chain. 502 00:24:13,630 --> 00:24:16,349 Speaker 1: ASML's lithography machines. Without that, nobody can make chips in 503 00:24:16,349 --> 00:24:21,399 Speaker 1: the world. And, and that ASML's uh lithography machine receives 504 00:24:21,400 --> 00:24:24,149 Speaker 1: components from the Karl Zais and the Siemens and the 505 00:24:24,150 --> 00:24:25,069 Speaker 1: BSFs of the world. 506 00:24:25,469 --> 00:24:28,750 Speaker 1: So, it is not the case that Europe has lost 507 00:24:28,750 --> 00:24:32,250 Speaker 1: it entirely, that it does remain fairly consequential in certain 508 00:24:32,670 --> 00:24:35,540 Speaker 1: tech stack. Um, but it seems to me that the 509 00:24:35,540 --> 00:24:38,389 Speaker 1: commercialization of the technology or creating like a new class 510 00:24:38,390 --> 00:24:41,560 Speaker 1: of wealthy tech entrepreneurs who capture the imagination of the 511 00:24:41,560 --> 00:24:43,829 Speaker 1: next generation of entrepreneurs, that seems to be missing out 512 00:24:43,829 --> 00:24:44,430 Speaker 1: of Europe. 513 00:24:44,750 --> 00:24:47,189 Speaker 2: That's where we come back to our old friend capital 514 00:24:47,189 --> 00:24:51,390 Speaker 2: markets union or a more unified market for savings and investment. 515 00:24:51,739 --> 00:24:53,739 Speaker 2: In Europe, which, as you know, has been the dog 516 00:24:53,739 --> 00:24:56,040 Speaker 2: that has failed to bark for the last 20 years. 517 00:24:56,459 --> 00:24:58,979 Speaker 2: Europe is now after all that time, slowly getting its 518 00:24:58,979 --> 00:25:02,010 Speaker 2: act together and things like reforming the insolvency laws, which, 519 00:25:02,020 --> 00:25:04,459 Speaker 2: as you know, has been a bugbear for the last 520 00:25:04,459 --> 00:25:06,810 Speaker 2: 20 years. And without that, it's difficult to put together 521 00:25:06,810 --> 00:25:12,400 Speaker 2: a proper unified financial market structure. I think without some greater, uh, unified, 522 00:25:12,500 --> 00:25:15,260 Speaker 2: I would call it framework rather than a union, without 523 00:25:15,260 --> 00:25:16,839 Speaker 2: some interoperation ability. 524 00:25:17,640 --> 00:25:19,790 Speaker 2: those different financial centers, it's going to be very difficult 525 00:25:19,790 --> 00:25:23,040 Speaker 2: for those commercial enterprises to scale up. And they may 526 00:25:23,040 --> 00:25:27,760 Speaker 2: well produce some fantastic results as smaller enterprises. Unfortunately, they'll 527 00:25:27,760 --> 00:25:30,969 Speaker 2: go to the United States to take that to scale, 528 00:25:31,199 --> 00:25:33,680 Speaker 2: partly because of the size of the financial markets and 529 00:25:33,680 --> 00:25:36,679 Speaker 2: the risk taking appetite of the United States, but also 530 00:25:36,680 --> 00:25:39,800 Speaker 2: because of salaries being higher over there. And they're generally 531 00:25:39,800 --> 00:25:42,619 Speaker 2: being a more open attitude towards risk takers. 532 00:25:42,780 --> 00:25:44,660 Speaker 2: The one thing that might give pause to this is 533 00:25:44,660 --> 00:25:47,099 Speaker 2: that the US itself is not in a good state 534 00:25:47,099 --> 00:25:49,209 Speaker 2: at the moment. It's difficult for people to get visas 535 00:25:49,209 --> 00:25:52,520 Speaker 2: for long term work, particularly if they come from a country, say, 536 00:25:52,530 --> 00:25:55,640 Speaker 2: outside the mainstream of, of the West, and people just 537 00:25:55,640 --> 00:25:57,699 Speaker 2: might just not want to go to a country which 538 00:25:57,699 --> 00:26:02,349 Speaker 2: seems to be going through, shall we say, kind of decivilizing, uh, phase. 539 00:26:02,619 --> 00:26:04,819 Speaker 2: It could be that the famous values of Europe, which 540 00:26:04,819 --> 00:26:07,260 Speaker 2: I believe very strongly in and which we should try 541 00:26:07,260 --> 00:26:08,198 Speaker 2: to uphold, should. 542 00:26:08,589 --> 00:26:11,989 Speaker 2: be the defining factor. It could be that some people 543 00:26:11,989 --> 00:26:16,109 Speaker 2: will stay in Scandinavia or in Lyon or Marseille or 544 00:26:16,109 --> 00:26:19,150 Speaker 2: wherever and, and do their scaling up there. But until 545 00:26:19,150 --> 00:26:21,429 Speaker 2: we get this capital markets union going, which will take 546 00:26:21,430 --> 00:26:23,670 Speaker 2: a bit of time still, I think Europe will still 547 00:26:23,670 --> 00:26:24,910 Speaker 2: be a laggard. And in that time. 548 00:26:25,280 --> 00:26:29,079 Speaker 2: I foresee there'll be a hysteresis effect because the, the 549 00:26:29,079 --> 00:26:31,520 Speaker 2: Americans will be so far out in front in some 550 00:26:31,520 --> 00:26:35,180 Speaker 2: leading technologies that will be very difficult, if not impossible 551 00:26:35,359 --> 00:26:37,400 Speaker 2: for the Europeans to catch up. Maybe we're not there yet. 552 00:26:37,640 --> 00:26:39,719 Speaker 2: But you can see in the banking, for example, in 553 00:26:39,719 --> 00:26:41,319 Speaker 2: terms of the size of the banks. 