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Multipolarity: Episode 7

All Turkey's Christmases, Materiel World, Chinese Burns

[00:02:00] Andrew Collingwood: Coming up this week. Why does 2020 threes top performing stock market belong to Turkey? As the world's balance of power continues to tilt, we dig into how the Turks are reclaiming their historic position as the ultimate multipolar state.

[00:02:15] Philip Pilkington: We're shipping all our arms out to Ukraine, so how exactly are we going to replace them and at what cost? We've run the numbers. Could Western material be terrible bang for Bach? China's 

[00:02:26] Andrew Collingwood: diplomatic core has been out on maneuvers, releasing a withering broadside against us, heger money, even as their key diplomats have been on the ground, wooing Europe.

[00:02:35] Is this diplomacy by confusion, or is there a master strategy somewhere between the charm and the offensive? But first 

[00:02:44] Philip Pilkington: all turkey's, Christmases. Turkey, uh, obviously has been having a lot of problems economically for a number of years. The Turkish lira has been in almost permanent decline. They've had inflation rates that are arguably hyperinflation levels, and the government's been reluctant to use very high interest rates to try and control these, I think because they want to encourage a real estate investment, which is the kind of core c.

[00:03:11] The Turkish economy, and I also think a lot of those, the people who are engaged in it are backers of Erdogan, but the year 2022 has been a pretty good year for Turkey relative to Turkey previously. I mean, you probably still wouldn't look at it for economic stability, but it appears to have got better.

[00:03:29] Actually, since July of 2022, it's been the best performing stock market in the world. So what accounts for this? Well, there seems to have been a bit of a turnaround in Turkey's fortunes, the balance of payments issues that they've had have gotten less severe. And this has led to actually a stabilization of their currency.

[00:03:48] Throughout 2022, the currency stopped falling in value. Just for some context, it's fallen about 80% since 2017. So we we're seeing rapid and crisis style declines, and now it's stabilized. Well, why is it stabilized? Well, their bounds of payments issues have gotten less. But what's very interesting at the Economist, David p Goldman wrote a fascinating assay for the Asia Times.

[00:04:12] And he showed that if you dig into their current account, their balance of payments, you find that, as he put it, 25 billion fell off the back of a truck. It was registered as errors and emissions. And of course the suspicion here is that this is the shadow oil trade. Turkey is, is turning around and selling Russian oil via its intermediaries.

[00:04:34] And this has been reported for a very long time, but we're starting to see it feed into the statistics and ultimately feed into the Turkish macroeconomic picture. So I think turkey's done very, very well out of this, but. David Goldman says that that this is also giving them a kind of a broader amount of geostrategic importance in the regions, and that it's boying Erdogan's famously very, I suppose, optimistic view of what Turkey can achieve in the world.

[00:05:01] Andrew Collingwood: Well, I think the first thing to say is that for many, many years now, Turkey has been quite a volatile performer in terms of the market. It tends to be reliance on a reliance for its stock market and currency perform. On hot money, which is money that goes into a nation very quickly and can be removed very quickly.

[00:05:23] And because of that, if you look back over a year long series of data for Turkey's stock market performance, quite often you'll see it as one of the top five stock markets in the world, or one of the bottom five stock markets in the world. So this kind of volatility isn't anything. The other thing to say is I would also, you know, you mentioned the shadow oil market and Turkey's role in potentially circumventing some of the sanctions that have been imposed on Russia by the Western powers.

[00:05:55] Another question is, of course, whether some of this money is coming in from Russia, because Russia has decided understandably so that it doesn't want to store its reserves. In Euros dollars. Now obviously they have to, I, if it wants to hold foreign currency reserves, they're going to have to be stored somewhere.

[00:06:17] And if you read Alexander Ackoff, the Economist for Russia at Bloomberg, he argues that Turkey is one of the few candidate countries for that. So I wonder whether some of the, the gap plugged in Turkey's current. Has indeed come from Russia's desire to store some foreign reserves. The third thing I would say about this is that, of course, Turkey has traditionally been volatile.

[00:06:44] Of course, now that it's doing more business with Russia, or perhaps another way to say that now Russia has a greater need for Turkey in terms of doing business. We've seen either through the oil market, perhaps through reserves as well, that turkey's been able to plug some of its current account deficit.

[00:07:02] Of course all of that's true, but I, I think the real lesson from this, Philip, is that Turkey, simply because of its geographical location, has a tremendously important geopolitical position in the world. It really is very important. Not only does it control the Darden nails and the Bosphorus, which are, you know, of classical importance going way, way back into the 18th and 19th century, but it also sits on a crossroads of east and west and North and.

[00:07:31] It has traditionally been, and it still is a trading route of paramount economics importance for the world. In addition to that, as a, as a power, it's traditionally had a great many directions that it can move and is able to move and has connections with. Okay, so if you, if you look back, you know, fairly recently in human history terms, Turkey controls all of the Balkans.

[00:07:56] A big chunk of Austria and Hungary as well. It, it, it controlled a feral chunk of Southeastern Europe. In addition to that, it also controlled almost the entirety of the Middle East, and it has in the past also controlled large chunks of the caucuses as well. So Turkey really has a lot of different directions it can move.

[00:08:15] It controls an absolutely crucial maritime bottleneck or choke point, depending on how you want. And it also is an important land trade route from east to west and north to south as well. And for all of these reasons, Turkey is really blessed by its, uh, geopolitical position or geostrategic position in the world.

