Transcription
Is Donald Trump destroying the Western Alliance? This is a question that many people around the world are asking. But in order to try to provide an answer, we have to go back and look at where the Western Alliance even came from in the first place. Because we can't forget that for hundreds of years, the European powers were constantly fighting each other in endless wars. And this culminated in the horrors of World War I and World War II when the European Empires and the Japanese Empire all destroyed each other.
And coming out of World War II, the United States was the only great power that was not devastated by the war. And the US used this as an opportunity to create a global empire. At the Brenton Woods conference which was held in the US in 1944, a new global financial system was created with the US dollar at the center of that new financial system. And then in 1949, the US helped to create NATO, the North Atlantic Treaty Organization, which was a way of militarily unifying Europe after Europe had destroyed itself for hundreds of years in these constant internal battles. And it's very important to understand that the United States has always been the leader of NATO and Europe has been subordinated to the US. This was admitted essentially by the first founding secretary general of NATO, the British General Lord Isme, who famously said that NATO was created quote to keep the Soviet Union out, the Americans in, and the Germans down end quote. So in other words, NATO was a way for the US Empire coming out of World War II to subordinate Europe to prevent Europe from having an independent foreign policy in order to serve the foreign policy interests of US corporations and especially Wall Street and the military-industrial complex. And by waging the first cold war against the Soviet Union, this was a way for the United States to maintain this western alliance with Washington on top because there was the perception that the Soviet Union was the shared enemy of not only the US but also of Europe.
However, in 1991, the USSR was overthrown and the United States became the only superpower on Earth. This was known as the unipolar era. But then something happened that completely changed everything and that was the economic rise of China. Throughout this time, China was economically developing and in fact in 2016, China overtook the United States as the largest economy on Earth when you measure its GDP at purchasing power parody. China now makes up close to 20% of the global economy compared to less than 15% represented by the United States. And over time, China's share of the global economy is increasing, whereas that of the US is falling. Moreover, it's not just economic size, but also manufacturing capacity. China became the factory of the world. Today, China produces around 1/3 of all global manufacturing output. China manufactures more than the next nine largest manufacturing economies in the world combined. And at first, China was only producing low value added goods like textiles and toasters and toys. But now, China has rapidly moved up the global value chain through state planning and public investment and industrial policy. And now, China leads scientific research in 90% of advanced technologies, cutting edge technologies in the world today. So, China has become the leading economic power, the leading manufacturing power, and the leading scientific and technological power. In other words, China is the only country powerful enough to challenge the global dominance of the US empire in multiple domains, which is why Washington previously was trying to change its strategy. In particular, the Joe Biden administration was trying to remake the Western Alliance in order to focus on containing China. And the Biden administration used ridiculous rhetoric of so-called democracy verse authoritarianism to try to further increase the unity within the Western imperialist block in order to wage a new cold war against China. Cold War 2. In the battle between democracy and autocracies, democracies are rising to the moment and the world is clearly choosing the side of peace and security. >> Just as the US had used the supposed threat posed by the Soviet Union in order to unify the Western Alliance in the first cold war, the US was trying to use China to unify the Western Alliance in the second cold war. But there have always been some very significant problems with this strategy. First of all, China is one of the top trading partners of Europe, of both the European Union and the United Kingdom, which means it's difficult for the US to force Europe to completely cut off ties with China given how economically they are already deeply integrated.
