Putin's Birthday Gifts and Economic War with China
In this episode, we discuss Russia’s growing losses in Ukraine, signs of dissent from Russian elites, and intrigue in global energy markets. We move on to East Asia, where North Korea’s Kim Jong-un is vying for attention with a missile launch over Japan. We also discuss Biden’s new economic war with China, particularly in light of the recent moves to ban the selling of semiconductor chips to Chinese companies.
NOTE: We did not get to the updates on Iranian protests and the presidential election in Brazil, so if you are interested in the topics, stay tuned for the next episode.
Topics Discussed in this Episode
Putin’s Birthday present and latest developments in Ukraine
Energy Intrigue: Nord Stream sabotage and OPEC’s snub
North Korea Missile test
Growing Economic War with China
Follow Us
Putin's Birthday Gifts and Economic War with China
In this episode, we discuss Russia’s growing losses in Ukraine, signs of dissent from Russian elites, and intrigue in global energy markets. We move on to East Asia, where North Korea’s Kim Jong-un is vying for attention with a missile launch over Japan. We also discuss Biden’s new economic war with China, particularly in light of the recent moves to ban the selling of semiconductor chips to Chinese companies.
NOTE: We did not get to the updates on Iranian protests and the presidential election in Brazil, so if you are interested in the topics, stay tuned for the next episode.
Topics Discussed in this Episode
Putin’s Birthday present and latest developments in Ukraine
Energy Intrigue: Nord Stream sabotage and OPEC’s snub
North Korea Missile test
Growing Economic War with China
Follow Us
Welcome to Kellogg's Global Politics, a podcast on current events in US foreign policy and international affairs. My name is Dr. Anita Kellogg, an international relations scholar specializing in the relationship between economics and national security. I'm here with my co-host Ryan Kellogg, an expert in energy investment and policy. Thanks and glad to be back. So this is episode 20 and we're recording this on October 8th, 2022. On this episode, we discuss Russia's growing losses in Ukraine and signs of dissent from Russian elites. We move on to East Asia where North Korea's Kim Jong-un is vying for attention with a missile launch over Japan. We also discuss Biden's new economic war with China, particularly in light of the recent moves to ban the selling of semiconductor chips to Chinese companies. But first, hey, this is episode 20. That's something? That is. Well, I mean, is it? It is. I thought 25 was the more significant one. Really? Yeah, I don't know. I'm going to say, yay, 20. Then we can say it again at 25. Oh, okay. We have a bigger. Have little milestones. Yeah. I like that. Well, you wanted to talk about college football. Well, I just want to cry about it. Yeah. Well, yeah, I do feel bad about that. But I think it was, yeah, it was just more, well, it was looking. For anyone who doesn't know, I'm from Arkansas and support the Razorbacks. And what was a promising season has turned into kind of a disaster. Yeah. But let's rewind to a week ago before everything went south for both of our teams. So I'm from North Carolina and I went to NC State. I'm a big NC State Wolfpack fan. And if we rewind to a week ago, well, maybe, okay, two weeks ago. Two weeks ago, Arkansas has been on a little bit of a downward slide here. But Arkansas was ranked 10, I think, and NC State was 12 or something in that order. And for our teams, for our programs, because we're not powerhouses, we're the perennial underdogs, never quite reaching that level. But the fan base always has kind of those expectations, but also the knowledge that they're going to be deeply disappointed by the team at some point during the season. So again, our hopes are built up as we are facing Arkansas is facing the number two team in the country, Alabama, coached by the legendary Nick Saban, Boo, and... Carry that out by yourself. And then NC State went against Clemson, which at least as of late, and I say that because I'm old, so anything in the last 10 years is as of late, has been also a perennial powerhouse. So they're growing up. They weren't quite at that level. So both of their teams then went with very high expectations and came out with some rough losses. It's been downhill for Arkansas since then. Yeah, I don't know what... I know what happened today. We just lost to Mississippi State. I'll tell you exactly. We don't have our star quarterback. Yeah, that doesn't help. So you lost to him at the end of the Alabama game. Plus defense, that's all I have to say. Yeah, but that being said, what you guys almost did against Alabama is really impressive. I haven't seen this before. I mean, coming that close to pulling it off, but they were down 28-0 right before halftime, and they came back and scored 23 unanswered points to come within five points. And Nick Saban was about to blow a gasket. I mean, he was losing it on the sidelines because... I mean, what team blows a 28-0 lead like that? Arkansas. Well, okay. Besides Arkansas, that was bull game. Normally... Normally, a team doesn't do that, and it definitely doesn't happen to a Saban coach team. So... They figured it out. They figured it out, and you guys kind of ran out of gas, but it was still a very noble effort. Got us excited. And then, you know, I was proud of my wife back. They hung in. Totally competitive game in Death Valley. I had never actually watched the beginning of a... And they call it Death Valley because they stole a rock from Death Valley, California. Oh, really? I didn't know that. I'm just saying they stole it. But that's where the rock comes from. So they had this rock at the top of their stairs, and all the players in Clemson get on a bus beforehand, and they go to the top of the state. It's a huge stadium. It holds over 100,000 people. They get on a bus? They get on a bus. Yeah, I never watched this, but I watched the beginning of the game. They all get on a bus. They take like a three-minute bus ride to the, I guess, the top exit point of the stadium, and they all come out, and then they run down this grassy ramp at the top of the stadium, touch this rock from Death Valley, and that's their tradition. So, I mean, it was an intimidating environment to play. I mean, those fans were... I mean, it was a sign of respect, I thought. You know, NC State wasn't treated as a joke, which I kind of expect half the time. But... And then we played a very competitive ball for the first half, and... But, you know, I lost in there. So, it's sad. And then my fantasy football team is not going well either. So, football just makes me want to cry as well. Normally, it's exciting. This fall, it just wants... I just want to cry about it. Hey, you never know. We're only... We're only, what, four weeks in? Five weeks in? Yeah, but... It's the first season. But I'm one in three, and any other team in the NFL went into... You got your first win. How many times did I have to tell you? I went 0-6 two seasons, and I almost came back one season and made the playoffs in fantasy. So, never give up. And you won that one game, which is very critical. You know, I go in that... You know, I go as deep as 0-6. That's what I learned. One in four would not be great either. Okay. So, on to more serious topics. Okay. Sounds good. So, we were talking about Russia, Ukraine. We always start with those updates, and we were talking about the mobilization of Russian troops. So, you would have expected maybe some pushback on the Ukrainian gains, but instead, Russia continues to lose against Ukraine. Yeah, and that's not too surprising, just given... Take them time to mobilize. So, I think Ukraine has this window of opportunity before Russia reorganizes, get these troops in place to make as much gain as they possibly can before the winner comes in. So, I think that's what we've seen over the last two weeks, is they're continuing to push forward. They're continuing to build on the gains that they had in the Northeast. I think the most critical aspect of it was the taking of the cities of Izium and Lyman. And Lyman in particular was strategically important for the Russians because it's a rail hub, and it really supports a lot of the supply of Russian troops in the Donbass region. So, actually, the taking of that city triggered a lot of things we'll get into later around some of the criticism. Various Russian elites are targeting primarily the defense minister within Russia, but it was really that taking of Lyman that kind of triggered this, okay, this is getting ridiculous, because it was timed right at the point, because the other thing that happened the last two weeks, they held their fake annexation elections where they were dragging people out of their homes at gunpoint, forcing them to devote. Other videos are showing them counting the vote, not even looking at the ballot, just saying, you know, yeah, yeah, you know, just ridiculous, absolutely ridiculous sort of stuff. And then, of course, the display in the Kremlin and the Imperial Palace with the four new ministers of Russian appointed ministers of the four provinces celebrating with Putin. I don't get why they dragged anyone out of their house. I mean, can't they just forward the whole bunch of ballots? I mean, everyone knows it wasn't legitimate. I don't know why I go through the process in the first place, but yeah, just filling the total villain role completely, I don't know. But yeah, so they continued to make gains there, and then you see more of a push in the south because that's originally the objective was to push into Kherson, the province, and eventually the city because that's the only city I think left on the Dnipro River that the Russians still occupy. The taking of Kherson city would allow them then to be strategically positioned to strike Crimea more effectively. But then we woke up this morning to the surprise that everybody now sees of the strike on the 12-mile-long Kerch Bridge, which opened just in 2018, it cost $4 billion, and it connects mainland Russia to Crimea. And it was seen as a very big deal. Putin attended it. It was a symbolic, this is part of Russia now. Architecturally, it is quite extraordinary because just of the conditions that had prevented for centuries a bridge on these land masses. So it creates a big wind tunnel through the mountains, and you have sort of like soft, silt-like soil. And so that's why it costs so much, and was it true engineering beat? Okay, no, I didn't know. Yeah, that's really cool. I was wondering why it cost $4 billion in Russia because I was like, wow, you know, that