[00:08:38] And I think what it's starting to do is really cash in on some of these geopolitical advantages. So at the moment, Russia has a need Turkey. Natural links with Russia and some alignments with Russia. In terms of interests, you mentioned the article which discussed some of Turkey's influence with Saudi Arabia, with the United Arab Emirates and with Iran, which are also directions in which Turkey or as it used to be known, the Ottoman Empire traditionally moved and traditionally had influence.

[00:09:07] And in addition, it's also dealing with Europe and of course we talk about the shadow oil trade, but really secretly the Europeans are quite. With all of these countries which are facilitating the shadow oil trade because they know that they can't do without Russian oil. So if they have to pay a bit of a premium because it goes through Indian refineries or it's mixed with uh, other oil and Turkey or, or Russian gas is mixed with other gas in Turkey, then they're quite happy turning a blind eye to that.

[00:09:34] So I think what this is really is Turkey's had a lot of volatility and especially recently, it's had a very bad time in terms of its economy, its currency inflation, its stock market, its debt. Everything. But now what we're seeing is Turkey cashing. On its geostrategic 

[00:09:51] Philip Pilkington: advantages. I mean, one, one of the things that I took away from that, that essay that we referred to earlier is, is that the Turkey really does have very broad geopolitical ambitions, and it's not, it's not a major player in the world.

[00:10:05] It's not a China, it's not a Russia, it's not a United States, and yet it remains having these ambitions and finding creative ways to, to pursue them. It, it's almost the perfect multipolar country in a. I mean, two of the things that David Goldman mentioned in the article that really stood out to me were, first of all, he reminded readers of turkey's, uh, support for the Muslim Brotherhood, which is a, is a kind of a, a large Arab organization that that has a lot of political influence in, in various places.

[00:10:34] If there's continued instability in the region due to. Inflation, food inflation, stuff like that. If we saw another spade of those kind of uprisings, turkey's influence over the Muslim brotherhood could have very serious consequences. Another, uh, thing that Goldman pointed to was a report on February 4th in the Jerusalem post.

[00:10:54] Russia's trying to convene a historic meeting between Turkey, Iran and Syria. Turkey and Syria have found themselves on opposite sides of the Syrian Civil War, but clearly Russia wants to try and broker a deal between Turkey, Iran, Russia, and Syria. And if those kind of connections start, I think that's a real multipolar style theme in that region.

[00:11:15] It really could change, maybe not the balance of power, but de definitely the balance of forces. 

[00:11:21] Andrew Collingwood: I agree a hundred percent. I think that, uh, Erdogan right from the beginning of his involvement in, at the top of Turkish politics, whether his prime minister or as president has made no secret of his desire for to, to make Turkey great.

[00:11:39] And certainly there, there has been a lot of talk of a neo Ottoman empire. Whether that's possible right away is perhaps doubtful, especially given turkey's economic instability in erdogan's, shall we say, unorthodox economic policies and preferences. However, as I say, Turkey really does have an incredibly advantageous.

[00:12:03] Geos strategically. It also has things like a, a pretty decent birth rate. It's not quite replacement level, but it's really very, not very far short at all, unlike a lot of the other great powers or would be great powers in the world like China and all of the European countries and Russia. So it has that advantage as well.

[00:12:21] And also in region there aren't a lot of very powerful, uh, content as there. Uh, you know, Syria is, is, you know, has never really been a great power and it's completely destroyed at the moment. Saudi Arabia would seem to find it very difficult to project any sort of power very far. Iran is always traditionally hemmed in by the United States.

[00:12:47] Egypt doesn't seem to have a, you know, a great deal of potential at the moment, so it would seem natural for Turkey really to be the largest power in that region. Of course not very long ago. It really was one of the great powers of the world, and just a little bit before that, it was an even greater power.

[00:13:09] It was far more powerful even than Europe. So, you know, these things go in cycles and it's undoubtedly the case that Turkey has this potential. The key is whether it's, as you say, Build a net, a diplomatic network, and and, and reach agreements that allow it to fulfill that sort of potential rather than attempting to use kind of brute force tactics and the deal that would potentially be a broker by Russia between Turkey and Syria primarily.

[00:13:40] But obviously Iran would be involved as serious primary sponsor That would be. Extremely important for the region, especially as it comes on top of a certain degree of detant between Saudi Arabia and Iran as well. So very interesting times in the Middle East, and I think that Turkey is almost overflowing at the moment with geostrategic opportunities, whether because Russia now very much needs Turkey's help and that allows Turkey to play off Europe with Russia, with the United.

[00:14:17] Whether it, because, whether it's because chips are starting to move around in the Middle East, because that could advantage Turkey as well. All of these things are happening at the same time. And if it could ever get over this economic instability, it could in not very long at all be a real force to be 

[00:14:33] Philip Pilkington: reckoned with.

[00:14:34] I mean, the, the energy situation that's being created in Europe definitely sets it up with the potential to do that. Maybe not fully stabilize its economy or. Completely, you know, wealthier, anything like that. But if it becomes an energy hub, I wouldn't rule out Turkey figuring out a way to stabilize its balance of payments crisis.

[00:14:53] Andrew Collingwood: Yeah, for sure. For sure. Because you, you know, you've got the Azerbaijan gas, which would probably have to go via Turkey. You'd have the Russian gas, which, you know, Turkey would probably be the only route by via the, the Turk Stream pipeline that goes across the Black Sea. You know, there's the potential there for Turkey to be an energy hub for the richest and most valuable energy market in the world.

[00:15:16] Now, if that's not an opportunity, I dunno what is, you've also got Russia's desire to invest in and work with Turkey a lot more. You've got a general desire for more peace and stability in the Middle East, which Turkey can be involved in as a country, despite the tragedy that's performed recently with the earthquake.

