What will Trump's return mean for Ukraine, Gaza, and the economy?

What will Donald Trump's 2nd term as US president mean for the NATO-Russia proxy war in Ukraine and Israel's war on Gaza? How will tariffs affect the economy? Radhika Desai and Anatol Lieven discuss.

By Radhika Desai and Anatol Lieven

What will Donald Trump's second term as US president mean for the NATO-Russia proxy war in Ukraine and Israel's war on Gaza? How will his tariffs affect the economy?

In this episode of Geopolitical Economy Hour, host Radhika Desai is joined by Anatol Lieven, director of the Eurasia Program at the Quincy Institute for Responsible Statecraft.

You can find more episodes of Geopolitical Economy Hour here.

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Intro teaser:

RADHIKA DESAI: President-elect Trump has been treating the world to a shock-and-awe scale torrent of economic threats. He's threatened, of course, to impose tariffs on all and sundry and to deport 11 million people from the United States. He's threatened to buy Greenland. He's threatened to take back the Panama Canal, and he's also threatened to make Canada the 51st state. And I did a quick back-of-the-envelope calculation that this would more than triple the U.S. landmass.

ANATOL LIEVEN: I think it would be a mistake to think of Trump as a tremendously clear and consistent thinker. Yeah, I'm putting that kindly. He is extremely impulsive, and his impulses are towards American power.

Full show:

RADHIKA DESAI: Hello and welcome to the 39th Geopolitical Economy Hour, and happy new year to everyone. As you know, this is the show that discusses the fast-changing political and geopolitical economy of our time. In the United States, the liminal period between the November election and the January 20 inauguration has already been, to say the least, very turbulent. And it's not over yet.

President Biden has been doing everything in his power to tie the hands of the incoming Trump administration on as many policy fronts as possible. He makes sure that all the money allocated under his signature economic legislations and allocated to Ukraine gets spent. He puts limits on Arctic drilling. He pardons Hunter Biden after promising not to do so.

Meanwhile, President-elect Trump has been treating the world to a shock-and-awe scale torrent of economic threats. He's threatened, of course, to impose tariffs on all and sundry and to deport 11 million people from the United States. He's threatened to buy Greenland. He threatened to take back the Panama Canal, and he's also threatened to make Canada the 51st state. And I did a quick back-of-the-envelope calculation that this would more than triple the U.S. landmass.

These threats have been punctuated by appointments to the 4,000-odd positions, which Trump is entitled to fill, and no small number of them have drawn gasps from the liberal establishment: the world's richest man as the deregulatory-in-chief, an anti-vaxxer as health secretary, a hedge fund manager at the Treasury, a wrestling executive as education secretary, and a militarist TV show host as defense secretary.

But for all the shock expressed by leading Democrats on these threats and appointments, what's the real difference between the Biden Democrats and the Trump Republicans? What can we expect from Trump? In what way will his administration be really different from Biden’s, given the continuities we saw between Trump Mark One and Biden?

This is a good question. Will there actually be less war, as Trump has promised on many occasions? Will Trump upend the post-Bretton Woods World Order?

These things are hard to judge these days. It used to be said that the United States is really a one-party state, but with typical American extravagance, it has two of them. In recent years, however, we have been treated to a barrage of analysis of the alleged populism of the Trump administration, which is then contrasted very sharply with the allegedly more normal politics of, and sane politics of the Biden Democrats.

There is also talk of civil war within the capitalist class, between a house-trained faction, which is at home with taxes and regulation and democracy and supports the Biden Democrats, and a warlord faction, which we are told is for more deregulation, even lower taxes, and even less democracy and they support Trump. Some have also argued that these latter folks, a counter elite if they are also called. They will use their power in Washington to usher in a new post-neoliberal order. How credible is all this?

With me to discuss all this is Anatol Lieven. Anatol is director of the Eurasia Program at the Quincy Institute for Responsible Statecraft and has also been a professor at King’s College London. He has also been a journalist and author of many award-winning books on parts of the world as different from one another as the Baltic Republics and Pakistan. And, of course, he also takes a particular interest in Ukraine and Russia.

So, welcome, Anatol, it’s great to have you here.

ANATOL LIEVEN: Hello. It’s very nice to be with you. Thank you.

RADHIKA DESAI: Anatol, you have observed and studied so many parts of the world, and you are now based in Washington, DC, in your work for the Quincy Institute. You have, for the past many years, I believe the Institute was set up in 2019, been recommending a less warlike, less militaristic foreign policy on the part of the U.S., urging successive governments to engage in more responsible statecraft.

Perhaps you can start off our discussion by talking about whether you have any hopes of that from the Trump administration, given that Trump’s choice of foreign secretary is Marco Rubio and of defense secretary is Pete Hegseth. What do you think this portends for U.S. foreign policy? Please start us off.

ANATOL LIEVEN: Thank you. Well, Trump, I think, will make an attempt to reach a peace agreement in Ukraine. That is perhaps the one good thing that can be said about him in international affairs. That’s not to say that he will succeed because what his designated chief negotiator, General Kellogg, has said would, in fact, rule out an agreement with Russia. But at least, unlike the Biden administration, they do want peace, and they are anxious to talk. So, there is some hope there. But, of course, this desire for peace in Ukraine is largely driven by a desire to concentrate resources against China.

