Michael Hudson on Russia, Iran and the Red Sea: NATO War Economy Collapses – a view of the world at the beginning of 2024

Danny Haiphong, “Michael Hudson on Russia, Iran and the Red Sea: NATO War Economy Collapses” (Danny Haiphong, 17 January 2024)

Danny Haiphong is an independent journalist, socialist activist and political analyst who has his own YouTube channel which focuses on current geopolitical trends around the world. Recently he interviewed notable economist and writer Michael Hudson, now well into his 80s and as keen as ever in analysing current world events such as Russia’s Special Military Operation in Ukraine that began in February 2022, and Israel’s genocidal operations against the Palestinians in Gaza and the West Bank since October 2023. In this interview, broadcast on 17 January 2024, Haiphong and Hudson discuss US policies against Russia, China and Iran, and why the US and other Western sanctions against these nations not only fail to affect the targeted nations in any way but damage the economic and political interests of US allies in Europe, and ultimately backfire on the US economy itself.

Initially Haiphong and Hudson look at the current situation in Ukraine, with Russia clearly having won against the Ukrainians, and by implication the West as well (since the West has been sending weapons, ammunition and military equipment – and also mercenaries and “military advisors” to Ukraine), yet the US tries to paper over Ukraine’s defeat (and Western defeat) by claiming that the situation is at “stalemate”. From there Hudson goes to point out how the US is facing defeat in many different ways across the world: it faces defeat from Russia and China in industrial production, not only military industrial production, but in the production of aircraft, automobiles and other products and services necessary for a technological civilisation and culture. At the same time, Europe also faces defeat and depression due to the destruction of industry in Germany arising from German and other Western sanctions against Russia; the destruction of the Nordstream II gas pipelines in September 2022 which would have delivered cheap Russian natural gas to Germany; and the curtailing of European trade with China and other nations deemed by the US to be enemies of the West, even when such trade would benefit the Europeans more than not. In particular, Hudson refers to an article in the British newspaper The Financial Times (15th January 2024) written by Joseph Nye, a former advisor to US President Bill Clinton back in the 1990s, who coined the term “soft power”, referring to the various non-military tools nations can use to influence others to do their bidding. For the US, these soft power tools have been physical geography (being close to Latin America and Europe); having control of domestic energy supplies and oil resources in the Middle East; compelling other nations to use the US dollar in trade, and in particular forcing Saudi Arabia to keep its international financial reserves in US stocks; and the edge the US has had in technological advancement since 1945. For a long time after World War II, the US was able to use these soft power tools to enforce its leadership over the rest of the world but in the current multi-polar world, these soft power tools no longer have the influence and power they used to have, due to the ways in which the US has used and abused these tools at the expense of other nations’ development.

The result is that for the past 20 years, Russia and China have been forging ahead with developing and increasing their industrial production, to the extent that (as of this time of writing) Russia can now claim to be the largest economy in Europe on purchasing power parity (PPP) terms, in spite of Western sanctions against it. Indeed, it might be said that sanctions have had a stimulating effect on Russian industry, the same as if the Russians themselves were to have imposed trade protections such as tariffs on imported goods from Europe. China’s industrial development has been stimulated in part by Western nations outsourcing their manufacturing to that nation to take advantage of cheaper Chinese labour and a less regulated industrial environment in that country. The two nations are now at a stage where they are now planning a major industrial development project for eastern Siberia that integrates Russian and Chinese industry and technologies in new cities that will combine related industries, together with the required economic and social infrastructures, as closely as possible. As this massive project comes into being and progresses, the US and the West will become more irrelevant to the rest of the world, and the world will split into two camps, with much of the Middle East clearly wanting to be part of the camp led by Russia and China.

This realisation has led the US into encouraging Israel to follow wherever Israeli Prime Minister Binyamin Netanyahu and his government lead, in not only trying to get rid of the Palestinians in Gaza and the West Bank, but extending Israel’s war against Hamas and Palestine to Lebanon, Yemen and ultimately Iran, whom the US consistently accuses of directing the actions of Hamas, Hezbollah in Lebanon, and Ansarullah (formerly the Houthis) in Yemen. South Africa’s recent action against Israel in charging that nation with genocide at the International Court of Justice represents a recognition by the nations of the Global South that what Israel, aided and abetted by the West, is doing to the Palestinians is the same as what European colonial powers did to the Americas, Africa and Asia, and the indigenous peoples of those continents, over the past 500 years. Furthermore, Israel’s attempt to spread its war to the rest of the Middle East potentially provides an excuse for the US and its allies, particularly Britain and France, to invade Iran and seize its resources, and from there intimidate and dominate the countries surrounding Iran in western and central Asia.

The discussion concludes with a conversation about China and its advancement as the pre-eminent manufacturer of automobiles, especially electric vehicles, and surpassing Japan in exporting cars throughout the world. Since China now controls most of the world’s supply of lithium, cobalt and other rare earth minerals needed for computerised electric cars, the country is now the world’s main supplier of electric vehicles. In the meantime, the US is increasingly acting as a destructive wrecking force to stop Russia and China from becoming major world industrial powers. That China can do what it has been doing over the past 40 years since the death of Mao Zedong and the overthrow of the Gang of Four can be put down to the Chinese government maintaining control of its central bank and the power to create and spend money into existence: money that houses, feeds and educates the Chinese people, and enables them to travel and communicate with one another, and to generate more communications that create work and jobs, and keep the whole cycle and the infrastructures associated with it going. By contrast, in the West, public utilities are increasingly being privatised, with the result that the ownership and control of land and resources pass into the hands of a small number of individuals and private corporations, and the majority of people must pay to gain temporary access to these resources. In the long term, as being demonstrated by the economic decline of the US and other Western nations, and by Russia’s experience during the Yeltsin period in the 1990s, privatisation leads to the looting of a nation’s wealth and economy by a small elite, to the impoverishment of the majority of people, and to deindustrialisation, loss of jobs, the demoralisation of people and the degeneration of culture and society.

While aspects of Haiphong and Hudson’s discussion might be disputed, and the role of other nations and private corporations in influencing current US actions against Russia, China and Iran is not discussed, the general argument Haiphong and Hudson present is solid.

A number of websites have linked to Haiphong and Hudson’s discussion and a summary of it can be found at this link. A transcript of the discussion can be found at this Naked Capitalism link.