554 00:26:41,670 --> 00:26:43,589 Speaker 2: Uh, or the size of some of those very leading 555 00:26:43,589 --> 00:26:46,069 Speaker 2: stock market companies. Each of those top 5 have got 556 00:26:46,069 --> 00:26:49,669 Speaker 2: a stock market capitalization, bigger than the combined force of 557 00:26:49,670 --> 00:26:52,869 Speaker 2: the DAX in Germany. If that goes on for more 558 00:26:52,869 --> 00:26:55,750 Speaker 2: than a year or so, I think it will become irreversible. 559 00:26:55,869 --> 00:26:57,790 Speaker 2: We're not there yet, but we could get to a 560 00:26:57,790 --> 00:26:58,790 Speaker 2: point of no return. 561 00:26:59,229 --> 00:26:59,560 Speaker 1: You 562 00:26:59,750 --> 00:27:02,150 Speaker 1: touch upon that issue in your book, and it was 563 00:27:02,150 --> 00:27:08,310 Speaker 1: pretty telling. Um, so just in terms of where this Russia, Ukraine, 564 00:27:08,630 --> 00:27:10,449 Speaker 1: Europe situation evolved. 565 00:27:11,219 --> 00:27:15,099 Speaker 1: The reader of your book will see repeated instances where 566 00:27:15,099 --> 00:27:17,859 Speaker 1: Europe has found it extremely challenging to deal with Russia. 567 00:27:18,420 --> 00:27:22,780 Speaker 1: They've found Russian leaders to be duplicitous or succumbing to 568 00:27:22,780 --> 00:27:25,479 Speaker 1: certain grievances that simply are not aligned with the way 569 00:27:25,939 --> 00:27:29,510 Speaker 1: Europeans have tried to look at the East-West relationship. Uh, 570 00:27:30,060 --> 00:27:32,659 Speaker 1: my view is that Trump's instincts are wrong, that, you know, 571 00:27:32,859 --> 00:27:33,910 Speaker 1: trying to appease. 572 00:27:34,479 --> 00:27:38,599 Speaker 1: Putin is pointless and it will lead to newer layers 573 00:27:38,599 --> 00:27:42,478 Speaker 1: of conflagration. What's your view in terms of Trump's strategy 574 00:27:42,479 --> 00:27:43,119 Speaker 1: in dealing with 575 00:27:43,119 --> 00:27:43,429 Speaker 1: Putin? 576 00:27:43,599 --> 00:27:45,560 Speaker 2: Well, I think he is trying to appease Putin, whether 577 00:27:45,560 --> 00:27:47,829 Speaker 2: it's right or wrong. Let's leave that to one side. 578 00:27:48,119 --> 00:27:50,300 Speaker 2: He is trying to do that for the reasons stated 579 00:27:50,300 --> 00:27:52,750 Speaker 2: because he feels he can somehow rely on Putin more 580 00:27:52,750 --> 00:27:54,439 Speaker 2: than he can on the Europeans, which is a bad 581 00:27:54,439 --> 00:27:55,389 Speaker 2: state of affairs, but 582 00:27:55,670 --> 00:27:57,469 Speaker 2: That's where we are. And he likes to do a 583 00:27:57,469 --> 00:28:00,349 Speaker 2: deal man to man, state to state. He likes the 584 00:28:00,349 --> 00:28:03,829 Speaker 2: idea that allegedly Mr. Putin's very rich, uh, and can 585 00:28:03,829 --> 00:28:07,188 Speaker 2: press a button and have his economy marching according to 586 00:28:07,189 --> 00:28:09,760 Speaker 2: his tune. That seems to be very much in line 587 00:28:09,760 --> 00:28:13,949 Speaker 2: with Mr. Trump's authoritarian instincts. It doesn't leave the other 588 00:28:13,949 --> 00:28:16,589 Speaker 2: Europeans with much place to go. But don't forget that 589 00:28:16,589 --> 00:28:20,869 Speaker 2: Putin himself is a chameleon-like figure. He charmed and seduced 590 00:28:20,869 --> 00:28:23,629 Speaker 2: and persuaded a whole load of Europeans, not just. 591 00:28:23,880 --> 00:28:26,670 Speaker 2: Gerhard Schroeder, uh, Tony Blair was one of them, that 592 00:28:26,670 --> 00:28:29,879 Speaker 2: he was a fine guy on the right side of history. 593 00:28:31,140 --> 00:28:33,780 Speaker 2: It only took place after nearly 10 years of being 594 00:28:34,000 --> 00:28:37,000 Speaker 2: first prime minister and then president, that he started to 595 00:28:37,000 --> 00:28:40,560 Speaker 2: turn against the West partly because of this eastward expansion 596 00:28:40,560 --> 00:28:45,000 Speaker 2: of NATO, very complicated subject where there's no unified answer 597 00:28:45,000 --> 00:28:48,479 Speaker 2: on that. But I think Putin with his neuralgia, this 598 00:28:48,479 --> 00:28:51,439 Speaker 2: psycho drama he has about the ending of the Cold War, 599 00:28:51,479 --> 00:28:51,839 Speaker 2: I think. 