DEF IX - Gathering Storm: Cold War II or World War III?

Summary

Historian Neil Ferguson discusses Greece's economic recovery since the 2010s, comparing its economic depression and recovery to Germany. He highlights Greece's significant improvements in fiscal health and defense spending. Ferguson warns against Greece's geopolitical complacency, emphasizing the dangers of underestimating threats from Russia and China. He draws parallels between the current geopolitical climate and the Cold War, stressing the importance of manufacturing in prolonged conflicts. Ferguson also warns of the risks associated with US political instability and a potential crisis over Taiwan's semiconductor industry, advocating for Greece to stay vigilant in global politics.

Takeaways

• 🎤 Neil Ferguson addresses the forum, noting the uncomfortable situation of depriving attendees of a break.
• 🔍 He discusses Greece's economic crisis during the 2010s, highlighting a significant drop in per capita GDP and high unemployment rates.
• 📈 Ferguson contrasts Greece's economic recovery with Germany's stability post-financial crisis, emphasizing Greece's fiscal improvements.
• 👑 Prime Minister Kyriakos Mitsotakis is praised for his leadership and Greece's remarkable economic achievements.
• 🌍 Greece's geopolitical position is examined, with Ferguson arguing that Greece cannot be neutral like Switzerland due to historical and current geopolitical tensions.
• 💡 Ferguson references Henry Kissinger's views on a new Cold War with China, emphasizing the increasing dangers of this conflict.
• ⚙️ He discusses the complex global supply chains and the challenges of decoupling the US and Chinese economies.
• 🚢 Greece's involvement in global trade, especially its significant shipping industry and trade relations with China and Russia, is highlighted.
• 💣 The ongoing wars in Ukraine and the Middle East are predicted to continue and potentially escalate, impacting global stability.
• 🛡️ Ferguson emphasizes Greece's defense budget and its importance as a NATO member, while also expressing concerns about US defense spending and its implications for allies.

Q & A

Who is the speaker in the transcript?

The speaker is Neil Ferguson, a renowned historian.

What is the main theme of Neil Ferguson's speech?

The main theme of Neil Ferguson's speech is the economic and geopolitical challenges faced by Greece and the broader implications for global stability.

What economic crisis did Greece experience in the 2010s?

Greece experienced a severe economic crisis in the 2010s, with its per capita GDP plummeting by more than a quarter.

How did Germany's economy compare to Greece's during the same period?

Germany's economy remained relatively stable with no significant increase in unemployment, in stark contrast to Greece's economic downturn.

What recent fiscal achievement of Greece does Neil Ferguson commend?

Neil Ferguson commends Greece's recent fiscal and macroeconomic stabilization, noting its improved fiscal position even after the shock of the COVID-19 pandemic.

What geopolitical risks does Neil Ferguson highlight for Greece?

Neil Ferguson highlights the risks posed by the geopolitical situation in Ukraine and the threat from the People's Republic of China, suggesting that Greece cannot ignore these dangers.

What did Henry Kissinger say about the new Cold War?

Henry Kissinger stated that we are in the 'foothills of a cold war' and later updated this to the 'mountain passes of a cold war,' indicating an increasingly dangerous geopolitical situation.

What impact does Neil Ferguson foresee from the economic interdependence between the US and China?

Neil Ferguson suggests that the considerable economic interdependence between the US and China complicates the situation, making decoupling an almost impossible undertaking.

What warning does Neil Ferguson give about potential conflicts involving Taiwan?

Neil Ferguson warns that a crisis over Taiwan, similar to the Cuban Missile Crisis, could plunge the global economy into a far greater crisis due to the importance of semiconductors produced in Taiwan.

What is Ferguson's view on the political stability of Greece compared to other countries?

Ferguson views Greece's political stability favorably, especially in comparison to the political turmoil in other countries, such as the UK, which had three prime ministers in one year.

Outlines

00:00

🎤 Introduction and Greece's Economic History

The speaker, Neil Ferguson, starts by apologizing for the cancellation of a 10-minute break, leading to discomfort among the audience. He introduces his talk with a focus on Greece's economic hardships in the 2010s, comparing it to Germany's stability. Greece experienced a severe depression with a significant drop in per capita GDP and high unemployment rates. Despite recent improvements, he highlights Greece's previous catastrophic fiscal state and current fiscal health, praising the Greek Prime Minister for the remarkable economic recovery.