seems pretty expensive for Russia. I mean, it's the typical bridge project here, but for there. Okay, that makes a lot more sense. So it was this big engineer. So it was seen as this symbol of imperialism and national pride and so on. So the strike on this, on Putin's birthday, is particularly symbolic. So that seems out of commission. There's a vital lifeline for supplying because Crimea has also been a strategic staging ground for Russian military operations. That doesn't mean that they're cut off because that was the reason for securing the land bridge. So they have that, but that's far less secure than obviously this bridge that was connected to, directly to the Russian mainland. So it definitely creates a lot of complications. So Ukraine basically hinted that they took credit for it. Washington Post is reporting from their sources and Ukrainian intelligence that their special forces, essentially, are responsible for it. So I think there's little doubt that it was helpful. Is it like a truck bomb? Is it a truck bomb? Some people think, well, maybe it's planted explosives under the bridge. Because they wanted to dock the bridge, but Russia has also been defending it quite adamantly. So it was difficult to find a way, I think, to do this, but I thought that was interesting. So I guess investigations haven't completely settled on how they did this, but it's very striking and does factor strategically. That was a way of getting troops to Crimea. So they're trying to get the Russian mainland. Russia? Yeah, it's far more difficult now, I think, to supply Crimea. They'll have the boats being able to do that, but the land route obviously will become more risky over time as Ukraine makes gains, and they become within striking districts of artillery. So yeah, it's a major victory for Ukraine. And it'll be interesting to see kind of how Russia responds to that. But I think though, the one thing that you will see is these accusations amongst the elite. So this is kind of interesting. It was so the Guardian had a very good article analyzing primarily the attacks on the current defense chief who's been a longtime Putin loyalist. And all of these people are allied with Putin, and his whole strategy has been to play them off of the intelligence. Right, they're jockeying for power. Right. So a lot of people see an opportunity now that Sergei Zorgu is under such direct attack for the military failures to gain position. So the two primary ones who are a little bit periphery compared to the kind of the more powerful structures of the intelligence service, the FSB, the defense itself are one, the CEO of Wagner, which is the private mercenary group that was founded in 2014 after the annexation of Crimea, his names, which are these names, but you have Gzerny Prygoshin. And then the other one that's been kind of allied with him is actually the Chechnyan leader, so Ramzan Kadyrov. I love that quote from him because he was like, I just need a few of my fighters. We could have taken Kiev. Oh my God. Yeah, yeah, yeah, that guy's full of it. Yeah, the Chechnya leader. Yeah, but if you knew the sort of just the hyper warfare that went on between Chechnya and Russia. No, no, no, I mean, they're pretty hardcore. I'm not saying they can get into it. They're hardcore, but I think a lot of myths has been built. I mean, we now see the capabilities of the Russian military, so standing up to them isn't that impressive. Oh no, bad. But they are savage. They have a reputation of being savage fighters. Very. So, I mean, these two guys are basically saying there's opportunity to get a rung into the formal part of Russian power. They're a little bit peripheral members. Yeah, they're part of the war effort into filling gaps. I knew the Wagner group has been used in Syria to help fill gaps. I have to say, my other favorite part of this article was describing the defense minister getting into fistfights. Yeah, that does sound like it's... Just the visual image of that. I still, it cracked me up so much, because I kind of can see it, but these Russian leaders getting into fistfights. Oh yeah, I can totally see it. Yeah. It's one way to conduct business. Yeah. What I think was good about that article, in contrast to another one you had in here from the Washington Post or the way the US has covered it, because the US wants to cover it as like, oh, this means Putin himself is very vulnerable and fragile. And the Guardian, I think, had a much better analysis because he was talking about how this might hamper... Black community hampers the war effort, but it was saying that these were like, they're jockeying themselves, amongst themselves, for power. It doesn't have anything to do with Putin's ability to hold on to power. Yeah, I mean, yeah, the Guardian kind of had a note in there. And I think that was the thing, and I think just in general, you see from the European papers that they have better quality sources within Russia, and better reporting than you would get from the times. I agree, because the Washington Post, the way they covered it, was just this very strong slant without support from anything. And the one thing that they never seemed to take into account very well is that you would have to have a leader come out of this, like a clear leader to supplant Putin. And if anything, this sort of inviting just shows you how unlikely that is. Yeah, and they kind of make that point. They have a political scientist that they quote in the article. It's like this whole system is built around a leader. So if you get rid of Putin, you have to be able to deliver these quick results. But because he's kept them so fractured and competing against each other, even in this time, which isn't, I mean, you would want, you'd think, kind of a unity amongst the elites during a period of war and mobilization. But instead, yeah, you have all this back fighting. But at the same time, it helps them from uniting in this sort of effort to overthrow Putin. We're to blame Putin. So all of it's being focused on the fall guy. You probably will get sacked. It'll be interesting to see if the bombing of this bridge leads to that. It's just another huge embarrassment on Putin's birthday, if all things. Yeah, I mean, I wouldn't imagine in Russia, I wouldn't have pictured there'd be this unity of a beast, the war effort. For what little that I read about war, there's lots of times elites are not unified. And are kind of fighting amongst each other for power. Well, so publicly too. I mean, that's been the interesting thing, seeing even the propagandist on the state television, criticizing in particular the defense. It's almost like it's been designated that the defense minister is going to be the fall guy, despite being a Putin loyalist for... Yeah, but it just made me think. So I've been reading about mobilization and war too. And you saw this really play out in the private sector and within the different agencies, where people were trying to take advantage of the situation to gain power, to be closer to the president and get more lucrative contracts. So I mean, I think the story was that, oh, despite this lack of unity, they made all this technological progress for mobilization. But I don't think that you ever see a lot of unity from elites. Yeah, and I guess that, I mean, it kind of goes back to the team arrival sort of approach Lincoln was famous for. Yeah, you want a certain amount of friction and competing ideas and... Well, you don't even have to encourage it....in animosity. Yeah, because people are going to seek power against... Right, and they were very......attacked each other very much in public. And we're pretty vicious against each other. It's just the US was able to bring those different aspects together in the technology, but it wasn't like, oh, there was this perfect cooperation between that and the government or even within the government. Yeah, but I feel like that's more acceptable in the US system of kind of the free market and free speech and the free press. But I'm just saying like, there's a kind of a mythos that you would expect like unity. Oh, for the complete... Yeah, no, no, yeah, I agree. No, it's always... Because that's just not how it works. It's always really messy, yeah. I mean, these people weren't cooperating with each other. They just happened to produce things that... Yeah, no....different parts that were able to be effective. Yeah, but they were still kind of rowing. And I think you see that here with the elites. Nobody is against... The war....saying pull out of Ukraine. This is a mistake. This is just all this is being managed in plain competence. Right. Right. And that, oh, I could do a much like the Wagner CEO. I could do a much better job with my mercenaries where you know, the Sheshen leaders. Yeah. I can go take care of with like five guys in a pickup truck. I don't know. I love it. I love it. I love the moxie of it. It's weird. Well, he's very popular with the Russian. And this is what kind of kills me is... I mean, at one point, he was... Doesn't he basically state terrorist, right? When they were waging war. But now he's reframed himself as Russian macho... Well......with the Duce. He's very popular with the Russian people because he gets on camera and he has all that profanity. Yeah. Well, because the deal was you get to be... As long as you don't oppose Russia anymore, you get to have your own fiefdom. You're in real fight. Right. Yeah. Yeah. Yeah. Where we're not going to interfere with it. You can rule it how you want, govern it how you want. And so it was a good deal for Russia. I had to stop all the losses that they were putting into... Yeah....with Chechnya, Chechnya stopped being essentially terrorists. Right. And the leader got to have his own kingdom, really. So... Yeah. So now he's looking for that next rung up into kind of formal leadership within the defense. So... Okay. So moving on, I think the other big thing... So there's a couple other elements we want to cover. So Biden gave a speech where he stated and pretty certain about kind of Russia's threats to use nuclear weapons and use the terms, which got a lot of headlines, but amounted to the most serious prospect of Armageddon in 60 years. And a lot of these comments were a reflection, not of a change or a new intelligence, but rather a long held distrust that he's personally harbored against Putin since at least 2001 when Bush famously gazed into Putin's eyes. And I can't remember what the exact connotation was. Kindred soul or something. Kindred soul, deep trust of Putin. So basically it's just saying, yeah, they're taking this very seriously. But that being said, there's nothing on the