Iran War Updates and A New Day in Japan?

In this episode, we discuss the new (or not so new) developments in the U.S. war with Iran. Relatedly, we also analyze the U.S.-Israeli divide in formulating a peace deal with Hamas, and the recent emergence of a Saudi-Turkey-Pakistan defense alliance.

We then turn to Japan, where the U.S. recently bailed out the Japanese yen amidst Japan’s economic woes. We also examine the almost one-year tenure of Japan’s first female Prime Minister, Sanae Takaichi, and Japan’s shift to the right, particularly in matters of military defense.  

Topics Discussed in this Episode

• 1:05 - Anita’s podcast guest appearances
• 3:35 - Iran-US War, Gaza Peace Plan, and Saudi-Turkey-Pakistan defense pact
• 39:15 - A New Day in Japan?

Articles and Resources Mentioned in Episode

Anita’s podcast guest appearances

• Polypolitics (‘The Economic Battlefield with Dr. Anita Kellogg’)
• Net Zero Compare (‘Why Geopolitical Risk Now Belongs in Corporate Sustainability Strategy’)
• Invezz (‘Iran conflict is going to be difficult to end, says Dr Anita Kellogg on Zero Sum’)

Topic 1: Iran-US War, Gaza Peace Plan, and Saudi-Turkey-Pakistan defence pact

• Iran’s New Grand Strategy (Foreign Affairs)
• How the Axis of Resistance Recovered (Foreign Affairs)
• The War That Could Swallow the World (NYT; David French)
• How long can Iran weaponise Hormuz? (The Economist)

Topic 2: A New Day in Japan?

• When Japan buys yen, it unwinds a dangerous trade (The Economist)
• The Return of Japanese Hard Power (Foreign Affairs)
• Why Antiwar Protesters Are Rallying in Japan (NY Times)

Follow Us

• Show Website: www.kelloggsglobalpolitics.com
• Show Twitter: @GlobalKellogg
• Anita’s Twitter: @arkellogg
• Show YouTube

Transcript

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Anita Kellogg: [00:00:00] I’m Anita, and I'm here with my co-host, Ryan 

Ryan Kellogg: Hi, and glad to be here. 

Anita Kellogg: In today's episode, we discuss the new or not so new developments in the US war with Iran. Relatedly, we also analyze the US-Israeli divide in formulating a peace plan with Hamas and the recent emergence of a Saudi-Turkey-Pakistan defense analysis.

We then turn to Japan, where the US recently bailed out the Japanese yen amidst Japanese economic woes. We also examine the almost one-year tenure of Japan's first female prime minister, Sanae Takaichi, and Japan's shift to the right, particularly in matters of military defense. So we took off a few weeks because we had a big change in our life.

Ryan Kellogg: Yeah. Yeah, you could say that. 

Anita Kellogg: So we moved to a new house, and, and I've been busy with that 

Ryan Kellogg: Yeah. Yeah, it's pretty, pretty overwhelming, um, just, uh, just making the move and all that's involved with that. Number of boxes, of packing and unpacking. I mean, it's, it's exhausting, and the most [00:01:00] excited about the move is the fact that we won't have to move again anytime soon, which is very exciting for me.

Anita Kellogg: We hope so. Yeah. You never know what life is gonna throw at you. 

Ryan Kellogg: Okay. 

Anita Kellogg: But- 

Ryan Kellogg: You got something in mind? 

Anita Kellogg: No. 

Ryan Kellogg: Okay. 

Anita Kellogg: Just saying. Can't count on it. 

Ryan Kellogg: But beyond that, you also started a new academic year at the National Defense University, so you taught for the first time- Mm-hmm ... this semester. Started 

Anita Kellogg: classes last week.

Ryan Kellogg: Yep, yep. So how, how are things going? How are things shaping up? 

Anita Kellogg: It's good. It's always exciting in a new year. Uh, as I say to my colleagues, um, it's different this year, a lot of changes to our curriculum, and our class sizes are a lot bigger, so that kind of stinks some, but... 

Ryan Kellogg: Mm. '

Anita Kellogg: Cause, like, a seminar used to max out at 16, but it was probably average around 14, and the seminar I have now is 19.

So it's a little trickier, I think, to have the flow of a seminar [00:02:00] the more people you have. 

Ryan Kellogg: Yeah. 

Anita Kellogg: But the class that I taught went well. I mean, there was a lot of good conversation, and I was surprised. Like, everybody got involved except for maybe, like, one person, so it 

Ryan Kellogg: went well. Okay. Well, no, that's good. I mean, I think the other big thing that you've been, you've been, uh, hitting the podcast circuit, trying to, trying to promote this podcast, but also sharing your in-depth knowledge on China and, uh, critical mineral supplies, uh, with, uh, with other podcasts.

Uh, d- talk a little bit about that. Who'd you speak with? 

Anita Kellogg: So recently, I went on the Net Zero Compare podcast, which, where we talked about critical minerals and, uh, in the defense industry and the importance of that to the overall energy industry. Then I was on the PolyPolitics podcast, where they have a big YouTube following, and that was on more general geopolitics, as was Invesz's Zero Sum podcast, where I talked about the implications of geopolitics on [00:03:00] finance decision-making.

So we'll have links to all those, and hopefully you'll check them out and enjoy. 

Ryan Kellogg: Yeah. Yeah, that's real exciting. 

Anita Kellogg: Okay. Today we're going to begin with an Iran war update and look at the new and not so new developments. So when I say not so new, we seem to be at an impasse that hasn't really changed much over the past few months, and we just wanted to look at the status of the US-brokered ceasefire deal and peace plan.

Ryan Kellogg: Yeah, so it's definitely been a on-and-off-again process, uh, with obviously a lot of, uh, hyperbola and anticipation and market management, uh, coming from the administration. But essentially where things sit now is that the original ceasefire that began in June, uh, that the Trump administration announced, that came with a 60-day pause that was meant to negotiate an [00:04:00] end to the war and rein in Iran's nuclear program, uh, that deadline has officially passed, and there really doesn't seem to be a clear endpoint to the conflict.