600 00:28:52,239 --> 00:28:54,880 Speaker 2: The, the West as a whole could have been somewhat 601 00:28:54,880 --> 00:28:58,219 Speaker 2: more sensitive to his thoughts about that. None of that 602 00:28:58,219 --> 00:29:02,829 Speaker 2: excuses the brutal aggression, the rape, the murder, the bestiality, 603 00:29:03,160 --> 00:29:06,959 Speaker 2: the abduction of children that Putin has done in Ukraine. Uh, 604 00:29:07,040 --> 00:29:08,959 Speaker 2: it doesn't excuse that at all. It does provide a 605 00:29:08,959 --> 00:29:09,390 Speaker 2: kind of 606 00:29:09,599 --> 00:29:14,060 Speaker 2: Explanation. And I think it also produces a reason why 607 00:29:14,060 --> 00:29:16,719 Speaker 2: that invasion, the full scale invasion did take place in 608 00:29:16,719 --> 00:29:20,719 Speaker 2: February 2022. Um, Europe should have been more alive to 609 00:29:20,719 --> 00:29:24,140 Speaker 2: the trip was the signals, the first invasion 10 years earlier, 610 00:29:24,560 --> 00:29:27,719 Speaker 2: where people on the whole turned a blind eye. So Europe, 611 00:29:27,770 --> 00:29:29,359 Speaker 2: I think has been, um, 612 00:29:29,849 --> 00:29:34,640 Speaker 2: Not vigilant regarding Putin. Uh, Europe is partly to blame, 613 00:29:34,800 --> 00:29:37,439 Speaker 2: not wholly to blame, uh, but partly to blame for 614 00:29:37,439 --> 00:29:39,380 Speaker 2: the conflagration that we now see. 615 00:29:39,589 --> 00:29:39,880 Speaker 1: It seems 616 00:29:39,880 --> 00:29:43,459 Speaker 1: to me that at least in Trump 1.0, the view 617 00:29:44,000 --> 00:29:46,880 Speaker 1: from Europe and maybe from leaders elsewhere was also this 618 00:29:46,880 --> 00:29:51,520 Speaker 1: is an aberration. It'll go away. Uh, the US has 619 00:29:51,520 --> 00:29:54,400 Speaker 1: long term commitments to its allies toward trade and so on. 620 00:29:54,520 --> 00:29:57,160 Speaker 1: Now we have Trump 2.0, and I'm beginning to question. 621 00:29:57,569 --> 00:30:01,890 Speaker 1: Whether Trumpism survives Trump. And I, I'm raising that question 622 00:30:01,890 --> 00:30:04,229 Speaker 1: because I'm again trying to think it from Europe's perspective. 623 00:30:04,489 --> 00:30:07,489 Speaker 1: How reliable an ally for the long term. 624 00:30:07,819 --> 00:30:08,890 Speaker 2: Is 625 00:30:08,890 --> 00:30:12,199 Speaker 2: the US quite right to be posing those questions. Clearly, 626 00:30:12,430 --> 00:30:16,739 Speaker 2: Obama and Biden in different ways, uh, were saying also 627 00:30:16,739 --> 00:30:19,189 Speaker 2: that they wanted Europeans to step up more to the 628 00:30:19,189 --> 00:30:22,750 Speaker 2: plate and try to be uh bigger players in the 629 00:30:22,750 --> 00:30:25,829 Speaker 2: defense sphere. In fact, every president since Eisenhower has been 630 00:30:25,829 --> 00:30:27,910 Speaker 2: saying that more or less Europeans on the whole turned 631 00:30:27,910 --> 00:30:28,469 Speaker 2: a blind eye. 632 00:30:28,939 --> 00:30:31,619 Speaker 2: Don't forget America gets a lot out of those dollars 633 00:30:31,619 --> 00:30:35,060 Speaker 2: it spends in Europe as it safeguards American interests. So 634 00:30:35,060 --> 00:30:37,680 Speaker 2: I think you're right, we won't be returning to a 635 00:30:37,819 --> 00:30:41,670 Speaker 2: kind of kind, gentler, uh, Obama type of figure, even Obama, 636 00:30:41,709 --> 00:30:44,300 Speaker 2: we all know, wasn't really interested in Europe. I think 637 00:30:44,300 --> 00:30:47,579 Speaker 2: this element of fawning towards the Americans, the, uh, you know, 638 00:30:47,660 --> 00:30:49,420 Speaker 2: the Roman power if you like. 639 00:30:49,739 --> 00:30:52,219 Speaker 2: The power in the land is going to have to 640 00:30:52,219 --> 00:30:56,020 Speaker 2: continue whoever takes over. But this isn't totally new. One 641 00:30:56,020 --> 00:30:58,770 Speaker 2: of the quotations I dug up from the book was 642 00:30:58,770 --> 00:31:02,640 Speaker 2: actually uh what Churchill said about Roosevelt, uh, in the 643 00:31:02,849 --> 00:31:05,699 Speaker 2: latter stages of the Second World War. And he said 644 00:31:05,699 --> 00:31:09,109 Speaker 2: something like, uh, uh, never has a 645 00:31:09,780 --> 00:31:14,719 Speaker 2: A man had to succumb more to the whims of 646 00:31:14,719 --> 00:31:19,239 Speaker 2: his mistress than I've had to pay attention to the 647 00:31:19,479 --> 00:31:25,319 Speaker 2: uh ideas and thoughts and persuasions of President Roosevelt. He, he, Mr. 648 00:31:25,349 --> 00:31:27,520 Speaker 2: Churchill had to allow himself to be, if you like, 649 00:31:27,560 --> 00:31:28,650 Speaker 2: seduced by 650 00:31:29,010 --> 00:31:31,180 Speaker 2: Uh, Mr. Roosevelt and had to pay attention to what 651 00:31:31,180 --> 00:31:34,140 Speaker 2: he called quotes, whims, end quotes. So it's not as 652 00:31:34,140 --> 00:31:36,939 Speaker 2: though this is entirely new. And also Europe has been 653 00:31:36,939 --> 00:31:38,810 Speaker 2: let down by the Americans on a number of occasions. 