Every US foreign intervention is a gift to China – ex-president of UNSC
The US trade war against China is putting the global economy and world order to the test. Which side has more to lose? We ask Kishore Mahbubani, former president of the United Nations Security Council.
Sophie Shevardnadze: Mr. Mahbubani, it’s really great to have you in our show. Welcome. So lots to talk about. We’re going to start with your book. You believe that the Western global domination is over. Your latest book that we have displayed here is actually titled “Has the West lost it? A provocation”. I have a couple of questions regarding the title right away - why has the West “lost” it? To who has it lost it? And what has it lost - the knowledge, the understanding of the global processes, or the economic might and domination?
Kishore Mahbubani: Well, the answer to the question whether the West has lost it is “no” or “not yet” because I fear that the West which has been in many way the most successful civilization ever in human history, accumulating so much power, wealth and ideas that have transformed the world is now sadly on the way of losing its place. And that’s a result of many strategic mistakes that the West made, especially at the end of the Cold War when after the defeat of the Soviet Union without firing a shot they said: “We have arrived, we don’t need to change, we don’t have to adapt.” And the mistake they made was that the West went asleep at precisely the moment when China and India were waking up. And the reason why China and India were waking up is that from year one to the year 1820 for eighteen hundred of the last two thousand years the two largest economies of the world were always those of China and India.
SS: But you have said that the Western powers do not quite understand that China and India are taking over economically. But that has been a common knowledge for quite some time now, I’m sure, the Western leaders do realise that. By some measurements China is already overtaking the U.S., it’s happening right now. So it’s not like they can’t acknowledge the process? I’m sure they see it and understand it.
KM: I think, they can pay lip service, but they don’t understand it deep in their guts that the world has changed.
SS: Are they in denial?
KM: I’ll give you a simple example. The world’s two most important global economic organisations are the International Monetary Fund and the World Bank. Today you have a rule that says that to become the head of the IMF you must be a European. To become the head of the World Bank you must be an American. And Asians which make up the vast majority of the world’s population and which have the most dynamic economies in the world today don’t qualify to run the IMF and the World Bank. That’s a sign of resistance to the idea that they now have to share power...
SS: Resistance or snobbism and supremacy?
KM: Well, I think, it’s a combination. The Western mind is a very troubled mind now. And that’s why they vote for populist leaders like Donald Trump, or voting for extreme right parties in Europe. In their minds they are very troubled. They know that their era of domination is coming to an end. But they cannot accept it psychologically, emotionally and therefore they are resisting it. And that’s why they are confused. And my book is an effort to help them understand how they can adjust to the new world and create a better world in the process.
SS: Adjust in the terms of keeping being the leaders? Or adjust in the terms of accepting the world as multipolar?
KM: In my book “Has the West lost it?” I conclude it by giving the West my “Three M” advice. Three m-words, and the first is minimalist. The West continues to intervene in the affairs of so many countries around the world. I’m saying “stop it”. And even a relatively peaceful president like Barack Obama, in the last year of his administration the U.S. dropped 26 thousand bombs on seven countries. Why? Why are you bombing other countries? Stop! The second word is multilateral. And here, frankly all the multilateral organisation - the UN, the IMF, the World Bank, the World Trade Organisation - are western gifts to the world. So the West should be strengthening, for example, WTO, but now the United States is undermining the WTO very unwisely. But the third m-word, of course, is the one that surprises the West. I advise the West to be Machiavellian, to calculate its own interest. So, for example, Europe’s problem is that Africa’s population which used to be half that of Europe is now double that of Europe and by 2100 will be ten times the size of Europe. So Europe should focus on Africa. And who can help Europe in Africa? China. So Europe has got to work with China instead of opposing China because America opposes China.
SS: If you don’t mind we’re going to go through all of those Ms step by step. But we’ll start with Trump. You’ve mentioned the WTO - he wants to pull America out of WTO, he was sceptical of the organisation from the very beginning of his presidency. If that actually happens, if America is out of the organisation what would that mean for WTO and for the global economy?
KM: Here I actually have some good news for you. The good news is that the rest of the world will carry on with the WTO with or without the U.S. Just a few days ago I had a conversation with Mr. Pascal Lamy, the former head of the WTO for many years. He said: “Kishore, the WTO can carry on without the United States, and the United States surprisingly will pay a prize if it leaves the WTO.” So this is where, I think, the United States should think very carefully because at the end of the day if you want to curb some of the unfair economic processes of China - and some of them are unfair clearly - then use the WTO to change China’s behavior.
SS: You mentioned that your book will help the West, America to adjust to the changing world. But right now in the current American political climate everything is based on patriotism and the “America First” concept and that is causing so much traction. What would it take for the Americans to realise that they’re not No.1 any more?