intelligence side. There's nothing that the Russians have mobilized any part of their nuclear force. So I don't think anything's really changed from kind of what we talked about in the last episode in terms of the choices that NATO and the US would have if Russia chose to use that. I think we have to think about the audience that Biden is speaking to. He's primarily speaking to the Russian audience and to Putin himself. Like if you use even these smaller nuclear weapons, this isn't going to be like some small nuclear response or even non-nuclear response. Even though that's probably true, this will be Armageddon and we'll destroy you even if we're destroying ourselves. But do we threaten that? I don't think we threaten that. No, we didn't threaten it. We said that's just what's going to happen. Things are going to get out of control. Yeah, things will get out of control. Even though we've kind of also signaled things, we're probably not going to. Right. But we don't know what's being communicated. But if you're telling Putin, you're like, no, things will get out of control and you'll destroy the world. Yeah, which he may be fine with if he's going to lose power. Also, then that's a message to the elites too. Like if you keep this guy in power, he's going to destroy the world. Which we did just talk about. We talked about there's no- Globalized fractured elites. Right. I mean, Biden wants regime change. The White House doesn't seem to understand the practicality of that. But I guess maybe if you say that, at least have the elites more seriously organized to prevent the use of a nuclear weapon or that's the hope. Yeah, that they would step in at that point. And then as we said, we should all have to take this seriously and saying Armageddon does to the American public say we have to take this seriously. Yeah. Not that it changes the public put. Yeah. But that's part of I think also why using the term Armageddon, which is pretty dramatic language. No, he's definitely known for that. I mean, I guess this follows up with his regime change comments in Poland some months earlier. He definitely has a set view on Putin and on what the end goal he'd like to see. Clearly, his speeches are not vetted either because every time you have these headlines, the White House would be surprised. I think they're vetted. I think he just ad-libs in there. Well, yeah. But I mean- Why is she sure that would drop, I guess? The language. Because like the White House always seems unprepared with these statements. Yeah, they should expect this at a certain point. Oh. Oh. Then there was this aspect. I mean, these are serious topics. When I say it's funny, it's not to take away from the seriousness of what's happening. But Elon Musk, who always needs attention, came up with his own plan for peace. That's right. That he wants to advance. Yeah. And you never know with Musk, obviously the biggest thing he's involved in currently is the coming back again to the original purchase price that he agreed with Twitter. I heard that's to avoid the court case. Yeah. It's a messy situation. And a lot of these, it's unlikely that he'll be able to get the financing because I know the original bank to finance the debt for the purchase is already backed out of it. This is really bad time for debt financing in general. So, end up falling through again. Anyway, it's a messy environment. So maybe to distract from that, Musk is completely weighted into geopolitics. We're just going to cover his first idea. But yeah, with the peace plan for Ukraine, Russia, basically saying, he tweeted out, let's redo the elections of all the indexed regions under UN supervision. Russia leaves it as the will of the people. Russia has already said that they've done this already, that the elections are fair. And they're not backing up from their support interest. But they liked all the other parts. So Crimea, the other thing Musk said was that Crimea is formerly part of Russia, as it has been since 1783 until Khrushchev's mistake. So kind of a poor reading of history there. I know a lot of, like Ian Bremmer immediately slapped back against him. There was a number of exchanges of polling data going back to 1991 to 2018 on the various referendums and kind of opinion polls. And then I think the most critical element where Ukraine, particularly, I mean, obviously giving up territory or acknowledging that, yes, Russia can invade these annex regions, which weren't even challenged and certainly under polling. It wasn't even debatable, the majority outside of Donbass and Crimea that they could be rewarded. I mean, there's no point even kind of going through it. But then, yeah, Ukraine will remain neutral. So essentially not apply for native membership. This shows another example of people who have probably genius level IQ applied to certain areas, like with science. Or marketing. Or marketing. He's not the one doing the engineering out there. Okay. Well, you're the one who at one point, I don't know. I don't have a high opinion of him. But I know this, that he's very stupid when it comes to anything outside of engineering. Yep. So I think the best response that everybody pushing back was Gary Kasparov, most famous as a Russian chest grandmaster. But he's also been very much an anti-Putin political activist, has been arrested numerous times over the decades. He responded, you know, this is moral idiocy. This is repetition of Kremlin propaganda, portrayal of Ukrainian courage and sacrifice, and puts a few minutes browsing Crimea on Wikipedia over the current horrific reality of Putin's bloody war. Musk, of course, couldn't have leave it alone and basically said, well, what have you done sacrificing for Ukraine? I basically lost like $80 million on the Starlink application, which I think others had done. And he's being paid by Western governments to supply. Starlink, oh yeah. I just write a little bit about it. The losses, I think, are related to the fact he's not charging market rates. I thought he's not charging them at all. No, no. He's getting paid by Western governments. I didn't read that article. Yeah. Oh, wait. He's not being paid by the Ukrainians. He's being paid by Western governments to supply Starlink to Ukraine. Which allows internet communication to clarify. Right. Anyway, Gary Kasparov didn't have to clap back, but everybody else did and showed all the pictures of him being arrested and beaten by Russian thugs. Oh, because he's an anti-Putin activist. Right. Yeah. Yeah. So he's sacrificed plenty. But what is interesting, the final interesting part, and Musk up to this point around Ukraine was seen as a bit of a hero because his Starlink, which was a series of microsatellites, were launched by SpaceX, enabled Ukraine despite the loss of its communication during the initial invasion to maintain internet access and more importantly, all the secured communication between military units. And at the same time that this whole kerfuffle happened, there were complaints that, oh, Starlink has lost issues or has increased in issues on the front lines. And it's still an issue to this day. And a lot of people are saying is Musk being a big baby and has turned off Starlink because people got mad at him. Wait, there's just a little bit. I want to see political views. But here's the deal. This is how I imagine life goes for people like Musk. Like, so I'm always thinking, I'm always thinking about geopolitical events. I mean, it's what I write, what I do. And, you know, I come up with all kinds of ideas in my head, all kinds of arguments that no one ever hears except for me. But I imagine that Musk says all of his ideas out loud without having the sort of background. And he has an entourage. She's just like, yeah, that's an amazing idea. Like, if you were in charge, you could solve this whole thing. And then Musk decides, man, I'm so smart. I'm going to put it on Twitter because that was also like he put this idea on Twitter and asked his fans to vote on it and they voted it down. But I just think like people like that just, they're just thinking, you know, like, there's nothing wrong with that. But they're being told that all their ideas are just genius level ideas. And so they believe it themselves. Anyway, that's my take on it. Yeah. No, I mean, I think that's right. I mean, I think a lot of... He has too much attention for this. Yeah. I mean, I think, and you've seen that a lot. Anybody that's been successful has billions of dollars, immediately thinks that they have a right to political power. And obviously they can solve all these problems easily. And you see that, you know, to a lesser extent on like the education industry in the U.S., where Bill Gates had a famous initiative 10, 15 years ago to, I don't know if that was around chartered schools or different... I think it was around charter schools. Yeah. That, oh, you know, this is obviously nobody's been thinking about this correctly, but me, genius Bill Gates, can go in and solve it. And all of these initiatives have ultimately failed. Yeah. A lot of people bought his argument. I don't know. Yeah. Sometimes you... But I feel like Gates, it wasn't a terrible idea. I think it sounded like a good idea. It had just never been tested before, and it turned out not to work. Yeah. And there's not, like you said, there's nothing wrong with having these ideas and trying them. And I think he's become more humble and retrospect about it. And he's certainly had a lot of success around like vaccine distribution or anti-malarial things. His long-term view now has been critical in many areas. I mean, there's a lot of things about Gates that's probably not good as a person. But if we're evaluating his, what he's doing action-wise, yeah, it's been really important. Yeah. I don't know. I guess I feel like there's a different quality to Gates ideas. Yeah. Because I think they were well researched. They got the buy-in of many people before being implemented by state governments, by local governments. For Musk, he's just thinking out loud. Musk is just tweeting out stuff. Yeah. He's just thinking out loud. But nevertheless, you know, it has implications because, I mean, he does put in what's basically a critical part of the national security infrastructure for Ukraine and the war effort. Which was certainly the article I said, like Ukraine wants to tread very carefully. Right. Yeah. Yeah. They don't want to go out and attack Musk. Yeah. It was a pretty gentle push back, like, so when Ski has like, which Musk do you like better? The guy who supports Ukraine or the guy who goes along with Russia? Good way to handle it. Yeah. Okay. So wrapping up this topic on what you labeled