654 00:31:39,020 --> 00:31:41,459 Speaker 2: Think back to the Suez Crisis. Think back back to 655 00:31:41,459 --> 00:31:45,479 Speaker 2: the abrogation of the gold dollar link in 1971, all 656 00:31:45,479 --> 00:31:46,140 Speaker 2: kinds of ways. 657 00:31:46,224 --> 00:31:47,944 Speaker 2: We have had ups and downs. So it's not as 658 00:31:47,944 --> 00:31:50,545 Speaker 2: though this is totally new, but you're quite right. This 659 00:31:50,545 --> 00:31:53,464 Speaker 2: is a perturbation of a different kind. And I don't 660 00:31:53,464 --> 00:31:56,185 Speaker 2: think we are going to, uh, return to a kinder, 661 00:31:56,224 --> 00:31:58,665 Speaker 2: gentler world. And Europe is going to have to be 662 00:31:58,665 --> 00:32:01,545 Speaker 2: tougher and have to make priorities, one of which will 663 00:32:01,545 --> 00:32:03,464 Speaker 2: have to be whether the so-called values. 664 00:32:03,790 --> 00:32:06,829 Speaker 2: That we have uh maintaining a very high level of 665 00:32:06,829 --> 00:32:09,989 Speaker 2: social security system, a good deal of equality in areas 666 00:32:09,989 --> 00:32:13,719 Speaker 2: like healthcare, and also sound education for all, whether that 667 00:32:13,719 --> 00:32:18,550 Speaker 2: will survive, um, a, a less friendly, uh, more unforgiving 668 00:32:18,550 --> 00:32:19,609 Speaker 2: world where people have 669 00:32:19,660 --> 00:32:21,579 Speaker 2: To pay for their own defense. Indeed, 670 00:32:21,699 --> 00:32:24,699 Speaker 1: I'm glad you brought up the gold standard story from 671 00:32:24,699 --> 00:32:28,180 Speaker 1: the 19 early 1971, in fact, because I finished reading 672 00:32:28,180 --> 00:32:31,219 Speaker 1: this book called Three Days in Camp David, uh, where I, 673 00:32:31,300 --> 00:32:33,060 Speaker 1: I sometimes get a sense of deja vu because some 674 00:32:33,060 --> 00:32:35,540 Speaker 1: of the complaints that Nixon administration officials had. 675 00:32:35,819 --> 00:32:37,849 Speaker 1: You know, US was paying too much for West Germany's 676 00:32:37,849 --> 00:32:40,300 Speaker 1: defense and Japan's defense seems like to have made a 677 00:32:40,300 --> 00:32:43,500 Speaker 1: comeback now. But, but you're right, uh, David, there, there 678 00:32:43,500 --> 00:32:46,739 Speaker 1: is a cyclicality in, in sort of, you know, between 679 00:32:46,739 --> 00:32:49,939 Speaker 1: that event and today's events, but this feels more, um. 680 00:32:51,060 --> 00:32:52,619 Speaker 1: Final in in some ways. 681 00:32:53,099 --> 00:32:55,380 Speaker 2: On the whole, I don't think that this is the 682 00:32:55,380 --> 00:32:59,030 Speaker 2: end of 80 years of Euro-Atlanticism. I think there's a 683 00:32:59,030 --> 00:33:01,260 Speaker 2: huge amount of common interest. I, I delve a great 684 00:33:01,260 --> 00:33:03,979 Speaker 2: deal into the Marshall Plan and the reason why the 685 00:33:03,979 --> 00:33:07,819 Speaker 2: Americans canceled their idea of, of forsaking Europe and leaving 686 00:33:07,819 --> 00:33:10,579 Speaker 2: Europe to its own devices, because at that time, after 687 00:33:10,579 --> 00:33:13,380 Speaker 2: the Second World War, it seems that Europe was totally 688 00:33:13,380 --> 00:33:16,459 Speaker 2: ruined psychologically, materially, politically. 689 00:33:16,770 --> 00:33:19,839 Speaker 2: And it was seen that Stalin was just waiting to 690 00:33:20,140 --> 00:33:23,859 Speaker 2: take over. That was the view, particularly of the British government, 691 00:33:23,979 --> 00:33:26,560 Speaker 2: the Labour government was under Atley, which came into power 692 00:33:26,560 --> 00:33:30,060 Speaker 2: in 1945, and they persuaded the Americans that that was so. 693 00:33:30,339 --> 00:33:32,339 Speaker 2: And Truman then played. 694 00:33:32,454 --> 00:33:35,194 Speaker 2: The right card. Of course, now it's different because Europe 695 00:33:35,295 --> 00:33:38,694 Speaker 2: is not war ravaged. It is in a position technologically 696 00:33:38,694 --> 00:33:41,974 Speaker 2: and financially to defend itself far far more than it 697 00:33:41,974 --> 00:33:45,135 Speaker 2: could then. But nonetheless, I think there's vital American interest 698 00:33:45,415 --> 00:33:48,094 Speaker 2: in allowing Europe to remain whole and free. 699 00:33:48,489 --> 00:33:52,099 Speaker 2: And to remain still uh a very big part of 700 00:33:52,099 --> 00:33:54,260 Speaker 2: American capitalism. And I don't think that can be part 701 00:33:54,260 --> 00:33:57,449 Speaker 2: of the game plan of the forty-seventh president to somehow 702 00:33:57,449 --> 00:34:01,180 Speaker 2: abandon Europe to his own devices. And therefore, I think 703 00:34:01,180 --> 00:34:04,219 Speaker 2: that we will reach a limit to what you call Trumpism. 704 00:34:04,609 --> 00:34:07,250 Speaker 2: We won't go back to the status quo ante, but 705 00:34:07,250 --> 00:34:08,889 Speaker 2: I don't think we are going to go into a 706 00:34:08,889 --> 00:34:12,609 Speaker 2: rampant world where Trump and Putin and Xi do deals 707 00:34:12,610 --> 00:34:17,229 Speaker 2: with each other like some sort of Orwellian 1984, uh, geography. 