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Transcript
00:00:11:00 – 00:00:32:03
Yusuf
Welcome to Geopolitical Horizons, the podcast from geopolity.com. Now we’ve got exciting news for you guys. It’s that time of the year where geopolity will be publishing its annual report. It will be out on the 2nd of January. The Strategic Estimate 2023. Now, our analysts have been working hard following the key events for you guys over the past year
00:00:32:10 – 00:00:43:12
Yusuf
the trends, the patterns you name it. I’ve had the privilege of getting a preview of the report, and I’ve got geopolity founder Adnan Khan here with me today to discuss the report. Now, how you keeping Adnan?
00:00:44:01 – 00:00:45:17
Adnan
I’m good Yusuf, I’m good. How are you?
00:00:46:05 – 00:00:55:14
Yusuf
I’m good. I’m very well, thank you. Now, a lot of this report was kind of centered around the Ukraine war. Why did you go with this particular theme?
00:00:57:11 – 00:01:33:14
Adnan
So, Yusuf, if you look at any annual report, annual publication, there is always a theme which brings everything together. And we did discuss this quite extensively at geopolity what the theme of this year should be. And I think it’s probably safe to say that the Ukraine war is probably the key political event, geopolitical event of the year. And that’s because if you look, it involves all the powers Russia, European powers, America, you got China involved in some form shape.
00:01:33:23 – 00:02:03:19
Adnan
Every country had to take a position on it. So an event which involves all the worlds powers is a very important event. And no doubt Yusuf, the outcome of the Ukraine war whether Russia wins whether Russia loses,news will have an impact on the global situation. So if you look at 2022, there is no other events of such magnitude or scale that would leave a lasting impact.
00:02:03:20 – 00:02:11:00
Adnan
So for us, it was quite an easy decision to make to go with the Ukraine war as the main theme of the report.
00:02:12:03 – 00:02:24:14
Yusuf
Now, you mentioned that we’ve been discussing this over the past year. We’ve done a number of podcasts and there’s been a number of reports on it. Where would you say that this war currently stands in a nutshell?
00:02:26:05 – 00:02:53:07
Adnan
So in a nutshell, use of the war in Ukraine is it’s at a point now where an immediate victory for either side looks unlikely. It’s turned now into a slow, grinding a war. And now what you’re finding is the economic implications of queue up with both parties. Russia has now mobilized further troops, which have been having economic impact.
00:02:53:22 – 00:03:19:10
Adnan
We’re in Europe and the energy formula is already having an impact on us. So really at the moment, it looks as though this is going to be a long, grinding war. The victory for either side, for the moment and for the immediate future looks quite a unlikely. And, you know, whatever the outcome is, it will leave a massive impact on Russian global position if Russia wins
00:03:19:24 – 00:03:51:13
Adnan
Russia has strengthened. It’s a global power, it’s expanded its territory, its annexed a surrounding land. Russia is a country that has to be taken seriously, has to be considered now by the other powers. If Russia loses, then it really raises a lot of issues about the country. Its military have already taken a massive hit. You know, for decades, the image of Russia created and the position of every analyst and every think tank was Russia’s military is a power to be reckoned with.
00:03:52:00 – 00:04:19:08
Adnan
Look at their invasion of Georgia. Look at the invasion of Ukraine in 2014. You know, look at the participation in the war in Syria. But what we find is in a conventional war where it’s not about futuristic weapons or an air force, it’s about bread and butter warfare, which is what your ground forces, equipping them maneuver and controlling and occupying territory.
00:04:19:23 – 00:04:42:03
Adnan
Russia has really been caught short in this particular area. So the longer this war goes on, the more of a drain it will have on Russia. You’re right, 23rd of February was when the war kicked of, so soon we were not too far from a full year. And for the moment, victory looks quite a long a dim prospect for Russia.
00:04:44:12 – 00:05:03:18
Yusuf
Now, a lot of the report was centered around Ukraine, but U.S. was also part of that report. And we see that there is a growing there’s growing issues at home. There’s more political polarization. Again, this is something covered in the report. But could you go over the key findings for us?
00:05:04:04 – 00:05:30:11
Adnan
So America’s in quite an interesting scenario, despite its foreign policy and global action its taken and the achievements it’s had. I mean, if you take your mind back this time last year, Yusuf, we were talking about the departure and the debacle that took place in Afghanistan. And literally a year later, America has managed to get Russia involved in a war.