energy chess, because I think you were too, you had just read the- Yeah, I think I just read the Garrett Casparov. So it's like, oh. But yeah, there's been several interesting moves, strategically within the energy world. I think the first that we will highlight, obviously, in the last two weeks, you saw the acknowledgement that the Nord Stream pipeline was attacked, was sabotaged. Actually, both, it was three different points. I didn't know this before. Yeah. Three different points within both of the pipelines that had observed by Swedish authorities, a seismic event, so clearly some sort of explosive that has now taken Nord Stream out of commission. Now it's in 80 meters deep water, which is about 250 feet. So not like ultra deep, but the repair time, I haven't seen anybody kind of talk about that. Well, what I saw was that it means that really it's over. It's over, yeah. Yeah, which is extraordinary. For like, how much did this cost? $15, $20 billion pipeline? Yeah. Before they were insignificant repairs, I mean, that would be easy to repair. Yeah. And so there was the thought that this would be fixed possibly. I mean, it could definitely be fixed and might by Russia in some months, depending on what they wanted, what they were trying to get out of it. But this means that it's done. And I mean, at least the thrust at this article that Europe will no longer get energy from Russia. Well, at least from Nord Stream. I mean, there's other pipelines. Yeah. I mean, even the pipeline crossing Ukraine is still supplying Russian gas to Europe. That is true. That being said, obviously the most likely source is Russia. And it was timed shortly after a new pipeline connecting, I think, the North Sea, the Norwegian sources to Europe. That was commissioned, I think, within like a week before. So it was seen as developing other alternatives. So it was seen as kind of punishment for that. And like we've talked about before, this winter, Europe is in okay shape, obviously high prices. But in terms of running out of gas, very little challenge. But it's going to be next winter. And especially if those remaining Russian sources of gas are gone, those are going to be very difficult to replace. So it's more the winter of 2023, 2024, that could be extremely challenging. Right. Because you draw down all your stockpiles to buy the summer, you have no... How are you going to refill that in the summer? And how fast can you get energy from the United States or green energy? Yeah, the problem is, yeah, you've already... There's no huge increase in capacity, LNG export capacity coming on in the US. Some came on this year. They certainly maximize that. You've already, because of both lower demand in China, just because the Chinese economies largely have been shut in between COVID and some just kind of a poor economy in general. They've been able to draw more of that natural gas away from Asia to Europe. But if China comes back on, it's not obvious where that additional gas. So a lot of it's going to have to come from efficiency. So using less gas, keeping those thermostats lower during the winter. But yeah, it's going to be difficult. Yeah. Well, I mean, they're already going to have to do that this winter. It'd be next winter, it'd be critical. It's going to be critical to do that. It wouldn't just be about the lowering. Exactly. Yeah. So that's pretty significant. And the article was like the end of the East Politique, which was that Germany had been pursuing since the end of war two to have create the special relationship with Russia. And that's the end of it. Yeah. You talk about the war and the rocks piece. Yeah. I've read other stuff on it. Yeah. Yeah. Yeah. Yeah. No, I mean, yeah, it definitely, and it'll be interesting to see how the German economy kind of adapts over time. But certainly it seems like Europe's heading for a deep recession because these high energy prices aren't going anywhere. Yeah. So then the final aspect of the kind of energy that came up was OPEC had their meeting in Vienna last Wednesday. And they kind of shocked particularly the White House on an agreement to cut two million barrels a day of oil production beginning on November 1st. So this was really seen as a slap in the face to the Biden administration, which we talked about over this last summer. They went to Saudi Arabia at the FISBOM diplomacy with NBS. So it's seen as a great sense of betrayal. They were given no heads up on this. OPEC leaders, of course, cited budget and social stability as their points of concern, but at these kind of elevated price levels, even at $80, which would have fallen to prior to the announcement of these cuts. Nobody's really buying that argument. Plus the timing, it's taking place on November 1st. So right before the midterms. And I'm not sure if it's graduating. I can't find information on that, but this seemed to be immediate. That being said, it probably won't have a full two million impact just because they've been unable to meet their quota in the first place. So effectively, it's probably taken a million barrels off the market. But nevertheless, oil prices have gone up 15% since that announcement are now back in the mid-90s. A couple of things. One, I think this really pushes back on the argument that I keep hearing that Russia is increasingly isolated and is becoming this isolated regime because India and China have tried to distance itself from some of the Russian tactics or so often I hear like, oh, well, China's supporting Russia. And the other time, you know, we're like, oh, Russia's totally isolated. But China's not supporting Russia, but they are not against Russia. I mean, I don't know. They're happy to buy the oil and gas, but they haven't pushed on anything else. But the thing is, Russia still has a lot of allies, and that includes OPEC countries. Yeah, no, it definitely, it definitely signaled that. We have to keep pretending that we've turned Russia into pariah. Yeah, that's definitely not the case. You kind of wish we had, but it's not like North Korea. It's actually quite hard to turn a country into a pariah that still has all these economic ties and partnerships with other countries. Yeah, I mean, just from the, I mean, the amount of arms, I mean, the second biggest arms supplier besides us, that alone was so many defenses like India dependent on the Russia that when it comes down to these national security issues, they're not going to, they're not going to turn against, you know, bite the hand that gives you your ability to protect yourself from your enemies. So yeah, so there's a lot of anger right now. I'm seeing a lot of bad ideas, frankly, being thrown around as countermeasures, either being proposed by Biden or Democrats within Congress. Of those, you know, one is putting a, a NOPEC bill has been proposed, which basically allowed the Department of Justice to sue OPEC and other oil cartels for antitrust violations. I don't care what that really does. Well, it certainly doesn't do anything in the short term. Yeah. And I don't understand the oil system, where the ability collect, and obviously it hurts relations even further. And that made a lot of sense. Other bad idea is limiting oil and refine petroleum product exports. I think we've talked before about the complexity of oil markets and refining. And so any sort of intervention in that free market oil market system really creates a lot of inefficiencies and doesn't help the consumer at all in terms of, of lowering prices. Strategic fuel reserve was thrown out. This basically is just like the strategic petroleum reserve, but instead of crude oil, which can last a long time in storage. You have gasoline and diesel. The gasoline diesel, as we all know from zombie apocalypse movies, it stops working. It basically breaks down. Yeah, it breaks down after. I missed that part. Like, oh yeah, that's why none of the cars work because all the gasoline is like broken down. I always wondered that. Actually, you have wondered that before. So how did this work? You're constantly having to re-change refresh supplies. And it's just, it's a pretty complicated system, not to mention kind of the refining capacity and other issues with that. The one that is getting traction, interestingly, is the easing of sanctions on Venezuela. Now, Rand's in there too, but Rand is more complicated situation. And so they're actually looking to allow companies, because I wasn't aware of this, but Chevron is actually the only US, maybe the only Western company still operating in Venezuela as a JV partner. So they're not an operator, but they're one of the ones investing still within the space. Right now, they don't have any control on operations or the decision making, but that's something apparently the Venezuelan state oil company is open to. So Chevron is trying to renegotiate its joint venture to give it more operational control and essentially create incentive for Chevron to put capital in there and to increase production, but it would have to get obviously permission from the US government in order to do so, given the sanctions. I think Chevron's bet has probably been, well, eventually the sanctions will be lifted on Venezuela. We don't know when, but I think the thing there that's important to know is how far the capabilities of Venezuela have disintegrated. In both terms of just the equipment, and they don't have the personnel because of the political prosecutions, which began with Chavez when he fired half of the state owned oil company for not being loyal to him. And you've just seen sort of an exodus of that sort of talent. Well, I mean, Chevron with greater control bring in its own people. They can bring in people from Colombia, essentially, Rick Cruz. These are all not state employees. These are all contractors. But they're going to have to like redo a lot of the infrastructure. Yeah. I mean, I don't know what the state of all the infrastructure, I think the hope is you would focus probably on their onshore assets, the offshore stuff way too expensive, too complicated, but I mean, just the capability, not even the sanctions. I mean, for a long time, been studying this has just continued to plummet. They just don't have the capacity right now to produce a lot more oil. And that's sort of also what that article said that they could maybe get to 400,000 barrels per day. They would take, yeah, within like six months. Within like six months. That's still a lot in a tight oil market. They could bring 400,000 barrels a day. When you're losing two million barrels. No, you're losing one million. You're losing one million. US production will continue to kind of slowly ramp up, given all the constraints