So, this is where Donald Trump comes in. His strategy has been a bit different. The Trump administration is also obsessed with trying to contain and weaken China. But Trump views Europe with contempt. He sees Europe as a liability, not an asset for the US Empire. So Trump has been using threats and blackmail to force Europe to pay tribute to the US Empire to try to strengthen the US to prepare for a future conflict with China. And this is why Trump forced an unequal treaty on the European Union in which Europe is not allowed to put tariffs on US goods, but the United States puts tariffs on European exports. And even more importantly, according to the Trump White House, in this trade deal the US forced upon the EU, Europe is going to purchase $750 billion in US energy and invest $600 billion in the US from 2025 until 2028. We're talking about more than $1.3 trillion being spent in the US economy. So the US in the short term under Trump is trying to suck massive resources out of Europe in order to strengthen the US to prepare for a future conflict with China. And this is also why Trump wants to physically expand the territory of the US empire. This is why Trump has vowed to colonize Canada and turn it into the 51st state as he says. He also claims that he's going to colonize Venezuela. And another very important factor here is Greenland. Trump has repeatedly said that the US is going to colonize Greenland and take over Greenland, which is a territory of Denmark. And Denmark is a NATO member, a European ally of the US. And Trump admits that this is because the US wants to further militarize Greenland in order to weaken China and Russia, especially as climate change melts ice and the Arctic and open new trade routes and also potential routes for military vessels. So Trump wants to militarize Greenland where there already is a US military base, but he wants to make more. But this is also because Greenland has hundreds of billions or perhaps even trillions of dollars worth of critical minerals that the US wants to get access to. And by the way, many billionaire oligarchs in the US who donated to Trump's campaign and are close allies of Trump have invested very heavily in exploiting those critical minerals in Greenland. But more profoundly, this is also related to China because China dominates the global supply chain for most critical minerals and especially for rare earth elements. And the US government is obsessed with trying to create a new supply chain for critical minerals that cuts out China. And this is bipartisan. It's not just Trump, but also Biden and the Democrats that have tried to do this. And this is partially from their perspective an issue of so-called national security because the US military-industrial complex needs lots of critical minerals and rare earths in order to make weapons and military equipment and yet China dominates the supply chain for those critical minerals and rare earths. So if the US wants to prepare for a future conflict with China, it has to create a new supply chain in order to cut China out of the supply chain as it makes more weapons and military equipment to prepare for a conflict with China. So again, this is a significant reason why Trump wants to colonize Greenland and also because processing rare earths is very environmentally destructive. So the Trump administration would prefer to poison the people of Greenland and pollute their territory rather than pollute domestic US territory. But again, this has significant geopolitical implications because Greenland is an autonomous territory of Denmark, a NATO member and US ally. So Trump is threatening to colonize the territory of a major US ally. And this is why some US politicians have said that if Trump annexes Greenland, it would be the end of NATO. But is that true? Could this actually be the end of NATO? Could this actually be the end of the Western Alliance? Well, if you want me to be honest, I'm still quite skeptical about that. But today, I'm going to be looking at some of the significant developments that have been happening recently.
Now, I mentioned earlier that the Biden administration's strategy was to try to strengthen the Western Alliance in order to contain and weaken China. But ironically, the extremely aggressive policies carried out by the Trump administration have actually reminded Europe that there are other alternatives in the world. The US is not the only game in town. And in fact, European leaders have been taking many trips to Beijing, meeting with their Chinese counterparts and talking about ways to deepen cooperation. So, the UK's Prime Minister Kier Starmer visited China in January, and he announced a new series of trade and investment deals with China. By the way, Starmer also announced that UK citizens will be able to travel to China visa-free. This is a very significant development that's been happening over the past few years. And now citizens of most countries in Europe can go to China without a visa, which obviously has led to a significant increase in tourism and person-to-person exchange. And it's not just the UK that has been improving its relations with China, but also the European Union. and top leaders of EU member states have taken some high-profile trips to China recently, including France's President Emanuel Mron. But the US is not just sitting on its hands and allowing all this to happen without pushing back. Donald Trump has been openly threatening European leaders. And when the UK's Prime Minister Kier Starmer visited China, Trump said it was very dangerous and he warned European countries not to improve their relations with China. Of course, the US wants these European countries to remain vassels of Washington. So, a lot of people have been pondering the question, will this lead to a split in the Western Alliance and will Europe lean more toward China rather than toward the US, which you know, US European relations have been extremely close? Transatlantic relations have been extremely close since the end of World War II.