00:05:30:20 – 00:05:56:11
Adnan
America is funding and arming Ukraine to bleed Russia to death. That’s actually a major achievement. But really, if you look at domestically, America is got huge problems going on. The country is just polarized when it comes to its politics. And we’re not just talking about red and blue politics. You know, whether your Democrat or Republican. Abortion or race, economics.
00:05:56:22 – 00:06:17:24
Adnan
The differences are becoming so huge now that it’s leading to the complete polarization of America. It’s unlikely they’re going to be able have to move forward on a lot of issues because they’re so polarized. They have so many differences. Next week or by near the end of the year, the report will be coming out from the House committee who looked at the Capitol Hill riots.
00:06:17:24 – 00:06:40:12
Adnan
And we have to see if there’s going to be any slam dunk news in there. But from the looks of it, you had a president who refused to accept the electoral result and he did everything he could to stop Joe Biden coming into power, including abusing his time in office. And as a result, his supporters stormed the Capitol Hill seat of American democracy.
00:06:40:22 – 00:07:09:24
Adnan
And you know, the ideological implications, these are huge. If a segment of your population refuses to accept the electoral result. And then it does other actions to show that we refuse to accept it. I mean, this is the rule of the jungle. And this is really just a snapshot of where America is and what’s going on. And really the key finding we found is if America is polarized internally, this will catch up with its global position eventually.
00:07:10:12 – 00:07:30:03
Adnan
So, you know, if you’ve got China, if you’ve got Russia, and if your involved in every region, your going to have, eventually, what you’re going to have is American actions being polarized abroad as well. So this doesn’t really bode well for America, the global superpower. So many issues at home will catch up with the global position eventually.
00:07:30:16 – 00:07:58:12
Yusuf
Now, something I find unusual is that with all these problems that America has at home, they are also looking into going back to the moon. U.S. is thinking about going back to the moon. You would think that with all these issues here on earth, why would they be focusing on space? Is this something maybe like the space race restarting again, especially with Russia coming out of its with shell and China actually progressing?
00:07:58:20 – 00:08:22:17
Adnan
Yeah, absolutely Yusuf, the space race is now in full swing. America has a new program, the Artemis program, which was formally established in 2017. And they were supposed to launch this year. And despite the delays, eventually on November the 16th, the first spaceflight actually took place. And lifted off from Florida and it marks to start of a new space race to mine the moon.
00:08:23:07 – 00:08:46:00
Adnan
With the US looking to secure a lead in a 21st century space race. Obviously everybody remembers the space race or the sixties. In the seventies, you had, you know, the leader of the Capitalist world America. You had Russia, the Soviet Union, leading the communist bloc. You know, they competed with manufacturing powerful rockets. Then going into outer space and then putting a man on the moon.
00:08:46:11 – 00:09:11:12
Adnan
So obviously, we know historically America technically won the space race in some ways actually drained the Soviet Union. Eventually it was one of the factors that led to its collapse. What’s really happened is once the Soviet Union collapsed, obviously the Soviet, Russia was in no position to engage in space and America significantly cut the NASA budget. But there’s actually been two main developments since then.
00:09:11:22 – 00:09:39:13
Adnan
The first is that whilst the previous programs were national endeavours, they were public sector endeavors by the governments of Russia, the Soviet Union and America. What you now find is there’s a significant involvement of the private sector. One of the biggest problem of going into space is its very expensive to the rockets needed, the technology needed to maintain human life and a significant presence out in space.
00:09:39:13 – 00:10:04:01
Adnan
Whether it’s the moon or around the earth, it costs a lot of money. What’s happened now is the rise of space companies such as SpaceX’s and other private launchers, they’ve actually driven down the cost of getting access into space. So what you have now is a raft of countries and a whole host of private companies. They are now engaging in space.
00:10:04:02 – 00:10:31:20
Adnan
So what we mean here is getting people and getting equipment out of the Earth’s atmosphere and then trying to get to the moon and actually staying there for significant period. The main changes being the use of reusable rockets, I think one rocket on the space launch costs over to tens of million. And the biggest cost was is the rockets only used once and that cost is gone.
00:10:32:02 – 00:11:01:11
Adnan
What private sector companies have been able to do is they’ve developed reusable rockets, which is significantly reduced the price of going into space. What you also find is many other countries now China, Russia, South Korea, Iran, Turkey, even a couple of countries in Africa, they all taking part in the different parts of getting into space. So ehat Washington has concluded that other countries now are getting involved.