So I think that's, that's the real struggle, uh, faced with the region right now. So the, uh, abandoned June plan admittedly, uh, would have been a boon for Iran, actually would have locked in, uh, a pretty number of significant gains for them, including sanctions relief, uh, a reconstruction fund, as well as a delay in any sort of concessions around nuclear enrichment.

That being said, uh, Iran, as we'll talk a little bit later, is, uh, is feeling confident. I mean, they, they feel like they have emerged, which I think is the correct position. They have emerged from this conflict at a much stronger position, uh, than they were in in February. And based on that, the leaders have optimat- opted to escalate [00:05:00] instead, believing that they have greater pain tolerance and can wait out the Trump administration.

So that's really where-- why things have fallen apart, because they're not willing to open the Strait of Hormuz, uh, unless the US, um, takes actions and, and relieves sanctions. 

Anita Kellogg: Yeah. I was asked recently why Iran has kept fighting and not folded, and the answer is that they can, right? It's, it's sort of existential for them to, to not give in, and they've managed to accrue a significant amount of power by keeping the Strait of Hormuz closed 

Ryan Kellogg: Yeah.

Yeah, and I think that was the, the, the biggest shift is the fact that, I mean, this threat always existed, um, but it was never demonstrated in reality exactly how, um, Iran would, would accomplish, you know, this, this shutting in. But-- And, and obviously the Trump administration has talked a lot about, you know, in terms of its accomplishments, is around, like, the neutralization [00:06:00] of the traditional Iranian navy.

But the fact is, I mean, Iran's able to do this, uh, through asymmetric means, primarily through drones, fast boats, and then the threat of mining of, of the strait itself, and that's been enough to effectively disrupt, uh, all travel to the strait, which a-again, is, is now, um, been shut in again after briefly opening up to maybe two-thirds of its traffic, is now at a much, uh, much lower throughput.

Anita Kellogg: Yeah, I think it was not fully anticipated how effective low-cost one-way drones would be that are coming out of Iran when we deteriorated some of their more conventional capabilities. And I think in being able to close the strait, that certainly was not a factor that was considered, uh, to be as damaging as it has been.

And, you know, you don't have to hit every single, uh, ship that goes through the strait. You just need to hit a couple to have enough fear, and, you know, no one's gonna insure [00:07:00] it to be able to close off, off the strait. So you don't have to have superior military power. And Iran's been a great lesson in how, uh, again, how a country that is far outmatched militarily can find itself, as you said, in a stronger position after a war has started 

Ryan Kellogg: Yeah.

Yeah. So I think it, it really, it, uh, having discovered this economic lever, it doesn't seem like something that it's going to, uh, release anytime soon, and it's still very much pushing kind of in its direct negotiations with Oman, you know, a formal fee system, which I've seen, uh, ranging anywhere, you know, based on The Economist's, uh, recent analysis, anywhere ranging from, like, upwards of $20 to $30 billion a year, which I think people see as pretty extreme, to a more realistic, like, $2 to $3 billion a year, which would be adequate, um, without encouraging [00:08:00] alternative, um, means of getting around the Strait of Hormuz, uh, while assuring a heavy enough flow of traffic.

'Cause I think the things being proposed within the Iranian, uh, leadership and, and legislative process is something that's like a per ton, uh, fee that's charged for, for ships based on kinda what they contain and, and, and things along those lines. 

Anita Kellogg: What I'm wondering, though, is what is Iran's incentive to open it even with a fee-based system because they're able to...

How they're imposing economic cost is through the close down of the strait and the oil shock that's affecting much of the world, as well as other goods that are highly dependent on shipment through the strait. 

Ryan Kellogg: Yeah, no, I think it's, I mean, it has to be coupled with sanction relief. I mean, that's what they're pushing for.

The, and that's where the point of disagreement between the US and Iran have landed, is that the US wants the strait open and then talk about sanction relief, while Iran wants the opposite. It wants sanction relief in exchange for the strait being [00:09:00] opened. So, you know, with, with that being said, um, you know, uh, countries have been taking action in order to reduce the over- the amount of leverage that Iran has over the region.

I think it's particularly acute, and I didn't think a lot about this, um, but it's more on the import side for the Gulf states. Uh, the fact that 95% of the grain shipment, you know, for a lot of these Gulf nations, uh, come through the Strait and are, aren't exposed, and they do have, you know, four to six months of supply of grains.

Uh, but it's, it's a more existential, uh, kind of acute thing for that region, uh, even as opposed to, uh, Southeast Asia or Europe that depends on kind of the LNG, the, and, and fuel, uh, exports coming, coming out of the Strait. So in this analysis that The Economist did, they did see, you know, there is a pathway to mitigate, you know, like the oil shipments from these additional pipelines being built.

Even with that, you're still exposed five million barrels a day, which is a [00:10:00] big difference between like the 15 million pre-war condition to a five million, uh, barrel exposure. LNG, unfortunately, there's no way all of that comes from Qatar, uh, and there's no plan to build additional gas pipelines or an additional LNG export terminal that would have to be built in like, uh, like an Oman, you know, for instance, further down the Arabian Peninsula.

So, you know, either way you look at it, I mean, they just geographically kind of have this, um, albeit shrinking, uh, amount of leverage that now that they've demonstrated this asymmetrical approach, um, it's, it definitely from a position of what seemed to be extraordinary weakness in February, and obviously that together with the success in Venezuela is what drove the administration to roll the dice and, and, and try for regime change to this point where...

Yeah, uh, they're easily the strongest they've been since prior to, um, Oc- October 7th and, and Hamas' interdiction in, in [00:11:00] Israel. Uh, so it's really an extraordinary turnaround. Um, and I think all the parties involved are, are kind of adjusting to that. 

Anita Kellogg: Yeah. I think there are a lot of lessons to learn here, and I think, again, you know, the US keeps getting bogged down in wars in the Middle East.

I mean, that does seem to be our MO. Even, even as we shifted our focus to Asia, the fact that we decided to start another war in the Middle East, which looks like it could go on for quite a long period of time, I mean, years even, because there's no real insight, no real endgame. We don't know how to end the war 

Ryan Kellogg: Yeah, certainly not on terms that the administration envisions.