[00:15:34] Pretty horrible economic instability of late. It's, it seems to be overflowing with 

[00:15:40] Philip Pilkington: opportunities. It's really not clear to me that the west is winning out with this situation. 

[00:15:45] Andrew Collingwood: Well, no, not at all. It's it, it's like you got rid of Vladimir Putin as your gas supplier and now you have Rice Erdogan, so pick your poison there.

[00:15:55] Material world, speaking of whether the west is winning or. We all know that the United States spends vastly more on its military than any other nation. In fact, I think I'm right in saying that the United States spends more on its military than the next 15 nations combined. Although that might be changing, given China is ramping up, its military spending at the moment, and I guess so Russia will be as well.

[00:16:22] But anyway, it's a, it's a huge advantage in terms of raw spending. However, you, Phillip Pilkington have done some absolutely fascinating research recently to look at whether we can really compare dollar for dollar military spend and also what implications that has for relative military 

[00:16:43] Philip Pilkington: power. Yeah. So I wrote this essay for American Affairs called Assessing the Economic Value of Military Material.

[00:16:50] I guess I was interested. Well, a few things really. I mean we, we were told a lot of stories about, you know, Roundup military power in the runup to Ukraine and Russia was always portrayed as a nuclear power with a fairly unimpressive military. Its economy was always portrayed as something like smaller than Texas, I think used to be the phrase.

[00:17:11] And I just don't think that's born out in the past year. I think people must be coming aware at this point. That there's something wrong with that. Kind of thinking about military strength, so obviously I'm an economist, so I, I said, well, they're talking about role of spending. What would we find, if we actually dug into this, what would it tell us about using role of spending as a metric to gauge military strength?

[00:17:37] And I think once you dig into it, you find that there's a lot there, a lot that hasn't been discussed and that hasn't really been explored. The first thing is just that raw spending power. Tells you absolutely nothing. Russia. The example I use is Russia and the United Kingdom. In 2021, Russia spent about 68.4 billion on its military.

[00:17:59] The United Kingdom spent a 65.9 billion, so basically the same spending, and they get vastly different armies for that. Well, first of all, Russia have all in military personnel that includes reserves and so on of over 3.5. The United Kingdom has 217,000, so Russia has like 15 times the military personnel of the United Kingdom.

[00:18:24] While they're spending the same amount, the United Kingdom has about 200 to 300 tanks, artillery and nuclear weapons. Russia has 12,000 tanks. 18,000 artillery pieces and an almost 6,000 nuclear warheads. Now, some of that's a stockpile from the Soviet days, but even that raises the problem. Well, if stockpiles are important, why are you measuring it on annual military expenditure?

[00:18:51] So basically what you come away from it, from the, the raw numbers seeing is that Russia has an army pretty much comparable to the United. It really does. Now, I'm not saying that the quality of their arms or, or, or anything like that are, are the same as the United States. I, I'm not an expert in these things.

[00:19:10] Looking into it a little bit. They have some pretty good military tech and maybe some of the stuff isn't as good, but the fact of the matter is that they have something of the same magnitude as the United States, yet they're spending the same amount as the United. And I think that should just raise all sorts of alarms to people who've been thinking about a strength in terms of spending for a very long time.

[00:19:33] And I mean, I'd probably have fallen victim to that too. 

[00:19:36] Andrew Collingwood: Okay. So I guess one critique of that might be a qualitative one. One way of looking at it might be to say, look, a challenger two main battle tank is simply better than a T 72 or T 80, or perhaps even a T 90 tank, right? So, Russia might be getting more of these.

[00:19:56] One challenger might be worth, I don't know, say three T nineties. I dunno if that's true, but just for the sake of argument. And equally, the United Kingdom might have much better technology in other areas as well. The other point to say is, of course, that it's a matter of wages, isn't it? I mean, do how well do Russia pay their soldiers?

[00:20:18] And indeed, how much time do they spend on training them, for instance, You know, the parachute regiment in Britain, the role Marine commandos have, I think I'm right in saying the longest basic training program of any NATO regular regiment. And in addition to that, they then have further specialized training.

[00:20:35] Do would a Russian soldier have the same amount of training? And thereby you might say that although brush has a far greater mass than Britain, that's equaled out somehow in the quality. Is that a critique that you might take 

[00:20:49] Philip Pilkington: on board? Well, first on the wages. I mean, that's, that's measurable. So what you do is you adjust the spending metrics for what's called purchasing power parity.

[00:20:58] And I don't know why this isn't just standard fair, when we talk about military, it's, it's the, it's the normal way of comparing. Economic strength, but that doesn't really help if, if you use a P P P adjustment. Russian spending is then about double British spending, right? It goes up to about hundred and 49 billion.

[00:21:16] And then Britain's p p P adjusted is about 77.8 billion now. Okay, so you've got, you've got double the bank for the buck there if you take wages and living standards into account. But that doesn't explain 15 times the military personnel. It doesn't explain what I mean. 50 times the tanks, 50 times the, or 60, 70 times the artillery.

[00:21:39] It just doesn't explain that. So I suppose you could go with quality. Now I do actually at the end try and lay out a way of thinking about qualitative, the qualitative aspect of this. But I think the first question that you have to raise with this is how much better? The higher quality. Good. Okay, so take two tanks, take take, you know, the, the, the American M one Abrams, or you can take the British Challenger or whatever you want, and then compare it to, you know, the standard bottle tank of the T 14, the Russian T 14.