05:02

🌍 Greece's Geopolitical Reality

The speaker emphasizes Greece's unique geopolitical challenges, arguing it cannot be neutral like Switzerland. He compares Greece's stance on Ukraine and China with other European countries, suggesting a somewhat unrealistic view of its geopolitical situation. Drawing on historical context, he mentions Henry Kissinger's insights into the Cold War, indicating the current global tensions resemble a new Cold War, with significant economic interdependence complicating the geopolitical landscape.

10:05

💼 Greece in the Globalized Economy

Focusing on Greece's role in the global economy, the speaker discusses its significant shipping industry and diverse trading partners. He highlights the impact of recent global crises, including the pandemic and the Russian invasion of Ukraine, on international trade networks. The speaker argues that these events illustrate the interconnected nature of global supply chains and the challenges of decoupling major economies, particularly in the context of Greece's trade dependencies.

15:05

⚔️ Greece's Defense and Global Manufacturing Shifts

The speaker discusses Greece's defense spending as a NATO member, noting its high budget compared to Germany. He raises concerns about the U.S.'s growing debt and its implications for NATO allies. Highlighting a significant shift in global manufacturing leadership from the U.S. to China, he argues that manufacturing capacity is crucial in prolonged conflicts. He draws parallels between the potential Taiwan conflict and the Cuban Missile Crisis, warning of severe economic repercussions.

20:08

🤖 The Uncertainty of U.S. Politics and AI's Impact

Concluding, the speaker cautions about the instability in U.S. politics, especially with the influence of artificial intelligence in elections. He stresses the importance of understanding Greece's geopolitical role and the potential risks of future conflicts. The speaker's overall message is a warning about the interconnected nature of global crises and the need for strategic awareness in navigating these challenges.

Keywords

💡Great Depression

A severe economic downturn experienced by Greece in the 2010s, similar to the global Great Depression of the 1930s. It resulted in a significant drop in GDP and a dramatic increase in unemployment. The script highlights this as a critical period in Greece's economic history.

💡GDP (Gross Domestic Product)

A measure of a country's economic output. In the video, Neil Ferguson compares Greece's GDP to Germany's during the financial crisis, showing a significant decline in Greece's GDP, illustrating the severity of its economic situation.

💡Unemployment

The state of being jobless. The script notes that Greece experienced unemployment levels above 25% during its economic depression, a stark contrast to Germany's stable employment during the same period.

💡Macroeconomic stabilization

Efforts to stabilize a country's economy on a large scale. The video praises Greece for achieving macroeconomic stabilization and improving its fiscal position post-crisis, which contrasts sharply with its earlier catastrophic financial state.

💡Geopolitics

The study of the effects of geography on international politics and relations. Ferguson emphasizes the importance of Greece's geopolitical position and its implications in the context of modern conflicts and alliances, particularly with reference to Ukraine and China.

💡Cold War

A state of political hostility between countries characterized by threats, propaganda, and other measures short of open warfare. The video draws parallels between the current US-China tensions and the Cold War, highlighting the potential for a 'second Cold War' exacerbated by technological advancements like AI.

💡Global supply chains

Networks that span across multiple countries for producing and distributing goods and services. The video underscores the complexity of these supply chains, especially between the US and China, and the challenges of decoupling their economies.

💡NATO (North Atlantic Treaty Organization)

A military alliance of European and North American countries. Greece's significant defense spending as part of NATO is highlighted as a noteworthy point in the context of its economic challenges and geopolitical role.

💡Artificial Intelligence (AI)

The simulation of human intelligence in machines. The video suggests that AI is a critical factor in the new geopolitical landscape, influencing both economic and military strategies, thus making the current era potentially more dangerous than the original Cold War.

💡Taiwan semiconductor crisis

A hypothetical scenario where tensions between the US and China escalate over Taiwan, a major producer of semiconductors. The video uses this as an analogy to the Cuban Missile Crisis, emphasizing the strategic importance of Taiwan's semiconductor industry to the global economy.

Highlights

Neil Ferguson is introduced as a renowned historian and takes the stage, despite the cancellation of a planned break, placing the audience in a unique position to hear his talk.