that we talked about before. Not saying it balances oil markets, but it makes a big difference. Just like we talked about inflation, like a 1% inflation easing by getting rid of the Chinese steel tariffs, 400,000 barrels additional on the market is meaningful. I mean, I think it's worth per saying. I think, you know, the difference between I don't think they're politically, but I mean, it's kind of stupid. They were always, I mean, Venezuela obviously is not a threat to our interest in any way like Iran is. So it's kind of natural place to do it. It was just also interesting that it comes in light of Columbia opening its border to trade with Venezuela this week. I didn't know about that. Okay. Yeah. So I think countries had tried to make Venezuela or kind of effectively a pariah cut off all of its ties with the West in order to hope that that was going to create political change. And surprising to me, they did not create any sort of pressure on the actual regime. So now you see a lot of like opening back to Venezuela. People, I read were pretty optimistic about this, but I think the basic problem when we were in Columbia, how many years ago, I don't remember, wasn't even the border being closed was that Venezuela didn't have the money to pay the Colombian exporters. And with its economy in shambles, I don't know that there's going to be this return to any substantial level of bilateral trade. Yeah. I wouldn't think so. I guess we'll see. Anyway, I just thought that was interesting. Yeah, that is interesting. I guess that doesn't make sense given the change in the Colombian presidency. They could have a more dovish policy to which Venezuela. So yeah, and I think that was, I mean, obviously the other one that immediately came up around, how can we punish Saudi Arabia in particular is there's now talk of, well, what can we do to reduce the military support? And the Atlanta Council had a good take on this and that, well, we do this, this is just going to create an opportunity either for China to fill that gap or even the EU. So the French immediately stepped in, I think when one of the Gulf states, when we want to sell them the F-35, the French immediately stepped in and sold them the latest kind of French aircraft. Just sort of going to be an issue later on when we talk about the trade war with China, the economic war, just because we're not selling to a country doesn't mean other countries won't sell to them. Right, exactly. Yeah. Also Iran, we want a coalition against Iran and Saudi Arabia as key to that. Yeah. So I don't see that. Which is why we don't have, I've repeated, this is why we don't actually have leverage over Saudi Arabia. I think they know that too. Clearly. Yes, it's clearly. And I think that was the other interesting thing. I can't remember which article, but it's a break from the past where there was an agreement that between both Saudi Arabia and the US that was a strategic relationship, but MBS has really structured it similar to how Russia and China run their operations is more transactional. He wants to see a more transactional relationship with the United States, not to have all this baggage around strategic. Human rights. Yeah. Which is what China wants to do and we're kind of not consistent on our policy that way. I guess we'll get into that a little bit later. Yeah. So I think that wraps up that discussion and kind of going geographically, we touched on the Middle East and now we are going to head to East Asia and some new updates there. So North Korea's Kim Jong-un has done some saber rattling this week. A few days ago, he launched a missile over Japan. Now, what's notable about this is North Korea often fires missiles into the sea of Japan, but this is only the second time a missile has gone over the land mass of Japan. The first time was in 2017 as part of the escalating tensions led by President Trump at the time. Now, you can see how that actually turned out pretty good for Kim because then he got two summits and a lot of international prestige. And so it's not surprising that he decided to try it for a second time when North Korea has not been getting any attention lately because the US is so focused on Russia and China. Of course, there's always the question, is it significant in any way? How do we respond to it? To a certain extent, it's sort of at the high end of what North Korea has done. I mean, obviously, well, one of the things that people talked about in 2017 too is what if there is some misfiled breakdown where it does land in Japan and how do you respond to that? My thing is they're continuing to progress with their missile technology. And do we just allow them to continue to do that and get better and more targeting of US interests, not just the West Coast, but pretty comfortably to Guam? And how do we deal with this? So the immediate responses to show that we're not ignoring North Korea was that the US aircraft carrier, the Roosevelt, which is something that Trump had deployed to Korean waters, was redeployed this time. You had a US and South Korea missile exercise and you had Biden call for an emergency security council meeting, but that was blocked by China and Russia. The US also put more sanctions on North Korea and their elites. Also, in this context, that the Biden administration is preparing for North Korea to have a nuclear test. Personally, I've been wondering when this is coming because every time North Korea is too far out of the picture, they need attention, and this is the only way they get attention. Like I said before, it's often kind of profitable. It certainly was profitable during the Trump administration. You mentioned, yeah, you got the photo op with Trump. Is that really just for domestic audiences to fully secure? So it's just ego. It's like an elite to tamper down any sort of threat from other elites. I mean, it seems like he has a full iron grip. He kills anybody that's a threat. Right. So yeah, what's the most is just strictly an ego trip. It's an ego trip and it plays well domestic audiences. But I think mostly about it. But you're not actually gaining economically or through release of sanctions or? No. He was quiet on the missile program during a lot of that. It's true. I mean, he was quiet. Oh, as a result of getting the photo op with Trump. But yeah, that's what Trump was saying. They'd be like, Hey, we gave him nothing. We gave him a photo op and they stopped doing things. Although I'm sure they still. They didn't stop the program, right? Yeah, probably 10 additional nuclear missiles during that time. But yeah, do anything from that aspect, but they weren't. They didn't do off the show. Yeah, the show. Okay. So I mean, if we just we're still searching for a strategy. So if we just think about the three last presidential, well, even before that, so you have George W. Bush, he pulls pushed a whole bunch of like the six party talks. And there is real effort to negotiate a halt to North Korea's program, which seemed possible at the time. And they just fell through. And it was a I mean, you had a carrot and stick of pro I don't know if this is part of the six party talk, but you had like the, what was the factory area that South Korea, the free trade area set up north of the border, where there was actually economic incentive to around the program. Proving bilateral ties there. And there was a lot of hope and optimism that this would be a new era. Obama basically just ignoring whatever North Korea was doing. So whenever there were these sort of provocative moves, Obama just kind of barely acknowledged them and went on ignoring it. Because it felt like, well, our strategy before had not worked giving them attention using multilateralism. So Obama's kind of ignored it. And then you have Trump, you can say it was more about impeachment. It was ratcheting up tensions there for a while. And then pulling back. And now, the judiciary says that Trump still has those letters. He's not turned them over. I don't think the government is ever going to get a hold of those letters. Love letters to Chairman. Oh, okay. He still has those. He won't give those over. I don't know if anyone's ever read them. Yeah, he has to give those. I mean, they all belong to the government. Right. They belong to the government. I don't think they'll ever happen. Does it end up in the toilet? No, the toothbrush is still in the toilet. No, those are in some vault somewhere where no one is ever going to read what it says in these letters. Because no one really knows. No one's ever read them. But yeah, I almost don't blame Trump on this. This is the one thing if I don't know. It's hard to, he really loves these letters. He really prizes them. And so it's, I can see how it's hard for Trump to accept that they belong to the government. I mean, you can have a copy. Geez. Right? You just want to see original. Just for yourself. Oh, so Biden is sort of like multilateralism, but instead of trying to bring in China and Russia, it's just focusing on strengthening security with South Korea and Japan. Yeah. Also, it's kind of part of its China response to, I understood why Obama did the ignoring approach because these are clearly just for attention. Obviously, I disagree with the Trump approach, which just gave him a lot of prestige. But the thing is we don't, there's no obvious strategy here, but there's a danger in just letting North Korea do whatever it wants and just to keep making advances and its missile technology and nuclear technology. But I don't know how you stop it exactly. No, I mean, it seems like an intractable problem. And the only one that really has leverage and it's questionable how much leverage they have is China. China's certainly. We've just made China more and more entire enemy. Right. Yeah. Yeah. On one hand, you can say, well, this is just attention giving action. But like I said, it's not completely insignificant. Right. Any significance with, because there seem to be maybe closer ties between Russia and North Korea now, given that North Korea, unlike China, is openly supplying weapons to Russia that are showing up in Ukraine, like those artillery shells we talked about. Any kind of significant, all three are kind of being tied closer together. And maybe that helps strengthen North Korea over time, having those connections. Maybe. I mean, it could only benefit the more the West turns Russia and China into an enemy. Of course, it makes sense why Russia is an enemy, but that labels both of those. It gives support to North Korea because then you want to support the enemy. The enemy of my enemy is my friend. And they also have other reasons. I mean, you definitely have a lot of North