I mean, I, I mean, a lot of people were thinking complete capitulation by the US, but I think even with the Trump administration focused strictly on the economic parameters, that complete capitulation would be too damaging to his long-term legacy. That [00:12:00] would be unacceptable. So I think dragging it out, and there seems to be an acceptance within the administration that whatever damage to the, for the midterms in November is locked in.

Yeah. There's kind of this acknowledgement now that, hey, gas prices are gonna be higher for a longer period of time, so they're gonna accept, you know, whatever that means, you know, for, for the Republicans, uh, heading into those elections. 

Anita Kellogg: Yeah, I think that's true. I think the administration's been confronted though too with, uh How much munitions we actually have, right?

So you have had periodic strikes go on, uh, with Iran, but I think Iran knows too that we're sort of handicapped because we can only replenish our missiles so quickly, and we don't want to diminish the stockpiles to a point where we couldn't, uh, field a war with a near-peer competitor. So there's a lot of concerns, and that's become a huge constraint on our war and the type of actions that [00:13:00] we actually have to maneuver with Iran.

The fact that we learned that we can't just, you know, keep bombing them and getting capitulation because we have limits on to the extent to which we can bomb them, and we've been intercepting all their missiles. But they're using, you know, low-cost drones that cost not even two thousand dollars, and we're intercepting them with missiles that are in the millions of dollars.

So I think that's an important component of this war too, that it has been getting more attention and Trump's frustration with the defense primes and that they can't just ramp up production to increase munition replenishment. That there's a lot of complications in the industrial base to do that, and it would cost, it costs a lot of money, which is also a problem the Defense Department is facing because of the cost of the war and the political divisions in the Congress in giving further funding for the war.

Ryan Kellogg: Yeah. Yeah, 'cause, um, I mean, I know, uh, [00:14:00] Secretary Hegseth got a lot of flack within Congress, even within, um, members of the Republican Party around the request for the one point five trillion dollar budget, you know, for, for the war. Were, were in part to help support the cost of the war and replenish those munitions.

Anita Kellogg: Just become a huge problem for the Defense Department, just their own, uh, budget being squeezed because of not getting the additional money allocated. At the same time, they need to replenish these missiles, which it costs a lot of money to ask Lockheed Martin. It's not the same to add another line. It's not the same cost as a production line.

You know, it, it costs significantly more workers working overtime, you know, the overhead. Mm-hmm. Uh, there's even just getting enough workers. There's a lot of complications that will cost a lot of money to replenish these, and it's important that we can do so in a timely manner because there is, uh, the real problem of how much we can dominate a [00:15:00] near-peer competitor, by which everyone means probably China.

Ryan Kellogg: Right. Right. Yeah, no, definitely. And I think that, uh, in terms of the success that, um, the Iranian leadership has had in terms of de- deploying kind of this asymmetrical warfare, I thought there was a, a great article in Foreign Affairs by, uh, Narjes, uh, Bejoloji and Vali Nasr. Uh, and these authors really focused on the fact that in decapitating the top rungs of the leadership, which, you know, frankly was kind of ossified and locked in, uh, a revolutionary, you know, that 1979 mindset, um, around, uh, theocracy and Islamic fundamentalism, and talked a lot about this third generation.

And the- these are even leaders that aren't shaped by the Iran-Iraq War- Mm-hmm ... uh, in the 1980s. Uh, much more technocratic, probably better educated, and I think pragmatic in their focus. So the authors give a lot of [00:16:00] credence to how quickly Tehran was able to adapt and prepare for this conflict following the 12-day war, which we talked about on this podcast, and I personally saw it as, like, devastating to Iran, like a complete capitulation and humiliation.

And I think to the regime's credit, uh, they took a lot of actions, uh, particularly around, uh, decentralization of decision-making. I think we talked about that before, how the IRGC, um, you know, split up kind of its military command and control units across all the provincial capitals. Uh, but then I wasn't aware of the extent to, um, that they, that they did that in kind of all areas of, of society as well, and, and then just using specifically the strategy of these drone attacks, knowing, you know, how much, uh, ordnance was, like, depleted during the 12-day war to defend [00:17:00] Israeli cities, making a, a concerted push to attack US bases, to attack kind of these Gulf states, using these cheap drones in order to outlast, you know, what they're currently doing, outlasting the US military.

Um, so it's very, uh... I mean, you have to respect it. I mean, it's very clever for, for- 

Anita Kellogg: A lot of lessons to be learned about- Yeah ... strategy in, in asymmetrical warfare, for sure. 

Ryan Kellogg: Yeah, especially for something-- I mean, I thought this, yeah, what really resonated about this article was, yeah, the nimbleness, 'cause you would not think before that, you know, these old, you know, the, the head of the, the Khamenei, 89 years old or whatever when he was, when he was killed.

I mean, that's, that's kind of the image of Iranian leadership, is something locked in this old backwards mindset from a generation ago. Uh, so you wouldn't think that, that a nation state kind of that ossified would be able to make these big changes in, like, less than 12 months, I mean, we're talking from [00:18:00] June 2025 to February 2026, to make these changes in their strategic, um, uh, decision-making, knowing that With this administration, with the current Israeli administration, that this wasn't gonna be the end of the conflict, that something like this would happen, and then to have a strategy to fight on their terms instead of Israeli-US terms.

Uh, so I thought it, yeah, I thought it was an excellent article. Uh, it made, made a lot of great point. It talked about, like, the missile thing, too. I mean, they, they spread out the, uh, missile locations, which were pretty well mapped out for the 12-day war, and that's why... I mean, probably one of the biggest shocking things is the fact that 70, 80% of that missile capacity is still in place after all of that ordnance was used in the bombings, uh, from, like, February to, to May of this year.

Anita Kellogg: Yeah, and I wanna say it's not just drones, right? It is the complement of using cheap drones with the missiles that they still have, uh, against US targets in, [00:19:00] in the Middle East. And I've mentioned this before. I mean, it shows so much that, that we think of conflict in terms of absolute military power, but conflict is much more complicated, such as the economics, economic statecraft is certainly not a separate phenomenon.