[00:22:12] If you say to me, well, the M one Abrams are, the challenger is three times better than the T 14. I say, okay, well what does that. It only means anything if it means that one M one Abrams or one challenger can kill three T 14 s. Otherwise it means nothing. It's just a subjective evaluation. And I'd say that for the training of troops and everything, if you put, I mean, I'm just making up numbers, but if you train a troop 10 times longer than an equivalent troop, than an equivalent troop, you know, a British T troop for 10 times longer than equivalent Russian.

[00:22:53] Will the British troop kill 10 Russians? And when you start thinking about it in those terms, you realize probably not qualitative differences. Can't make that much of a difference. That's my feeling. Again, I'm not an expert on it, but, but those are the kind of numbers that you'd need to be thinking about to justify these higher.

[00:23:15] Inputs. I mean, that's my opinion on it. Not an expert opinion, but just seems kind of logical to me. The M one Abrams probably can't take on three T fourteens. That just seems weird to me. And when you have artillery in the mix as well, which we've seen a lot of use of the artillery in in the Ukraine war, I don't know the statistics, but my impression from seeing videos is that a lot of tanks end up being taken out by artillery, not by other.

[00:23:38] Then that's a whole different kettle of fish because artillery is a lot cheaper than tanks, for example. So it's, it all these issues come up. And what it ultimately leads me to wonder is whether quality hasn't become a bit of an obsession in the West, making the highest tech good no matter the cost. We seem to think is the right way of, of spending money on military.

[00:24:04] And maybe that makes sense in the case of, you know, building a really high quality stealth bomber to do, you know, raids over Iraq and it can't be taken down by Iraqi air defense, but maybe it doesn't make sense if you're talking about kind of peer-to-peer combined ar arms warfare like we see in Ukraine seems to me much more likely just on a basic logical level when you start looking at the numbers and thinking it through that in the context of a ba of, of a war situation like you see in.

[00:24:34] A tank is a tank, really. It's just a big, heavy armored thing that has a gun and that can move around the battlefield. And if you spend twice as much on your tank, on one tank as on another, I don't think it makes it twice as good at avoiding artillery fire. I don't think it makes it twice as good at shooting down other tanks.

[00:24:56] I, I just, I I can't believe that. Yeah. 

[00:24:59] Andrew Collingwood: I, I think you, you know, you're probably right that, uh, You know, challenge two couldn't necessarily take out five or 10 or 50 or however many the differences between the, the number of British main battle tanks and the number of Russian tanks, it, it, it probably couldn't do that.

[00:25:15] I think the Air Force, by the way, when they test the new fighter jets, for instance, when the F 22 was tested under F 35 were tested, yours hear these results where the kill ratio in training was 20 to one or 15 to. You know, the F 22 was able to take out 15 F fifteens with zero kills on its side. So you do sometimes get that, but I, I generally take your point that I'm not altogether certain that when the numbers stretch out, to that extent, whether it is credible at all.

[00:25:49] You know, like if Britain has 200 nods, main battle tanks in theory, and Russia has, you know, 14,000 or however many it is, then unfortunately, Without wanting to get all Lennon about this in that sort of situation, mass most certainly does have a quality all of its own. The other point to mention about this of course, is that, you know, Russia is ahead of the Western powers in some areas, for instance, air defense for instance, it's a hypersonics.

[00:26:22] Its cruise missiles are more modern than the US Tomahawk cruise missile is. In some areas it's also ahead as well. It, it, it can produce higher quality stuff as well as mass produce it. What sort of implications do you think this has for strategic planning in the long term though? Because obviously when it comes down to it, military might, you know, when it gets really down to breast tax, military might is what's important.

[00:26:50] Okay. If sudden, The West is faced with the reality that actually, although we felt we've been outspending Russia and China and all these countries for years and years and years, they have much greater military potential than we had originally thought. What sort of implications does that have, and if people don't realize that, more importantly, what sort of implications could it.

[00:27:15] Well, I'm 

[00:27:15] Philip Pilkington: not, I'm not the expert. I'm just an economist who's looking into an interesting problem, nosing around in it and realizing that there's a bit of a bit of a stink there that needs to be sorted out. And if I can contribute anything, it'll probably be that. I mean, I'm, I'm of a kind of a default view that wars can't get very big because of nuclear deterrence.

[00:27:36] I think Ukraine is pretty much as big as you can. Without the potential for nuclear escalation, maybe a conflict in the South China Sea, that would be much more, I dunno how you'd say, technology against technology in a way that the World War I style grind of Ukraine. Isn't, perhaps you could get that without the risk of escalation, but I, I think, I think, you know, when you start talking about destroyed carrier battle groups and so on, I think you really are risking nuclear escalation at that point.

[00:28:05] So I'm just kind of skeptical that very large scale wars can take place. You could never have conceivably a war-like World War II ever again, because before it. To the level that it had got to, you know, in the mid 19, you know, 1942 or 1943, there'd be nuclear war, right? And we'd all be dead. I mean, maybe not everyone would be dead, but the, the, the powers would be destroyed.

[00:28:29] Let's put it that way. The analysis fits very well what we've seen in Ukraine, which is an attrition war that's been very difficult. The technology so far, as I can tell, hasn't made a huge amount of difference beyond you reference the, the very high tech Russian missiles, which have been. Seemingly very good at taking out strategic points and also drone technology.

[00:28:50] And the satellite technology has made the visibility of the battlefield extremely good. But ironically, that seems to have actually pushed it back together with the very sophisticated air defense that seems to have pushed it not forward into a new type of warfare, but it's, it's kind of switched the type of warfare being fought from a very mobile form of warfare like World War I.