What we're seeing now are growing divisions within Europe. On one side, you have countries like Spain which are pushing for closer ties with China and are more critical of the Atlanticist movement and the transatlantic alliance. Now, Spain and some of the smaller economies in southern Europe on the periphery of Europe are not major manufacturing powers. So, they're seeing this as an opportunity to attract Chinese investment. In particular, Spain does not have a significant car industry. So, it's attracting Chinese EV investment to make electric vehicles inside Spain in order to be exported to other countries in the European Union. However, on the other side of this split in Europe, you have major manufacturing countries like Germany. Germany has been a top industrial power for decades. And the heart of Germany's manufacturing is its car industry. And German car companies are extremely afraid of competition with China. Honestly, they cannot compete with Chinese car companies which make better products at a lower price point. And this is why German exports to China have been falling significantly in recent years. Now, if you go back a few decades, Germany loved to trade with China because German car companies had access to the world's biggest market. China has 1.4 4 billion people and they were buying a lot of German cars. But today they can buy Chinese cars and other products that again are superior and lower cost. So Germany now has become an obstacle within the European Union to improved relations with China because German capitalists are afraid of competing with Chinese companies. And let's not forget, by the way, that the current leader of Germany, Chancellor Friedri Mertz, was previously the head of the German arm of BlackRock, the world's largest asset manager, the Wall Street giant. And Mertz has been a lifelong fervent diehard Atlanticist. He deeply believes in this transatlantic alliance between Europe and the United States and especially Wall Street. So as some countries in the EU like Spain are looking closer to China, other countries like Germany are just begging. They are hoping that Trump represents a shortterm phenomenon and in a few years a Democrat like Joe Biden will come back to power in the White House and the US will improve its relations with Europe. They will repair all of the damage done and they will revive transatlantic relations. As the European Union said when Trump's first term ended and Biden came in in 2021, they're hoping that Trump's second term is all a nightmare and everything can be undone. And honestly, if a Democrat like, let's say, Gavin Newsome or Pete Budajed wins the 2028 presidential election in the US, then that certainly is a possibility that they will try to reset relations with Europe. But with that said, I should stress that there are some changes that are happening that will continue in the medium to the long term. So not everything can just be magically reversed.
For instance, it's not just Europe improving its relations with China, but the EU has also been seeking to make trade deals with other major powers, including for instance, India. So in January, the EU and India came to a major trade agreement after 20 years of negotiations. And so many people thought this deal would never go through. It was constantly failing for decades. And yet now, ironically, Trump's attacks on Europe have finally forced it to diversify its trade partnerships. We saw another example in January when the EU signed a historic trade agreement with meosur. This is a trade block of South American nations including Brazil and Argentina which are two of the largest economies in Latin America. And this breakthrough came after 25 years of negotiation. So once again, Trump's attacks on Europe finally forced the EU to seek more trading partners. to diversify their economic relations. But I should emphasize this is going to be a slow and complicated process. It's certainly not going to happen overnight because Europe is still pretty dependent economically on the United States. So 19% of the EU's exports go to the US market and 13.5% of the EU's imports come from the United States. The UK and Switzerland are also top trading partners, but their markets are very small. Turkey is a bigger market and another major trading partner. But China, of course, is just at a whole new level with 1.4 billion people. So, it makes sense that the EU wants to deepen its trade with China and India together. China and India have 2.8 billion people. That's a massive, massive market. The UK is in a very similar situation. 14% of the UK's exports go to the US and 12% of the imports into the UK come from the US. And the UK also trades a lot with EU member states and of course with China. So once again, it makes sense that the UK wants to deepen its trade with China.
I should say that when we're talking about the Western Alliance, it's not just Europe, it's also Canada and Australia. And I should say that I think it's more plausible for Europe to diversify its trade relations and weaken its dependence on the US compared to a country like Canada which is so extremely dependent on the US. Nearly 80% of Canada's exports go to the US market over three quarters. That is absolutely crazy. And it shows that the US has extreme leverage over Canada. Moreover, 50% of Canada's imports come from the US. China is the number two trading partner of Canada. But the gap in between Canada's trade with the US and its trade with China is extreme. And that makes it much more difficult for Canada to reduce its dependency on the US. Canada's current prime minister Mark Carney is trying. He also took a trip to China in January and he reduced Canadian tariffs on China. But for Canada, this is going to be a very long and difficult process.