It's not a soft power, that it's very integral to conflict, and that these other forms of strategy can offset, uh, weaknesses. And I agree with you. After the 12-day war, Iran looked very weak, and even when we started this war, you know, I didn't think that it would last this long. I thought Iran would have to capitulate more than in- instead of doing nothing, uh, because I didn't think about as much as our unwillingness, of course, to, to use more force than we have, and the fact that I think we don't wanna push Iranian leadership into a place of [00:20:00] instability, right?

Uh, yeah, so I mean, I think hopefully that our leaders are taking lessons not only about this war, but in the type of munitions that may be effective to use in other wars, such as with potential conflict with China. 

Ryan Kellogg: Yeah. Yeah, no, I, I think it definitely will push the US in, in directions, um, you know, understanding that the way that Iran waged this war and its lessons and the ability to, you know, kind of fight on their terms, you know, requires us to be as adaptive.

'Cause honestly,

going into a Indo-Pacific theater with a Japan-- with a China, like, fully reconstituted, I mean, we're going up against a more powerful, more powerful than us in terms of certainly close to the Chinese homeland. Uh, so embracing those kind of asymmetric, uh, advanced tech, uh, [00:21:00] drone-based warfare is the only way to defeat, you know, an e- enemy and Yeah.

I mean, yeah. So I think it's, it, it's pretty extraordinary, um, you know, between this and then the Russia-Ukraine War, um, seeing how modern warfare is kind of like being shaped. I mean, a lot of people have compared this to, you know, like a, a World War I with, like, these emerging sort of technologies and the change in tactics and, and, and warfare.

Um, David French in his article, of course, you know, tied in the, the more unpleasant aspects of, uh, the comparisons between, like, World War I or even World War II. Uh, but you are, you-- within this conflict, you are seeing much wider regional involvement. I mean, Ukraine attacked, uh, Iranian, um, ships, I think recently.

Obviously, both Russia and China are known to be supplying intelligence, uh, to the Iranian military to help in their strikes of, uh, of US and [00:22:00] Israeli, uh, targets within the region. And then, um, I mean, I think China's also was, uh, was shown to be up providing, you know, a significant number of missiles to Iran as well.

So kind of there's a building kind of global nature of it. I mean, I, I think even French was saying, you know, you're not pushing that too far that this could lead to a global war 'cause I don't think it's in anybody's interest, and you don't have kind of the alliance system, uh, set up. But nevertheless, it is, it's definitely a global conflict fought through proxies indirectly.

You know, it's, it's, it's a complicated, uh, complicated situation. Far more complicated than I think what the administration expected in February . 

Anita Kellogg: Uh, I think though, I mean, this has obviously made the United States militarily look weak and not able to, in, in not being able to, um, get, uh, Iranian capitulation.

But I think the optimistic side of me does think that we're learning a lot [00:23:00] from this war that's important and that if we-- not that we should have engaged in this, 'cause I totally think we shouldn't. But, uh, if, if we didn't have these challenges, then maybe we would have been less prepared for these new technologies in any sort of future conflict 

Ryan Kellogg: Yeah.

No, I think it is. I think it is, it's always better to get these lessons in a relatively low casualty, uh, sort of environment. I mean, obviously we sh- were and should have been learning these lessons via Ukraine- Yeah ... um, where our tech is, you know, widely deployed against, you know, a modern adversary, uh, using the most advanced, like, drone autonomous warfare techniques, uh, that are being deployed in the world.

But yeah, seeing this, um, firsthand, I guess you could say, in, in this theater is definitely a, a, a powerful, uh, lesson, uh, for any future conflict with China. And obviously the Chinese are taking similar [00:24:00] lessons away, uh, from, from both of those conflicts in terms of how, how they adjust and adapt as well.

Anita Kellogg: Yeah, and my, I do think there's a difference in actually fighting against it yourself than merely learning lessons, though, too. Not that, not that China won't adapt in a way that's truly challenging for us, but I think that almost that we needed to fight this, and that it is different than China, who's not actually militarily fighting in a conflict.

Ryan Kellogg: Yeah, that's true. That's true. I mean, there's, uh ... And e- even the level of coordination that exists between, like, the Russian and Chinese militaries or the Chinese and Iranian militaries is much less than, like, our coordination with the Ukrainian military. So the, the lessons, even if they're not directly fighting, are, like, one order of magnitude, you know, away from even what, what we're gleaning.

So, so yeah, within the, the region, you know, this is having a, a variety of, of, uh, ripple [00:25:00] effects. Um, I think one of the other elements that is, has been pointed out and, and certainly is a, a factor in the upcoming Israeli national elections in October, is the fact that the proxy networks of Iran too also haven't been disassembled, um, which is again, surprising coming out of that 12-day war.

I mean, one, we all know the, the story in Gaza, you know, the, the huge amount of devastation, the 70,000, uh, Gazans lost, um, and then Hama- Hamas, you know, supposedly devastated from it. But the fact is they still control, uh, about half, half of the, the territory. And then, uh, the same with Hezbollah. So there's been a lot of Israeli action in, uh, Lebanon, and this is following, again, part of the 12-day war or maybe just prior was the, the famous pager attack- Right

which supposedly decapitated a lot of Hezbollah, uh, leadership. But they have apparently offered much stiffer [00:26:00] resistance than, than was expected, so they're still active. And then, of course, the Houthis in, uh, in Yemen, and they've recently started, um, again, attacking vessels going through the Red Sea, which is 

Anita Kellogg: Which I was just gonna say is also one of those tactics that's hurting the diversion around the Hormuz Strait, right?

So, uh, it makes it harder to divert trade when you have these new attacks in the Red Sea. 

Ryan Kellogg: Yep. Yep. Yeah, but there is, so, a, another article, uh, within Foreign Affairs that was really good that kind of explained, well, how, how are these proxy networks accomplishing this, was by, uh, Peter Salisbury with Christian Paus and Henry Thompson, and really explained that the success came about from probably the last 10 years, that Iran, again, has been able to decentralize, uh, so much of its support.