00:11:01:11 – 00:11:28:19
Adnan
So America doesn’t necessarily have a dominance in this particular area, but its main competitor is really China. China is looking to mine the moon, mine asteroids and go further into space. So what America’s decided is we’ve got to take a lead in this particular area. The next geopolitical struggle, the next major find of resources or minerals is going to be Space and America with its advantage in industrial innovation capabilities.
00:11:28:24 – 00:11:41:02
Adnan
It wants to remain ahead. So you’re right, despite the problems domestically, despite its challenges globally, America seems to be quite united in America’s position outside the Earth.
00:11:41:10 – 00:11:57:17
Yusuf
Now, we touched on China in the last question. China is just celebrating, or should I say Xi JiNping is celebrating his decade in power and now it seems like it’s been a good decade for him. How would you sum up his decade in power?
00:11:58:17 – 00:12:29:15
Adnan
So definitely Yusuf you’re right. A lot of change has taken place in the last decade. China’s economy has grown. China’s capabilities have grown as well. But Xi Jinping really has been on a slightly different agenda. What you find with Xi Jinping is he spent significant time in the last decade really strengthening his own position. In fact, he considers himself now the leader for life.
00:12:30:06 – 00:13:00:06
Adnan
And if you look at what he’s really been up to for the last ten years, he’s really been getting rid of opposition to his rule and he’s effectively made himself the supreme emperor of China. So he began with a purge of the military. He got rid of a retired vice chairman. He started a brood and deep corruption program, which really was used as a guise to target anyone and everyone that could be a potential threat for him going forward.
00:13:00:17 – 00:13:23:03
Adnan
In fact, he’s anti-corruption campaign has probably been one of the most significant policies, actually, and a lot of people have been caught up with that. XI Jinping even has an ideology. It’s called the Xi Jinping thought of socialism with Chinese characteristics for a new era. Bit of a mouthful, but only Deng Xiaoping and Mao, they had their own particular philosophies.
00:13:23:16 – 00:13:56:08
Adnan
However, despite all this authoritarianism, there’s been significant economic troubles under Xi Jinping. now Xi Jinping tookover when this is obviously just after the global economic crisis in 2008. So China faced significant problems in a fallout from this because China relied on exports to the West and there was an economic crisis in the West. So one of the key things Xi Jinping had to do with come up with a new economic model, the move away from export driven growth.
00:13:56:16 – 00:14:29:01
Adnan
But what you find is China’s economic model largely remains the same. If anything, Xi Jinping has got even more authoritarian in implementing the same policy. What you also find is Xi Jinping has a very ambitious program to make China self-sufficient in certain future technologies, AI Robotics. And this is leading China to bump up against America. And there is a tech war really going on now between China and America.
00:14:29:11 – 00:15:00:07
Adnan
And probably the biggest challenge Xi Jinping has is we’re used to China being the largest populated country in the world. We’re used to China’s population growing at a huge rate. But in 2021, China’s population grew at the slowest rate. And in the next couple of years, China’s population was start to actually decline. So what this means is China’s workforce, China’s youth, China’s working age group is going to start to shrink whilst the pensioners in the Chinese population will start to increase.
00:15:00:20 – 00:15:26:19
Adnan
This demographic timebomb probably come at the worst possible time for China. So, yes, Xi decade in power, I would say it’s a mixed report that China’s facing many strategic challenges and these have not been resolved and they are growing in scope and depth and Xi Jinping really has been quite focused on really maintaining his position and maintaining control. So obviously we’ll have to wait to see how this pans out.
00:15:27:03 – 00:15:30:13
Adnan
But despite the achievements, there’s a lot of problems on the horizon Xi.
00:15:31:23 – 00:15:41:12
Yusuf
Another thing that’s been going on for about a decade now is the Belt and Road Initiative. How far is China got with this global infrastructure project?
00:15:41:22 – 00:16:11:24
Adnan
Yeah, so for at least five years since 2013 tehn BRI Project Belt and Road Initiative was getting a lot of media coverage. It was a grand project that nobody could get enough of. But for the last few years, what you find is not really in the news anymore. That’s probably because there’s other political developments going on. But really, the fanfare of a decade ago has now hit reality and this is the major challenge, obviously, for China.