But thus far, I've been focusing primarily on economic dependency, trade dependency. But that's only one form. There are many other kinds of dependency. And for Europe, one of the worst is military and security dependency. Europe is entirely dependent on the US. not only for military equipment which is created by US corporations in the military-industrial complex. Europe has been talking a lot about remilitarizing and NATO member states in Europe want to spend more on their own local militaries, but a lot of that money is going to US corporations in the military-industrial complex. And then Europe remains militarily occupied by the United States. The US has tens of thousands of troops all across Europe, including more than 30,000 troops in Germany. And the US has a constellation of hundreds of military bases across Europe, including 119 bases in Germany, 44 bases in Italy, 25 bases in the UK, which is no longer in the EU, but you know, it's still part of the broader Europe, and even Turkey, which is also member of NATO. It's not in the European Union. There are 13 US military bases in Turkey as well. So, European countries say they want to rebuild their militaries and they have vowed to significantly increase spending on the military, but that is much easier said than done. And if it's going to happen, it's going to take a long time. We're not talking about two or three years. We're talking about decades. And yet, there are other dependencies that Europe also has to think about.
Another major dependency is energy. And this is quite ironic because for many years pro-NATO Atlanticist politicians in Europe constantly complained about the EU's dependency on Russian energy, on Russian oil and gas. And they insisted that Europe should boycott Russian oil and gas. So what happened now? Europe replaced that dependency with a new dependency on US energy, on US oil, and US liqufied natural gas. I created these charts using data from the EU's official statistics office, Euroat, and it visually illustrates how Europe previously had gotten the vast majority of its oil from Russia. And due to the war in Ukraine, the EU stopped buying Russian oil. And then what country replaced Russia as the top exporter of petroleum products to the EU? None other than the United States. And when you look at the EU's imports of liqufied natural gas, LNG, I mean, it's just completely absurd. The level of dependency that the EU now has on the US. The amount of LNG that the EU imports from the US is significantly larger than from any other country by a massive margin. So now that Trump is attacking Europe, Brussels is terrified that Washington could weaponize the EU's energy dependency on the US. Trump could decide one day that he's going to cut off LG exports to Europe, which could cause a significant economic crisis. So the EU is trying to once again diversify its energy providers to reduce its reliance on US LG by importing more LG from Canada. That's not surprising. And also Qatar, which is hilarious because the EU constantly claims that its foreign policy supports so-called democracy and human rights. And that's why the EU hates Russia and all these other countries. Meanwhile, the EU has been depending more and more on monarchies in the Persian Gulf. Qatar is a monarchy. It does not even pretend to be a democracy. But the EU is totally happy to deepen their ties with these monarchies in the Gulf because of course it needs their energy. So, you know, European foreign policy has never been motivated in any way by democracy and human rights. That's completely childish. No one actually believes that. But anyway, getting back to the issue of dependency, another major dependency that Europe has on the US is in technology. And now EU officials have been sounding the alarm over their extreme dependence on US big tech corporations. For years, the EU has said that it's working on trying to promote more European companies, domestic technology firms in order to reduce their dependency on Silicon Valley in the US. But thus far, they have completely failed. Look for instance at the market share of cloud providers. Cloud services are extremely important for the digital economy today. Basically, none of the websites and apps that we use in everyday life constantly. None of them would work without cloud providers. And yet, European cloud providers make up less than 15% of the European market. And that figure has been decreasing over the past decade. It used to be over 25%, now it's less than 15%. And if you look at the global market for cloud infrastructure, there are only two countries that are real players. The US and China. So if you look at the top cloud providers, they are AWS, it's Amazon Web Services, Microsoft, Azour, and Google Cloud. Together, those three US big tech companies have more than 60% of the global market share for cloud infrastructure. You do have a few Chinese companies like Alibaba cloud and 10 cent cloud but their market share is pretty small. It's primarily in China and the other companies are also US firms. And if you look at the European cloud market in particular, these US big tech igopolies in Silicon Valley utterly dominate. Amazon, Microsoft, Google, IBM, Salesforce, those are the top five across Europe. In Germany, you do have Deutsche Telecom. In France, you do have OVH and Orange, but otherwise almost all of the cloud service providers in Europe are US companies. And when it comes to artificial intelligence, I mean, Europe is completely losing out. There are only really two major competitors in the global AI race, the US and China. Europe is barely even on the map. As in the US and China, there is this enormous historic buildout capital expenditure of data centers and infrastructure for AI for this new industrial revolution. And Europe is once again being left behind and becoming dependent on US big tech firms in Silicon Valley. And now the Trump administration is threatening to potentially weaponize this European dependency on US big tech companies. And if you've been to Europe, you know that it's not just cloud services. It's not just AI. I mean, all of the social media platforms, they're all from US companies. Most people in Europe use Google and the various Google products like Gmail for their mail and Google Drive and Google Docs. YouTube is the most popular website and YouTube is owned by Google. There are very few European alternatives and the US has already made it clear that it's willing to weaponize that dependency.