And, of course, in the Middle East, you know, terrible as the Biden administration's record has been on it, it can always get worse. And, you know, a great deal of what Trump and his people have been saying would, in fact, make it worse. There is obviously the potential now for a full-scale Israeli and American attack on Iran. Now, that's not certain, however, because, on the other hand, Trump and, you know, others of his leading followers, too, have recognized that after Iraq and Afghanistan and the disaster of Libya, the willingness of the American public to engage in more overseas interventions has diminished hugely. And, you know, they are capable of reading the opinion polls on that.

And it should be remembered that in his first term, you know, Trump went to the edge on a couple of issues, but he always backed away in the end. He does seem to have an awareness—which has, I have to say, evaded not just Republicans but also Democrats over the past generation—of, you know, the riskiness and unpredictability of war. So that's, you know, obviously our hope.

But you know his capacity for economic disruption through a full-scale tariff war on not just against China but also against Europe, Canada, and Mexico is also extremely great. It may, however, not come to that because what we've also seen on the immigration issue above all, but this seems to be a bit more widely true, is that the capitalist, the big capitalist, if you like, wild capitalists, but still self-interested as they all are, wing of the Republican Party, but also of Trump’s own personal support in the form of [Elon] Musk and [Vivek] Ramaswami, have started pushing back very strongly against the MAGA populist Republican side.

Now, as I say, this has come out first in the form of, you know, support for continuation of the existing system of H-1B visas. But I think it’s quite possible to imagine that when it comes to a full-scale tariff war, American capitalism will manage to enforce certain limits because of the damage that they can see this doing. But also, of course, tariffs without an industrial policy, which the Trump team seems entirely to lack and would not build up American industry, and it would of course greatly increase consumer prices for the American public.

Now, that is not a recipe for winning the midterm elections or the next presidential elections. So, that I think there is a possibility that, you know, Trump’s bark may prove worse than his bite.

But, I mean, on the other hand, of course, this would also mean that the positive aspects of the populist agenda, as represented to some extent—only, of course, to some extent—but still, you know, by JD Vance in terms of support for unions, in terms of concentration on, you know, the need to defend wages and living standards, the opposition to wild capitalism. The, you know, crossover on certain issues with the Bernie Sanders wing of the Democratic Party; what this means is that that would also fly out of.

Now, if the Democrats were wise, they would use this as an opportunity then actually to adopt a truly, you know, left-wing. I mean, we’re not talking, you know, serious radicalism here. We’re talking about New Deal policies, which, of course, ever since the 1990s before, the Democrats have completely abandoned.

That’s where the Democrats should go in response to this, but once again, I mean, the entrenched power of, you know, American capitalism, I mean, coupled, I have to say, with the way in which so much of the so-called left in America has been willing, you know, to allow themselves to be diverted into what many of us traditional social democrats would regard as dreadful, you know, distractions and side issues, does not give me great hope in that regard. I hope I’m wrong.

RADHIKA DESAI: Yeah, I mean, this is, again there are so many points here, and it will, you know, certainly take us through the next hour that we have. But let me just begin by asking you whether you see any coherent policy vis-a-vis China. I mean, you said that, you know, the overriding goal of Trump’s foreign policy will be somehow to target China. And we know that a part of the reason that he has been targeting China has, of course, been the populist promises that he has made to the people, you know, in order to essentially deflect attention from the fact that the misery of the people actually comes from the pursuit of neoliberal policies. Instead of fingering neoliberal policies, he’s fingering China, just as Boris Johnson in his time fingered the European Union, which had really nothing to do with, you know, Britain’s neoliberal policies were all homegrown.

But anyway, to come back to the Trump thing. So, on the one hand, he wants to do that. On the other hand, he clearly sees China’s rise as a threat to American power. And thus, the other thing as well. You know, if you could comment on exactly where Trump stands on American “hegemony.” I put it in heavy quotation marks because I personally think there never was any such thing. Not only that, you know, not that it once was and now is no longer or is declining but never was. But let’s leave that aside. U.S. power is definitely declining. Chinese power is rising. So, between the populist promises, between the threat represented by China to American power, and of course, the investment many American CEOs have in China, and then the threat many other American CEOs feel from China. So, where would you see the... what’s driving Trump’s China policy?

ANATOL LIEVEN: Well, I’m afraid, and I think this is the greatest risk, that when it comes to China, the U.S. foreign and security establishment, backed of course by the military-industrial complex, which is a particular, but of course, immensely powerful section of American capitalism and, you know, also of course, does employ a huge number of skilled American workers on. But here we’re talking about what is said to have been Eisenhower’s original draft when he made that famous speech. He talked about the military-industrial-academic complex.

RADHIKA DESAI: Interesting.

ANATOL LIEVEN: And here you have at bottom, I mean... I have to say, when it comes to actual people within the establishment, that is to say, you know, people who have a good chance and certainly want to be, you know, Chief Assistant, Deputy to the Deputy Chief Assistant for International Dog Washing in the next administration, they are united in hostility to China. And that is because they are united in determination to maintain what they at least see as a universal U.S. primacy across the whole face of the planet and not to accept any rival for serious influence anywhere in the world. I mean, if you don’t believe that, you are not a member of the U.S. establishment. Just as, you know, if you don’t believe that Russia must be a great power in a multipolar world, you’re not a member of the Russian establishment. You know, if you don’t believe that China has the right to an equal say with America on global issues, you’re not a member of the Chinese establishment. You won’t last long. So here, you know, Trump is capable of orchestrating a much wider consensus. And, you know, it’s striking that even somebody like John Mearsheimer, who has been bitterly critical of the U.S. establishment when it comes to policy towards Russia, when it comes to policy towards Israel, also sees China as a tremendous threat, which must be contained. Now, the differences are to a degree tactical, and perhaps not even that great, because after all, Biden has pursued a pretty tough sanctions policy and tariff policy towards China. The pivot towards, the pivot to Asia, which basically, you know, containment of China by a very transparent other name, started under the Obama administration.