Koreans working in Russia. There are already those ties on that border as well. So yeah, I mean, part of how it fends itself is its weapons program, selling weapons. Oh, sure. Yeah. You know, one of the things about this nuclear program is the proliferation of that technology ability. So a lot of what Iran was able to get was from North Korea. Right. So one of the biggest ways that North Korea does affect the entire international environment is its arms sales and nuclear technology. So I mean, it's clearly a threat. North Korea is a threat that we just don't know how to respond to. Yeah. And I know, I mean, South Korea facilitates between, yeah, kind of more devilish approaches and hawkish. It's currently in a hawkish round where the president's much more aligned with the U.S. and with Japan kind of on defense policy. Wasn't this launching also triggered? Weren't they conducting joint military exercises at the time, like defensive exercises? In the sea of Japan, I think, were exercises. Yeah. I think between the U.S., South Korea, and Japan, which those are always like not very tight exercises, but they're kind of like their sun cooperation there. Yeah. Because I know that's why Russia and China pushed back against it because they were like, well, you provoked North Korea by carrying out these aggressive imperialist actions with your joint naval exercises. Which, of course, China's going to say that because really they're more designed against China. So one other interesting thing is that you see the current president talk about the possibility of a second deployment of the THAAD missile technology. So adding on to the missiles to intercept any ballistic missiles from North Korea, which powerful sensors do you likely look into Chinese airspace? The reason why this is also important is, okay, that annoying person at the conference, I just have to say this. He kept telling me that I was wrong, that it was a success story because South Korea had made this just this unprecedented promise to limit their national security by saying that they would have no additional THAAD missile systems set up. And I said, that's not really a binding agreement. And there is a lot of controversy over whether how much South Korea meant it or not. And it's not really unprecedented when the current president is saying, I'm not bound by that. It's just some words. And I am considering it. Yeah, that is just depend on each administration policy. Right. So it's just, I felt, I felt its significance because of being told by this senior scholar why I was wrong. Yeah, because clearly, if it was real effective deterrence, then it wouldn't matter what administration is in place. Right. I mean, it was just like, it's not even a formal agreement of any kind. It was just something said to sort of appease China's anger. Yeah. And it was the more pacifist president. But even then, I mean, there was nothing, there was no indication that South Korea would ever really limit those options. Right. So that's about the problem that is North Korea that will not be solved maybe ever, but certainly is a problem that has to be dealt with in some way. And the far more significant news that came out is this latest bill, which will prevent selling microchips to China. And this made me just think about all these aspects that I've been thinking about talking about, but haven't really been able to really put all together. And I want to talk a little bit how really Biden is launching a new trade war with China. You could also they'll call it more of an economic war because it involves investment as well. But you know, Trump bragged about his trade war with China incessantly. And while Biden is not talking about this very much, his economic war is much stronger, very focused, and is worse, I think, in violating what we believe about trade. So I just want to start briefly kind of in the timeline. For a long time, there's been a talk limiting investment, US foreign investment that can go to China. So basically, you know, this building factories in China to produce things, investing in different companies and technologies. And there is regulation in general. That looks at sensitive military technology and limits companies from investing in those sort of things. But it's a pretty narrow scope. And it's what we normally think of national security. But there's been a bill in Congress for a long time that would create a new regulatory body with the authority to review and deny any American investments in China or other adversaries over national security concerns. Now, this would require US companies to disclose plans to invest in advancing Chinese sectors such as semiconductors, quantum technology, artificial intelligence, critical minerals, materials, and high capacity batteries. But if those all sound like, oh, maybe legitimate sectors, the president can choose any other sector that he decides is national security. These transactions usually fund new facilities like factories, joint ventures, and capital investments in Chinese startups. So this is a really huge blow to, if you believe, in the trading system that the United States set up, because that is all about reducing the barriers of capital. So it believes in the freedom of the movement of capital for countries to invest in each other without regulations. This is clearly going backwards. I think one of the problems is that when we think of national security, we're no longer thinking of narrow military national security, because the US administration has made it clear, particularly Jake Sullivan, that really economic competitiveness has now been subsumed into national security. So, and he said, these investments could undermine America's national security by blunting our technological edge. So that's a huge problem. I think everything is national security. So there's no real limit of what kind of sectors that could be touched by this. In terms of US companies, it reduces comparative advantage. It makes it very hard for US companies to sell to China. And obviously, these investments be filled by other countries who then will have more advantages. Well, yeah. I mean, would the idea also be, because I mean, one of the companies that came up around chip manufacturing is a Dutch-based company. And I think this is established recently where, essentially, because they're either dependent on capital from the US or probably financing from the US or other technologies from the US, that it's not just US companies, but essentially anybody that has access to US capital research, et cetera, et cetera, would also be blocked. So wouldn't that presuppose that also may get difficult for China to find substitutes from most of the countries capable of having replacements, because it's the only handful of countries that could replace? Well, that's the next part. This is just the investment part. Okay. But it still matters, because foreign countries are unhappy because of multinational companies that do business with the United States of US investment. Right? Doing things like this could seriously harm the technology sector in the United States. And overall, it could make our goods less efficient to produce, to not only lose selling to China, but then losing out to competition and selling to other countries. And I mean, because a lot of the, because you started off and it sound reasonable in terms of the industries that they listed, semi-conductors, common technology, AI, critical mineral, blah, blah, blah, blah. But what you're saying is that this could ultimately affect something like Apple. I think Apple is probably the number one, when Americans think of products that are essentially designed and engineered in the US, but then they're manufactured and assembled in China. So you're saying like the average iPhone, like new iPhone 14 goes for a thousand bucks, retail here, is going to be like 3,000 bucks. Right. Exactly. But this bill could affect the ability for Apple to do business in China, even though nothing within there is like critical to national security. Per se. I don't know about specific companies that would fall under this, but logically, something like companies like Apple, yeah, and that's why the costs become more expensive and we lose our comparative advantage to sell to other countries as well. More specifically, they talked about Microsoft, which has some joint ventures in AI in China, things of that nature. So, so that means they would have to close their offices in China around AI research and kind of lose access to the AI research that they're doing there. It sounds like it. Okay. But like you said, it's not just that. It is the factories to make a lot of products. So and like I said, a lot of those industries do sound reasonable on paper, but I mean, the effects would be quite extraordinary. And the real thing is, so as the US Chamber of Commerce warns that the bill addresses nearly every sector of US manufacturing in agricultural economy, it will create unworkable compliance concerns for businesses, undermine innovation and disadvantage for them in global competition. After all, companies invest overseas to exploit comparative advantage, reducing labor, transportation costs, or to better tailor products or services to that foreign market. So I mean, it's natural that business would be against this, but there's a good reason for businesses to be against this. It is dramatically increasing the intervention of politics into the market, which is also dangerous. Great inefficiencies. Yeah. So I mean, this could be pretty significant. Anyway, this is probably why the bill has never been passed. It has the bill itself had a lot of bipartisan support, but never got anywhere been debated over for over a year. So now the push is to have Biden put this into place through an executive order. Again, both bipartisan politicians have urged him to do this. Oh, so even in this environment, they don't think this could pass? They haven't been able to. Maybe because the lobbying efforts. Now the articles I read explained why. Yeah. There's just been articles over the past year about this bill and its evolution, but obviously had never been voted on. And it seems like the leaders of that kind of gave up on it. And really just within the last week, there's been talk of Biden considering an executive order. Interesting. Yeah. Yeah. Just because you do have that enough division still within Congress. And then yeah, you mentioned, right, even the Treasury Department. People within business and economics and all that. So no, I imagine part of why it didn't get passed was that just all businesses against it. Right. Yeah. That totally makes sense that you'd have that