But what was really interesting is the fact that it, it's not just, like, the organization and the training, but it's also the supply chain, [00:27:00] that these disparate, um, decentralized organizations aren't dependent on stuff, supplies coming from Iran, but it's rather that e- each one of these, Hamas, Hezbollah, the Houthis, can all build and field their own one-way attack drones and then fire them at targets up to 1,600 miles away.

So they actually have global supply chains, you know, comparable to a corporation, um, that they are able to independently manage, and all of this centers around China, really, 'cause it's the Chinese that have these dual use components, particularly around drone manufacturing that's completely unregulated.

You know, they s- they don't restrict, like, who can buy it. These organizations set up shell, uh, companies, and then are able to, you know, essentially, as these parts come together at different ports around the Middle East, um, they're able to pull them together, and any time one of them is, like, captured or, like, caught in a sanctions web, they [00:28:00] just get rid of that shell company and open up a different shell company.

So essentially, they're able to do this. Uh, one example they provided was they're using, like, Chinese commercial websites like Alibaba, uh, and that they can order these parts for, like, $1,500. So all Hezbollah needs, uh, to retrofit this into kind of these first-person drones and, and target Israel is a credit card, access to YouTube, and then a bit of, bit of manufacturing acumen.

So it's ... I, I found it really extraordinary that it's, like, that decentralized, that the whole idea was already antiquated, that if you just decapitate Tehran, which already was inaccurate 'cause they made all these adaptions to decentralize internally. But they had also before that had decentralized the whole dependence level on Tehran, um, for their proxy networks as well.

So it was just flawed on, like, multiple levels, that idea of, like, you can cut off the [00:29:00] head of the snake and then everything's gonna die. 

Anita Kellogg: Yeah, the, the idea that you could cut off the leadership within these organizations themselves, right? Which is definitely the premise that Israel had been operating on, and sort of the premise in how we fought terrorism for so long as well- Mm-hmm

to go after. And, and maybe that was more successful in the past, but these organizations keep learning from each other, and this is one way that they have learned, uh, to survive and, and still accomplish their mission. But again, drones have changed everything. Uh, you know, they're able to rely on cheap Chinese drones, which makes a huge difference.

But we've even seen, you know, countries being able, like Ukraine, how fast they learned how to manufacture their own drones. 

Ryan Kellogg: Mm-hmm. 

Anita Kellogg: I, like I said, uh, like you alluded to, I do think there is an apt analogy to World War I in just how technology is completely changing the tools that are being used to fight wars, and how that is giving [00:30:00] greater asymmetrical power to weaker organizations and states.

Ryan Kellogg: Yeah. Yeah, so it's, I mean, it really raises the question of like, what, what does the US do to, to counter these? Um, I mean, I know this article offered up some, some things, uh, around kind of striking deals with Iran and its non-state allies, which actually, I mean, the Trump administration in this deal with Hamas that supposedly the Board of Peace, which if you remember eventually originally involved Tony Blair as like heading up.

Oh. Tony Blair's involvement, psh. Oh, yeah. I don't think he lasted more than a month in it. So, uh, so it's just Trump. Trump's like the one heading it up. Okay. Um, but- Maybe that's why I don't hear much about it. But yeah, so they supposedly have been in talks, I guess, it's not really clear. It's not always clear what comes out of this administration.

Um, but they did announce, uh, uh, last month a, a deal, again, going back to these, the ideas you have to talk with these non-state actors, uh, with [00:31:00] Hamas regarding the group's disarmament and the withdrawal of Israeli forces. But what's happened around this is that both, Israel's rejected the deal 'cause again, I mentioned, uh, you have the upcoming national elections in October.

Netanyahu's actually in a lot of trouble. Uh, the Likud Party is trailing in the polls quite significantly against, uh, Gadi Eizenkot, which is the, the leader of the, the new centrist Yesh Atid Party, and he's former IDF chief. So this isn't, this isn't a guy, a dove by any means, but this is a one who believes in like accountability, uh, transparency, things along those lines, and he actually quit from the war council eight months- Right

into the war. Mm-hmm. So he has a, a, based on Polymarket, has a 53% chance of winning the election currently, so he's, he's in a strong position. But part of this, because of his parliamentary system, Likud's trying to appeal to the other, uh, right-wing [00:32:00] parties and their voters, that he has to take like this hard stance.

But it's kind of a balancing act for him because he doesn't wanna offend Trump too much. Like, but he did come out very noticeably and kinda rejected the terms of this agreement which require for Israeli forces to withdraw from Gaza, which is seen as, as unacceptable. That being said, Hamas also found it unacceptable, uh, because they, uh, would have to disarm.

Um, but what they're saying is that it wouldn't really be disarming 'cause we would store our weapons in Gaza under Palestinian Authority supervision. Um, so it doesn't sound real hopeful, uh, in terms of, of that aspect of the deal. 

Anita Kellogg: And then again, we keep announcing deals, uh, by which we, I mean, the United States keeps announcing deals with parties, and then the parties are like, "No, we didn't, we didn't agree."

We 

Ryan Kellogg: didn't actually agree to... Yeah, I always wonder who they're talking to. Maybe they're just talking to themselves. I don't... 

Anita Kellogg: Uh, I mean, they do this with Iran all the time. Iran's like, "We're not even negotiating."[00:33:00] 

Ryan Kellogg: They're talking to somebody, right? 

Anita Kellogg: I think they're talking to, like, intermediaries, right? Yeah. And, and saying a deal has been reached even when the other side hasn't confirmed it. 

Ryan Kellogg: Right, yeah, yeah, yeah. Yeah, so it's, um, uh, so I guess to, to salvage this deal, Jared Kushner- 

Anita Kellogg: He's not been very effective this term 

Ryan Kellogg: Well, who's been effective?

Anita Kellogg: No one has, but- I don't know that anyone... Can we have faith in Kushner coming to save the day when he hasn't done anything so far? 