[00:29:11] To a more static one, like World War I. So, and again, that kind of buttresses the kind of takeaway from my article that low tech in big quantities is probably superior in that type of a war. One other thing that I, I definitely take away from the article, I did mention it in it, now it's referencing another study by the Center for Strategic and International Studies.

[00:29:35] They released estimates of how long it would take the United. To rebuild the stockpiles of their munitions. And what they found is that even at surge rates, so that's kind of pushing your factory past its limit. And I've since found out that they probably can't achieve these surge rates. So this is a wildly optimistic assumption, but even at surge rates, it will take the United States five years.

[00:29:59] To replenish. Its 1 55 millimeter ammunition stocks. It'll take four years to replenish. Its 1 55 millimeter precision ammunition stocks, 5.5 years to replace the Javelins at scent. 2.5 years to replace the fairly limited number of high Mars sent and the stingers. The stingers at will take 6.5 years to replace.

[00:30:21] Now, I got a lot of flack on Twitter from the. From the defense guys in America, especially the Navy guys, cuz I used an example of a carrier battle group and a hypersonic missile, which is, as the Germans say, string verboten strongly forbidden. You're not allowed to talk about that for whatever reason.

[00:30:40] But they got very mad at me and, and told me I was wrong and stupid and dumb and everything. But honestly, if I'm wrong about these miscalculations that have been made in material procurement, then why do we have this? What's with the ammunition shortages? Those are the rates for the us. I mean, Europe is basically out of ammo.

[00:30:59] We hear these stories about like the bundles there doesn't have enough ammo for whatever it is, 24 hours of combat. I can't remember the exact number. So if I'm so wrong about material procurement, generally, why do we have this ammunition shortage after a year of. I mean, that seems to me like Prime of Fasi evidence that there is something really gone wrong with the type of military procurement that's 

[00:31:24] Andrew Collingwood: taken place.

[00:31:25] I think that's absolutely right. I think that it's been widely accepted for a long time that certainly in Britain and also in the United States, military procurement is a horrible mess and it gets terrible value for money. You have to look at some of the big tickets purchase. Ajax, which is kind of a medium armor kind of infantry fighting vehicle slash armored personnel carrier in the uk, which has been a a multi-billion pound disaster zone, I think it's fair to say.

[00:31:59] And then you look at things like the Zumwald class and the of, of Ship and Destroyer in the us the the lateral combat ship in the us. You could probably argue quite fairly as well, the F 35, which is now in the process of filling out pretty much every American Allies Air Force. So yeah, I think it's very fair to say that procurement has been a horrible mess.

[00:32:25] Even before the Ukraine, even before the west started pumping Ukraine full of weaponry and support of Ukraine, Britain, for example, ran out of key munitions after. Seven or eight days of a 10 day training exercise with the Americans in the French. So you imagine that's done under training conditions, which are not as kind of frenetic or panicked or urgent as battlefield conditions.

[00:32:51] And we managed to exhaust the entire national stockpile within seven or eight days. Right? It doesn't matter how amazing your main battle tanks are, I mean they, you know, they could have. Dropped down from the Imperial Fleet from Star Wars, but if they haven't got any ammunition, then uh, not gonna work very well.

[00:33:11] Equally, I'm almost certain that the parachute regimen and raw marine commandos are among the most highly trained and skillful light infantry forces in the world. But if they don't have support from artillery and, and, and tanks of their. They're simply going to be rolled over once they come up against a serious masked armor.

[00:33:33] It's just a way of the world, unfortunately, so this is indeed a huge problem for the west. I read an article from the backend of last year, which said that Taiwan had a 19 billion backlog of arms that it had ordered from the us, but the US hadn't yet been able to provide. Many of which the US had also sent to Ukraine.

[00:33:55] So it was things like man pads, which are the kind of shoulder launched anti air missiles, like anti-tank guided missiles like high Mars, all of these things. Taiwan has 19 billion backlog of these things, which again speaks to the fact that the US can't get its procurement and logistic production and logistics lines sorted out at the moment.

[00:34:16] For whatever reason, and I'm sure this is a 

[00:34:18] Philip Pilkington: big problem, Yeah, I mean, I didn't look too much into it. Maybe it's the economist minding me. I strongly suspect that this is something to do with a misaligned profit motive if you can't effectively get a market price on this stuff. Like you can for kind of consumer guards, you know, if you, if you pump too much tech into a television, at some point the television's too expensive to sell to the punter, right?

[00:34:43] Since there's no consumer check and balance on. I do suspect that it might be in the interests of the arms companies to ramp up the technology behind them to justify very high profit margins. And that may be at the core of the problem here. Chinese Burn. You sent me something this week from I think the Chinese Ministry of Foreign Affairs, which I think was as interesting insofar as it told us something about the Chinese mindset, but also I suppose in terms of, uh, diplomacy and their relationship with the united.

[00:35:16] Yeah, I was 

[00:35:17] Andrew Collingwood: quite shocked to read this actually, because at the same time that Mr. Yang is on his charm offensive around Europe. Speaking of very conciliatory terms toward the United Kingdom, for example, but also seemingly doing very well in mainland Europe and now visiting the Russian Federation as well.

[00:35:35] The Chinese Ministry of Foreign Affairs on its official website released a report titled US Hegemony and its peril. I was quite surprised by the force and vehement of this report coming from official channels. It, it had the same level of antagonism, I suppose I would say or dislike for the United States, as you might read in an opinion editorial column.