On the Pentagon, which is capable of being sometimes quite restrained and sensible when it comes to Russia and to a degree, the Middle East, is absolutely committed to arming against China, and support for Taiwan is rapidly becoming a completely bipartisan issue. So, I don’t know in the end that Trump will necessarily be so very different. I’m not saying that with any great confidence, and my worries are immense. But it must also be said, you know, I mean, the Biden administration and the Obama administration, in my view, adopted extremely foolish and dangerous policies towards China as well. But there is also the hope that, you know, in the end, under Biden, there was tremendous pressure to do things. I mean, when the Ukraine war broke out, you had a large part of the U.S. establishment and media baying for what they called a no-fly zone over Ukraine, which meant sending the American Air Force in to fight Russia, which meant war with Russia.

But in the end, you know, they did their scenario planning, and a lot of those scenarios ended up with nuclear annihilation. And in the end, you know, they backed off from that, and they have adopted support for Ukraine, which has, at the same time, been a good deal more cautious. My hope is that there are enough people in the security establishment who do realize, well, two things. You know, the first is that... I've been urging people—and it is to a degree recognized now within the Pentagon—that what has happened to the Russian Black Sea fleet has terrifying implications for the American Navy in the Western Pacific. Because everybody assumed before the war that the Russians would simply dominate the Black Sea. Ukraine has no Navy at all, basically. And what it did have was wiped out in the first few days. Instead, the Ukrainians have comprehensively defeated the Russian Navy with land-based drones and missiles. Now, I think what that means, you know, when it comes to the United States defending Taiwan, it also, of course, it does mean that the Chinese would have to think very, very hard about an invasion of Taiwan. But I don’t think that, in a real crisis, I don’t think they would invade Taiwan. I think they would blockade Taiwan, and I don’t think that the American Navy can break such a blockade, at which point America would be forced to confront a choice between defeat and going nuclear. And let’s hope, and let’s hope, that there are enough people, you know, in Washington who see that and will, in fact, back away.

RADHIKA DESAI: Again fascinating. And I want to come back to Russia in particular, but let’s stay with China for a while. I mean, you know, it seems to me that on the one hand, you know, in the first Trump administration, Trump did not, you know, I mean, he initially began by trying to do a deal with China. He began by trying to come up with a trade deal with China and so on. And I think that, I mean, would you say that Trump is more open to that? Because, of course, on the other hand, I would say that what we have seen in the United States, going not just back to Obama but even to George Bush Jr., who imposed first the trade and aluminum tariffs on China.

And I think basically, after China joined the WTO, within a few years of that, the Americans were quite aware that China’s economic power was rising, that China was not going to be satisfied with being sort of the producer of low-tech, cheap goods for the U.S. market, that it had other intentions, et cetera. So, I would say that explains a lot of what has been happening. You have seen a sort of rising tempo of anti-Chinese sentiment with every succeeding administration, and the Biden administration, rather than drawing back from it, actually intensified the economic war, the technological war against China.

But exactly, you know, whether they would dare to have a war with China... of course, as far as the nuclear option is concerned. You know, on the one hand, the United States is quite loathe to commit troops, particularly after Vietnam, and then, you know, they have tried to fight sort of what I call capital-intensive wars with relatively fewer boots on the ground and therefore not so labor-intensive, etc. So, you know, will they be reluctant to do that? As far as the nuclear option is concerned, I always feel that the U.S. is the only country in the world that has ever used nuclear weapons, and that too many would argue without justification. So, we can’t discount that possibility, but how close will they come to war at all? And who will be driving it? Will it be the military-industrial establishment? I mean, and how coherent is it, etc.?

ANATOL LIEVEN: Well, the military-industrial establishment needs tension in order to drive its profits. Well, its very existence, to a degree. It doesn’t necessarily need war.

RADHIKA DESAI: Yes, exactly.

ANATOL LIEVEN: War can, you know, some wars can be very good for business. But of course, some wars, especially if you lose them, especially if it turns into a nuclear war, it’s going to be very bad for business indeed. I mean, there was a nice phrase about the U.S. generals under Clinton in the 1990s that they were tremendously aggressive, but only about their budget. You know, actually, they really didn’t want to fight anywhere very much. And I think Iraq and Afghanistan have reinforced that. But of course, here, the risk is not, you know, I mean, of course the... I mean it’s not just the… I mean, the U.S. and the British, for that matter, I can't speak for the Canadians, you know, security establishment in general, go on and on and on and on about the origins of the Second World War and appeasement and Munich.

But a much more worrying parallel is, of course, with the origins of the First World War, on which nobody actually wanted. I mean, nobody set out with that in mind. Some of them, I mean leading members of the Russian establishment, were absolutely convinced this was indeed going to be a disaster, which it was. But they, through a whole set of steps, and their entire underlying ideology, of course, of nationalism and national power and imperialism, trapped themselves, the title of the famous book, "The Sleepwalkers," trapped themselves onto a path, path dependency with the academic phrase, in which, when it came down to it in July, August 1914, they eventually felt they had no choice but to fight, to go to war, or at least took to run a very high risk of war. And then, of course, the other side responded accordingly, and the result was disaster.

