Transcription
This is going to lead to a major global economic crisis if we continue the way we're going right now. The American security state, such as it is, which now includes a lot of Silicon Valley, uh, supports the war. Uh, and why do they support the war? Uh, partly the Zionist lobby, uh, partly they're testing all their weapon systems. This is just the greatest thing going. They're learning how to incorporate AI deeply into their weapon systems. You have a few mishaps. You kill a lot of school girls, but that's part of learning, according to these people.
Welcome everybody. Thank you so much for joining us. I'm your host Lyanna Petrova, with a new episode of World Affairs and Context. Today, I'm honored to welcome Professor Jeffrey Sachs, one of the world's most influential economists, public intellectuals, and experts on global development and international affairs. Professor, welcome to the show. Thank you so much for joining.
>> My pleasure to be with you. Thank you.
>> It's an honor to have you. Uh, professor, it may be fair to say that the war in Iran has actually transformed from a regional conflict into a struggle over the future of the international system itself. Here in the United States, it is surprising to see how little an average American is um interested in the war that the United States began. After Iraq, Afghanistan, and Libya, we should be seeing more of an opposition toward militarism and foreign interventions. Of course, you have previously argued that the Iran war is not an isolated event, but the sort of culmination of decades of geopolitical decisions. In your view, what were the principal strategic objectives of Washington when it launched the attack onto Iran in February? And have any of those objectives been achieved thus far?
>> Let me say first of all that this is a war basically carried out by the White House uh without public support, without congressional support. I think in fact, without much support even in the security apparatus. So the reason that there isn't more protest is no one was asked uh and no one is being asked of anything actually, because as usual, this war is just being financed by debt. Uh, so the budget deficits grow. Uh, the uh spending by the government takes place, but Congress doesn't vote anything. Uh, and uh the president doesn't explain anything. Just dumb truth. So uh, Truth Social posts every day that are nonsensical, uh, sometimes obscene, uh, sometimes uh absolutely contradictory from the beginning of the sentence to the end of the sentence. So the American people are unhappy. They oppose the war. They're facing higher gasoline prices at the pump. They're facing higher prices across the board because everything that uses hydrocarbons, oil, petroleum, air flights, uh plastics, petrochemicals, fertilizers, it it all bears uh the effects of this war.
Now, why did the US do this? Broadly speaking, uh, American wars are about American hegemony. Uh, the security apparatus of the United States believes to this day that it should run the world. Uh, and there are just some pesky oppositions to that, like Russia and China and Iran. Uh, but these are to be overcome. The mindset is America should run the show. And the mindset of the Trump administration is that America will control the Americas. Uh, we'll invade Venezuela if we want. We'll topple Cuba if we want. We'll do what we want in the Americas. And Europe, well, they're vassal states. And the Middle East, that's basically ours with the exception of Iran. We need to bring Iran into the fold. We already have the Gulf States. They are home to the US military. Of course, Israel is an American uh militarized state, American-backed state, and a nuclear power. So, Iran is, in a way, the last holdout. Uh, and the United States wants to bring Iran under American imperial control.
Now, with Iran, there are at least uh two other dimensions that are important. One is that Iran used to be under American imperial control. We toppled a government in 1953, uh, a democratic government of Iran, and imposed a police state under the Shah of Iran for 26 years. So that was the heyday of American control over Iran. Then Iran had its revolution in 1979, and they escaped the American Empire. Well, that's something you're not supposed to do. Uh, and so the United States is trying to bring them back into the fold. It's a kind of revenge match, in addition to everything else.
And then there's Israel. Uh, Israel hates Iran because Iran supports the Palestinian cause. Uh, and the Palestinian cause says that there should be a state of Palestine. Whether one state for everybody or two states, that's debated. But Iran supports the Palestinian cause. And Israel opposes the Palestinian cause completely. Israel doesn't say, "Let's compromise." Israel says, "What's ours is ours, and what's yours is ours." So, Israel is a completely dominating uh state. And in fact, Israel wants not only the West Bank and Gaza and East Jerusalem, it wants southern Lebanon. It it wants uh parts of Syria and heaven knows what else it wants because it never says what its borders are.
So, we have uh at least three motivations for this war. One is uh to bring Iran back to the empire. Uh, second, more generally, is hegemony. The US wants control over the Middle East. And the third is to subdue Israel's uh opponent because Iran supports the Palestinian cause. I think rightly supports the Palestinian cause in the sense that Palestine needs a state, and again, it can be a one-state solution for everybody. Uh, it could be a two-state solution, but Israel opposes anything other than complete Israeli dominance.