Ryan Kellogg: I don't know, but he's coming supposedly to help salvage this, uh, this, uh, board of peace plan for the Gaza Strip. Yeah, and that- that'll be next week sometime, yeah. And then in the background, so all of this, again, flowing from, uh, the war and what's happening, is that, uh, Saudi Arabia, Pakistan, and Turkey surprised everybody with the announcement of a defense pact on August 7th, [00:34:00] and this included actually a mutual defense clause, uh, similar to NATO's Article 5.

And the, the pact was notable because it represents this union between the most powerful Sunni nations, you know, within the greater Near East region. Um, obviously, Turkey, probably one of the biggest, you know, outside the US, um, militaries within NATO, Pakistan, a nuclear power, and then Saudi Arabia with, you know, significant wealth through its sovereign wealth fund.

So together, I mean, it represents a pretty powerful, in terms of their collective resources, alliance. So how people read this is, you know, one, obviously it's a, uh, a counterweight to Iran and its renewed strength within the region, but also to Israel, who, you know, maybe prior to, uh, this most recent war was obviously surging.

I mean, that, I think- Right ... the 12-day war sent shocks, you know, through the region, even if it was [00:35:00] against their, uh, nominal Shia enemy, um, Iran. Nevertheless, the fact that Israel was that powerful, um, needed to be, to be countered. But then the o- obvious other one is that, um, the US seeming much more unreliable and weakened, uh, following its failures, and I think in particular the attacks, you know, within the Gulf States and Saudi Arabia Uh, the fact that how effective Iran was in attacking our bases, which frankly hasn't been very transparent, you know, from this administration, the amount of damage that was done.

But I thought one notable thing that was pointed out in the articles is that we actually had to abandon our base in Iraq, Camp Victory, that was set up in 2003 because the extent of the damage was so great that it was, was unusable, um, as a location anymore. So they've, uh, these countries see then that US defense, air defense systems were not sufficient to protect, you know, the US bases [00:36:00] or, um, the civilian infrastructure within the region.

So as a result, you know, it's seen as a signal of, well, let's, let's at least supplement or build something in addition to, you know, having to depend on the US within the area. 

Anita Kellogg: I find this pretty fascinating, and I think the way it indicates the questioning about US, uh, continued commitment to defend, uh, again, we talk a lot about our missile depletion.

I mean, Trump is talking about it, and there is concern whether we'll continue to use these expensive missiles to support such as the civilian infrastructure and, and, and our allies. And as you were talking, it made me think, you know, they're not going to, but this would actually be a good time for China to make inroads, right?

'Cause, you know, it talked about all the deals it had made in the Middle East, but really unable to deliver militarily, and its absence is notable. But the, the small opening the US is giving, uh, kind of lucky that China is not walking through that door 

Ryan Kellogg: [00:37:00] Yeah. Yeah. I mean, that being said, I mean, obviously Turkey with kind of its NATO membership and then the Saudis, I mean, it, that's the, the thing.

Once kind of all your systems, you have kind of that built-in advantage to like serve. So a lot of the articles are s- kind of made the point of there's deep dissatisfaction with the decision-making obviously around this war and the services provided, but at the same time they feel kind of locked in place- Yeah

yeah, with the US. But that being said, I mean, uh, they obviously have made huge inroads into Pakistan, and, uh, when we talked about the brief conflict between Pakistan and India, you know, particularly the air-to-air interceptors, the Chinese look pretty good 'cause they were able to fire those from much further distances than I think the French-supplied systems.

Mm. Um, so China's definitely, you know, displaying, you know, some of its, its military technology, you know, via, via these alliances. Now that being said, we- going back to the, uh, the whole Article 5 thing, I think a lot of people are like dismissive of that and, you know, 'cause it's hard to [00:38:00] imagine, let's say there was another conflict between Pakistan and India.

There's no way Turkey and Saudi Arabia are getting involved- Yeah ... in that conflict. 

Anita Kellogg: I think yes. I think they would somehow redefine what an attack means. Right. Yeah. Yeah. But it's really, it's a really interesting development and, uh, and definitely something to keep, uh, an eye on as the Middle East itself seems to be rearranging itself where the US is not as dominant, where the US is slightly less dominant.

Ryan Kellogg: Yeah. Yep. No, I think that's, that's definitely accurate and, and not at all the situation one would predict back in February. 

Anita Kellogg: Yeah, it is- That's for sure ... it is pretty striking how fast things can change, and yeah, how different types of conflicts have different types of effects. Yeah. Well, moving to a completely new topic, Japan.

We wanted to look at the new prime minister. She was new last year, Sanae Takaichi, uh, who's a [00:39:00] hardline conservative, and the first female president, and the first female prime minister of Japan, and sort of what has been going on during the past year. First of all, I keep... Every time I hear things like this, I'm like, "And the US can't get a female president."

I mean, super sexist societies, super sexist societies have female leaders, and we can't get one. 

Ryan Kellogg: Yeah, but I think the key is that you need to have... It, it's gonna be a Republican, 100%. The first woman president's gonna be Republican. That was true for the UK., it was true for Japan. It has to be somebody from the right.

It could be a, a female that is not a feminist in any way and is not a threat to the dominant kind of male hierarchy. 

Anita Kellogg: Yeah. Well, this is an aside, but it always frustrates me. So, uh, the news that came out, uh, last month, end of last month, is that the US, in coordination with the Bank of Japan, bought, uh, a considerable amount of Japanese yen in order to prop up the [00:40:00] value of the yen.

This is a reflection of, one, the oil shock, right? When you have a country like Japan that is almost completely dependent on imports of food and fuel, it certainly has been hit very, very hard by the oil shock caused by the closure of the Strait of Hormuz, and this has, uh, caused rampant inflation, and the yen, the value of the yen was at its lowest point in four decades.

So this all led to the point where the US felt the need to prop up the yen. There's a, a lot of reasons why it was in our own interest. Uh, without intervention, Japan may have had to sell off a significant portion of its US Treasuries in order to boost its value, which would have caused bond rates to rise, which would have caused bond yields to rise and push up interest rates here in the United States 

Ryan Kellogg: Yeah.