lobbying pushback. And like I said, the Treasury Department is concerned about a new regulatory body to have this sort of government intervention into the free market. Yeah. Just because it's not clear how it'd be done. It was reading. Yeah, it's not even clear which agency would manage it. I think it was agreed like the US Trade Administrator. I can't remember the name of the agency, but it wasn't big enough essentially to handle. So it's not clear like where this interagency new regulatory body would even be set up. Plus it just creates a lot of red tape for companies, right? So it's not even the companies who are deemed like, oh, you can't invest in that. But for companies that can invest in it, they have to go through this whole process now. Right. So there's all this red tape, which is going to limit their ability to make investments. It's cost and time. I mean, I was reading consulting firms already talking to companies how to prepare for a compliance in case this happens. Oh yeah. Well, and you saw what big drops in all of the chip manufacturers, the stocks dropped at least like 6-7% with the announcement of this bill. So I mean, I know probably people listening to this, this seems technical and not interesting, but it's kind of, it's really huge. It's really significant. And when you have the two most dominant economies and you have one of them really pushing an economic war in a way that has never been seen, I'm going to go to the other aspects of this war. But it makes me very uneasy because for all people say, and I've said this before about how a world where one happened even though there was economic integration, there was actually a lot of trade wars going on right before World War One. And so I think this would be a very bad idea. And I'm really hoping Biden does not sign the executive order because we have enough bad ideas going on. So I just want to also like in the light of this war, you have what we talked about also with the semiconductor investment bill, which gave subsidies. The chips act. And that said that companies who participate in that cannot invest or produce advanced chips in China. So you already have that mixed in with this. But what happened this week is crazy to me. And one of the people who I sort of kind of stole through words, Sarah Danzen, who's mentioned in these articles, when I was at absent and talking to her, she had mentioned, and I didn't know what she was referencing because I hadn't kept up with all this new job and everything, but she'd referenced legislation, we would stop selling to my conductors to China. And I didn't understand because I totally couldn't imagine this happening. And this is what happened this week. We have new legislation and new law that you cannot sell advanced semiconductor chips or chip making equipment to China unless they have a special license. And most of these licenses are supposed to be denied. This is a really aggressive approach to try to impair the capability of China to indigenously develop certain critical technologies. And then sort of to your point, the Biden administration also imposed international restrictions that would inhibit companies anywhere in the world to sell chips if they are made with US technology, software or machinery. So if there's any inputs by the US in this software that's used, the technology, the machines made to use it, then those companies cannot sell these chips to China. Which is also this, I mean, I'm just the magnitude of this is really significant. So there's a couple obvious problems. One that Sarah had pointed out was like that they depend on US microchips is actually kind of a good thing because that gives us leverage if there was sort of a conflict, right? But they wouldn't be able to re-stock their military supplies if they're dependent on this one type of microchip to which they currently are. In the meantime, this gets supplied by some other country, like maybe even South Korea and Japan possibly. But when did they be then under the same sanctions and? Only if they're using US technology to make it. How does that define US technology? Like software? Right. So when did that capture almost every manufacturing system in the Western world? I think that Japan and South Korea, one of those countries are both of them, may have independent technology. Yeah. I mean, the other aspect of it was, in the case of war, that really creates incentive for them to take Taiwan's manufacturing capabilities. Right. So from a national security point, this actually seems not very productive. Yeah. And I think the, I mean, the FORX article that I read basically kind of made that point that when it was counterproductive, too, it would encourage, yeah, the development of native industry. Because I mean, on the human resources side, I mean, obviously, if you fire all these AI researchers like Microsoft, where are they going to go? They're going to go work for the Chinese equivalent immediately. So they've always been more and more successful and growing the quality of their own internal PhD programs. Because maybe they still haven't been able to bring back in a people, Western trained as much, but they brought back enough, they kind of seeded their own universities. And, you know, they're publishing a lot of high quality journals around these areas of research. So over time, they can certainly build that capability. And here's, here's, yeah, the thought. So one of the things that we really crippled Russia is because of the technology ban in ports where they depend on one piece of equipment, depends on a microchip or something built in the United States. And this is crippling to their military. Well, clearly, they aren't on great on the manufacturing side. They're having to get supplies from North Korea, not known as the manufacturing powerhouse. But they can't rebuild this one particular equipment because it relies, right? Yeah. So the situation now is you have certain military equipment of China's completely reliant on use. So I mean, China even now has incentive to create its own. But now we're supercharges. But now we're forcing them to, almost to develop this. So you lose your leverage. Yeah. And then you just kind of hurt yourself. You hurt your, you know, your brain power is a lot of it's going to China now, except that was, you were being able to utilize in your own technological development. Yeah. And I think the other point made in the forex art, and this is written by, I don't have his name in front of me, but he was a professor at the University of Illinois. But the other point is, yeah, you don't win these competitions by like hobbling, we're trying to hobble your opponent. It just means you have to innovate that much harder. Yeah. You need to focus on being that much better. Basically, kind of what we had to do with the Soviet Union, you're just going to have to stay ahead of them by investing a lot more in research and development, which we haven't done in this country. Well, and then we also lose our incentives to do that. Increase. We just increase China's incentives, kind of forced them to do that. Also, we lose a lot of money because China is a big, a huge market for US chip exports. They can be found in everything, smart forms. So this is one of the quotes from one of the articles with its fast ecosystem of factories. China continues to be a huge and lucrative market for US chip exports. One other thing too is this could completely shut down our base of manufacturing. We don't actually manufacture very many chips compared to the rest of the world. We design, but we actually, right, that's why- Well, yeah, that's the whole point of the chips act, is to invest. Right. But now we're closing off our market for that. Oh, being able to sell the finished product back. That's what we do. We sell them to China, so they build the phones and stuff for us. Oh, yeah, yeah, yeah, yeah. But we're saying you can't do that now. Yeah. Well, I mean, they would probably argue, well, you need to manufacture those iPhones here. You need to bring them all back home. But that's the argument that's not going to happen. Yeah, because it's going to cost $3,000 then for probably $5,000 for an iPhone. My phones are too expensive as it is. No, I mean, they're going to be built in other countries, but you don't have the economies of scale. They would argue that that's a good thing if it's built within other allies within the region. Not necessarily allies. Well, people there- Will you see it now I'm an ally? Borderline, yeah. They also have type- The enemy is my friend. Yeah, I really don't know where the industry goes if you lose one of your main suppliers. It becomes really uncompetitive to build. So we just like going to totally force this industry by supplementing and then not have customers. I mean, admittedly, I need to read a lot more on this than on the details, but yeah, it seems concerning. I definitely trust- I thought the Forbes article made a lot of good arguments on- And obviously, yeah, the Chamber of Commerce, the Treasury Department having these deep concerns. And the fact that it'll be an executive action, I mean, that automatically is like, well, if you can't get support of the legislative body of your country. I just can't get over it. I just- This is way beyond anything Trump did with Hawaii. Hawaii, is that how you say it? How do you say it? The phone? Oh, yeah, I'm not sure either. Yeah, Huawei were- Huawei. God, terrible. But this is so bad. It's so bad on so many fronts. It's actually possibly quite bad from a national security perspective. It's very bad from an economic competitive perspective. It's bad for, you believe it, all in the free market, even limited. I mean, the counter now is like, well, the free market, you have to intervene because it can't protect your national security concerns, which is yes, unless you make national security define it as everything. And then you're saying the free market can't function at all. Yeah, but I also don't- Yeah, even if it is the executive going back to that, yeah, there's not going to be the political will to reverse something like that. Because it's just going to damage a certain industry and a certain sector, but not people overall, at least not for some time. And then people will just see high prices for things, or they'll continue to hire inflation for things, but they won't necessarily trace it back to decisions like this. Right. They'll just be, yeah, nobody's going to want to touch the I'm weak on China. Right. So like I said, I don't think it's a particularly big industry, but I don't see how you build it with subsidies when you've lost your main buyer. And overall, it's