So, it is entirely possible to imagine a situation in which, without, you know, recognizing all the risks and not actually wanting a war, through a whole set of reciprocal steps, China and Russia do indeed, sorry China and the U.S. do indeed go, end up going to war. But as I say, you know, in the case of Russia… Look, I mean yes, America dropped nuclear bombs on Hiroshima and Nagasaki. But the Japanese did not have nuclear bombs to drop in return. If they had, I don't think the Americans would have done it. And during the Cold War, you know, in the last resort, the fear of nuclear annihilation, I mean, my God, we came pretty close a whole number of times. But in the end, we just, just, managed to pull back. So, my hope is that we will do so.

RADHIKA DESAI: As you know, Sergey Karaganov says that the United States has lost that sense of dread of nuclear war. And people like Daniel Ellsberg and others have documented how many times the United States actually contemplated the use of these weapons, even after the Soviet Union had acquired the bomb, the relevant delivery capabilities, and so on. So, yeah, you can't really put that out of the realm of possibility. But I have another…

ANATOL LIEVEN: Oh, not at all. I mean, I'm not. I believe we are not complacent on this subject.

RADHIKA DESAI: Exactly.

ANATOL LIEVEN: Indeed, you know, so much of my work, and that of my institute, is precisely dedicated to warning of this danger and trying to avert it.

RADHIKA DESAI: I mean, this is the thing, you know, the whole plea for responsible statecraft on the part of the United States seems to practically require a revolution in the United States in the following sense. You know, earlier you were saying that, you know, you wouldn't be part of the Chinese establishment if you didn't think that China should have its place as a major power in the world, and nor of the Russian establishment if you didn't think Russia should have an equivalent position. But of course, the Americans don't want…

ANATOL LIEVEN: Or the Indians, by the way.

RADHIKA DESAI: The Americans are distinguished by the fact that they don't want their due place in the world. They want overwhelming dominance. That's what they have fought for through most of the 20th century, and, well, since the beginning of the 20th century. And, you know, while without having succeeded, they have had the power to impose a lot of disruption, war, violence, etc., on the world in the process of achieving that. And I think that... it doesn’t seem to me... and that kind of brings us back to where you think Trump really relates to this idea of U.S. domination, because in many ways his MAGA project is actually, according to many people within the U.S. establishment, very isolationist. So, exactly how does MAGA relate to U.S. world power?

ANATOL LIEVEN: Well, I think one thing to keep in mind is... and I'm not saying that Trump is very special in this regard. It's probably true of most human beings, and indeed, you know, so much utterly confused thinking on the Democrat side as well. But I think it would be a mistake to think of Trump as a tremendously clear and consistent thinker. Yeah, I'm putting that kindly. He is extremely impulsive, and his impulses are towards American power. Now, he may well have a... I mean, a different view of American power. Um, it's more overtly, but only more overt people here than that of the Democrats. I mean, you know, if you look at what the U.S. has actually done under democratic administrations, and you know, when Biden first came to office, he emphasized, you know, American multilateralism, and America will return to the international table. But he said America will return to the head of the table, not to a place at the table, to the head of the table.

RADHIKA DESAI: Exactly, yes.

ANATOL LIEVEN: And there was not going to be any discussion or compromise on where America was going to sit. But I think one possibility, which of course, Canada has to worry about, and Mexico has to worry about, is that... for more than 100 years... well, at least depending on what date you take before America began to become a world power, the United States, of course, with the Monroe Doctrine, was absolutely committed to unconditional primacy in its own neighborhood. And, you know, in the 20s and 30s, after the First World War, the Americans did actually retire into something like isolationism and were far less engaged, certainly in Europe. But this was also in the era when America intervened several times in Central America and the Caribbean. And Trump clearly does have this idea that whatever happens elsewhere in the world, America must absolutely dominate its own hemisphere.

Now, this is to a degree actually a bit different from the Democrats and the foreign security establishment in general, because one of the most striking things—surprising things, in many ways—about the Washington establishment is how little attention it pays to Central America and the Caribbean. And it's… the only times it has done so over the past two generations were during the Cold War, when it seemed that Soviet communism was a real threat. Now, it could be that, you know, the growth of Chinese trade and investment will also energize them to pay more attention to their own backyard. But here, of course, Trump does have a... I mean, not a viable vision. I mean, you know, in terms of annexing Canada, one hopes, or buying Greenland, but certainly a notion of, you know, America as basically the dominant power of the Western Hemisphere. And there are very dangerous aspects for that because, while the annexation of Canada or the purchase of Greenland are not rational projects, some form of military intervention in Mexico is, and that would be, of course, unutterably disastrous.

RADHIKA DESAI: Hmm. I would think that they would come up against a lot of resistance but let me take that up and sort of direct in a different direction. This whole point you're making about Latin America and Central America, I mean, as you know, recently the… I was in Brazil, actually, that day when this happened, and I had no idea this was in the works. But suddenly we heard that the European-Mercosur, or the EU-Mercosur trade deal had just been passed. And it's not, you see, I think that there are a number of things happening at the same time, and they're all connected with the diminution of U.S. power. So, on the one hand, you know, the whole world has not gone along with the U.S. on sanctions and the war with Ukraine and so on. The allies, the Europeans, although the Biden administration hit a sort of sweet spot when so many European capitals had governments which were very sympathetic to his project, even at great electoral cost to themselves, which they are now having to face. But even though that was the case, actually the electoral cost is now catching up with these European capitals, and they are going to have to rethink their strategies.