Now, with all of that said, I should point out that Europe does have a small handful of cards that it can play. So, for instance, ASML is a major Dutch company. It makes the world's best photoiththography machines which are needed to make advanced chips. So ASML is one of the most important companies on earth and this is a Dutch company. It's in the EU member of the Netherlands. So some people in the EU have said that this is a bargaining chip that the EU can use as Trump threatens to colonize Greenland. European officials could try to use ASML to cut off the US from access to this very important photoiththography equipment. However, that strategy probably wouldn't work because ASML is also dependent on inputs and parts from the US from US companies. The supply chain is very deep. It's very long. There are so many levels of integration. It would be very difficult to try to break those off. And we're seeing the same discussion happening now in the financial sector because Europe's financial sector is also deeply integrated with the US financial sector. But some people in Europe are arguing that another card that Europe has in this dispute with the US is its $10 trillion of holdings of US assets. Because it's true that the dollar is the global reserve currency and Wall Street is the heart of the global financial system but actually investors in Europe including institutions and also retail investors they hold many US assets which actually could be leverage they could potentially hold over the US. So EU institutions hold $6 trillion in US equities that is stocks in publicly listed US companies. They also hold $2 trillion of US federal government debt treasury securities. In fact, European countries hold close to 40% of the US treasuries that are held by foreign investors. Now the number one holder on earth is Japan. But after Japan, the second biggest holder is the UK. And you also have massive holdings in Belgium, Luxembourg, France, Ireland, Switzerland, Norway, and other European countries. So, as Trump threatens to colonize Greenland, the autonomous territory of NATO member Denmark, some people in Europe have suggested that these European financial institutions could dump their holdings of US treasuries to cause a crisis in the US bond market. And that actually is a very real possibility. This would be very painful for the US bond market because as European investors sell their holdings of US treasuries, it would significantly increase the supply which would lead to a major rise in the yield on US treasuries. And we've already seen, for instance, that the yield on the 10-year US Treasury note has been persistently high at more than 4% over the past few years. Despite many attempts by the US government to bring down those yields, despite the fact that the Federal Reserve, the US central bank, the Fed has cut interest rates multiple times. And yet, that has only brought down yields on the short end of the curve. the long end of the curve remains stubbornly high. So like I said, this actually is a real card that Europe could play that would actually force the US government to take a step back. It's not only the US that has all of the leverage over Europe. Europe does have some leverage.