just so bad for me. And I think I just can't explain it because I just hear the stuff all the time, these ideas from people, whenever they're talking about China, whether it's at conferences or where I work or what I'm reading, it's just everyone's like, we need to get tough on China. Nobody understands China is this real threat. And yeah, free market, that's just keeping us from being able to prepare. It's just giving China all these advantages without ever understanding how the free market truly works, without understanding how America should be competing, not just like trying to get rid of all of it, not considering how if everything is national security, then you disrupt the entire market. And governments, when they intervene too much in the free market, it's a disaster. I mean, see that when you, that's part of the problem with communism, is it entirely controls the economy. So you're not going that far, but you are having very far reaching of the government into the market. And that does not have a history of ever producing good results. Right. So I think the public ignores a lot of these things because it sounds technical and boring. And I actually had to read quite a bit to kind of understand how all these play together. And like you said, there's a lot of uncertainty still. I mean, the reason why we have these questions is that usually it takes months to years to figure out how these rules actually get applied. It's a lot of red tape. It's a lot of like you make these declarations. But I mean, even with the subsidies too, there was a lot of lack of clarity of who would qualify to get subsidies, how that process would be, what was the, I mean, all these announcements are law, but they're not figured out yet. And so no one knows how long it's going to take to implement them. But this type of war with China, this type of, it goes beyond a trade war. It's an economic war. And it is far more devastating to ourselves than anything that Trump did. I mean, Trump hurt the U.S. economy. There's some, you know, modest inflation that came from higher prices from raising these tariffs on Chinese goods. We lost, stopped selling as much to China. We still bought as much from China, we stopped selling as much to China. I mean, those were all negative effects. But this affects not only like the pure numbers of buying and selling, but the building of technology itself and how companies work and participating in multinational companies. And, you know, more incentive for them to be located elsewhere. I don't even know how it works though, if they had any U.S. technology, they would still be. I mean, it's, it sounds technical, but it's really dramatic. If they were ever implemented the way it appears that they want it to be. Yeah. I mean, it definitely seems like an overstepping and to your point, not taking advantage of what America's true competitive advantages are and how it out-competed, you know, the Soviet Union. And how we also, we use talent, right? I mean, part of this is all in, you know, I was saying this week, people are like, why should we allow Chinese citizens to get PhDs and be involved in science research? Oh, yeah. Oh, really? Yeah. Oh, I can't talk too much about that. Yeah. Well, I mean, that hits real strongly. I mean, I think we mentioned before that was a core area of research that I did. And yeah, that's ridiculous. Because Chinese still to this day, at least through 2017, the latest data, their stay rates are at 90%. So 90% of Chinese PhDs in STEM that come here to study, they stay here and a good number of them, or the vast majority of them, end up getting green cards and becoming U.S. citizens. And very extraordinarily prolific U.S. citizens and contribute so much to the research and development and competitiveness of the United States. So to say, oh, we shouldn't allow that. I mean, there are cases, there are isolated cases where, yes, you know, they were spying, they were associated with some of the military with the state government. But the vast, vast majority of these hundreds of thousands that have come over the decades, end up being extraordinary assets for the U.S. So yeah, this is disturbing you hearing it. Yeah, the argument was that it's too much of a risk. The benefit does not outweigh the risk. Which is ridiculous. I mean, calculate the economic benefit. The benefit is really high and we lose economically, but ultimately we lose by not being able to have the latest technology. I mean, we're saying that China is hurting our ability to have technology. Yeah, I think no. So we're saying that, like, well, we can, we'll try to cripple them by not participating in it all. But meanwhile, they will find ways to continue to develop it. My impression is it's really about the gap, the gap in technology. We used to have this generational gap in technology. And because China and certain sectors, particularly like AI, have been able to close that significantly. But yeah, to that point of, oh, it's kind of a ridiculous argument. But yeah, I mean, let's just try to cripple China instead of investing more in everything that gave us this competitive advantage. We still want to have that brain drain. We should be like, we should open up. Yeah, we want to get the best of the best from China here because they're going to stay here. And they're going to be the vast majority are going to be loyal. And so much of our innovations comes from foreigners. I mean, so much because American citizens aren't willing to you. You know the grind and the pay compensation, especially for engineers and scientists is so poor. We're dependent on foreign scientists, engineers coming to our universities, working in these labs with the US government. If we didn't have this, the US would not be the most innovative economy. But and that's a huge advantage. Foreigners are not going to China. China is not going to brain drain anybody because China is a repressive, horrible society for foreigners coming. We're always at the advantage into like cripple our advantage there. Right. So we're saying we're protecting the gap where we say focused on this gap instead of we want to just be we can increase it this way instead of like slowing them down. Yeah. Well, we've said for a long time like during the Trump trade war, we're really good at innovation. We're really good at this stuff. I mean, the reason why we don't build microchips is because we do the design and we innovate and it's not our comparative advantage to have the factories. Look at the vaccine to like another area. I mean, I think I saw like pharmaceuticals mentioned in this area of kind of like strategic national security concerns. Everything. But yes, pharmaceuticals. But yeah, I mean, look at look at what we did. I mean, one good thing that Trump can't brag about because people will boo him on the campaign trial is the operation warp speed. That was an extraordinary development and confluence of kind of like government research and then corporate know how and manufacturing that led to an absolutely innovative, unbelievable RNA based vaccine. China still hasn't replicated that their vaccines a huge failure and a huge reason why they haven't been comfortable opening up their society. But yeah, I mean, this is our huge advantage is the openness, the innovation, the free market, the testing of ideas. So to go against that. We're shutting it down. And by shutting it down with China, who's like one of the biggest economies along with the United States, you have economies of scale are important. And so it is not you can't just make up with that that amount of loss. So yes, so I mean, all we're hurting ourselves in the name of hurting China. Yeah. And I feel like it's just it's probably that mentality of working in national security here where you're so focused on the risk and containing the risk and what your enemy adversaries doing and not understanding maybe what America's real competitive advantages. And because you haven't been exposed to that or so I think it's just not well, one, you know, just to hear like the stories like exaggerated of spot like why are we allowing Chinese students to come as the undergrads, but let alone allowing them to stay as PhDs and that they then their visa will expire. And then they end up in China contributing to China's I mean, to hear how proper that is without the actual data, you know, that we've talked about to just hear like what we national. I mean, it sounds sometimes logical if you don't have the facts because it would be like, well, the national security, we can't allow economics then to make the US vulnerable to attack. Which I mean, on the face of it, I guess this sort of makes sense. But it's about it's about but there's a limit action. It's you don't want them stealing, but they're if you're focused on innovation doesn't matter. Right. That's a counter argument completely to the being concerned about stealing, which is especially free market is that you innovate faster. There's going to be if you're the one innovating, there's going to be a gap that you can take advantage of. Yeah. And then yeah, you can do things to prevent corporate espionage. I mean, yeah, all of these things. I mean, I'm not saying yeah, you definitely should have all of these in place. Right. No, I'm just saying yeah, yeah, we're not arguing against that. Yeah. But these measures, these measures are really unprecedented and Severe handed motivated by people who didn't take a lot of economics classes. Yeah, that's true. These are all the all the economists that are in the government in the Treasury Department are like, what are we doing here? Yeah. Yeah. So anyway, it's a very disturbing trend. And I guess we'll just have to keep an eye on it and see where it goes. Yeah. No, I mean, we're really interesting topic for sure. And I mentioned her as Sarah Danzman. So we're going to have her on as a guest one of these days. She and I have spoken about it. Oh, okay. Yeah. And she's been testifying to Congress several times on these issues. Okay. Yeah, that'd be really interesting getting her in. Yeah. Yeah. Very good. Was that episode? That is an episode. That's good. It's a good conversation. This brings us to the end of this episode of Kellogg's Global Politics. You can visit our website at www.kelloggsglobalpolitics.com and follow us on Twitter @globalkellogg or me, @arkellogg. You can also reach us by email. So anita@kelloggsglobalpolitics.com and myself, ryan@kelloggsglobalpolitics.com. And as always, please see the show notes for all the articles we discussed in this episode and leave a rating and review on your favorite podcast provider. Thanks, everyone. Thanks, everybody. Bye.