708 00:34:17,320 --> 00:34:19,370 Speaker 2: I think that we will continue to see a very 709 00:34:19,370 --> 00:34:22,489 Speaker 2: strong bedrock of joint American and European interests. I, 710 00:34:22,570 --> 00:34:24,040 Speaker 1: I hope so too. I sometimes hear. 711 00:34:24,459 --> 00:34:28,209 Speaker 1: Disturbing narratives along those lines that US will just focus 712 00:34:28,209 --> 00:34:31,699 Speaker 1: on the Americas and have like a Dunroe Doctrine, not 713 00:34:31,699 --> 00:34:34,600 Speaker 1: a Monroe Doctrine and focus on its influence of sphere 714 00:34:34,899 --> 00:34:37,800 Speaker 1: there and and tell Europe to handle its backyard. But 715 00:34:37,800 --> 00:34:41,560 Speaker 1: when I see even Trump's evolution over the last nine months, 716 00:34:41,820 --> 00:34:43,600 Speaker 1: where he began by basically 717 00:34:44,399 --> 00:34:47,709 Speaker 1: Sort of invoking to the MAGA elements about an inward 718 00:34:47,709 --> 00:34:51,159 Speaker 1: looking policy, he's become far more international, probably not for 719 00:34:51,159 --> 00:34:54,479 Speaker 1: good reasons, but he is poking his nose in all 720 00:34:54,479 --> 00:34:57,899 Speaker 1: sorts of international affairs all over the world, um, including 721 00:34:57,899 --> 00:35:00,239 Speaker 1: the whole Russia Ukraine thing. I want to talk to 722 00:35:00,239 --> 00:35:03,159 Speaker 1: you a little bit about Russia. In your book, you 723 00:35:03,159 --> 00:35:05,320 Speaker 1: have a reference to reverse Nixon. 724 00:35:05,739 --> 00:35:07,639 Speaker 1: I think to those who have not read the book, 725 00:35:08,020 --> 00:35:09,379 Speaker 1: explain to us what you mean by that. Well, 726 00:35:09,459 --> 00:35:09,580 Speaker 2: it 727 00:35:09,580 --> 00:35:12,659 Speaker 2: was this idea that by cozying up uh and partly 728 00:35:12,659 --> 00:35:17,699 Speaker 2: rehabilitating Mr. Putin, um, Mr. Trump was trying actually to 729 00:35:17,699 --> 00:35:21,760 Speaker 2: drive a wedge somehow between Russia and China. So doing 730 00:35:21,760 --> 00:35:24,620 Speaker 2: the reverse of what Nixon did when he made that 731 00:35:24,620 --> 00:35:29,310 Speaker 2: famous visit to China to basically drive a a a wedge, 732 00:35:29,340 --> 00:35:30,280 Speaker 2: but from the other direction. 733 00:35:30,790 --> 00:35:35,080 Speaker 2: Uh, and to somehow do down the Soviet Union, um, 734 00:35:35,229 --> 00:35:38,629 Speaker 2: as a result of this, uh, diplomacy with China. I 735 00:35:38,629 --> 00:35:41,080 Speaker 2: don't think this is going to work. I, I don't 736 00:35:41,080 --> 00:35:46,459 Speaker 2: think that Mr. Trump, uh, cozying up and being pally with, uh, Mr. 737 00:35:46,540 --> 00:35:48,239 Speaker 2: Putin in the way he did say with the Alaska 738 00:35:48,239 --> 00:35:51,459 Speaker 2: summit in July with all those military hardware and the 739 00:35:51,629 --> 00:35:52,639 Speaker 2: red carpet and 740 00:35:52,919 --> 00:35:55,370 Speaker 2: Um, all that paraphernalia, I don't think it's going to 741 00:35:55,370 --> 00:35:59,610 Speaker 2: work in driving a wedge between China and Russia. I 742 00:35:59,610 --> 00:36:02,479 Speaker 2: think China is very happy to have Russia as a 743 00:36:02,479 --> 00:36:06,469 Speaker 2: supplicant state, uh, in a good place, um, from the 744 00:36:06,469 --> 00:36:09,169 Speaker 2: Chinese point of view. I think the Russians, although they 745 00:36:09,169 --> 00:36:12,129 Speaker 2: don't like being a junior partner because they were always 746 00:36:12,129 --> 00:36:15,049 Speaker 2: top dog in the 1960s and 1970s, they've got no 747 00:36:15,050 --> 00:36:17,889 Speaker 2: place to go but to rely on China for shoring 748 00:36:17,889 --> 00:36:21,129 Speaker 2: up the war economy. So I don't think this reverse 749 00:36:21,129 --> 00:36:22,209 Speaker 2: Nixon strategy. 750 00:36:22,570 --> 00:36:26,290 Speaker 2: was actually intended, nor do I think it could possibly work. 751 00:36:26,489 --> 00:36:28,629 Speaker 2: I think that there's a very strong reason for this 752 00:36:28,929 --> 00:36:34,529 Speaker 2: partnership between Russia and China, however unedifying we might find it. 753 00:36:34,929 --> 00:36:37,569 Speaker 2: Both sides are getting something out of it. In the end, 754 00:36:37,649 --> 00:36:41,459 Speaker 2: I think Russia will find itself relegated to junior status. 755 00:36:41,810 --> 00:36:44,449 Speaker 2: And China may well start to think about that very 756 00:36:44,449 --> 00:36:46,888 Speaker 2: long border that it's got with Russia and whether there 757 00:36:46,889 --> 00:36:50,169 Speaker 2: may be some territorial disputes that it could start to pick. 758 00:36:50,409 --> 00:36:53,060 Speaker 2: You could easily make the case that the biggest danger. 