Plus, Trump has come to power, demanding all sorts of things: that they spend more, that, you know, we are going to impose tariffs and so on. All of this will only further encourage the Europeans, the Chinese, the rest of the world, I mean, everybody, to sit down and talk with one another about how they can withstand any shock, trade shock, coming from the United States. And the more they do so, the less power the Americans will have. So, you know, bracketing the discussion we had about military power, this is one issue that U.S. power is limited. I was reading somewhere, I was just writing an article, as you know, and I was reading about it, and one statistic that I came up with is that the United States today accounts for less than 16%, like 15.9%, of world imports. So, you know, even if Trump were to carry out his maximal tariff threats, OK, Canada and Mexico have a really difficult problem. But most of the rest of the world will endure some pain, but then they will, you know, get up, dust themselves off, and proceed in a different direction, away from the United States. So that's one thing.

And quickly, one other thing, because you are such an expert on foreign affairs, I mean, ever since the beginning of the Ukraine war, since I really started paying attention to these things, it has... I've become aware... that for all the money that the U.S. spends on its military— and, you know, this figure is always some sort of astronomic figure, whether it's as big as the next dozen states combined or two dozen states combined, depending on the year you're looking at. But the fact is, it spends a lot of money on its military, and despite that, it seems to be behind the curve on even technological development. So, all the money the Americans are putting into it is not capable of producing cutting-edge technological weapons. The Chinese and the Russians have hypersonic missiles, and the U.S. still doesn't. Moreover, all this money is not leading to the adequate quantitative production of the weapons needed to fight even a proxy war like Ukraine, let alone if the U.S. were to instigate a war with even Iran, let alone China. Where would they be? So, if you could comment on those things, yeah.

ANATOL LIEVEN: Well, here you really… sorry I just have…

RADHIKA DESAI: Sure.

ANATOL LIEVEN: You really come back to the nature of the military-industrial complex and, to some extent, American capitalism in general. Because what we have seen over the past couple of generations, is a tremendous concentration and monopolization of the major military-industrial companies. I mean to a great extent, there are now only three, and of course, this leads to exactly what could have been predicted, which is, price rigging. And not just price rigging, but also, not quite dictation, but tremendous influence on the kinds of weapons that the United States buys. Which are of course, I mean if you want to look at why, amazingly, the United States has not been able to produce nearly enough 155mm shells for Ukraine, while producing very small numbers of F35 aircraft, aircraft carriers, and destroyers which can’t fight in Ukraine—the answer is quite simple. Shells are cheap.

RADHIKA DESAI: Yes.

ANATOL LIEVEN: They are not profitable, whereas enormously expensive high-tech platforms are very profitable indeed. And of course, the absolutely incestuous nexus between retired generals serving in the military-industrial complex, the huge profits, just absolutely entrenches that. The U.S. is far behind in the production of drones. Drones are cheap. But, when it comes to the US Navy, there is also a reason for this. And the reason… this really comes back to the determination to maintain U.S. global primacy.

If you want to maintain global primacy on the basis of a country, I don’t know what proportion of the world surface, but anyway, very limited obviously on the North American continent, you need ships that can sail long distances with huge range without refueling. You don’t need small inshore boats. And of course, once again it helps that the military-industrial complex loves producing destroyers, which aren't destroyers in the old sense anymore—they’re more like battle cruisers in terms of size. But of course, that puts the U.S. at a colossal disadvantage when it comes to a potential war with China. But also, I mean the British are even worse off because we can afford it. You talk to British military experts about our aircraft carriers and where could we use them. Well, really only for intervention in the Middle East alongside America, or rather behind America, and against China. But when you say that… on the other hand, you have just been saying that Russia is the real threat; how do you use it against Russia? Well basically, we can’t because it would be insane to send them into the Baltic or the Black Sea, given what’s happened to Russians. They’d be sunk on the spot.

But there's also a wider issue at play with the military-industrial complex and its love of high-tech, expensive weaponry is concerned, and that is, that ever since Reagan, and totally unlike, by the way, the Republican administrations of Eisenhower and Nixon, let alone Roosevelt, Truman, Kennedy, Johnson, um, has absolutely abandoned the idea of an industrial policy to the extent that for decades you couldn't even talk about it. The, you know, that that, you know, the U.S. needed to have a degree of planned industrial development, and of course, under Clinton in the 90s, the Democrats went in exactly the same direction as well. Yet at the same time, there always remained an understanding that you couldn't simply allow your whole technological base to disappear, and that also, you know, there were an awful lot of… you needed to maintain skilled jobs. So, U.S. military spending became the U.S. industrial plan that could not speak its name. And that of course, vastly increased its power because in so many areas, the only way in which, you know, the U.S. state could foster U.S. technology at all was through weapons spending. Which, however, at the same time, particularly in circumstances of monopoly capital, turned out to be the most wasteful, the most corrupt, the most inefficient way of promoting industrial development that could easily be imagined.