Ferguson reflects on Greece's economic recovery, contrasting its 2010s depression with Germany's stability, highlighting Greece's severe GDP drop and high unemployment.

He praises Greece's fiscal recovery and current stability, commending Prime Minister Kyriakos Mitsotakis for his leadership and comparing Greece favorably to other European nations.

Ferguson warns about the dangerous geopolitical climate, suggesting Greece cannot remain neutral like Switzerland and must be aware of its strategic position.

He discusses Greece's economic interdependence, noting its significant trade with China and Russia, and questions Greece's stance on major geopolitical issues like Ukraine and China.

Ferguson emphasizes the importance of understanding history in the context of current geopolitics, referencing Henry Kissinger's views on the Cold War and its modern parallels with China.

He outlines the complexities of modern globalization and supply chains, arguing that decoupling major economies like the US and China is nearly impossible.

The significance of Greece's shipping industry is highlighted, illustrating its deep integration into global trade networks and the impact of recent global shocks.

Ferguson connects the cascade of crises, from the pandemic to the war in Ukraine, to historical patterns, predicting that such conflicts are unlikely to end quickly.

He discusses the prolonged nature of wars and the difficulty of achieving peace once conflicts extend beyond a few months, suggesting current wars are likely to continue.

Ferguson underlines Greece's significant defense spending relative to GDP, particularly in comparison to Germany, and its role in NATO's collective defense.

He raises concerns about the sustainability of US defense spending, pointing out that interest payments on US debt are now exceeding defense budgets, a sign of shifting global power.

Ferguson highlights the shift in global manufacturing leadership from the US to China, stressing the importance of production capabilities in modern conflicts.

He draws parallels between the potential Taiwan crisis and the Cuban Missile Crisis, warning of the severe economic impacts if tensions over Taiwan escalate.

Ferguson concludes by emphasizing the need for Greece to be aware of its geopolitical realities, as it cannot adopt a neutral stance like Switzerland in the current global context.

Transcripts

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1 and it's time we have the pleasure to