759 00:36:53,399 --> 00:36:56,790 Speaker 2: To Russia is not NATO uh on its western flank, 760 00:36:57,040 --> 00:37:00,159 Speaker 2: but China, uh, on its southern flank. And that might 761 00:37:00,159 --> 00:37:02,120 Speaker 2: be something they need to think about. Right. 762 00:37:02,199 --> 00:37:04,839 Speaker 1: Although the Chinese like to say that other than India, 763 00:37:05,040 --> 00:37:07,679 Speaker 1: with everybody else, they have established borders that, you know, 764 00:37:07,760 --> 00:37:09,370 Speaker 1: there's no dispute whatsoever. 765 00:37:09,739 --> 00:37:13,549 Speaker 1: But, uh, but yeah, I think as relationships evolve, those 766 00:37:13,550 --> 00:37:14,550 Speaker 1: views can also evolve. 767 00:37:14,629 --> 00:37:17,109 Speaker 2: Well, let's say the Chinese do build up a very 768 00:37:17,110 --> 00:37:20,070 Speaker 2: large uh creditor position with the Russians, which the Russians 769 00:37:20,070 --> 00:37:22,399 Speaker 2: can't repay, then you could think of some sort of, 770 00:37:22,699 --> 00:37:25,388 Speaker 2: you know, debt for land swap, couldn't you, like the 771 00:37:25,389 --> 00:37:26,590 Speaker 2: Louisiana Purchase. 772 00:37:26,814 --> 00:37:29,084 Speaker 2: Uh, I mean, I'm sure people will write books about 773 00:37:29,084 --> 00:37:30,804 Speaker 2: this at some stage in the future. Oh my. 774 00:37:31,034 --> 00:37:35,064 Speaker 1: Uh, OK, let's stay with China, but from Europe's perspective. Um, Europe, 775 00:37:35,324 --> 00:37:37,245 Speaker 1: and in your book, you have gone in great details 776 00:37:37,245 --> 00:37:39,814 Speaker 1: about this, that you know, the view is that the 777 00:37:40,104 --> 00:37:42,725 Speaker 1: the Chinese market would be great for European exporters, particularly 778 00:37:42,725 --> 00:37:45,404 Speaker 1: auto exporters. And the view is that, you know, China 779 00:37:45,405 --> 00:37:46,225 Speaker 1: was going to be 780 00:37:46,620 --> 00:37:49,339 Speaker 1: A benign actor as far as Europe was concerned. Those 781 00:37:49,340 --> 00:37:50,479 Speaker 1: views are evolving. 782 00:37:50,820 --> 00:37:53,229 Speaker 2: Well, they are, they have to be, don't they? Because, uh, 783 00:37:53,500 --> 00:37:56,530 Speaker 2: all of those bets have turned sour. The idea was 784 00:37:56,530 --> 00:38:00,370 Speaker 2: that China would become more quotes like us, in quotes, 785 00:38:00,610 --> 00:38:03,409 Speaker 2: because they would move up the income scale, uh, natural 786 00:38:03,409 --> 00:38:05,449 Speaker 2: feeling if you have more people who are paying income tax, 787 00:38:05,500 --> 00:38:09,060 Speaker 2: for example, they, they demand some sort of say over 788 00:38:09,060 --> 00:38:11,899 Speaker 2: their democratic rights. That doesn't seem to be happening at 789 00:38:11,899 --> 00:38:15,300 Speaker 2: the moment. And rather than somehow placating. 790 00:38:15,709 --> 00:38:19,070 Speaker 2: The Chinese with Western technology and keeping them tame, but 791 00:38:19,070 --> 00:38:22,149 Speaker 2: keeping them high up the income scale that seems to 792 00:38:22,149 --> 00:38:25,589 Speaker 2: have turned itself against, particularly a country like Germany with 793 00:38:25,590 --> 00:38:27,870 Speaker 2: a lot of high tech exports. So there's been lots 794 00:38:27,870 --> 00:38:30,790 Speaker 2: of analysis, including by the European Central Bank, just to 795 00:38:30,790 --> 00:38:34,110 Speaker 2: show how competitive the Chinese have become in areas where 796 00:38:34,110 --> 00:38:36,989 Speaker 2: the Germans have always been pretty competent. 797 00:38:37,350 --> 00:38:39,469 Speaker 2: So those bets have turned sour and of course that 798 00:38:39,469 --> 00:38:42,389 Speaker 2: was one of the major bets that Germany in particular 799 00:38:42,389 --> 00:38:46,229 Speaker 2: made with China and even Angela Merkel in her totally 800 00:38:46,229 --> 00:38:51,830 Speaker 2: non-revelatory and uh totally, you know, gender regerien memoirs. Even 801 00:38:51,830 --> 00:38:56,029 Speaker 2: she says that the Germans were somewhat naive in dealing 802 00:38:56,030 --> 00:39:00,229 Speaker 2: with China uh during the uh early part of this century. 803 00:39:00,860 --> 00:39:05,139 Speaker 1: So defense underwritten by America, energy underwritten by Russia, and 804 00:39:05,139 --> 00:39:06,560 Speaker 1: export market underwritten by China. 