Yeah, so it is, um... Yeah, I mean, it's notable because it is the first, like, coordinated action since, I think, um, uh, Fukushima and, and s- and the, uh, and [00:41:00] some of the activities in Japan, uh, in 2011, and then before that, going all the way back to the Asian financial crisis in the late '90s. So our intervention in currency markets is fairly rare.

Uh, obviously we've done it twice now, uh, 'cause we intervened with the Argentinian peso, uh, prior to one of, uh, Milei's, um, big elections, uh, which was very successful. Uh, he did very well in his elections- It's true ... obviously, so. So yeah, I think it, uh, if you are an ally, which, um, certainly, uh, Taiki Ichi is considered, you know, coming from the more conservative side of the LDP, LDP being by far the dominant party within Japan in the post-war period, and she's also a, uh, was a, a mentee of, uh, Shinzo Abe, who famously was very close to, to Trump.

Uh, so she's tried to play that up kinda in relations with, with the US. Um, but yeah, so d- uh, definitely, yeah, the points that you made around, um, you know, the Japanese consumer [00:42:00] getting hit by, by high amounts of, of, uh, inflationary pressure from, from energy imports, uh, and then also kind of the, the actions that tie into the, some of the things you'll talk about around the, the defense industry, but trying to stimulate the- Mm-hmm

the Japanese economy after, you know, frankly, for 20 years, I mean, they talk about the lost decade, but it's basically been 20 years of, of pretty stagnant growth and extremely low interest rates within Japan. So, you know, people presented this as kind of like, "Oh, this is a potential crisis." Uh, I think The Economist in its article is a lot more, um, just kind of like a unwinding of the carry trade and that, you know, Japan having greater inflation and having more economic growth isn't necessarily, like, a bad thing.

But it has to be done carefully 'cause as bad as our debt is, um- Yeah ... their debt's even higher, so, you know, concerns on, like, servicing that and they're, and they're around, obviously, the, the currency. 

Anita Kellogg: So a couple things, yeah, I didn't mention, I realized as you were talking. One, obviously, um, a stronger yen is good for us in [00:43:00] terms of exporting, right?

Mm-hmm. So Japanese consumers can actually afford, and we have a huge trade imbalance with Japan. But yes, um- Japan has one of the highest debt to GB- GDP in the world. It's 200- more than 200% of GDP, where compared to the US, which is quite high, is 123 by comparison. 

Ryan Kellogg: Yeah. Yep. Yeah, so then, you know, the concern becomes the servicing of that debt as interest rates.

It's like the short-term bonds roll over and you're refinancing, um, what rate you're gonna refinance in that debt and how much of a burden, 'cause obviously anything you spend on interest, that squeezes out other spending, social spending and stimulus programs and things like that for Japan. 

Anita Kellogg: So, uh, Japan's economy, though, I wouldn''t say it's a huge crisis, but definitely something that, that was concerning to, to both parties.

Uh, and then just in general, like you said, the last 20 years, but I thought, I thought Japan's economy had gotten better over the last decade. 

Ryan Kellogg: Yeah, I would say, and [00:44:00] again, the, the 20 years was from the early '90s to maybe 2010s, 2000. So I would say the last 10 years is certainly, you know, nothing spectacular, but, uh, I think the Nikkei, so their stock indices finally reached and surpassed its 1989 peak, but it literally took like 20 years for it to do so.

Yeah. 

Anita Kellogg: That's just sort of my perception. Uh, but of course, I mean, it's hard to grow your economy when your population is declining, and so that's when a big problem, uh, you know, identified in, in China, which where demographics are hitting that country, uh, harder first, right? Demographic decline that's expected to be in other Asian countries and, and eventually in the West, uh, particularly Europe, and if we keep our immigration policy as it is, uh, maybe the United States too.

So Japan's population fell by more than 3 million over the past five years, and so the, the fact that people are getting older, that they are not [00:45:00] replenishing, I mean, it's a huge problem, especially because it's a country that is not very pro-immigration itself. And so it's, it's hard to have economic stimulus when you have a decline in population and aren't looking for immigration to help out managing the needs of a greater proportion of older people, as well as just spark economic activity.

Ryan Kellogg: Yeah. Yeah, no, I think that's, I mean, that's the great conflict, I think, within Japanese society is that, yeah, because of these, these demographics, it would benefit a lot, you know, from more, um, more immigrants coming in, you know, particularly from, from Southeast Asia. But at the same time, you know, it's extremely isolationist and, and xenophobic, uh, historically.

So it's a real contrast because, you know, Japan in terms of its, its soft power, I mean, it's a, a superpower soft power. Right. Of course. I mean, its culture is, is universal appealing. This led, of course, to [00:46:00] a, um, a tourism boom, you know, particularly following its reopening within COVID. Uh, you know, lots of people from the US, Europe, um, other parts of Asia traveling to Japan.

And part of it is the even more universal appeal of, of its kind of anime and, and video games and things along those lines. But there's actually a backlash against the number of tourists, even though economically that's a huge, you know, lifeline to Japan. But because, again, they just, there's, uh, within, I would say more the rural areas of Japan, uh, and you could say this about any country , they don't like foreigners that much.

We, you know, we saw that, we saw that living in the Netherlands. They don't like I 

Anita Kellogg: mean, they don't- And there are protests in Europe against American tourists because American tourism has injected a lot of much needed money into the European economies. But these, yeah, smaller towns are not thrilled to see a whole bunch of Americans, you know, come in, drive maybe the prices of their own food and lodging, and just in general aren't happy about [00:47:00] it and have launched their own protests.

So I think it's not an uncommon phenomenon, but 

Ryan Kellogg: Yeah. Yeah. But the, uh, part of this,

um, with, uh, Takeichi too is, you know, it is, there is a MAGA infused as we're seeing, you know, within Europe, within Latin America, uh, this kind of MAGA infused Japan First, um, sort of mindset. Uh, but yeah, they actually introduced additional, I think, entry fees, not for Western tourists, interestingly, for Japan, maybe 'cause they recognize those are probably your bigger spenders.

Um, but definitely towards China and towards m- other Asian visitors that there's now, I think quintupled, like it's around $100 entrance fee. 

Anita Kellogg: Interesting, 'cause Chinese tourism is a big source of income for these countries as well. 