[00:36:01] Although it was a lot more detailed and supported by a certain degree of evidence than that, the major argument that the Chinese ministry foreign affairs have made. The United States is hegemonic across a range of spheres, politically, culturally, militarily, technologically, and financially. It has, it enjoys a degree of hegemony, or it has enjoyed degree, a degree of hegemony in all of those spheres.

[00:36:27] And the Chinese Ministry of Foreign Affairs accuses the United States of abusing that, of bullying other countries of waging war against other c. Of deliberately trying to wreck countries economies and interfere in their politics, all to maintain its own hedge money. And ultimately this is unacceptable behavior.

[00:36:48] The Chinese argue and it must end, and in fact, there's a groundswell of opinion throughout the world that it oughts to end and ultimately, if the US doesn't change its ways, it'll lend badly for the United States. I think there were one or two parts of it. Didn't necessarily stand up to scrutiny. They, they, they made a couple of arguments or, or, or they offered bits of evidence, which I thought would've been best omitted.

[00:37:15] I, I, I think if they hadn't tried to lay it on quite so thick, it might have had more force. But ultimately I wondered reading it, whether this wasn't the official start of the Cold War. I, I, I don't know whether China is in a habit of releasing these things. I, I, Had a chance to kind of squirrel around on the Chinese Ministry of Foreign Affairs' website recently, and, and, and, and check to see if they're producing a lot of these kind of, quite fiery reports into the behavior of the United States.

[00:37:44] But certainly if this is new, if this is something that's slightly unusual or, or ramps it up, it, it read to me like the start of the Cold War, it read to me or the Cold War. Because it really read to me like China was laying down its point of view that the US has acted unacceptably and it is acting unacceptably in a range of spheres.

[00:38:03] It doesn't stick by the global rules. It argues, and ultimately that's how China views the us which. Really doesn't look like there's going to be any thaw or de hunt or backing down at all, at least from the Chinese side and not from the US side either at the moment. 

[00:38:19] Philip Pilkington: So far as I know, it is an unusual release.

[00:38:22] I'm not a, a regular follower of the Ministry of Foreign Affairs of China, but I think they do kind of like to keep things pretty, you know, buttoned up and yeah. When you sent it to me, I said, well, that's, that's quite notable. They clearly put some effort into it. I mean, my question would, Who do you think it was aimed at?

[00:38:39] Who do you think their ideal reader was? I don't think it was for Chinese consumption. I think they get plenty of that messaging at home, but they don't tend to project that me messaging outside. So who do you think it was, its target audience 

[00:38:51] Andrew Collingwood: was there wasn't necessarily a target audience as much as they, they were putting down for the record, their grievances with the United States, their grievances with the way that the United States has acted towards China.

[00:39:05] Of course they included other countries as well, but we, you know, we know that China isn't really concerned with what the US did to Japan during the Plaza records, right? We know that the Chinese aren't really concerned with what the US did to Venezuela and Cuba. Their, their grievance was what they did to Huawei.

[00:39:23] Their grievance is what they've done to the Chinese 5G technology. Their grievance is what they've done with microchips and, uh, AI develop. This is what the Chinese are, have got a real problem with. And what they're doing is they're putting down, as a matter of diplomatic record, how they believe the US has acted, what their position is, and that then justifies future Chinese action, doesn't it?

[00:39:47] Like, you know, you can't just in the world of diplomacy, start acting an X way without any, at least justification from your point of view. And I think that's what this is doing. It's it, it's out there in the world. So everybody knows now why China is going to move and act in the way that it does. That's the way I see it.

[00:40:06] It might also be an effort in the same way that Russia has to curry favor with the, the non-aligned world or the global south, but I think the main point of it was to get on record. China's grievances, what issues that China has with the us? It's 

[00:40:23] Philip Pilkington: interesting that it was released at the same time as China's top diplomat.

[00:40:27] Uh, Wang Ye was doing a, a tour in Europe, which I kind of followed a little bit, and I thought some of the trajectory was, was quite interesting. I mean, part of it was obvious. He went to, you know, France and I think Germany as well. And of course, Germany has signaled their openness to China with Chancellor Olav Schultz.

[00:40:45] Early November visit to Beijing, which, um, I think was widely read as a finger stuck in the Eye of America saying, we're not going along with your Cold War. But two things notable, stood out to me about the, the ESE trip in Europe. The first was the outreach to Britain. It was, it was pretty spirited. While they were releasing this kind of black book of American errors back in Beijing, the Chinese were in Europe saying to Britain, We want to continue normal relations.

[00:41:14] We don't have any problems with you. And I think it met a little bit of a frosty reception, but I do wonder about what people are thinking behind the scenes. I mean, I don't have any inside knowledge, but it does feel to me like, like Britain are a little bit conflicted on this issue. I don't think Britain are, are conflicted on the Russia issue.

[00:41:31] I think they, they're pretty much all in on that, on the Ukraine side of that. And I don't think there's any. Hesitation there, but the China issue, I think they are a little bit hesitant against, I, I, I think part of it is due to the fact that, well, China haven't gone to war with anybody. And so, you know, they, they, they have been apart from the odd balloon, which we've discussed before, they have been seemingly behaving themselves, or at least they haven't been behaving any differently to the, to the way that they have in the past.

[00:41:58] But also I think Britain sees the, the potential for trade relationships with China. They. As everybody does. So China is going to turn out to be the largest economy in the world just due to the fact that there's so many people there and that their living standards will raise to, to western living standards probably in the next 15 years, honestly.

[00:42:17] And at that point it becomes pretty much permanently the largest economy in the world. And so obviously the British probably won't wanna slice that pie. So it was interesting. They met the, the diplomat with, with a slightly frosty reception. It wasn't touted in the press or anything like. I do, I do detect a lot of tension in Britain around this issue.