00:16:11:24 – 00:16:32:07
Adnan
So the Belt and Road Initiative was really conceived after the global economic crisis 2008. They Chinese leadership realized that they can’t continue the export driven model, so by about 2010-11 they realised they got to change course. Part of the strategy with the Belt and Road Initiative, which was to expand China’s economic model to outside the country.
00:16:32:18 – 00:16:59:04
Adnan
So when Xi Jinping came in his job was to implement it. He wasn’t necessarily the father of this particular policy. So a decade on, China has signed a memorandum of understanding with 150 countries and 32 international organizations among which 46 in Africa, 37 in Asia, 27 in Europe, 11 in North America, 11 in the Pacific, and eight in Latin America
00:16:59:16 – 00:17:36:00
Adnan
China is now the largest overseas investor, and China, I think, is the largest exporter or the export partner of about 130 plus, uh, countries. However, BRI has received a lot of negative publicity. In 2018, the former Malaysian Prime Minister Mahathir Mohamad, he suspended the work on certain Belt and Road initiative projects. We know what happened in Sri Lanka where a port effectively was seized, taken over by China because Sri Lanka was unable to repay the debt.
00:17:36:06 – 00:18:02:18
Adnan
That government has now been overthrown. And even in Pakistan, Imran Khan voiced concerns of the different projects and he basically started a review. So the BRI has been getting a lot of negative publicity. Some of this is unfounded. So you see a lot of claims about the BRI is indebting many nations and thats funny as its coming from Western nations who the third world almost their debt to.
00:18:03:00 – 00:18:28:20
Adnan
Im not sute hoe China’s debt is problematic when most the debt by these countries is actually owed to them. So what you find Yusuf, there are lots of projects around the world in the different regions of the world. So we actually analyzed all the different regions by project for how they’re going, what their numbers are, and really where their progressed up to this moment I think are probably three finding wars is has hit reality.
00:18:29:05 – 00:18:53:02
Adnan
And the reality is that a lot of these projects, they’re not actually financially viable for China is building train networks and ports and you have to ask the question, why is it in these places there were no train networks and ports in the first place, and that’s because they weren’t very profitable or they weren’t even the demand for a lot of these Projects China’s building, they’re building in areas where China is going to have to give a leg up for very, very long time.
00:18:53:16 – 00:19:24:22
Adnan
Um, so the economic viability of these is highly questionable, but the claim that BRI will change the world and that China aims to transform its economic model, these have not succeed for the moment. So this BRI project is not a miracle. It cannot transform places that are not only not yet on the verge of taking off. So how China plans to do with this, how China plans to use the BRI for its domestic economic model, These questions, after a decade, still remain unanswered.
00:19:25:06 – 00:19:42:03
Yusuf
Now, as part of the competition between US and China, we find that the US has banned Chinese access to advanced semiconductors. And in this year, 2022. Now, what impact will this have on the country’s economic and tech development?
00:19:42:20 – 00:20:09:14
Adnan
She Yusuf this is going to have a massive, massive impact. This is as good as an uppercut in a boxing match. If we were to use an analogy, Now semiconductors, they regulate the current, the electricity in electronic products and we are now in a position where we have products which are very small. They require a high regulation of current and flow through them for them to operate.
00:20:09:21 – 00:20:35:07
Adnan
So we’re talking on the one side, your mobile phone, your tablet to the other side. You’re looking at quantum computing, you’re looking at servers, you look at some the most powerful computers in the world. So China has a plan. And that plan is to eventually be a leader in the next generation of technology. So robotics, raw materials, these sort of areas.
00:20:35:18 – 00:21:12:02
Adnan
And China, interestingly, it does produce a lot of semiconductors, They manufacture them. However, what you find, China largely manufactures the lower end of semiconductors, the more advanced onces the more miniature ones they actually manufactured by Taiwan. And the blueprints and the intellectual property to most of this belongs to America. And this is how America was able to put export ban on China, because all the even the Taiwanese companies that manufacture them, they manufactured them for Apple, for Tesla and for Intel.
00:21:12:09 – 00:21:37:20
Adnan
So these American companies own the copyright. They own the patent to these. And that’s how they were able to put these restrictions on. So what this means is China has a problem now in the advanced chip areas and semiconductors are not something you can just learn by. China is quite a lengthy process. Even the machines that make semiconductors and, you know, some of these semiconductors, they’ve got components which you can see with the naked eye.
00:21:38:04 – 00:22:02:20
Adnan
They’re like at nanoscale. So the machinery for this is very sophisticated, made by a handful of companies. All have an office in America. So the tech war has started. The war to be the future tech leader has begun. And if you take your mind back, all the global powers historically have had a lead in technology. When they lost that lead, they lost their position.