KM: I’m not anti-American. I speak as a friend of America. And I want to help America adjust to the new world, and it’s the world that America could live comfortably in because Americans will continue to do well in this large globalising economy with rising Asian economies. It just has to give up it’s desire to dominate the world and dominate the planet. And I think, most Americans if you give them a sensible choice “Do you really want to continue domination and pay a heavy prize? Or do you want to have a good life for your citizens?” - in my book I give a very shocking statistics which is that two thirds of American households do not have 500 dollars in emergency cash. That’s crazy! Your population doesn’t have money and you’re burning money maintaining 13 aircraft carriers around the world! Why? Why don’t you change your policies and do something that is good for the American people in the long run?
SS: If you take the last two presidents, for example, Barack Obama which you mentioned, and he was a very peaceful president, he came with a message of peace but then he was obliged to do so many interventions. It’s because the president doesn’t always decide. It’s the establishment…
KM: That’s right.
SS: If you look at Trump he clearly became President on this new wave of people wanting to live better in America and not really caring that much about the rest of the world because that’s oversees for them and doesn’t take care of their problem of having less than 500 dollars in security cash. But then Trump came and he can't do the things that he wants to do because of the establishment. So when you say “Americans should realise…” - who are the “Americans”? The people clearly want what you’re saying, the last two presidents wanted a change, but it’s not like they were able to do much...
KM: Well, you’re absolutely right. The thing that I find very tragic about the United States of America is that it has the world’s best universities, the world’s best strategic think-tanks, the world’s best strategic thinkers in terms of being well-known and it also has the worst strategic thinking. It’s a great paradox. And I think that the American establishment haven’t understood, it has been going on autopilot recommending interventions in countries like Syria when it served no vital national interest of America to be involved in Syria. Why? Clearly there needs to be a revolution in the thinking of the American establishment because one of the things that my book points out is that there’s a disconnect between what the American establishment is trying to do and what the American people want. And because the American people felt ignored by the establishment they voted for Trump in protest against the establishment. And the establishment hasn’t noticed that.
SS: So let’s talk about Trump and what he wants to do. I mean, the big topic here is obviously China. One of Trump’s election promises was a fairer trade for the United States. Right now he wants to impose another set of import tariffs on 200 billion dollars of Chinese goods. This will be very harmful for Americans. Why, do you think, is he doing that?
KM: I spoke to one of the leading trade economists of the world when I was in Harvard University in February this year. He said to me: “Kishore, Donald Trump doesn’t understand the basics of trade economics. He thinks like a businessman: a deficit is a loss, a surplus is a profit.” That’s rubbish. All countries live by the theory of international trade: even if you have deficit you’re benefiting because you’re buying a product at lower cost from somebody who can make it cheaper and better. If you do an objective audit and put all the factors in America is actually one of the biggest beneficiaries of the current trading order. It has a surplus in services, it doesn’t measure that. More importantly, the U.S. dollar is the global reserve currency. That means that Chinese workers have to work hard 24 hours a day to manufacture things to sell to America. How does America pay for that? It prints dollars. Come on, you’re having a very good trade! You print dollars, you’re getting hard workers’ products. America’s benefiting. Most sophisticated Americans know that America is benefiting enormously from the current system. And therefore the one dangerous thing that Donald Trump is doing is that he’s giving the rest of the world an incentive to move away from the U.S. dollar. And if the rest of the world moves away from the U.S. dollar the impact on America will be disastrous because you can no longer print dollars to buy products.
SS: I don’t think he thinks in that light. I think for him the primary goal is to undermine China. He made no secret of that from day one when he came. I was actually reading this analysis from Barclays Capital, they are saying that this war on tariffs would actually be more detrimental for China than America because China’s economy is more dependent on exports than American economy. So maybe this strange tactics of Trump that many people do not understand is actually justified in the long term, if he wants to undermine China?
KM: Well, you’re right, he might succeed. But believe me, it is a fact that there will be pain for America, there will be pain for China. Let me ask you a simple question: is it easier for a democracy to accept pain, or is it easier for an authoritarian government, like China, to accept pain? The Chinese population as far as I know (I’ve spent two months in China recently) are strongly supportive of the Chinese government, they say: “If America is trying to bully us we will pay the price, we will carry on.” So I think it’s a big mistake to underestimate Chinese resolve. Of course, China is going to pay the price, but in the long-run China cannot afford to be seen to be weak in the face of such pressure. China will stay firm by contrast. As you know, Donald Trump is going to face very difficult elections in November. And if he does badly in November he will be so distracted by the domestic issues that the trade war with China will be put aside.
SS: But do you understand where it’s coming from when he wants to undermine China economically and militarily? Because he feels threatened by China? Do you understand why he’s doing that? Is it justified in any way?
