are both sides playing for a draw I would say no because right now Russia controls about 20
of Ukraine's territory and the foreign minister lavrov uh upped the game uh this week by saying
that in fact uh the Russians intended to Annex not just the donbass but potentially also some
of the territory around her son uh I certainly don't see a draw there because I think what's
going to happen is that at some point later this year assuming that Ukrainian counter-offensives
have not been overwhelmingly successful which I I think you're right HR it's pretty unlikely I
assume Putin declares Victory and simply declares that the partition of Ukraine has has happened and
uh and that's the end of the show folks uh taking advantage of the fact now we get to the economics
that by that time the the weakness of the European position with respect to dependence on Russian
energy will have caused Western Unity to unravel it's already clearly unraveling uh one of the most
Ardent supporters of Ukraine has fallen from power in London Boris Johnson uh and now Mario draghi
the Italian Prime Minister who was strongly uh in favor of of the war is resigning in Italy with the
prospects of the right-wing Italian government perhaps as soon as September if I fast forward
from the hot weather we'll talk about later to the cold weather that will that must come later
in the year I see a moment when when Putin can achieve something that looks a lot like Victory
and that's when it gets really difficult not only for Philadelphia the Ukrainian president but also
for the U.S government 50 billion dollars worth of support military and non-military is hard to
do every six months for the foreseeable future especially when you're in the in in the grip of
an inflation crisis that you failed to see coming last year how much support can Ukraine count on
uh from the United States if the war drags on uh into next year I think there'll be great pressure
from Europe and perhaps from some elements in the United States for Ukraine to settle and accept
that the donbass is gone I don't think Ukraine's going to want to do that I don't think there's a
government in Ukraine that could do that but you can see where Putin's going here and you can see
why he thinks Colder Weather and you Europe's energy crisis uh are really the the Trump cards
so let me throw an economics question to you John sanctions were supposed to be a deterrent
last year they weren't then they were supposed to be the key to defeating Russia that doesn't
seem to have happened and in fact the ruble did a pretty brief round trip before actually
becoming somewhat uh Stronger after the initial phase of the war it doesn't look as if the Russian
economy is on its knees uh though it's certainly true isn't it that the Russians don't have access
to much sophisticated Weaponry now because they simply can't import the the semiconductors that
they would need to manufacture it for those who are worried about inflation and that's what's
happening in China where in the last quarter for which we have dated the the economy actually
contracted now when I look at what's going on in China I think it really ought to be the biggest
story of the moment because here is the second largest economy in the world which has been for
decades one of the fastest growing and it stopped dead in its tracks this is partly because of
season ping zero covert policy which is basically unsustainable in the face of Omicron variants
the effect of lockdowns uh some of which have been extraordinary Draconian has been to scare
are Chinese consumers out of spending but there's something else going on in China which I would be
very worried about if I were president XI and that is that the real estate sector seems to be in in
free fall so the three of us are always debating China this seems like a good moment to come back
and take a look at what's going on obviously if if China's demand suddenly stops dead at
least some of the pressure uh on global commodity prices comes off and you can see that things like
copper have been falling off a cliff but I guess the question I have is what the heck is going on
in China and what does it imply let's just turn to HR for a second HR you followed China closely
you played a key part in reassessing the U.S view of China as a national security thread what do you
think is going on there and where does it lead if the Chinese economic Miracle is actually over
I want to hear from both of you on this but what I hope we finally do is is is
to no longer believe that uh Xi Jinping will act uh based on the way that that we might
act when confronted with a economic crisis I think it's really clear especially since the
beginning of kovid that the party prioritizes its effort to maintain its exclusive grip on
power even when that leads to nonsensical economic decisions right the that we didn't
mention the Crackdown you know on on the tech sector other sectors of the economy
um the the tutoring uh industry just completely went away uh Healthcare is next on The Chopping
Block potentially but that's all because the party is fearful of losing this exclusive grip
on Power and will prioritize you know it's control it's obsessed with control and you know you know
I think your your point on the the real estate sector is immensely important the people who want
to keep the bottom from falling out of Chinese stocks and bonds keep saying well that's really
compartmentalized it won't be that big of a deal but what I'd love to hear your your
thoughts because it seems to me the way that they've been able to stoke economic growth in
the past is with local governments provincial governments selling land generating capital
and investing that Capital often poorly which results in you know an overproduction uh and and
uh and over stocks uh that then are dumped on the International Market at low prices and they take
a loss but they don't really care because it's kind of a Ponzi scheme you know I mean to me it
looks like a positive scheme from the outside as a as a washed up General looking at this so
hey I think that the time is now I mean one thing I would say is you know another way they've been
able to compensate for it is with the inflow of a a foreign investment dumb money and then also
Venture Capital money that is the scaffolding that holds up their Mercantile estate driven
model maybe if we stop underwriting our own demise you know we might uh we might be able to uh you
know begin to compete more effectively and force you know the Chinese Communist party to take a
different path but I mean these are just some of my thoughts on it but I I want to know how
serious you think it is I think it's serious but I'm not a trained Economist or economic
historian like you guys well let me before we get into the economics again let me just let me
just ask you a very specific geopolitical question do you think an economic crisis
is going to make China more or less aggressive on questions such as Taiwan yeah more aggressive but
but you know this and this and this is because I think Xi Jinping will see a fleeting Widow
of opportunity that if he doesn't act now he's going to lose competitive Advantage you know the