00:22:03:03 – 00:22:23:15
Adnan
If you look at Spain, Portugal, if you look at the Netherlands, if you look at the British Empire, if you look at Germany, all of them, they competed with the power of the day. And whoever won, they were able to define the global power. So that’s why the semiconductor wars, the outcome of this will have a massive impact on who the future power is and who shapes the world.
00:22:24:08 – 00:22:49:08
Yusuf
Now, I’m sure we’ve got lots of questions with the China and US but we won’t have enough time for the rest of the report. So we’re going to move onto Europe now. They’ve been impacted massively with Ukraine’s invasion by Russia. And in the report you mention the energy crisis in the continent and also the strategic decisions that Germany now needed to make
00:22:49:18 – 00:22:51:19
Yusuf
Why does this all leave Europe now?
00:22:52:09 – 00:23:23:04
Adnan
So Europe Yusuf is in a very precarious situation and really there are no good short term options. They’re all bad options in the short to medium term. And the reason why this is, is for a long time, Europe had no problem with Russian energy. Russia supplied a huge volume of energy, through supply lines through pipelines that go from the Urals in Russia all the way up to Germany.
00:23:23:24 – 00:23:55:19
Adnan
And no other country, no other single country provides such a regular supply of energy. All of that is gone now, literally overnight that has gone and i think 45% of European energy, European gas coming from Russia. 94% of European oil comes from Russia. And about 35% – 40% of European coal come from Russia. So if you’ve overnight stopped all this energy coming, you need to now replace that by someone else and there is no good short term option.
00:23:56:04 – 00:24:22:11
Adnan
No one country can provide all of that energy at that volume, at that price to Europe. That’s why you’ll find Europe’s looking at North Africa, Europe’s looking at the Caucuses, Europe’s looking at Central Asia. But for the moment, it looks as though Europe is just relying on American LNG, liquefied natural gas. And this is where gas is turned into liquid because this volumus.
00:24:22:23 – 00:24:47:12
Adnan
And then you need ports in Europe to be regasify again, this is very expensive to the point where European countries are getting into debt. So, in effect, Europe has made a decision which is going to have massive economic fallout. I mean, there’s already been talk of winter of discontent in Europe. And the most affected by this has been Germany, because Germany imports 99% of its oil and gas.
00:24:48:04 – 00:25:10:21
Adnan
So you’ve seen massive price hikes of energy in Germany, basic prices of derivatives of oil and gas. So plastics of cooking oil have gone completely through the roof. And Germany is going to have to make a strategic decision. Are you going to stay to America, politically gives you security or are you going to side with Russia Who keeps the German people warm during the winter?
00:25:11:05 – 00:25:28:10
Adnan
For the moment, Germany decided to get in bed with America, but that’s going to have significant implications for it going forward. So really the most interesting insight we found is all the options for Europe on getting rid of Russian energy, all the possible options are bad options in the short to medium term.
00:25:29:10 – 00:25:49:05
Yusuf
Now, I know we’ve also felt the energy crisis in Britain, and it doesn’t seem as rosy as it was made out to be post Brexit. We were told that post-Brexit there would be a lot more wealth available, there would be a lot more money towards the NHS. What’s gone wrong with Brexit?
00:25:49:16 – 00:26:14:15
Adnan
So its very simple Yusuf the whole Brexit narrative of a utopia, the promises that were made were a lie. There were never going to be true. Just two weeks ago Yusuf, there was a report by a think tank in the UK and it said the food prices have gone up. One of the reasons is because of the red tape and the extra tariffs based on the imports of food coming from Europe.
00:26:15:18 – 00:26:37:16
Adnan
All the arguments for Brexit were based on things will be great, we’ll get rid of the red tape of the European Union. We’ll take back control. And they’ve taken back control. But nothing changed for the people. In fact, things have got even a worse. And that’s why, you know, people in Britain now a Banana epublic at the moment, the nurses on strike, the railway staff on strike, the police look like they’re going on strike.
00:26:37:17 – 00:26:59:24
Adnan
Teachers want to go on strike. Everyone striking and this was after Brexit was supposed to be great. And I think Britain’s got some very important strategic decisions to make because how are you going to engage globally when you are completely dysfunctional at home? And Brexit just hasn’t been the utopia that they promised. I mean, if you think about it, Yusuf it doesn’t make sense.