[00:42:36] The other notable point was that when Wai was on his way to Russia, he stopped over in Hungary to meet the Hungarians. And I think, I think what he was trying to signal with that was that China want to be a core partner in brokering the eventual peace deal in Ukraine. And they've already said, I think Wai actually stated that they are putting together a.

[00:42:58] For peace in Ukraine, and they clearly want to position themselves as doing that. Now, maybe they don't end up brokering the peace, although they might have some say in that because of the friendship that they've made with Russia. So China might actually have to be somebody at the table in those peace negotiations.

[00:43:15] But I think in purely diplomatic terms, I think that that's a very strong hand to play to come in and, and show yourself as the kind of the adult in the room, the person who's willing to, you know, try to put Humpty Dumpty back together again after he is fallen off. The war. I think that's a very powerful position to be in.

[00:43:34] And actually that's the position that the West, and especially America and Britain used to play and I hope we're not falling down on, on handing that accolade to China. 

[00:43:44] Andrew Collingwood: Oh, well there's note that we are on this issue. I think you're right though that it's interesting that at the same time that Onei was in Europe on something of a charm offensive.

[00:43:53] Certainly there were, as far as I could, No real crosswords, no great display of diplomatic frostiness at all. It, it seemed to go very well and really quite shockingly conciliatory words towards the United Kingdom, which. As surprised me a lot, and at the same time as that happened, the Chinese Ministry of Foreign Affairs releases a document that calls the United States bullying, egotistical, ruthless, warmongering, a country that uses force and subs, substative subs, subterfuge to get its way.

[00:44:32] The contrast is really quite shocking, and I wonder whether the game here isn't. China is starting to make an effort or to see an opportunity. To peel off Europe from the United States, or at least keep Europe neutral in any future, in any future conflict between the United States and China, which makes sense when you think about it.

[00:44:53] Look at what's happened to Europe since the Ukraine conflict. I think we can all accept that outside Britain, the United States has been a lot more aggressive in terms of pursuing Maximalist policy with regards to Ukraine with regard to. Membership of NATO with regard to its membership of Western organizations in regard to generally it being in the western sphere of influence.

[00:45:18] Now, since the conflict started almost a year ago now, what's happened is first of all, Europe has been deprived of its economically most rational place to purchase energy, which is the cornerstone of any modern economy. It's been flooded with millions and millions of refugees. It's had a key export market that it's lost.

[00:45:44] It's even been affected in ways whereby it's airlines are now struggling because they're unable to fly over Russia to to key locations in Asia. So Europe truly struggled. Because of this, it's now faced with an exiting this conflict when it does finally end. If it does after this, it's, it's gonna be faced with a huge, an absolutely enormous cleanup cost in Ukraine to rebuild it.

[00:46:10] It's going to really struggle to rebuild economic ties with Russia, so it's quite likely that it's not going to have that economically most rational source of energy. Yes. Decades perhaps until renewables come on stream, eventually maybe take over the world. It's gonna have large numbers of refugees.

[00:46:30] It's going to really be struggling economically. It's going to have to rebuild its own military. Does Europe in that position really have the economic strength to go fully behind the US in the event of a conflict with. That would mean sanctions on China equivalent to the sanctions that the US and Europe placed on Russia when the sanctions on China would make the damage done by the sanctions on Russia look like a little kind of a starter course.

[00:47:01] China is even more important economically, again than Russia. So perhaps China's thinking, look, if we can just maintain friendly economic relations, maybe Europe in its weakened economic state will take one look. The second Cold War, or Cold War 2.0, whatever you wanna call it, between the US and China and take it to itself.

[00:47:21] No way. We're gonna stay neutral. We're gonna continue trading with us, we're gonna continue trading with China. We need this. You know, we've just lost one plank of our economic model. Let's not lose another plank as well. That would make a lot of sense for me, and perhaps that's what China's working. 

[00:47:38] Philip Pilkington: Yeah, in terms of trying to tear Europe away from America, I think I saw some commentary in the financial Times that that's the case.

[00:47:44] I mean, that's, that's not realistic in my opinion. I mean, Europe and Europe and America are always gonna be related, you know, linked Unless, you know, America wants to engage in complete protectionism against Europe or something like that, which I don't think would ever happen. They want to keep them neutral and, and not start a Cold War 2.0.

[00:48:01] Yeah. I think that's the goal, and I think they'll succeed. I mean, as I said, Olas Schultz went to Beijing in early November. The, the Europeans have made up their mind. They're not going Cold War 2.0 on China, so that's just not happening. Britain mice. That's, that's why I thought it was so interesting that there was, there was that outreach from the diplomat and it'll be one to watch.

[00:48:21] I, I'm really interested to see what happens there, because I, I really don't 

[00:48:24] Andrew Collingwood: know. Well, actually you, I mean, you did wonder what was happening and I, you know, I would say this, that. Potentially China is pretty important for Britain a and to a certain degree it might be already within the city of London specifically, which obviously plays an outsized role within the British economy.

[00:48:43] So probably in theory, it would make a lot of sense for the UK to stay fairly neutral in any kind of conflict. We don't want to lose the potential that China has to help and support the uk. However, I just don't see that as being realistic for two reasons, first of all. Or, or, or, well, for one reason it's because of the UK political class and, and, and not just the politicians themselves, but the, the network of think tanks and thinkers around them and who might replace them and, and, and, and the general kind of intel against here, if you like, but they have two strands among them, neither of which are compatible with being neutral in the US China conflict.