805 00:39:06,659 --> 00:39:08,639 Speaker 2: It's become a bit of a cliche, but it is true, 806 00:39:08,699 --> 00:39:10,550 Speaker 2: of course, all those things do happen and the Germans 807 00:39:10,550 --> 00:39:11,270 Speaker 2: now do admit it. 808 00:39:11,540 --> 00:39:14,860 Speaker 1: That's, yeah, that's all not working out. But having said that, um, 809 00:39:14,899 --> 00:39:17,049 Speaker 1: it seems to me that whether it is 810 00:39:18,159 --> 00:39:22,580 Speaker 1: Tariffs vis a vis China or um dealing with Chinese 811 00:39:22,580 --> 00:39:26,060 Speaker 1: imports into uh Europe. Europe seems to be going somewhat 812 00:39:26,060 --> 00:39:29,120 Speaker 1: at a different, more independent path than just mimicking American 813 00:39:29,419 --> 00:39:30,679 Speaker 1: restrictions and sanctions. 814 00:39:30,780 --> 00:39:34,580 Speaker 2: I definitely think there's an angle here that that Europe 815 00:39:34,580 --> 00:39:37,320 Speaker 2: doesn't have to be friends with uh China in everything 816 00:39:37,320 --> 00:39:39,639 Speaker 2: that it does. It doesn't have to be friends with 817 00:39:40,060 --> 00:39:42,250 Speaker 2: the United States in everything that it does. I think 818 00:39:42,250 --> 00:39:43,330 Speaker 2: there is a 819 00:39:43,600 --> 00:39:47,239 Speaker 2: An area of common ground where the Europeans could map 820 00:39:47,239 --> 00:39:50,659 Speaker 2: out a semi-independent path, you could certainly think of some 821 00:39:50,919 --> 00:39:54,320 Speaker 2: non dual use, non-military goods, where there could be a 822 00:39:54,320 --> 00:39:57,739 Speaker 2: bit of a free ride for the Chinese and the 823 00:39:57,750 --> 00:40:01,560 Speaker 2: Europeans to do things together. Um, I definitely think that 824 00:40:01,560 --> 00:40:03,669 Speaker 2: the Brits could be brought in there to help with 825 00:40:03,669 --> 00:40:07,439 Speaker 2: the Germans. We're both vulnerable countries in different ways. Brits 826 00:40:07,439 --> 00:40:09,840 Speaker 2: because there's a lot of Chinese investment in the UK, 827 00:40:10,120 --> 00:40:11,069 Speaker 2: Germans because they 828 00:40:11,235 --> 00:40:14,895 Speaker 2: Invested a great deal in China. So I think there are, um, 829 00:40:15,074 --> 00:40:18,235 Speaker 2: under the variable geometry mechanism, there's lots of areas where 830 00:40:18,235 --> 00:40:21,574 Speaker 2: I think there could be a semi-independent path for Europe, 831 00:40:21,875 --> 00:40:26,435 Speaker 2: without necessarily antagonizing either the United States or China. But 832 00:40:26,435 --> 00:40:27,995 Speaker 2: I repeat, that can only really be done from a 833 00:40:27,995 --> 00:40:31,194 Speaker 2: position of some strength, and not as a perfect supplicant. 834 00:40:31,395 --> 00:40:34,195 Speaker 2: If only Europe could somehow, you know, stress the word 835 00:40:34,195 --> 00:40:36,264 Speaker 2: if only because we don't know how to do it, 836 00:40:36,514 --> 00:40:38,634 Speaker 2: could get back to say 2% growth per annum. 837 00:40:39,070 --> 00:40:40,689 Speaker 2: Don't forget the Germans at the moment, according to the 838 00:40:40,689 --> 00:40:45,109 Speaker 2: Bundesbank have got a productive growth potential of 0.4% per annum. 839 00:40:45,469 --> 00:40:47,739 Speaker 2: If we could get back to something, you know, give 840 00:40:47,739 --> 00:40:50,060 Speaker 2: me 1.5% per annum, it would make Europe. 841 00:40:51,379 --> 00:40:53,340 Speaker 2: Look a whole lot stronger. I know there's a bit 842 00:40:53,340 --> 00:40:56,259 Speaker 2: of a pious hope at the moment, but that would 843 00:40:56,260 --> 00:40:59,060 Speaker 2: give some grounds for hope. And there's a number of 844 00:40:59,060 --> 00:41:01,060 Speaker 2: things that Europe could do. I think all the things 845 00:41:01,060 --> 00:41:04,330 Speaker 2: we've been talking about could put us on a stronger path. 846 00:41:04,379 --> 00:41:08,159 Speaker 2: And that's really been the semi optimistic conclusion that I've 847 00:41:08,300 --> 00:41:11,070 Speaker 2: struggled my way to come to in the book. 848 00:41:11,500 --> 00:41:14,260 Speaker 1: Well, I hope that between defense spending and sustained interest 849 00:41:14,260 --> 00:41:19,270 Speaker 1: in European tourism, we we get somewhere at least past 1%. Um, David, 850 00:41:19,419 --> 00:41:21,790 Speaker 1: you just came back from a lovely holiday in India. 851 00:41:22,219 --> 00:41:25,069 Speaker 1: We're recording this in Singapore. So let's end our discussion 852 00:41:25,459 --> 00:41:28,300 Speaker 1: by talking about South Asia and Southeast Asia vis a 853 00:41:28,300 --> 00:41:28,860 Speaker 1: vis Europe. 854 00:41:29,169 --> 00:41:29,330 Speaker 2: We 855 00:41:29,330 --> 00:41:32,218 Speaker 2: have to take this more seriously, the Europeans, I think 856 00:41:32,219 --> 00:41:34,780 Speaker 2: the British and the Germans and and 857 00:41:35,080 --> 00:41:38,139 Speaker 2: The French have taken, say, Japan much more seriously. We 858 00:41:38,360 --> 00:41:41,159 Speaker 2: probably need to turn our attention to ASEAN and, and 859 00:41:41,159 --> 00:41:43,879 Speaker 2: the way that this is an intact group of countries 860 00:41:43,879 --> 00:41:46,639 Speaker 2: which are trying to protect the interests of individual countries 861 00:41:46,639 --> 00:41:47,859 Speaker 2: by banding together. 