00:27:00:08 – 00:27:22:07
Adnan
Half of your trade is with a continent across the water from you. You now need a trade deal with that continent. But that now means you are like any other foreign country and you’ve got to pay taxes and tariff. Surely prices will go up. How is leaving your most important trade partner a solution to your problems? Unfortunately, now you’re now seeing the repercussions of that.
00:27:23:14 – 00:27:33:11
Yusuf
Now, obviously, this is something very close to us where living this life that you mentioned isn’t anyone accountable for this lie that was pushed?
00:27:34:03 – 00:27:58:06
Adnan
So in the last five years, four years, sorry, I think we’ve had six different prime ministers. In the last year we’ve had three different prime ministers. Politically, the country is in such a mess, there’s actually no one to account because the Prime Minister doesnt last for long. So the political drama being played out, really has diluted and overtaken the repercussions of Brexit.
00:27:58:24 – 00:28:24:04
Adnan
So, I mean, just a few weeks ago we were talking about Liz Truss and, you know, within 40 days she was gone. So what you find is there are people that need to be accountable. But what you find it is bigger problems going on in the country that the the Tory party is so divided amongst each other that the drama that comes from there completely dilutes and drowns out the unfortunate drama of Brexit no longer being a utopia.
00:28:24:21 – 00:28:38:04
Yusuf
The global economy has been massively hit by the Ukraine war and it was already really struggling from the COVID 19 pandemic. Now we’ve got a section in the report about globalisation. Is this really the end of globalization.
00:28:39:14 – 00:29:05:07
Adnan
Is definitely the end of globalization, as we’ve known it for the last two, three decades. America was talking about a globalized world after World War Two, but the Eastern Bloc got in the way. Once communism collapsed, you saw globalization expand on steroids. So you find the former Soviet republics all became part of this global market. Borders and tariffs and restrictions to trade all went away.
00:29:05:17 – 00:29:24:09
Adnan
And what you found was many companies from the West, they moved their manufacturing facilities abroad. One of the reasons that led to the rise of Donald Trump in America was he got support from areas with many of those companies shut up shop and they moved their production facility to China. So all these people in the Rust Belt lost their jobs.
00:29:24:24 – 00:29:46:13
Adnan
So what you find is for the 1990s, all you saw was praise of globalization and how people would benefit. But really, from the 2000 onwards, most people have seen the problem of globalization. What they see is jobs that should be in their country of going abroad because it’s cheaper. What they find is money that should be invested in their areas.
00:29:46:13 – 00:30:08:14
Adnan
It goes abroad. And what they also find you see people, immigrants moving from other places because we’re supposed to be as one market. And really these trends are what led to the rise of populism and led to the rise of people like Trump, Boris Johnson. And if you look at it, all of these guys ran campaigns on being anti-globalisation, on taking back control.
00:30:08:15 – 00:30:33:15
Adnan
I think probably the biggest example this was the demand for PPE equipment, personal protective equipment during COVID. What most countries found was the manufacture of this was abroad and countries like China and America, they were holding this equipment for their population. So where it used to be that you should meet production abroad, have a global supply chain. We’re now seeing that countries have seeing that supply chains need to come domestic.
00:30:33:24 – 00:31:05:24
Adnan
We need to be more and more self-sufficient, rather then allowing companies to go abroad, because that makes you vulnerable now to global issues, global developments. So this trend is being called deglobalization. And most leaders have a mandate from the people to bring things back home. I mean, just last week, America passed the Inland Revenue Act, which basically is a piece of legislation that gives tax breaks to companies that work in the green sector and other sectors.
00:31:06:09 – 00:31:33:08
Adnan
On one condition, though, that you manufacture and bringing your production to America is giving privileges to domestic companies over foreign companies. So Macron and China, they plan to take this to the WTO, the World Trade Organization, as a contradiction and a violation of their trade agreement. But that’s going to be the trend. Now, what the public want to see is their companies come back home as supply chains being local rather than global.
00:31:33:20 – 00:31:41:03
Adnan
So I think it remains to be seen if it’s the end of globalization, but it’s definitely the end of what’s been going on for the last three decades.
00:31:41:09 – 00:31:44:00
Yusuf
I guess Brexit is another example of that as well.