RADHIKA DESAI: Now, I wanted to come back. I want to end our conversation by coming back to Russia, but I just want to add, you know, what you are saying is very interesting from a number of angles. So, if you look at, you know, obviously the United States produced a lot of weapons during the Second World War. But there was a completely different scenario in which the state essentially ran the economy. It told capitalists what they were going to produce and what price they were going to get, and all those sorts of things. But I would say since then, probably this was something that Eisenhower well knew, but has gotten a lot worse since, is that essentially, not only— I mean, Fred Block, you probably know his work, The Hidden Industrial Estate or Hidden Industrial Policy, I forget what the exact title is. But, um, he says, you know, that the military spending has been a hidden industrial policy. And that argument has been made by others, but also then contested by Seymour Melman and others saying, you know, people say, well, you know, we get so many spin-offs from military spending, R&D spending. So, it's perfectly OK to do this, but of course, people point out that if you had a straightforward civilian industrial policy, you would get even better technological development and something that happens by chance and so on.

But the point is, we've now come to the stage where it's not even such an industrial policy. Rather, industrial policy has become a way, or a name, for giving subsidies to big corporations. Because you can't have industrial policy unless the state has somehow acquired the authority to tell powerful capitalists and their corporations what they're going to do and what kind of results they're going to get. And that's how—that's one thing. And the second thing is really, you know, this whole thing, what you're pointing out about drones and how these really big weapons are now seeming extremely vulnerable to these new sorts of military technologies. It really reminds you of, you know, why the U.S. ultimately lost the Vietnam War is because it was essentially fighting a people that could not countenance defeat. And they were morally committed, politically committed to winning, and so. So, I think that we're looking at a different version of that. You know, Iran or Turkey or whatever, they have an investment in their own security, which is far greater than America's investment is in world domination. And so, in the end, they're going to win, aren't they? I mean, yeah.

ANATOL LIEVEN: Well, and from that point of view, though, it depends on who you're talking about. Because the Chinese and Russians can win all or at least compete successfully because they also have very strong industrial and technological bases. And the Vietnamese, I mean, like, I mean the Algerians, so many people in the last years of colonialism can win if the imperial power has to or chooses to fight them on their own ground. But I think you know what is happening in the Middle East today has very sinister implications and will, I believe, drive more and more countries to develop nuclear weapons because, of course, apart from Gaza and the immediate areas of southern Lebanon. The Israelis, well, even Gaza of course, have not relied on troops on the ground. They have relied on their ability to bombard other places, and those countries have not been able, or those movements have not been able to resist that. And of course, the growth of unmanned vehicles and missiles makes that even easier to a quite a terrifying degree in many ways because, you know, in the past, you did have to reckon — I mean, Yugoslavia Notwithstanding, you know, with North Vietnam, against a country with serious air defenses; you were going to lose a fair of proportion of your planes and therefore your pilots. There wasn't that the planes mattered so much, you know, the loss of pilots certainly did. Now you don't even have to risk that. You can potentially blast the Iranian economy to pieces from a safe distance.

RADHIKA DESAI: But doesn't that make Israel equally vulnerable to the use of the same technologies against it? Like, didn’t I read the other day that there was a Houthi missile that made its way into Israel and that the Iranian shower of weapons on Israel a few months ago was precisely designed to detect exactly how the so-called Iron Dome works and so on? I mean, don't you think Israel is equally vulnerable to the use of these weapons?

ANATOL LIEVEN: Only if China and Russia decide massively to arm Iran, which so far, they have backed off from doing because, actually, contrary to American propaganda, they don’t want more war in the Middle East.

RADHIKA DESAI: No, of course not. They don't, yes.

ANATOL LIEVEN: For their own reasons. But I mean, you know, if you look at what Israel has been able to do to Lebanon and Hezbollah, and what Iran has been able to do in return, you know, there's no parallel. So, from that score, America and its allies still have a great advantage. But once again, you're dealing with countries that have much lower technological and economic level. But the other point I think should be made about the failure of the military-industrial complex, and this is especially dramatic in the case of Britain, and Europe, but it's becoming more visibly so in the case of the U.S. as well, is that it is very hard, if not impossible, in the long run, to maintain a successful military-industrial complex without a wider industry. A key part of the problem that so many countries, including the U.S., have had recently is producing warships is that the U.S. and Britain still have military shipbuilding industries, but they have no commercial shipbuilding industry? It's gone. It's gone to China and, to some extent, to Korea and other countries as well. And so, there’s just not that pool of skill, of engineering skill, of trained workers to sustain the military aspect of that, hence, British aircraft carriers go to sea, and their propellers fall off.

Now, that, however, brings us back to Trump's demand that Europe vastly increase its military spending. Because Europe, I mean, there is a belief in Europe now, and a very strong one, that Europe must, over time, increase its military spending. But certainly, in the short term, and probably in the long term, Europe just does not have the military industries to produce this stuff itself. So, where’s it going to get all these new weapons? It’s going to buy them from America, just as, you know, limiting imports of energy from Russia, where is European buying it instead, the United States. Now, you know, you were talking about how, you know, the backlash in Europe, that I think, is going to be one of the defining issues in the next few years, as, you know, more and more European publics, you know, turn against the costs of supporting the U.S empire.

But on the other hand, of course, within Europe, within the security establishment, to a quite extraordinary degree—if you travel through European think tanks—they are absolutely unconditionally... I mean, this has long been true of Britain, but now it’s true of Germany, and even remarkably, France and Italy. It’s whatever the public thinks. And by the way, these think tanks express overt contempt for the publics and democracies, but for security establishments. It’s more than slavishly, they’re almost organically subservient to the United States and committed to, you know, to U.S. universal power. And so, you know, we are looking at, we’re already seeing colossal political battles coming within Europe.