However, with that said, I'm still very skeptical about all of this. I think a lot of this is just rhetoric. It's Europeans puffing up their chest and saying that they'll fight back and defend themselves against the US. But we've seen again and again and again in recent years that pretty much every time the US attacks Europe, Europe does not actually retaliate. Which is why Trump feels so empowered to just continue walking all over Europe and treating European countries like vessels. And in fact, in response to this discussion of Europe potentially dumping US assets, Trump threatened quote big retaliation end quote against Europe. So Trump has made it clear that if Europe does actually try to retaliate in this way against Trump's threats that Trump will only move further up the escalation ladder. And this is why at the end of the day I'm very skeptical about this narrative that Trump has completely destroyed the Western Alliance and this is the end of NATO because again we've seen how Europe has always bent over backward despite the fact that Trump has constantly threatened them for almost a decade now. European political leaders love to issue strongly worded messages and send out open letters and wag their finger. But when the US attacks them, almost always European leaders give in. They buckle. A perfect example of this was the embarrassing episode involving inst. This was an institution called the instrument in support of trade exchanges. The acronym is Instex. and it was created in 2019 by the leading governments of the EU and the UK. The reason they created this is because during his first term as president, Trump illegally withdrew from the Iran nuclear deal, the JCPOA. He tore up in violation of international law and he reimposed sanctions on Iran. Again, those were completely illegal sanctions. And the Iran nuclear deal not only involved the US but also Europe. So in response to Trump's illegal sanctions on Iran, Europe created Instaxs and they did one transaction in March of 2020. It was a totally symbolic transaction to show that the institution worked and they sold 500,000 euro of blood treatment medication. This is at the beginning of the pandemic. There was tons of media coverage of this and Europe said that they were standing up to Trump, but they did a grand total of one symbolic transaction. And then what happened? They shut down Instaxs at the beginning of 2023 after just four years of pretending that this was a real institution. This is just one small example of why I'm very skeptical of all of the hyperbolic rhetoric claiming that Trump has ended the Western Alliance and Europe is going to be independent of the US. Also, because come on, we've heard all of this before back when Trump was president the first time. And back in 2018, there was a famous photo that went viral of Germany's leader, Chancellor Angala Merkel, arguing with Trump at the G7 summit. And people in Europe said this was the end of the Atlanticist alliance. And in fact, Merkel and Mron called for creating a quote real true European army end quote. That was in 2018, nearly a decade ago. Where is the real true European army? It was just rhetoric. Again, I've talked about how European political leaders love to issue strongly worded statements. They love to focus on rhetoric, but not action. We need action, not just words. Another great example of this was this historic speech that France's banker turned president, Emanuel Mun, delivered in 2017, announcing a new initiative for Europe. Back in Trump's first term, there was tons of discussion in the Western media of the ambitious plan to save Europe. How Merkel and Mron were going to save Europe and pursue a path of strategic autonomy. That was the term everyone was using at the time, strategic autonomy, European strategic autonomy. Yet, what came out of all of that? Nothing. In fact, as Europe was talking about so-called strategic autonomy, it became more dependent on the US than ever to such a degree that in 2023, the major think tank, the European Council on Foreign Relations, which is funded by multiple EU member states, they published a white paper titled The Art of Vasilization, talking about how the proxy war in Ukraine had further increased the subordination of Europe to the US Empire and how European countries were vassels of the US Empire. So again, I know I'm being redundant here, but this is why I'm very skeptical about this narrative that Trump has ended the Western Alliance and after Trump leaves office, it will never be the same again. That's what we were told during Trump's first term. And then Biden came in and made up and the EU completely subordinated itself to the US. And the EU became even more dependent on the US than ever before. I'm not saying that this is exactly the same. Today I talked about some of the small changes that have been happening that over time in the medium to the long term could lead to Europe being a little more dependent. Like for instance, if Europe does significantly improve its relations with China and the trade agreements with India and Merosour in South America, those are significant developments. I'm not trying to downplay them. But what I am stressing here and this will be the last note of my analysis today is that Europe is so extremely dependent on the US in so many ways militarily and in terms of security in terms of technology, economically, financially. It's going to be very very difficult for Europe to actually pursue a path of strategic autonomy. Now in terms of my view, I think Europe should try to do that. It should try to be more independent. It would be good for Europe and it would be better for the world than this current situation where European governments are largely just the imperial lackey of the US empire and go along with whatever Washington wants. But if Europe is actually serious about pursuing strategic autonomy, this will take much more than words. It will take concerted action. It will take strategic planning by governments. It will take a lot of investment over decades, not just a few years when Trump is president and then a Democrat comes in in the US and they just reverse everything. We're talking about a transition that will take decades. So maybe in the medium to the long term, this is a possibility, but I'm very skeptical in the short term. On that note, I'm going to conclude. I am Ben Norton. I want to thank everyone for joining me today. Please like and subscribe. Please share this. I will see you all next time.