00:31:44:01 – 00:32:03:01
Adnan
Yeah, I mean, if you look at most people who voted for Brexit – take back control, control their borders, all of these were economic nationalism over globalization. And you know, integrating more with the world is more. I mean, these are the sort of thing that we lead to more differences. It’s going to be nation versus a nation, great power vs great power, competition versus other people.
00:32:03:06 – 00:32:19:04
Adnan
While for the last three decade the mantra was where, you know, we’re cosmopolitan people, we’re a global society. Let’s get rid of all these barriers. Now, the demand, the public opinion is for barriers to be erected, and they see that as a better protection, more people see it as better protection of their economic well-being.
00:32:19:20 – 00:32:36:22
Yusuf
Now, in the report Adnan you discussed the BRICS organization and you put it in a quite funny way. You say they’re all bricks and mortar, but many people they see as the emerging bloc, which will counter the Western led liberal order. What do you make of that?
00:32:37:04 – 00:33:09:21
Adnan
So Yusuf over a decade ago I was a fanboy of the BRICS organization. I felt finally we had a another organization that could probably compete and counter the existing liberal order led organizations like the World Bank, WTO and, you know, BRICS, which is Brazil, Russia, India, China, South Africa. These were new mid-tier emerging nations, and they felt they have little say over the global order because the global order was written by Europe and the West.
00:33:09:21 – 00:33:28:07
Adnan
And, you know, they were presenting themselves as a potential new order going forward. But a decade or so later, Yusuf what you find is they still do lots of talking, but they’re doing very little doing. And the reason why that is, is that, you know, the BRICS organization is no, it’s not about the World Bank, the IMF, World Trade Organization.
00:33:28:15 – 00:33:52:00
Adnan
It’s really an informal grouping of countries of a certain type, you know, future economic powers who come together and talk. They’ve actually got no institutional power because not that sort of organization. And the reason why that is, is with each of these countries, although they have similarity to each other, really, they have more differences. You know, each of them are a different parts of their development.
00:33:52:00 – 00:34:16:11
Adnan
And each of them have a more important relationship with America and the West. And they do. We cover the countries like China and Russia. They like to promote this organization as a possible alternative, and they like the credibility it brings to them. However, practically, it does nothing. It does very, very little for even if you look at the loans this organization given out is minuscule compared to the IMF and the World Bank.
00:34:17:08 – 00:34:52:24
Adnan
So I think this organization is great on paper. It brings credibility to China and Russia, but beyond that, physically does absolutely nothing. Now, does that mean it’s always going to remain like that? Not necessarily, but really it’s not a full alliance between these countries. Really on paper, there is an alliance in practice there really isn’t. And I mean, the fact that India and China refuse to openly side with Russia’s invasion of Ukraine because they want to still maintain the ties of America in the West, showing that the relationship between them is quite tenuous at best.
00:34:54:00 – 00:35:03:12
Yusuf
Now you talk about central bank digital currencies, also known as CBDCs Can you tell us a little bit more about these? Should our readers know about them?
00:35:03:21 – 00:35:37:21
Adnan
Yep, they absolutely should know about them. These have been I mean, all the talks really being about Bitcoin and cryptocurrencies. Central bank digital currencies are similar in some ways, but different If you look at things like Bitcoin and cryptocurrencies, these are decentralized currencies where you use blockchain as a way to make transactions and regulate money. So obviously in cryptocurrency, the money doesnt physically exist, its a algorithm on your phone, on your computer.
00:35:38:11 – 00:36:10:11
Adnan
What central bank digital currencies are is the central bank version, which you think will be a bit contradictory because the whole idea of a crypto currency is you take the banking industry out the equation. The normal financial system we have is you have central bank to the center and everything goes through them. So cryptocurrencies was the opposite today when you decentralize it, when not the banking system doesn’t dominate finance. What central bank currencies is is central banks came back and because of the financial power, they basically can completely digitize a national currency.
00:36:10:20 – 00:36:34:06
Adnan
So this is being trailed in a handful of countries and the results are not being great yet. However, if you look if you have digital currencies, if you have a currency on your phone, there’s no physical currency you can transact in a different way. And it also means crime, organized crime goes out the window because having to use money and more importantly, every transaction have a will can be monitored because money is an algorithm.
00:36:34:24 – 00:36:57:21
Adnan
This has huge implications for an economy, for the nature of the economy. It has a massive impact because the physical money you have changes. So for the moment we have physical money. You have obviously financial, you have your bank account where you have money. If you get rid that all and all you have is digital currencies, it fundamentally changes how we transact the volume of transactions.