RADHIKA DESAI: Coming, and that only underlines the point that you were making. I didn’t know that Eisenhower originally wanted to talk about the military-industrial, well, and academic complex, because I think that’s exactly what you’ve got in Europe right now—this Atlanticist consensus that exists only among them. But, you know, you will more and more hear... I mean, the academic establishment can be discredited very quickly if, you know, everything that it’s been proclaiming, asserting, assuming comes a cropper. And we are looking at a point at which, I mean, you know, I just don’t, you know… what will happen in the next German election, will be very interesting because, of course, Germany has really fallen most steeply over the past two to almost three years now. Uh, so, you know, maybe if you can reflect and particularly, you know, take Germany and talk about what really you think has happened. Why would a government agree to cut off the very branch, the energy branch on which its economy is sitting? Its just bizarre. But also, how do you think this will all feed into whatever sort of resolution we might see to the Ukraine conflict?

ANATOL LIEVEN: Well, I mean, if it were only think tanks and academia, then yes, they could be discredited. But you have to remember that this extends across the dominant swathes of the media as well. Then of course, too, so much of the left, with the German Greens absolutely exemplifying this, really fell for the humanitarian intervention. Business, which depends totally on American power. Then, of course, you have the growing power within Europe of the East Europeans, some of whom—not all—but, you know, certainly the Poles and Baltics, who, for historical reasons, are pathologically hostile to Russia. As a result, of course, they are unconditionally pro-American in ways which has bizarre results, such as, you know, Lithuania leading the charge in trying to limit Chinese investment in Europe. Now, how, for God's sake, does hostility to China serve the interests of Lithuania? Well, it does, if you believe that your security absolutely depends on serving the United States. Bizarrely, of course, the more people are afraid of U.S. isolationism. I mean, in any kind of logical world, that should mean, "Well, we better think much more closely about getting on with our immediate neighbors, who will remain long after America's gone home," namely, Belarus and Russia. But no, it actually means that they cling more and more and more, hysterically, to the United States.

RADHIKA DESAI: So, I think the operative word there was "hysterical." I think they can only do so by completely losing connection with any realistic assessment of the reality.

ANATOL LIEVEN: Entirely agree, but I'm... well, I was about to say, whoever said that human beings were rational. Unfortunately, of course, modern civilization, to a degree, is built on the belief that human beings are basically rational, which could well be, and to a great extent, the fundamental error. Alas!

RADHIKA DESAI: But I think irrational human beings, and even societies, will soon meet their end in the end.

ANATOL LIEVEN: Well, yes, indeed. But, I mean, you know, Europe went mad to, I mean, large parts of Europe went mad in the 1930s. And yes, they met their end, but they dragged everybody else down with them. And that is my fear. You know, the American Empire is a colossally powerful force, you know, backed not just by military and financial power, but also by huge ideological conviction and nationalism and self-satisfaction, which has totally colonized large political and intellectual sections of Europe as well. That is not an imperial system that is going to go quietly.

RADHIKA DESAI: Correct, it will... Well, it has neither existed quietly nor will it go quietly unless the American people themselves say we need different leadership, which, you know, they have also paid the cost—the very serious costs—of deindustrialization, financialization, inequality, declining social services. I mean, the whole across the board. All this growth that we are told, you know, the American economy is growing better than its rivals. Well, first of all, it's still not better than China, and it's all, you know, as a friend of mine and I put it once in a conversation, it's empty growth. It's financial growth. It's not growth that produces more goods and services that we can use, but only more and more profits for a small number of people, which essentially transfers power toward a small number of people.

But anyway, I mean, on that note, I will simply say again that, you know, my contention is that U.S. power is heavily exaggerated, and more so today than ever. And yes, of course, I completely agree that the elites of the European countries have gone collectively mad, but that doesn't mean that they will be allowed to stay in power for very long. You see, this is the change that's coming. And then the question will become, where will the conversation in Europe go? It’ll be really interesting. You know, I think it has to take the direction of, as you said, Europeans have to, I mean, Europe cannot be secure or prosperous without good relations with Russia. They don’t have to love the Russians, but they have to learn to live next to them in a peaceable fashion. And I would say that if they even began there, they would find lots to cooperate with the Russians about. And of course, they are not going to be able to do for very long without China. I mean, that's partly, as far as China is concerned, even the American ruling class is, you know, I mean, if the best possibility of no war with China actually exists in the divisions within the American establishment over what to do with China because a reasonable number of very powerful CEOs are invested in a relationship with China. Elon Musk must have his relationship with China.

So anyway, but maybe if you would wind our conversation down with maybe saying a few things about how you think... What is the best possible peace that we will see in Ukraine at this point once Trump comes to power? I mean, what do you think he’ll do, and what are the possibilities that you can see?

ANATOL LIEVEN: Well, I think the Trump administration will be prepared basically to have a ceasefire, which leaves the present areas occupied by Russia in Russian hands. That’s partly because the Pentagon is telling them now that Ukraine has no chance of reconquering these areas by force. And the Trump administration is clearly not interested in the further expansion of NATO, which goes completely against all its fundamental attitudes. So, on those two issues, I think it will be prepared to compromise. But the question is, I mean, does it understand that other issues are equally unacceptable to the Russians? Namely, this idea that has come from Kellogg, actually, and from people in the Trump team, of a bigger, essentially European army as part of a peace settlement to guarantee Ukraine’s security. That is just as unacceptable to Moscow as NATO membership itself.