welcome Neil

Ferguson one of the worst n renowned

historians thank you very

much please take your

seats the floor is yours and it's a

great honor having you

here sorry for this well I um I thought

it was a mistake to announce a 10-minute

break but now that that break has been

cancelled I'm in the uncomfortable

position of depriving you all of the

coffee and sustenance and bathroom

breaks that you were

craving but this is not the least of my

problems because in addition to

depriving you of these

Comforts I'm also going to be a rather

gloomy Oracle those of us who come to

speak at dely feel inclined to be

oracular but I'm afraid my prophecies

will be more

Cassandra than the Oracle at Deli so you

may begin to wish you'd gone for the

10-minute

break I'm only going to speak uh for 19

minutes uh so cross your

legs I want to remind you as this is an

economic

Forum that in the

2010s this country suffered one of the

very few great depressions there have

been since the

1930s if you look at the data from the

international monetary

fund Greece saw per capita gross

domestic product me measured on a

comparative basis Plunge

by more than a

quarter now I just happen to choose

Germany as the economy to compare Greece

with but you can see in these charts

that while Greek per capita GDP crashed

by more than a quarter Germany's barely

missed a beat during the whole period

that followed the global financial

crisis notice too that there was no

increase inre in unemployment in Germany

it continued to

decline whereas in Greece unemployment

Rose uh to a 2013 peak in excess of a

quarter of the labor

force these are Great Depression numbers

that you would find if you studied the

history of the United States or Germany

after

1929 now the recent fiscal and

macroeconomic stabiliz Iz ation of

Greece are causes for real

congratulation you can see on the

leftand side of my

slide that Greece's fiscal position on

the eve and during the financial crisis

was

catastrophic whereas today even after

the shock of the covid-19 pandemic

Greece's public

finances measured by the annual

deficit are incomparable Health to those

of

Germany this is an astonishing

achievement which you should never

understate and it is a pleasure for me

as a native born Britain to congratulate

prime minister kirakos

mitsakis on all that he has achieved it

is a remarkable feat and singles him out

in my view as the most able European

political leader of them

all by comparison it might be said that

some other

countries have been losing their marbles

to use a colloquial English

expression these

days the British look with admiration at

the political stability of Greece when

did you last have three prime ministers

in the space of one

year

however I don't think that the Greeks

can

disregard the increasingly dangerous

geopolitics of this

decade and I have the

feeling that you would like

to but my

message is that Greece

can never be

Switzerland if you look at opinion

polling on two distinct

subjects the situation of

Ukraine and the threat posed by the

People's Republic of

China you will see from these

charts that only

Hungary is less sympathetic to the

plight of Ukraine than Greece in Europe

today and only Hungary is more favorable

in its view of China than

Greece and it seems to me that this

evinces a somewhat delusional view of

Greece's geopolitical

situation ask yourselves in the world

wars of the 20th century was Greece un

scathed could Greece step

aside could Greece be

Switzerland you know your Greek history

and you know that that was not for a

moment

conceivable Henry

Kissinger died last year shortly after

celebrating his 100th birthday

it seems to me that if you want to

understand the geopolitical situation we

find ourselves in he was a reliable

guide no one understood the Cold War

better than Henry

Kissinger I asked him just over four

years ago at a conference in

Beijing if we were in a new Cold War if

China had taken the place of the Soviet

Union and he replied

memorably we are in the foothills of a

cold

war a year later he upgraded that to the

mountain passes of a cold

war and the year before he turned 100

when I asked him about it again he said

the second Cold War will be even more

dangerous than the first because of

course we now have artificial

intelligence as well as nuclear

weapons the great Paradox of the second

cold war is that unlike in the first

there is considerable indeed vast

economic interdependence between the two

rival

superpowers although the US China trade

deficit has come down somewhat since its

peak in the middle uh of the last decade

it Still Remains around a third of the

total us trade deficit and when people

talk of

decoupling I would merely remind you

that for Apple to reduce its production

in China from 100% to 90% of its

Hardware is scarcely decoupling it's

barely even drisking to use the

fashionable word of the

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time now this is because globalization