KM: I would say in that sense, if you want to understand his thinking you have to read the writings of Steve Bannon. And Steve Bannon actually believes that America should be number one forever, and if China is about to overtake we must undermine China. And that is actually a strong school of thought in Washington DC who believe that America should undermine China and prevent it from overtaking it. But this cannot be done, it’s a mission impossible. China, just by the sheer laws of mathematics with the population that is four times the size of the United States of America, if you think that an average Chinese is even half as smart as an American, China will have the economy which will be twice the size of America. And as you now the Chinese are as smart as any Europeans. And the mistake that these American thinkers are making is thinking that these two last centuries of Western domination is normal. Actually, as I said it was an aberration, because from year one to the year 1820 the two largest economies were always those of China and India. So this aberration has to come to an end when you cannot fight.
SS: Presidents come and go, and with every new president there’s a new course of action. This approach towards China - do you think it will perish with Trump? Or is it a long-term strategy for America now?
KM: I’m actually writing a book on this subject this year - on U.S.-China relations. History teaches us that whenever the world’s emerging power which is China is about to overtake the world’s number one power in economic size (this is going to happen in the next ten years), then there will be a maximum amount of tension and friction between the U.S. and China, that’s coming. The question is how you’ll manage it. And I’m hoping with my book to give both America and China advice on how to manage this transition well. Because we now live - and this is a very important point - in a small interdependent planet. You don’t have planet B to go to, we only have planet A. And with climate change becoming a serious problem we all have to work together to save planet Earth. So I’m going to point to the common interest that China, America, Russia and India and everybody else have in making sure that we can continue to grow our economies, we can continue to improve lives of our people without having to go to war with each other, without having to fight each other. Those nineteenth century games need no longer be played in the twenty first century.
SS: So talking precisely about that and another M from the three Ms you’ve written that the western elites do not understand that it is in their interest to be prudent and non-interventionist because every intervention comes with repercussions. You could have understood from the intervention of 2003 that the consequences were disastrous, you just shouldn’t do it any more over and over again. But the truth is that this course of action of Westerners interfering in other people’s affairs is still on the table and going pretty strong. I do not believe that is because the Western leaders are stupid or don’t have an understanding or reason. I just don’t understand why. I understand that they are smart people, I understand that this doesn’t work, and it’s been proven that it doesn’t work, but it is still happening and it is an official line of action. Why?
KM: Well, it’s very hard to give up habits of two hundred years…
SS: Old habits die hard?
KM: Old habits die hard, exactly. For example, the British-French intervention in Libya was a disaster. The result of the British-French intervention in Libya was a flood of migrants into Europe, it led to the rise of far-right parties in Europe. It shows you the dangers of intervention. Why? It is actually very puzzling. I completely appreciate your question. This society that has produced the best thinkers for so long have completely lost the art of strategic thinking. And I can tell you one point that I make in my book that every time the United States intervenes and invades in another country, for example, its intervention in Iraq was a geopolitical gift to China. It gave China 10 years to keep growing while America was busy fighting a war. And in that decade something remarkable happened. In year 2000 the United States’ GNP (the nominal market terms) was eight times the size of China. By the last year it was only 1.6 times. So while America was busy fighting wars China was busy growing its economy. And that shows the strategic stupidity of the United States.
SS: But on the other hand, do you blame the Westerners for feeling so superior about their systems? The standards of living in Europe or in America are light years ahead if you compare it to any other country in the world…
KM: Well, you haven’t been to Japan and Singapore then…
SS: That’s right, I’m sorry.
KM: No actually you’re fine. The most important thing a society needs is to provide hope for its young people. And it’s the societies where the young people are the most optimistic are the happiest societies on planet Earth. And trust me, if you looking for optimism in young people don’t come to Europe. And if you looking for optimism in young people today don’t even go to America because Americans are also very troubled about their future which is why they voted for Trump. If you want to find the most optimistic populations come to Asia, come to China, India, Indonesia, South-East Asia, and you’ll find incredibly optimistic young people. So clearly in terms of not where you’re today but where you will be tomorrow it’s very hard to beat the optimism of Asia.
SS: But do you believe that Westerners should completely give up interventions? Because obviously the interventions in Iraq or Libya, like you mentioned, with no plan of action after the intervention brought disastrous results to everyone including the Western countries. But then there are interventions like Mali intervention that helped prevent a more disastrous result on the ground. Should we say “no” to interventions altogether or should we choose and pick - here we can do and here we can’t?
KM: My second M was multilateral, and I’ll give you two examples. There were two interventions in Iraq: one by Father Bush and one by Son Bush. Father Bush sends the Secretary of State James Baker to over a hundred countries to get support for the UN resolution. It was a legal war, and the whole world supported it. Son Bush went ahead, and I was in the Security Council in 2001-2002 sitting next to Sergei Lavrov for two years, and that war was against the opposition of the international community, and that’s why it was a disaster. So I say: yes, do intervene, but follow the international rules for interventions which is get the Security Council’s approval before you intervene.
SS: Thank you so much for this wonderful insight. I really recommend all of you to read this amazing book by this amazing man, and hopefully we’ll have you as a guest really soon again.
KM: Thank you, my pleasure.