[00:49:25] The first. Is that they tend to have a neo-conservative or, or, or liberal universalist view of the world. And because China is a, is an autocracy and, and, and, and because of some of the human rights issues within China, that would make it very difficult for those people to countenance taking any side that wasn't against China in any kind of conflict.

[00:49:48] And the second point, of course, is that Britain's absolutely tied at the, at the ankle. With the United States, or perhaps that's a, that's a a, a bad analogy. Cause that would imply equals in some ways. A, a another point would maybe be that it's, its hand is glued to the coattails of the United States. And as we've really seen since the late nineties when Tony Blair really put in place this kind of relationship, the UK has essentially followed exactly what the US wanted to do.

[00:50:18] And in, in many ways, it's, it's even tried to preempt what it thinks the US would want of. In the realm of foreign policy that the only break on that really was with Brexit, but on the big issues, the wars and the conflicts, the UK can be relied upon to be four square behind the US and, and there's no way that that's going to break anytime soon.

[00:50:40] I'm not sure. 

[00:50:40] Philip Pilkington: I think China could still be the test for that. I really, I, I really think that, I know it's not widely talked about, but I just, I really don't think among the business community among most of the politicians, I don't think there's a huge amount of. To break with China. The other key points here as well is that for some reason, I think because we're all consuming too much news headlines, we're somehow imagining that a conflict is inevitable.

[00:51:04] I don't see any inevitability. I've said this over and over again of a conflict over Taiwan. I think the Chinese are in a really good position to sit and wait it out because the political balance of power in Taiwan also, you've got to remember that I'm not trying to justify Russia's invasion of Ukraine.

[00:51:19] It, it happened in a, in an area that already was ribbon with conflict, right? There were, there were constant artillery bombardments. There was a, there was a minor war going on there since 2014. There's nothing like that in Taiwan. There's, there's no, there's no threat on the border to Chinese nationals or anything like that in Taiwan.

[00:51:40] So I don't think there's that kind of incendiary spark to sp to spark. And then if China are trying this charm offensive in Europe and so on, and it's working to a large extent, maybe not in the uk, but it is working in Europe, then why burn the house down, wouldn't the grass of action? It makes absolutely no sense.

[00:51:57] So, ADA that I, it's, it's, it's, it's actually. The outreach itself that I see, the success that it's having, which leads me to think if I were China, would I really, really burn the house down on all that? By taking an aggressive action against Taiwan that's gonna be viewed by the rest of the world as another instance of Russia invading Ukraine, another act of aggression.

[00:52:20] That would potentially drive the rest of the world against China. And I think they know that. I mean, it must be obvious because when the diplomat comes over and the, and the, and the topic of Taiwan comes up, I'm sure they say, you know, what do you think of this situation? And they say to them, we don't want any more wars.

[00:52:37] We don't want any, we don't want another Ukraine. And they go back and they register that. So I think actually the whole way that this is shaping. Leads me to be more confident in my kind of crystal wall gazing that I, I just don't think the, I think the Taiwan issue's gonna fade to the, into the background again in the 

[00:52:54] Andrew Collingwood: next decade.

[00:52:56] I wish I were as sang green as you, Mr. Ingston, but unfortunately I cannot be At the Munich Security Conference, whichi attended. He was asked at the end of a interview that he did on stage whether he could promise or whether he could reassure people. There would be no invasion of Taiwan and that there would be no war in Taiwan in the way that there has been in Ukraine.

[00:53:20] And he, he said, I can confirm that Taiwan is not an independent country and will never be an independent country. I think that you are right when you say that. What China would like to do is continue growing its economy, continue becoming richer and more prosperous and more. Continuing to extend that economic power outward, continue improving its potential, and with Taiwan, let nature take its course.

[00:53:54] As trade increases between Taiwan and China as cross straits, exchanges of workers and people continuous, it has been going slowly. The integration will take care of itself. I think that's what China would like to. However, the United States a very strong interest in not allowing that to happen. The United States.

[00:54:17] For the United States, it's crucial that it maintains its positions across the first island chain from Japan, through Taiwan, through the Philippines, through Indonesia, and eventually to the Strait of Malacca. It, it, it, it's vital because that gives the United States a degree of. That means that China is balanced within the region, and that means that the United States can continue to set the, the terms of, or, or have a say in the terms of trade in a, in an important part of the world, and most importantly, prevent China from becoming a regional hegemon in Southeast Asia in the same way that the United States has regional hegemon in North America.

[00:54:59] Okay. I don't think the United States will allow Taiwan. To slowly, slowly integrate with China. Now you say you don't think that China wishes to invade Taiwan. It would be a huge mistake. It would throw away a lot of the progress. It could turn Europe against China. Yes, yes, yes, yes, yes. That that's all true.

[00:55:20] I agree with that. But what if the US signed an agreement to station troops in Taiwan? What if it signed basing right in Taiwan? What if Taiwan declared its independence? What if there was a color Revolut? In Taiwan that overthrew a China friendly government and immediately sought consultations on independent.

[00:55:42] I think in that sort of situation, a military solution would come very much on the table. 

[00:55:51] Philip Pilkington: I mean, we'll have to wait and see. I, I, I really am more optimistic about this than you. I think we've, we've had a big shock from the Ukraine war last year and eventually that war will wind down hopefully, unless we go to World War ii.

[00:56:04] And I think, you know, the war drums will quieten down and. People will take stock and we'll probably have quite a nasty recession in the west, and we might be focused on that or a financial meltdown or something else.

[00:56:24] Andrew Collingwood: You've been listening to Multipolarity Subscriber Follow for Fresh episodes every week.

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