the he's going to realize hey they're not going to Grow Rich before they grow old they can't grow out
of the middle and come trap and then also you know what what a better way to divert the population's
disappointment in not meeting their expectations economically than to stoke jingoistic nationalism
in fact he's already doing it Neil if you saw you know the speech he gave on the Korean War I
think is quite instructive in which he described Mal's decision to intervene in Korea in the war
against American aggression as they call it as as a preemptive war in which Mal delivered one blow
to prevent a hundred and in that speech which has just recently been translated he also then alluded
to Taiwan it wasn't an explicit Connection in terms of a potential invasion of Taiwan but it was
listen and then he told the Chinese people we're going to have to make sacrifices to to achieve
the vision of national Rejuvenation he's preparing them I think for for maybe deprivations Associated
uh with war time I think he's preparing the Chinese people for war and of course we're
focused very much on Taiwan but I think the South China Sea is probably the most likely Flashpoint
at this time where the Chinese the people's Liberation Army Navy and and the maritime
militia and this Coast Guard with with uh vessels that are repainted from navy colors to Coast Coast
Guard colors are becoming much more aggressive let me ask you before again before I go to economics
this way I got to learn for you guys I also see especially with China in trouble politically but
and a long uh grinding war in Ukraine uh with sanctions and material shortage problems uh
we seem to be sort of an axis is forming between China Russia uh Iran uh sad to see uh turkey there
too uh Putin's visit to the Middle East seem to go a whole lot better than our dear leaders fist
bump Adventure uh this is this is particularly bad news for the geopolitical aspect isn't it
yeah you know I I think so I mean I but but I'll tell you this doesn't mean it's over right I mean
you know what cocktail party do you want to go to you know I mean what the one with you
know well the one that I'm like I mean I mean I think we have a much stronger Alliance and and
and and more appeal to those who are sitting on the fence but those sitting on the fence
guess what they get to do they get to play us off against each other right and this is the salon De
refuse gets together and uh you know they they they maybe would like to come to our cocktail
party but they're not allowed so they're making a cocktail party of their own and that one has
vodka in it no they are and I I do think okay this you know this this strategic agreement
that that uh that China signed with uh with Iran there's this the you know Putin's uh recent uh
visit as well I mean all of this is designed to solidify and access you know that that uh that
can challenge uh the the Free World you know and and we don't want to underestimate that I mean
I think that there is a potential for cascading crises you know the the Iranians just they just
announced recently right that that that they are at a nuclear weapons threshold capability in the
nuclear program which they deny ever existed right so so I think that that uh the chances
for example of in Israeli Defense Force strike against Iran nuclear facilities is like 98 you
know it's just a question of timing I think and uh I agree with that I think one of the things
that's really going to be challenging about the next few years is that we could get a crisis in
the Far East we could get a crisis in the Middle East before the crisis in Eastern Europe is even
over uh and this is one reason why I think that that 1970s analogy may come in handy because just
as 1973 in the Middle East was the beginning of a whole series of of geopolitical crises my sense is
that the war in Ukraine is is just the beginning of a succession of crises in different parts of
the world or God forbid Neil you know we've said this before not to overuse it but in third 1939
you know well the the risk of course that we go to something more World War to like is more I think
in the nuclear domain because it's not easy for me to imagine conventional Warfare on the scale
on the scale that we saw in 1939 by 1939 standards what's going on in Ukraine is still really pretty
small scale but we could find ourselves in 1945 if a nuclear weapon were used and it's of course
this problem of nuclear proliferation that is making the world a more and more dangerous place
I keep saying to people who tell me stories about amazingly successful Ukrainian counter-offensives
if there is an amazingly successful Ukrainian counter-offensive that is going to put Putin
back on uh the mode of of rattling his nuclear saber and that's another reason why I don't
think a draw is a very likely outcome but let me bring it back to the China problem because I
think this is really a very a very interesting one if Xi Jinping is under as much pressure as
I think he is then the time Horizon for action over Taiwan may be shorter than the the expert
consensus and you you made this point HR a minute ago that there's a sort of window of opportunity
a window of opportunity when we're focused on Ukraine when weapons that were supposed
to go to Taiwan are going to Ukraine a window of opportunity before we really got uh Taiwan
in a position to defend itself as well as Ukraine did a window of opportunity when we don't really
have a credible War plan for the eventuality of a Chinese Invasion so let me put you on the
spot HR why don't you think this could happen what kind of time frame seems realistic for the
next Taiwan crisis or if you prefer the South China Sea crisis that you talked about well you
know I think it's after the Taiwanese election in 2024 and the reason I think that is because
after the Communist Party Congress in October November when Xi Jinping will become you know
leader for for Life chairman for life and the new you know the next Mao Zedong um he will feel the
pressure to make good on the promises he's made he says you know Taiwan is is not a is not a pro
a problem that can be deferred it's something that has to be resolved in this generation not
on future generations and and uh but I think he will try to do everything he can short
of an invasion between the the Communist Party Congress and 2024. he'll try to buy off Elites
he'll try to he'll launch a major information Warfare campaign who use economic coercion he'll
try to get the kmt into Power because ultimately he'll make one last-ditch effort to get annexation
By Invitation well you know he's not going to get it right he's not going to get it because
the Taiwanese have learned vicariously because of the fate of Hong Kong but also the fate of
Ukraine as well uh and I think the the will and if you've seen the polls in Taiwan uh the the
will of the Taiwanese people seem to be going way up especially among the young population
so it's a race Neil I think to to to establish deterrence by denial you know by 2024 because
I think the period of Maximum danger is after uh the elections in Taiwan in 2024. thank you
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