So here we have this war. Uh, there's just one problem. The US and Israel can't win it. They can't win it without causing global disaster. They thought, well, we're going to kill the leadership and then we'll install the next leader. Kind of a, you'd say, a crazy idea, but they did something like that in Venezuela uh earlier this year, or the US did. Uh, we don't even really fully understand the Venezuelan case because it seems to be a kind of inside job in a way where senior Venezuelan officials conspired with the United States, which kidnapped the president, uh, and then quickly made a deal with the vice president who became acting president. Something like that was aimed for in the case of Iran. But this is simple-minded, like our president. I'm afraid he's a very naive man, not very intelligent. Uh, Netanyahu sold him a lot of BS, uh, that this would be a one-day operation, and it didn't work.
Since then, since May, since March 1, we've been stalemated. There's no military option. You can't invade Iran. It's a big country with 90 million people, quite sophisticated, and Americans are dead set against putting American boots on the ground. And the military is too. They know that it's completely foolhardy. Well, you could bomb Iran to smitherreens, according to Trump, but before you accomplish that, if you call it accomplishment, uh, Iran is going to destroy a lot of the Gulf and perhaps a lot of Israel as well because it's got drones and missile systems and the capacity to retaliate. So since the regime change operation failed on the first day, we're in a completely bollixed up situation. Uh, the US should say, "Well, that didn't work. We're going home." That would be the right answer. Instead, it says, "We demand Iran do 1, 2, 3, 4, 5, 6, 7, 8, 9, 10." All our wish list.
>> Mhm.
>> But on what basis? How are you going to do that? So Trump thumps and stomps and and threatens and does all sorts of things, but he can't enforce his will. And this has now gone on for 3 months. Uh, the world energy situation worsens every day because just a few ships get through the Strait of Hormuz. So, uh, all of the stockpiles of oil are running out in Europe, in in Asia, in Africa, and so forth. And, um, I have an easy solution to the for the US. You don't have to negotiate anything. Just go home. Uh, stop it. You made a mistake. Call it the greatest victory in the world. I don't care what Donald Trump calls it. Just stop. That's my recommendation. Instead, they're trying to negotiate something, but frankly, the demands are outrageous. Why would Iran accept these demands under these circumstances? And um, there's no trust. And how can there be trust? And just as we're speaking, the United States started bombing Iran again. Uh, so uh, the Iranians also just announced, just uh shortly before we began, that they were suspending even indirect talks because Israel is in the process of expanding its invasion of Lebanon against Iran's uh colleague, the the Hezbollah.
Mhm.
>> So all of this is totally messed up, and actually our country has other things to do for itself. We could rebuild our roads. We could actually make a railroad uh uh function. Uh, we could improve our airports. We could improve digital. We could improve our healthcare. But no, uh, our security apparatus wants perpetual war. Um, and no doubt they're making a lot of money from, uh, the perpetual war, except the rest of us are getting poorer and poorer as a result.
>> Absolutely. Uh, Professor, you mentioned Lebanon, and of course, we've seen Israel bombing Lebanon for for weeks now, even though uh Iran has repeatedly said that the ceasefire actually covers Lebanon, all of the Middle East, and of course, you know, it's fair to argue that the ceasefire has collapsed a long time ago because you, the United States bombed Iran, and Israel has continued its assault on Lebanon. So, what is it that prevents the Trump administration from being able to restrain Israel in order to move forward to a diplomatic solution um in the Middle East? Why, why has the bombing of Lebanon not been um not been addressed already?
>> Well, because the American security state, such as it is, which now includes a lot of Silicon Valley, supports the war. Uh, and why do they support the war? Uh, partly the Zionist lobby, uh, partly they're testing all their weapon systems. This is just the greatest thing going. They're learning how to incorporate AI deeply into their weapon systems. You have a few mishaps. You kill a lot of school girls, but that's part of learning, according to these people.