Ryan Kellogg: Yeah, but I think that's also been an area, especially with the election of, uh, Takeichi, um, because again, she's similar to Abe, you know, reinstituted the visits to the one shrine that has the, the war criminals [00:48:00] from, uh, from World War II.

Uh, but also the, the actions that she's taken around, uh, Japanese defense spending. 

Anita Kellogg: Right. So kind of on that note, one thing that, that definitely drew the ire of China fairly recently in, back in November, she told the Japanese parliament that a Chinese attack on Taiwan could threaten Japan's survival, signaling more clearly than any of her predecessors that Tokyo might use military force under the 2015 security laws if an assault on the island occurred.

Man, was China unhappy about that. So there, uh, so China definitely pushed back, but as in many cases, that only sometimes, uh, hardens the resolve of the countries that it's sort of attacking. But in more s- in, in even more important ways, she has increased military spending, but not just spending. She lifted long-standing restrictions on arms exports, has deployed long-range missiles in Japan's southwest [00:49:00] islands.

No. Has deployed long-range missiles in Japan's southwest and promoted stronger defense ties, uh, with allies. So one thing I found pretty interesting is we always talk about the 2% benchmark in Europe. Tokyo is now sent, is now set to spend roughly 2% of its GDP on defense by 2027. And I guess we should just provide context, right?

After World War II, Japan's this very historical pacifist nation, and so this is a very big turnaround. And, you know, part of this reaction is the geopolitical concern from China has sparked more of acceptance toward these ideas, although there are still significant anti-war protests in Japan, uh, linked to some of these actions.

So as I mentioned, strengthening security on its southwest islands, uh, investing in munition stocks. One thing, uh, I thought that was interesting [00:50:00] is the defense-- industrial defense cooperation, so that it's not just importing munitions from the United States, but it's actually partnering Japanese companies with manufacturing in, in the US to gain that technical know-how as well.

So I think the, the thing that they want to manufacture their own weapons, sell them, I think kind of a trajectory closer to South Korea is very interesting. Uh, so... And there's also the idea that this could, uh, channeling investment into advanced manufacturing, aerospace, shipping, building, and software allowing this, uh, defense revival to also boost up the economy after we've talked about such anemic growth.

Uh, so basically it's still unclear the US response, how much they are, are going to partner, share technology, uh, and, and otherwise just take advantage of this. But it, it definitely is part of what Trump and the US has complained about for [00:51:00] decades in that Japanese being this very wealthy country, not spending on its own defense and depending on the United States.

Ryan Kellogg: Yeah. Yeah. No, I think it's all, all very positive, uh, trends, and definitely something, I mean, I think the US across administrations has, has pushed for, you know, kind of more, 'cause we, we need together with, um, South Korea, uh, uh, a strong alliance network and burden-sharing. You know, uh, that's the only way that, you know, we'll stand a chance of being able to, to contain China and, and create enough of a deterrence effect around the, uh, the Taiwan situation.

So it seems, it definitely seems, uh, encouraging. Uh, I mean, hopefully the Trump administration, I know there's, you know, some of the concerns within the articles is that, you know, tend to take a very, uh, transactional, mercantilist sort of approach, you know, like around the tariffs and things like that, um, that, you know, they'll, they'll see kind of the opportunity, um, to, uh, where both, both parties will, will benefit a lot from it.

That being said, I mean, 2%'s still low. I mean, remember [00:52:00] that was like the minimum in Europe prior to, that was- 

Anita Kellogg: Yeah, but this is a pacifist, this is a historically pacifist nation- Yeah, yeah. Yeah. It is true ... where it was written into its constitution. 

Ryan Kellogg: We wrote it, yeah. We wrote it into the Constitution. Um, and it was interesting seeing the protests 'cause, um, protest culture, unlike Korea, you know, complete- almost completely unheard of within Japan, so the fact that they were drawing 50,000, 90,000, you know, for these protests around, um...

I, I didn't see any, like, full, it's not like they're revoking this, uh, article within the Constitution, but it seems like they're amending it so much that, you know, effectively it wouldn't be, wouldn't be in, in place. But definitely has, has gotten pushback, you know, from certain segments within the population 

Anita Kellogg: Of course, it's, it's borne out by geopolitical realities, a much more threatening China, but that doesn't mean the culture of Japan itself is willing to embrace a more militaristic [00:53:00] stance.

Ryan Kellogg: Yeah, 'cause they definitely went much further down the line than the Germans, who also, you know, f- for, reluctant for a long time of spending a lot, but o- only recently, you know, since the start of the Ukraine War, now kind of at the levels where, you know, approaching a France or a UK in terms of, uh, defense spending and GDP.

That's 

Anita Kellogg: a pretty big difference, right? I mean, you have Germany that's always been part of NATO, and you've had German forces involved in coalitional and- Y- 

Ryan Kellogg: yeah, but the, the, the, the more pacifist... They also wouldn't take on, like, combat roles within NATO operations. But yeah, I think the difference is the fact that the West Germans were on the front lines during the Cold War, so it is, it is a different- 

Anita Kellogg: Completely different

a 

Ryan Kellogg: different mentality, yeah. 

Anita Kellogg: And then, you know, like, like you said, we didn't write the German constitution, but we did mostly write the Japanese constitution. We didn't write the German constitution. What is that look for?

Uh, but yeah, I think it's a completely [00:54:00] different situation. It's a much, much bigger shift for Japan, and it's not surprising that, that there's a lot of cultural pushback. 

Ryan Kellogg: Yep. Yeah. 

Anita Kellogg: Well, I think that 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 X, @globalkellogg, or me, @arkellogg.

Ryan Kellogg: You can also reach us by email, anita@kelloggsglobalpolitics.com, and myself, ryan@kelloggsglobalpolitics.com. As always, please see the show notes for the articles we discussed in this episode and, and definitely check out the episodes that Anita- Yeah ... was a guest on. 

Anita Kellogg: Yeah, so we'll have those links also in the show notes.

Ryan Kellogg: Yep. 

Anita Kellogg: Thanks. Thanks. 

Ryan Kellogg: Bye.