is really a complex network of supply

chains and you can see in these

brilliant diagrams from the recent work

of my old friend hung song Shin at the

bank for international settlements just

how complex these networks are to

decouple the two largest economies in

the world from one another when the

supply chains resemble these

kaleidoscopic complex diagrams is an

almost impossible undertaking

let's consider the situation of Greece

in the globalized economy we've just

been hearing about the enormous

importance of Greece's shipping industry

and yes it is important because Greece

as much as any country is bound up in

that International network of Supply

chains the atlas of economic complexity

allows you to

see that Greece has trading partners

everywhere though the destination of its

exports is overwhelmingly European those

are the blue squares on the diagram on

the

left Greece imports from all over the

world but again

predominantly uh from Europe notice

however that in 2021 more than a tenth

of Greek Imports came from

China 6% from Russia and just 2% from

the United

States the implications of Cold War war

two are painfully obvious think only of

the impact of the Russian invasion of

Ukraine uh the following year the year

after these figures were calculated for

Greek

trade the network that I just described

to you a network in which we are all

individually

nodes has come under a sustained series

of

shocks in the space of the last four

years first of course was the

pandemic we almost take for granted that

we can meet here in this crowded

reasonably crowded and somewhat

overheated tent and not a mask is to be

seen and one reason we've begun to

forget the pandemic is the other crises

have come after it thick and fast

in my last book Doom a cheerful title if

ever there was one I argued that in the

wake of the great Public Health disaster

of the pandemic other disasters would

follow in a kind of cascade of

conflicts after the plague I said will

come the war and sure enough war came it

came to

Afghanistan when the sudden abrupt

withdrawal of American forces handed

that country and its people including

many who had cooperated with the US and

its allies back to the tyranny of the

Taliban scenes in Kabul were reminiscent

of the fall of Saigon for those of you

old enough as I am to remember that

black

day and that was just the

first then came the invasion of

Ukraine now this it seems to me is

equivalent to the impact of the Korean

War at the outset of the first Cold War

the first major hot war that makes it

clear that you really have entered a new

era that the interwar period that began

with the collapse of the Soviet Union or

perhaps with gorbachov is well and truly

over the war in Ukraine is a

fundamentally different war in its scale

and intensity

than the wars in the Balkans that

followed the breakup of Yugoslavia it is

a return to a kind of war that Europe

has not seen since

1945 in which the levels of Destruction

and The lethality of the violence really

do recall the Carnage of the world wars

indeed the

battlefields uh of eastern Ukraine

closely resemble those of the first

world war except that drones fly

overhead greatly increasing the accuracy

of weapons and The lethality of the

war that was February

2022 in October last year another war

broke out when a terrorist attack by

Hamas and Palestinian Islamic Jihad wre

Havoc Slaughter and rape on the

population of

Israel the problem about wars is that

unless they are stopped very quickly

they become very hard to stop

indeed if you look at every war that

there's been in the world since 1816

since the period after Napoleon's defeat

it's striking that while many wars are

brief lasting just a few months a really

large proportion of Wars last much

longer than that indeed I would say as a

kind of rule of thumb if a war lasts

longer than months it's highly likely to

last quite a bit longer than one year a

quarter of the wars since 1816 have

lasted more than a year and of these 16

lasted more than two years and four more

than five

years after the opportunities had been

missed to bring an early end to these

conflicts and I believe opportunities

were missed it became progressively

harder with every passing month to

achieve achieve peace in other words you

must expect these wars in Ukraine and in

the Middle East to continue and

potentially to

escalate

Greece as I said ain't

Switzerland and it never will

be now to be fair as an integral member

of the transatlantic Alliance Greece is

one of the very very few European

members of NATO with a serious defense

budget in fact on the latest NATO

figures as a percentage of GDP gree's is

twice that of

Germany and this is an impressive thing

to maintain when you consider the fiscal

challenges that Greece has faced and the

still very large debt that is a hangover

from the previous period of economic

crisis but remember that more than 60%

of total NATO spending is accounted for

by one member and that is the United

States and every member of NATO

including Greece must be very concerned

about the growing

vulnerabilities of that most important

member Ferguson's Law the only law of

History that I

recognize states that when a great power

spends more on interest payments on its

debt than on defense its greatness is

likely to fade if you look at the most

recent Congressional budget offers

projections you can see that this year

is the year when debt payments interest

on the federal debt exceed the US

defense budget for the first time in

American history not only that but by

2040 interest payments are likely to be

twice the size of the defense

budget this is not an encouraging

outlook for any American Ally and that

includes

Greece an even bigger

problem which I think is strikingly

illustrated by this chart is that in the

space of 20 years leadership in global

manufacturing has decisively shifted

from the United States to China in 2004

just a few years after China joined the

World Trade

Organization us manufacturing value

added was more than twice that of

China's by

2022 China's manufacturing value Ed was

twice that of the United States a

profound reversal of economic

fortune and ladies and gentlemen if

there is one thing we have learned from

the war in

Ukraine in a conventional conflict that

has protracted over months and then

years

manufacturing

matters you must be able to supply your

armies with shells and now with drones

on a massive

scale under these circumstances it would

be extraordinar dangerous for the United

States and its allies to risk a Taiwan

semiconductor crisis by analogy with the

Cuban Missile Crisis of

1962 the analog is a good one you know

if you ask Americans what they would do

if China blockaded

Taiwan 62% say that the US Navy should

be sent to run that

blockade

1962 it was the United States that

blockaded an island just off its coasts

Cuba

and it was krov who had to send a naval

Force to run that

blockade it was the closest we came to

World War 3 in the whole of the Cold War

and it is truly fantastic to me that any

policy maker in either Beijing or in

Washington would want to roll the dice

of rerunning the Cuban Missile Crisis

with Taiwan as the

island bear in mind what Cuba's

principal exports were

and still are that's right cigars some

of you may still smoke cigars but you'll

acknowledge that compared with the most

sophisticated C nanometer semiconductors

they're not economically terribly

important a crisis over Taiwan would

plunge the global economy into a far

greater crisis than the global financial

crisis of

2008 because at the very heart of

innovation of artificial intelligence is

tsmc which dominates the production of

the most sophisticated

semiconductors finally and

unfortunately you and America's other

allies cannot count on us politics

especially now that artificial

intelligence will play a part in the

campaigns to deliver greater political

stability

in less than S months

time ladies and gentlemen I warned you

that I would be somewhat Cassandra likee

but I would be neglecting my duty to

Simeon and the other organizers of this

forum if I did not point out that

geopolitics applies to Greece too and it

applies to Greece even more indeed a lot

more than it does to Switzerland thank

you very much indeed

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