So, um, they're not trying hard. If the president of the United States said uh just now, "Israel has to stop, and we're cutting off all uh munition support, military support, financial support, and diplomatic cover unless Israel stops immediately," Israel would stop immediately. I just refuse to accept the fact that Israel dictates terms to the United States. We have uh a lot of people who confuse what's good for Israel. It's not even good for Israel. Let me be more clear about this. Uh, what is pursued by Israeli nutcases, as far as I'm concerned, because I think Smotrich and Ben-Gvir and Netanyahu are war criminals and and nutcases. But American uh leaders confuse what these nutcases want to do and what's good for America. We have people like Lindsey Graham in our Senate, or Richard Blumenthal in our Senate, or Ted Cruz, or others that frankly, give me a break. Why don't you represent the United States of America? Uh, what's happening right now is not in America's interest. It could be stopped immediately. Nobody could tell me that the United States can't stop Israel. That's ridiculous. Of course, it could. Uh, but you need a president that understands the difference. And yes, he gets money from the Israel lobby. That's true. Uh, the uh arms manufacturers like Palantir love this war. They're making money. Their stock prices are going up. Their uh weapons battlefield experience is rising. Uh, so we can understand why it doesn't stop, but it should stop because actually, the 60% of Americans who are opposed to this war versus maybe 20% who support it are right. And this country is for us. It's not for Palantir. It's not for Miriam Adelson. It's not for a few lobbyists. It's for the rest of us. And Israel is deserving the United States badly right now. And the US should say so. "We're done with your abuses." And by the way, I'm not saying uh that the US has to somehow physically restrain Israel. All it has to do is say, "We're not arming you. We're not funding you. We're not providing diplomatic cover for you. We're not excusing your behavior." That'd be interesting. I'd like to see what Israel does. I think it would take about 3 minutes for Israel to announce a ceasefire.
The economic implications of the war are truly devastating. And now that we're seeing another round of escalation, it is very difficult to predict just just what happens next. Bloomberg recently reported that US oil inventories may last only through July. Now, global oil stockpiles are being depleted as well. Global inventories are reportedly approaching historically low levels, while of course, geopolitical tensions continue to threaten key supply routes. How vulnerable is the global economy and the US economy to a major energy shock today compared to previous oil crises?
>> I think the vulnerability is very high, and we are absolutely playing with it, but it's uh being hidden right now by the stock market boom, uh, and uh the people in power count their money every day. They look at the stock prices, they look at their portfolio. Uh, Silicon Valley is thrilled stock prices keep rising. So from the point of view, not of the average American person, the working family, but from the point of view of a multi-billion billionaire, big tech person, this is fine. We can wait. They're going to be very surprised if this continues. However, this is going to lead to a major global economic crisis if we continue the way we're going right now, which is very few ships passing the Strait of Hormuz uh every day and the dwindling stockpiles reaching basically zero. And we already know that lots of countries are engaged in energy rationing right now, and that's going to continue and and worsen, I should say. So there's a kind of a fool's uh paradise right now that can last uh a few weeks, maybe. Uh, but the big tech owns our government. Uh, it runs our government. You know, we could ask Mr. Thiel what he thinks of all of this, or ask Mr. Karp what he thinks about all of this. They'd say it's great. This is just fantastic. We're building the best AI military system imaginable for all of this. But I don't think their economics is so good when the whole world is entering an economic crisis. Even their little bubble is going to burst.
>> Professor, what is your prediction in terms of the global economy? Let's say within the next 6 to 12 months, because there are multiple reports that say we haven't actually felt the the results, the sort of the the consequences of the two months of war, and now we're in the middle of another possible escalation. Just what is this, what could this mean going forward, given that so much oil flow has been taken off the energy markets globally? What does this mean for the emerging economies, those that already have very high sovereign debt and now have to face rising energy costs, as well as rising food costs and transportation costs as well?
>> I think it's very hard just to make a forecast. What you can do is make a kind of conditional forecast. If this happens, then here's the result. So there are three scenarios, I think. One is that Trump escalates. So this uh fighting actually turns into renewed open war. The second is we continue the way we're going, which is uh skirmishing, uh, and few ships passing the Strait. And then the third is that one way or another, either agreement or just uh backing off, uh the Strait is effectively reopened.
If it's the first, escalation, I think it would be a global calamity because I think that if Trump ever actually carried out his threats to reduce uh Iran to ruins, Iran would reduce the neighborhood to ruins in that context. And then we would see what a real energy shock is, because it would mean a uh dramatic uh humanitarian crisis and energy crisis uh that would affect the whole world.
If we continue the way we're going right now, I think it's a slower moving path to major crisis. Uh, so I would say if we continue the way we're going, few ships crossing, strategic reserves going down, but no overt turn to war, uh, we'll see oil prices climb back up to where they were before. What's happened is in anticipation of a supposed agreement, they declined from about $120 a barrel, uh, so-called Brent uh benchmark price, to around $95 a barrel. Still higher than before the war, which was about $65 a barrel, but down from the peak, but they would return to the peak and they would exceed uh the peak that had been reached because we're running out of reserves. This is clear.