00:36:57:21 – 00:37:16:05
Adnan
We can have. And it also puts central banks in a very key position because they could you offer maximum your money, they could give you more money than you need and you would do things which would stimulate the economy. So this is quite a significant development. So in the report we do cover the prospects where this currency, there’s still a way to go by.
00:37:16:05 – 00:37:23:21
Adnan
It we see the birth has taken place of central bank digital currencies. And you know, that’s going to have massive implications.
00:37:24:03 – 00:37:37:09
Yusuf
The geopolitical issue that you have done a deep dive on is oil. Now, oil, it’s been on the news a lot this year because of the war in Ukraine and many other issues. What were the main conclusions and key insights in the report?
00:37:38:16 – 00:38:01:00
Adnan
So, yeah, we had a lot of discussiont the team here at geopolity on this chapter. So what we’ve tried to do is really just look at the oil industry oil situation and draw some conclusions from this. In a way, we started very neutral at this. So, you know, simply put, Yusuf the world obviously, before COVID was consuminh about 100 million barrels of oil a day.
00:38:01:00 – 00:38:26:01
Adnan
And what you find is America, Russia, Saudi, they are the largest producers and the largest consumers are China, India and Japan and then Europe. So there’s significant challenge evolving regarding this. So obviously, where is future oil going to come from? What are the region that’s going to produce future oil? The other populations growing and even more demand for oil.
00:38:26:09 – 00:38:48:11
Adnan
Obviously, the biggest change that has happened is America. America over a decade ago was one of the largest consumers of oil. Now its not just the lot. It’s not even the large consumer anymore, but it’s actually the largest producer, for the shale revolution that took place has turned America into a major oil manufacturer, a major oil producer, rather than being an oil consumer.
00:38:48:16 – 00:39:13:11
Adnan
And that has massive implications. You know, I remember George W Bush saying that the oil in the Middle East effectively is a tax on the American people. You know, that should be really because of America’s dependency. He saw the security and these sort of issues around oil effectively being a cost to the American consumer. So the oil market, you know, that’s been probably the biggest shift in the report.
00:39:13:12 – 00:39:36:05
Adnan
We do have a look at the major oil producers. What are the challenges they face? You’ve obviously got decarbonization is a big move to move away from fossil fuels due to a variety of issues, including climate change. But what we’re finding is that oil is just in a very, very unique position. The amount of energy per kilowatt, the energy per unit you get from oil is very unique.
00:39:36:16 – 00:39:54:20
Adnan
Now, global transport primarily runs on oil, and there’s still a long way to go for transport to get off oil. And if you think about the last hundred years, the oil companies have been some of the key geopolitical companies in the world due to their demand, the demand for oil is only going to go up as global population increase.
00:39:54:20 – 00:40:13:07
Adnan
So we’re consuming about 100 million barrels of oil a day. Where are the next 10 to 20 million can actually come from? Because most, although some regions can increase the amount of oil they’re producing, there’s only so much they can do. There isn’t a problem on the supply side as such, because companies are countries are producing large amounts of oil.
00:40:13:16 – 00:40:41:22
Adnan
The issue really is can the world transition beyond oil? So, yes, new resources are coming online, but what you find is the increase in energy the world needs the percentage increase every year. For that there is renewable energy and things like that. But what you find is for the moment there won’t be any transition beyond oil because oil really is in quite a unique position until another fossil, another fuel is found.
00:40:42:05 – 00:41:04:14
Adnan
That can get you thre same amount of miles you get in your car. Really, oil is here to stay. So oil, you know, those who manufactures, who consumes it, how much reserves a country has, all these have geopolitical implications. That’s what makes oil a very important. Oil still remains the most traded commodity in the world. They really show this important position.
00:41:04:20 – 00:41:11:13
Adnan
And you know, who produces it, who consumes it, who controls it? These are still going to remain major issues for the foreseeable future.
00:41:11:20 – 00:41:35:13
Yusuf
Thank you for your time today Adnan. Now, the report Strategic Estimate 2023, it will be published on the 2nd of January and you can download that from our website. Now we’ve got a lot coming up in the next couple of weeks. We have our 2023 forecast that will be coming out soon. I will be sitting down with Adnan and will record our 2023 forecast podcast.
00:41:36:19 – 00:42:16:16
Yusuf
We’ll also be publishing a 2023 forecast in both article and video form, so keep an eye out for that. Thank you for your time.