862 00:41:48,229 --> 00:41:52,050 Speaker 2: Um, so this is, uh, we've probably concentrated too much 863 00:41:52,050 --> 00:41:55,100 Speaker 2: on China. This is long overdue. I would like to 864 00:41:55,100 --> 00:41:59,659 Speaker 2: see some genuine European missions, uh, to ASEAN, if you 865 00:41:59,659 --> 00:42:03,570 Speaker 2: could band together again under the variable geometry banner, uh, 866 00:42:03,699 --> 00:42:06,620 Speaker 2: that some British and some Germans and some French interests 867 00:42:06,860 --> 00:42:09,100 Speaker 2: and try to do a few more things jointly getting 868 00:42:09,100 --> 00:42:09,810 Speaker 2: over the 869 00:42:10,060 --> 00:42:14,399 Speaker 2: Uh, nationalistic divides in Europe and adopting some common policies 870 00:42:14,399 --> 00:42:17,090 Speaker 2: on say, some kind of, you know, intact savings and 871 00:42:17,090 --> 00:42:20,819 Speaker 2: investment framework, for example, between Europe writ large and the 872 00:42:20,820 --> 00:42:24,500 Speaker 2: Southeast Asian area writ large. There's lots of savings in 873 00:42:24,500 --> 00:42:29,520 Speaker 2: this area, lots of potential for collaborating on investments in 874 00:42:29,860 --> 00:42:31,780 Speaker 2: kind of high tech enterprises we're talking about. 875 00:42:32,070 --> 00:42:34,989 Speaker 2: So right, I think this is a a Tehran, which 876 00:42:34,989 --> 00:42:37,709 Speaker 2: is well worthwhile mining together. 877 00:42:37,939 --> 00:42:41,189 Speaker 1: Uh, sitting here in Singapore, I certainly feel that UK, 878 00:42:41,429 --> 00:42:43,590 Speaker 1: the government of UK, particularly the new government seems to 879 00:42:43,590 --> 00:42:48,270 Speaker 1: be very keen on building deeper relationship with business and 880 00:42:48,270 --> 00:42:50,699 Speaker 1: governments in Southeast Asia, and we certainly welcome that. And 881 00:42:50,699 --> 00:42:54,049 Speaker 1: of course, UK India are on the verge of uh 882 00:42:54,060 --> 00:42:57,229 Speaker 1: uh signing several uh fairly deep trade agreements. 883 00:42:57,629 --> 00:43:00,469 Speaker 1: Uh, Europe is also in the fray, but to your point, 884 00:43:00,600 --> 00:43:03,360 Speaker 1: we don't see as much cohesiveness coming from Europe. I 885 00:43:03,360 --> 00:43:05,989 Speaker 1: see the French delegation, the German delegation, but I'd like 886 00:43:05,989 --> 00:43:07,300 Speaker 1: to see more EU delegations. 887 00:43:07,439 --> 00:43:09,879 Speaker 2: I never do see that. It's amazing where they hire 888 00:43:09,879 --> 00:43:12,000 Speaker 2: an Airbus and they put all their own people on board, 889 00:43:12,120 --> 00:43:14,439 Speaker 2: Germans or French or British. I mean, why not have 890 00:43:14,439 --> 00:43:16,760 Speaker 2: a bit of a mixed group? I mean, it's interesting 891 00:43:16,760 --> 00:43:18,790 Speaker 2: when I went to Mumbai, there's a big placard in 892 00:43:18,790 --> 00:43:21,439 Speaker 2: front of the gateway to India with a big picture 893 00:43:21,439 --> 00:43:23,719 Speaker 2: of Keir Starmer and Moody and so on. I'd like 894 00:43:23,719 --> 00:43:26,250 Speaker 2: to see, uh, a, a European delegate. 895 00:43:26,992 --> 00:43:29,363 Speaker 2: there. And so pictures of whoever happens to be the 896 00:43:29,363 --> 00:43:32,143 Speaker 2: French president, whoever happens to be the German Chancellor, whoever 897 00:43:32,143 --> 00:43:34,982 Speaker 2: happens to be the British PM and Mr. Modi together, 898 00:43:35,193 --> 00:43:38,072 Speaker 2: that would make my heart beat a little faster. And 899 00:43:38,072 --> 00:43:40,272 Speaker 2: I'd be very excited to see that. 900 00:43:40,542 --> 00:43:43,312 Speaker 1: Yeah, so would I. Um, David Marsh, thank you so 901 00:43:43,312 --> 00:43:44,502 Speaker 1: much for your time and insights. 902 00:43:44,672 --> 00:43:46,471 Speaker 2: Thanks very much, Tama. Until next 903 00:43:46,472 --> 00:43:47,042 Speaker 1: time. 904 00:43:47,226 --> 00:43:49,145 Speaker 1: Next time indeed. It was great to have you and 905 00:43:49,145 --> 00:43:51,665 Speaker 1: thanks to our listeners as well. Copy time was produced 906 00:43:51,666 --> 00:43:55,325 Speaker 1: by Ken Delrich. Violet Lee and Daisy Sharma provided additional assistance. 907 00:43:55,585 --> 00:43:59,025 Speaker 1: All 166 episodes of this podcast are available on YouTube, 908 00:43:59,266 --> 00:44:02,055 Speaker 1: as well as on Apple, Google and Spotify. As for 909 00:44:02,055 --> 00:44:04,705 Speaker 1: our research publications and webinars, you can find them all 910 00:44:04,706 --> 00:44:08,025 Speaker 1: by Googling DBS Research Library. Have a great day.