And then if the Strait is opened, uh, which is my of course recommendation and preferred outcome, I want the US to pull back, and I want Trump to say, "We pulled back because we achieved every objective we ever made in the history of the world, because we are the greatest country, and I'm the most peaceloving, and I'm the most beneficent leader, and I want the whole world to thrive, and so I'm pulling back so that I get the Nobel Peace Prize." Okay, good. Let him say that. If that happens, the price of oil will fall to $80 a barrel. It won't go down to where it was before. Some production has been taken offline. Some fields are shut down. Some physical infrastructure destroyed, but there would be some reversion. People would go to the gas tank and they'd be saving a lot of money. So these are the three scenarios. Uh, which is the most likely? Hard for me to judge because my problem is I'm typically an optimist. I think people behave rationally, but they don't. So I get it wrong a lot. If anything were to make sense, we would just leave. That's all. So that's what I tend to think will happen, because how stupid can these people be? But then again, they constantly surprise me at how stupid they can be.
>> Absolutely. And um, professor, I know we're running out of time, so maybe the last question for today. Um, you've mentioned that the the the war was to actually was meant to preserve American hegemony. And there's an argument to be made that the world sees the United States differently now. What effect has Trump's war of choice had on American political, military, and economic power globally? And now that we see so many states move toward de-dollarization and creating alternative financial settlement platforms, what do you expect uh the implications of the war to be on the economic power um of the United States to sanction, to effectively um, you know, increase tariffs, and and impact the global economy, uh, in that way?
>> Broadly speaking, we're already in a multipolar world. There are at least three superpowers: the United States, China, and Russia. There are arguably, and I do argue it, four superpowers, because I would add India to that list. Then there are lots and lots of regional powers, of which Iran is one, Turkey is another, Brazil is another, Indonesia is another, and so forth. Uh, these are highly populous countries. Pakistan too. Uh, massive population, nuclear uh armed, not so well off economically. Uh, so it should uh focus on development. But the point is that we're already in a multipolar world. In the American mindset, they don't believe that because in 1992, they proclaimed the unipolar world. And they still are saying, "We've got to figure out how to defeat Russia, contain China, uh, side with India, uh, control the Americas, control the Middle East, uh, and get on with it." That's the continuing US strategy. The strategy is not, "Let's find out how to cooperate with China, with Russia, and so forth in a truly multipolar world." It's, "How do we gain this? How do we get around this?" That's why this war is taking place.
And I mentioned in the American mindset, well, we own the Americas. We effectively own Europe. They are vassal states. We're close to controlling the Middle East. India's on our side, so they think. Uh, and so we're really down to Russia and China. That's their thinking. Uh, and I think it's cruel and naive. Uh, you know, the United States is 4% of the world population. You have to be delusional to think that at 4% of the world population, you should even try to run the other 96% of the world. You have to think that, well, you have everything and they have nothing. You know, you're so dominant, and that's the US thinking. But Iran has shown it's not only resilient nationally, it's technologically sophisticated. These are hypersonic missiles. Uh, these are advanced drones. These are no fools. But America thought, "Oh, this is a medieval country. Uh, and so it's going to be a small operation to to own it." America thought by now Russia would be defeated and broken into multiple pieces. Uh, America thought it could launch a trade war with China and bring China to its knees. All of this is completely delusional.
Now, where does reality stand, therefore? Well, uh, Europe is not too happy with the United States, but it's kind of paralyzed. It doesn't quite know what to do. Uh, Russia understands that the US is not a friendly force. It's uh been out to weaken or even dismantle Russia since 1992, just as it was out to weaken or dismantle the Soviet Union from 1945 to 1991. China understands full well what this is about and basically laid down the law to the United States, which is, "Don't even try. Don't try with Taiwan. Don't try with your trade wars." And I think the United States is a little scared of China, which it should be, not that China's going to want to do something terrible to the US, but that it absolutely is not going to buckle to US pressure.
So Trump, in a way, also is falling back on the Western Hemisphere. That's his backyard. That's his playground. Uh, I'm pretty sure that they're going to try to do something terrible with Cuba uh soon. Uh, because maybe he'll pull back from Iran, and then he'll topple the Cuban government, and you say, "See how powerful we are." Uh, so what is probably true is that in the backyard of the Americas, not that people in this hemisphere are happy about this, but Trump will try to throw his weight around. But I think in the rest of the world, people are beginning to understand, gee, you can't uh put all your uh all your national security, throw it over to the Americans, and expect that this is going to work out. So the Gulf countries have to recalibrate. Uh, Europe is busy recalibrating. Uh, much of the rest of the world is saying, "We don't oppose the US, but we want good relations with China, thank you very much." So all of this means that we're in the midst of real geopolitical change. Uh, my main argument to American leaders is, wake up to reality before you wreck everything.
>> Professor, thank you so much. This was an absolutely fascinating conversation, and I hope you come back to continue it.
>> Great. Very good. Good to be with you. Thank you so much. Thank you.