But then there is also, of course, the question of just how much the Russians will demand because there is one Russian demand in particular, which is that Ukraine withdraw from parts of the four provinces that Russia claims to have annexed, but parts that Ukraine still holds. Well, that’s a nonstarter. The Ukrainians will not do that. I mean, the only possible basis for a peace settlement is essentially you stop the war where the present front lines run. And now I have been told by members of the Russian establishment that this is an initial bargaining counter, and that in fact, you know, if it got what it wanted on NATO expansion and aspects of military limitation, Russia would compromise on that.

RADHIKA DESAI: Compromise on what exactly? Compromise on allowing parts of...

ANATOL LIEVEN: On this demand for further Ukrainian withdrawals. You know, the Russians have also, well, not categorically, but still, there have been demands that Ukraine legally recognize the Russian annexations. That is also simply not going to happen. Now, once again, Russians have said, actually, we don’t expect that because the Indians and the Chinese won’t recognize this either. But we have to see, you know, after all, there are demands the Russians could make which would also make a peace settlement impossible.

But as I’ve said again and again, you know, we won’t know any of this until talks begin. And then there are, you know, other issues. What does Russia mean by "de-Nazification”? What does it mean by "demilitarization"? All of it... You know that this will be a long process of negotiation. But on the other hand, of course, it can’t be too long because time is not on Ukraine’s side. And I hope that the Trump administration also recognizes that because, OK, you know, Trump, of course, has threatened that if Russia doesn’t compromise, he will vastly increase aid to Ukraine. But I don’t think that that is actually a credible threat because he could do it, possibly for one year, but he isn’t going to—you know, that’s the whole point. You can’t do that just for one year. You have to do it for every year for years to come. And I really don’t think that Trump would want to do that. So, I am modestly, modestly hopeful when it comes to a peace settlement on Ukraine, but much more worried about the Trump administration and Israel in the Middle East, and vis-à-vis, China.

RADHIKA DESAI: I mean, again, two very quick questions. Number one, what is the Trump difference vis-à-vis Ukraine? Like, what difference will Trump make? Because we know that, of course, even the Biden administration was just waiting until after the election, which it of course hoped to win, or hoped that Kamala Harris would win, before they would stop for the aid to Ukraine, etc. They just didn’t want to have to admit defeat before that. So, what is the Trump difference? And then, yes, indeed, Israel. Where do you think that will go? Well, do you think Trump’s going to take that?

ANATOL LIEVEN: I mean, on Ukraine. I think the good things about Trump is precisely that he is, to some degree personally at least, and some of his followers as well, like Vance, they are from outside the establishment. They are, you know, to a degree anti-establishment figures. That means that Trump is not nailed to this program of NATO expansion to which, you know, successive Democratic administrations have nailed themselves and Republicans too, of course. But he’s not part of that tradition. So, he has no feeling that he is bound by the promises and statements and prestige concerns of previous U.S. administrations on that. So, I think that’s the biggest difference. And, you know, that he is not path-dependent in quite that way.

RADHIKA DESAI: And he’s aware that the war is quite unpopular. So.

ANATOL LIEVEN: Indeed, yes. But on Israel, I mean, look, it’s not as if the Biden administration has done anything serious to rein in Israel, except that very much, also backed by the Pentagon, it has discouraged Israel from a full-scale attack on Iran. And partly because, I mean, Israel can do damage to Iran, but Israel does not have the power actually even to destroy the Iranian nuclear program, let alone to destroy the Iranian economy. All Israel’s calculations on that, from what I’ve been told, are that, you know, Israel would launch some really massive provocation—kill, for example, kill parts of the Iranian leadership in Iran itself—but would only do that if it were assured that if the Iranians responded, which they would have to, that America would then come in and basically finish the job, you know, by unleashing the whole of the U.S. Air Force on Iran.

Now, the Pentagon does not want to do that. They really, really don’t. In part of course, because a very large part because of China. You know, I was often said that if I were a conspiracy theorist, which I’m not, the only way to explain American policy in the Middle East over the past 25 years would be that it was designed in China. Since China is the only country that’s benefited, and unless you count Israel, but I believe that Israeli policies are actually disastrous for Israel in the long run. But that is my great fear. I mean, you have within the Trump administration people who are clearly not even, you know, committed to Israel in the way of Blinken, which is obviously a deep emotional attachment, but who are actually, you know, who are fanatically committed to Israel, like Huckabee, you know, like the new ambassador. And that could lead them into some, you know, horribly dangerous and criminal actions.

Now, of course, within Europe, there is a deep ambiguity because, on the one hand, such a demonstration of American aggression, recklessness, criminality would undoubtedly strengthen the anti-war and anti-Atlanticist left in Europe. But on the other hand, the terrorist attacks within Europe that would follow from that, would strengthen the populist right. War, of course, is completely incapable of distinguishing between Shia and Sunni and Iran and ISIS, many of these things. And that could actually, tragically, lead to increased support for America and Israel in the Middle East. So, we have to see.

RADHIKA DESAI: It’s not looking good, yeah. On a very, how can I say, very sad, very dreadful note, I suppose we should wind down our conversation, which has been going for a little over an hour. But thank you so much. I think this has been extremely enlightening, and I hope you'll come back because I’m sure that particularly after January 20th and the weeks that follow, and whatever we see happening vis-à-vis Ukraine, it would be wonderful to talk to you about that again sometime.

ANATOL LIEVEN: It would a great pleasure. Thank you.

RADHIKA DESAI: OK, great. Thank you so much.